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Promoting an Open and Equitable Global Food System

Chicago Council on Global Affairs

Global Agricultural Development Initiative Policy Paper Series

Leveraging Private Sector Investment in Developing Country Agrifood Systems

by Charlotte Hebebrand

May 2011

Study Prepared under the auspices of the Global Agricultural Development Initiative

Co chairs: Catherine Bertini & Dan Glickman

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This paper was commissioned and published by the Chicago Council on Global Affairs, with significant input from the International Food & Agricultural Trade Policy Council's members.

Summary

The for-profit sector is now a critical player in the shift from subsistence agricultural economies, where poverty and uncertainty perpetuate hunger, toward well-functioning commercial systems, where farmers can afford needed inputs and reach cash markets. Private-sector engagement is also essential for “scaling up” government-financed development projects, and for sustaining these projects after government funding is reduced or withdrawn. Because it does not appear to be feasible to reach the necessary level of food security funding through public finance and overseas development assistance, both donor governments and governments in developing countries have focused more on leveraging investments from private companies. This paper seeks to examine what has been done, and what needs to be done to strengthen agricultural development through private sector investments.


This policy paper consists of four sections. The first reiterates the benefits of sound private-sector investment in sustainable food security; it also explains the paper’s primary focus on investments from transnational corporations (TNCs) and describes how TNCs approach decisions on investment allocations. The second section highlights examples of TNC investments that have simultaneously benefited smallholders in developing countries while creating profits—or the potential for profits—for the investors. The third section explores how the US government engages with TNCs and incentivizes investments. The final section concludes with recommendations for TNCs, governments, and other players, with a view towards increasing TNC investments that both strengthen agricultural development and offer profits to TNCs.

About the Policy Paper Series

Policy Papers gather data and provide guidance and technical assistance to policymakers and other relevant parties on how aspects of agricultural development and food security activities might be most effectively shaped and realized. Studies’ background and conclusions are developed through consultations with appropriate subject-matter experts from the academic, non-governmental organizations (NGOs), government, think-tank, and business sectors.


About the Global Agricultural Development Initiative

Policy Papers are published by The Chicago Council on Global Affairs’ Global Agricultural Development Initiative (GADI). Launched in 2008 and expanded in 2010, GADI purposes to build support and provide policy innovation and accountability for a long-term U.S. commitment to agricultural development as a means to alleviate global poverty. It aims to maintain the policy impetus towards a renewed US focus on agricultural development, provide technical assistance to agricultural development policies’ formulation and implementation, and offer external evaluation and accountability for US progress on food security. The Initiative is led by Catherine Bertini, former executive director, UN World Food Program, and Dan Glickman, former secretary, US Department of Agriculture and overseen by an advisory group comprised of leaders from government, business, civic, academic, and NGO sector circles. For further information, please visit thechicagocouncil.org/globalagdevelopment.

 

 


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