ACDI/VOCA A New Approach to Public Investment to Foster Sustainable and Resilient Food Systems

Elements of a sustainable food system Sustainable Food System Defined – “a collaborative network that integrates sustainable food production, processing, distribution, consumption and waste management in order to enhance the environment, economic and social health of a particular place“ (U. C. Davis) From the ground what does this look like? A collection of linked, minimally sustainable units providing a living standard (e.g., family farm, cooperative or farmer association, business, etc.) Efficient, effective and profitable enterprises along the value chains Sustainable landscapes – protecting and enhancing the environment

What is the rationale for public investment (or donor interest) in agriculture? Economic inefficiencies brought about by market failures which can be corrected through public sector (or donor) involvement – subsidies, policies and regulations, public investment or ownership, technical support and capacity building. Address unacceptable levels of poverty, inequality and need through policies, subsidies, direct support. Overall need to ensure coordination and collaboration when both rationale operate in the same area - local procurement (PPP) a bridging example.

Public (or donor) investment can be… Made directly in support of sustainable food systems Agricultural Research and Development – viewed as highest return public investment (IFPRI) Extension and irrigation (good value according to IFPRI study) Fertilizer subsidies – least return Commodity exchange, storage facilities Finance – tends to crowd out private sector if not structured properly Or in areas that support or strengthen sustainable food systems Key infrastructure – both physical (e.g., roads, ports, corridors, etc.) and in support of information data (i.e., climate or other type of data that permit indexed-based crop insurance, etc.) Policy and regulatory reforms

How are public (or donor) investments targeted? Eliminating poverty and ensuring food and nutrition security Promoting growth and diversification of services in high potential areas Programs often seek to find market-based solutions while providing substantial subsidies Emerging trends include local procurement for food relief Cash or vouchers in lieu of commodity Longer term focus on sustainable livelihoods and living income that may or may not be farm-based Programs target the hidden middle typically through public-private partnerships Address the missing middle in finance and investment – patient capital and mezzanine finance Agro-corridors or clusters foster agriculture and value added agro-industries and businesses Agro-based special economic zones attract private investment

Public-Private Partnerships (PPP) described FAO (2016) defines PPPs as formalized partnerships among public institutions, private partners and at times, financial institutions or civil society designed to address sustainable agricultural develop objectives where public benefit anticipate from the partnership are clearly defined, investment contributions and risks are shared, and active roles exist for all partners. One recommendation for the workshop is identifying ways to re-energize the Agribusiness and Agro-Industries Development Initiative (3ADI)

Setting the stage and points to ponder Keep the focus on long-term sustainability and resiliency, living wages, market segmentation, and collaboration Promote local and regional trade, especially in staples. A food security model based on national self sufficiency cannot work in most countries due to different seasons and rainfall patterns, and variability in production. Opaque and unpredictable trade policies and opportunistic decisions to import significant staples or accept relief without deliberate consideration undermines local production, weakens markets, and dampens private sector partnerships and investment. Focus on collaboration and partnerships. Engage at all levels of government and with informal and formal actors and markets. A sustainable and self-supporting commodity exchange, for instance, needs to extend its reach to include village level storage and certification!

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