The challenges facing the Agribusiness have often been roadblocks to realizing the full potential of the industry despite the role agriculture plays in shaping the future of food security, nutrition, growth and employment.
President of the World Bank group, Ajay Banga who stated this at the Agriculture Flagship Event at the World Bank Group 2024 Annual meetings in Washington, DC said the Bank had examined the challenges from all angles, like how to increase food production, boost productivity, and resolve issues around water scarcity, fertilizers, infrastructure, and financing.
Ajay noted that four key shifts are emerging that make it the right moment for a new strategic approach for the World Bank Group, saying first is that agriculture is increasingly vulnerable to climate risks and a significant contributor to emissions, yet it only receives 4 percent of climate finance globally.
“ There is an opportunity to tap into these resources to advance climate-smart agriculture, which would grow productivity while reducing emissions”. New tools for derisking are opening doors for private capital to flow into the agricultural sector. We’ve seen credit guarantees, first-loss facilities, and insurance instruments help make lending safe and more commercially viable. These financial tools, when paired with public sector policy and regulatory reforms, can create a favorable environment for private investors”
“In the past, reaching individual farmers has been difficult for fintechs or commercial banks. Advancements in digitalization and new digital tools have created opportunities to aggregate farmers and connect them with buyers, financial services, and innovative technologies that enhance productivity. Additionally, these tools create a “digital footprint,” helping farmers establish credit histories and dramatically reduce the cost of delivering financial services by up to 90%”.
“A significant portion of agribusiness financing is sourced from large food companies and traders, who often operate in isolation. This approach can create inefficiencies and fragmentation, leaving smaller farmers out. However, we have found that with farmer associations and producer organizations we can move beyond the challenges of the past”. He said.
Ajay says these four emerging shifts have the potential to fundamentally reshape the agribusiness landscape, at a time of extraordinary opportunity as global food demand is set to increase by 50 to 60 percent in the coming decades.
“This strategic pivot is made possible because of the work we have done over the past 16 months to become a better, simpler, more coordinated institution. It moves us beyond fragmented efforts to a constellation of solutions that includes everything from warehousing to logistics to production, but with smallholder farmers and producer organizations at the center”.
“We are combining a new way of working with a new level of investment, doubling our agri-finance and agribusiness commitments to $9 billion annually by 2030.”
The World Bank President says with IBRD and IDA’s experience building capacity and services of the public sector, and IFC and MIGA’s financing and private sector access, the world Bank hopes to make changes that will be seen and felt by business and government partners alike, with a goal to increase mobilization to $5 billion.
“We cannot predetermine these interventions universally. But with a World Bank Group ecosystem approach, we will be able to identify and address any number of barriers to build opportunity. The effort to transform agribusiness is not only about securing the food systems of tomorrow, it is fundamentally a jobs initiative.
In the next 10 years according to him, 1.2 billion young people in developing countries will enter the workforce while only 420 million jobs are projected to be available, leaving nearly 800 million without a clear path to employment.
“We face two paths, one where this generation powers our future, OR one where they challenge our future ,due to migration, social unrest, and despondency driven by unemployment. Our strategic shift in agribusiness is aimed at unlocking the path to a brighter future, delivering quality of life and job opportunities.
Ajay noted that quality of life improves as agricultural productivity increases adding that Climate-smart production practices mean fewer emissions and cleaner air while higher incomes lead to investments in fresh water infrastructure leading to improved diets, children grow up healthier, and are better able to make the most of their education.
“For young people, the rise of a thriving agriculture industry brings the promise of a better life. With more jobs in rural areas and higher incomes, they no longer face the same limitations as previous generations. They have the opportunity to pursue fulfilling careers, whether in agriculture with their families or to pursue a new generation of job, which would require skilling and education of a different type. The chance for a brighter future becomes more attainable, creating a cycle of prosperity and progress.”
In conclusion, Ajay Banga said the path chosen today will determine the future as it could transform agriculture and agribusiness thereby creating food system of tomorrow, raise living standards, and create jobs.