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Value Chains

Farmers invest 50 times more in farms than their countries get in aid

A farmer in Manthralaya, India plows his field. Photo: <a href="">Ananth BS (Flickr)</a>
A farmer in Manthralaya, India plows his field. Photo: Ananth BS (Flickr)

The major report out Thursday from the Food and Agriculture Organization (pdf) includes numbers that show, better than anything else, why major changes to our future food supply will depend on market forces.

Even in poor and middle-income countries, investment by farmers in their own land dwarfs public investment.

From the Guardian:

Farmers in low- and middle-income countries invest more than $170 billion a year in their farms—about $150 a farmer. This is three times as much as all other sources of investment combined, four times more than the public sector's contribution and more than 50 times the size of official development assistance to those countries.

Figures are in constant 2005 U.S. dollars.

The FAO's annual report picks a single topic each year around which to build its research. For 2012, the subject is agriculture investment. And many of the figures in the report go to show that although state spending on agriculture can certainly affect outcomes, it's just one factor among many.

For example, here's a chart (from page 23) showing the weak correlation between state investment and agricultural productivity per farmer in selected low- to middle-income countries:

Graphic by United Nations Food and Agriculture Organization.
Graphic by United Nations Food and Agriculture Organization.

The overachievers here turn out to be Lithuania, Moldova, Romania, Nigeria and Latvia, all of which posted much more agricultural growth per worker from 1990 to 2007 than state investment levels would have anticipated. The agricultural laggards, where state investment didn't seem to help productivity much at all: Botswana, Bhutan, Kenya, Saint Vincent and Sri Lanka.

Many factors went into those trends, of course. But other things being equal, expect the farm aid programs of the future to focus on making the economies of the lagging group function more like the economies of the overachieving ones.

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