Food Security
Strengthening the Supply
Response:
The Role of EBRD and MDBs
Prepared for the Meeting of the G20 Ministers of Agriculture,
Third Deputies Meeting, 11 - 12 of May 2011, Paris
Heike Harmgart
European Bank for Reconstruction and Development
Outline
1. Strengthening the supply response: the
investment challenge
2. Key objectives and instruments to increase
investment: examples from the EBRD region
3. The role of the MDBs
4. Opportunities for coordinated MDB action and
the G20 process
The food supply challenge

To feed the world, global agricultural production
needs to increase by 70 percent over the next
40 years

The FAO estimates that 90 percent of the
necessary production increases will have to
come from increases in yields and cropping
intensity and only 10 per cent from the
expansion of arable land.
The role of MDBs
Identified areas of specific collaboration:
•
Strengthening global food supply
•
Reducing food price volatility
•
Strengthening safety nets
•
Addressing the food-water nexus
The global investment challenge and
the role of the private sector

Global Investment Gap to achieve the
targeted food supply increase is estimated at
US$200 billion annually

Developing countries will need to increase
investments by 50% relative to current
trends

Investments will mainly need to come from
the private sector
The investment challenge
An EBRD country example: Ukraine

Ukraine has huge agricultural potential …


•
•
8% of global grain exports, with a potential to double
yields and increase grain output from 40mt to 80mt
… requires massive investments …

Investment costs of c. $1000-$2000 per ha

Require a total of 40-80 billion US$

Adapting existing technologies

Using sustainable technologies
… which need transparent and predictable
policies to boost investor confidence
MDB support is important to achieve this
Ukraine (con’t)

MDBs have been promoting this through intensive
policy dialogue between the Ukrainian
government, IFIs and private companies
 Organization of a conference in January 2011 in Kiev
with key stakeholders : the Ministry of Agrarian Policy,
grain associations, 30 local and foreign private
companies and IFIs (EBRD, WB, IMF, IFC, FAO)
 Start of a regular public/private Working Group in Kiev
with the Ministry of Agriculture and key market
participants, supported by the EBRD and FAO
 Joint action/letter by the IMF, WB and EBRD to the
Ukrainian PM to correct policies
Increased Investment since the food
crises – the EBRD experience
The role of the MDBs in supporting
the supply response

Each MDB (ADB, AfDB, EIB, EBRD, IADB, IFC and
the World Bank) has formulated individual
strategies and committed resources to respond to
food and water security

EBRD and IFC focus their activities solely on the
private sector

In October 2010 under the auspicies of the Heads of
MDBs meeting, a special MDB Working Group on
food and water security was formed to improve
coordination and utilise synergies
Joint actions by MDBs

Strengthen coordination and collaboration to avoid
overlap and maximize synergies

Promote policy reforms jointly that enable private
sector investment

Provide investments along the whole food valuechain

Support public sector investments

Engage in coordinated
governments (see Ukraine)
policy
dialogue
with
Joint actions by MDBs
Jointly promote policy reforms that enable private
sector investments and provide direct private sector
financing
• Promote private investments through the whole food value chain
→ spill-overs from downstream financing
• Provide direct financing in food chain-related infrastructure that is
critical for storage, transport and trade efficiency
• Promote access to commercial finance for agricultural producers
through risk-mitigation (co-financing, private sector take-up of risk
management tools)
• Support a platform for private public consultation
Joint actions by MDBs
Coordinated support
investments:

public
sector
Tailored R&D for high-yielding, climate change resilient crops
Promote secure
investments

for
property
rights
and
public
infrastructure
Facilitate access to markets and promote SMEs and microenterprises

Promote institutional change for agricultural collateralization
options and insurance for farmers, such as Warehouse Receipts
and Crop Receipts, land mortgages and rural guarantee funds,
indexed insurance.

Joint Action Plan by MDBs
underway

Better global policy coordination

Higher resource efficiency, incl. utilisation of GAFSP

Greater knowledge pool to share innovative
approaches (e.g. CPRs IFC-EBRD initiative)

Joint financing of specific food and water security
projects/initiatives, including regional projects

Expand global multilateral financing instruments
(loans, grants, funds and technical assistance)
G20 guidance

The missing link: top level policy coordination to
support an adequate supply response and avoid
price volatility from uncoordinated individual action
– Point in case: Ukraine‘s export quotas

How to do it? EBRD‘s ongoing analysis
– Top political level coordination
– Counteract/leverage local vested interest.
Thank you!
Heike Harmgart
[email protected]