The slow progress towards Sustainable Development Goal (SDG) 2 (Zero Hunger), over recent years has been further impacted by the global food and energy crises arising from global supply chain disruptions, the repercussions of the Covid-19 pandemic and the war in Ukraine. The cost of food systems transformation is estimated at USD 300-350 billion per year, and the part of this directly related to SDG 2 is estimated at USD 170-190 billion.
Official development assistance remains insufficient; thus, the need to diversify the sources of development finance is greater than ever. To date, private financing has not led to sustainable solutions in addressing food security and nutrition. For development institutions, leveraging private financing for SDG 2 does not mean receiving private funding flows to deliver on their mandates. Rather, it entails working with partners to identify potential private financing solutions that are sustainable, mutually beneficial, and that positively impact SDG 2.
OPPORTUNITIES IN FOOD AND NUTRITION
There are components of the food system and agri-food value chains – compared with other development challenges not as tangible as food or that largely require public investment – that could be scaled up and sustainably implemented using innovative public-private sector models. Here, agencies such as the World Food Programme, supporting over 160 million people in 120 countries in 2022, can enable the scaling up of sustainable solutions, with:
- Financial inclusion – resource management, insurance, and savings: In the context of climate shock mitigation, WFP assists at-risk farmers and their families with a comprehensive risk management approach, reducing financial vulnerabilities and promoting resilience. This includes assets, insurance, diversification, microcredit, and savings. Strategies include partnering with financial institutions and local public entities in sharing risks. Access to finance enables smallscale farmers and agri-processors to become viable businesses.
- Market access and value chains: Smallholder farmers face challenges in accessing markets due to limited infrastructure, lack of financial resources, and inadequate market information. WFP helps improve smallholder farmers’ livelihoods and the supply of nutritious foods, by connecting them to markets. It provides market intelligence and technology, improving smallholder farmers’ integration into formal value chains. WFP sees opportunities in attracting private sector finance to support the structured development of small-scale farming, agri-SMEs, and local food processing by anchoring demand and providing diverse technical assistance across value chains.
- Support for local production ofcomplementary foods: WFP has extensive experience in the local production of quality, nutritious foods, due to its engagement in producing for local markets and its procurement for governments. However, meeting the demand for specialized nutritious foods (SNFs) is challenging, due to the limited supply chain agility and resilience (sourcing reliability) of current supplies. Establishing local production of SNFs is difficult due to the lack of market incentives – beyond institutional purchasing – for private investment and barriers such as high investment and regulations.
How WFP enhances food security
The WFP procures approximately USD 2 billion worth of food in developing countries annually. The WFP aims to enhance food security – focusing on improving small-scale farming, agri-SMEs, and local food processing – in collaboration with the private sector. By providing demand for commodities from smallholder farmers and offering technical assistance, WFP promotes the development of value chains and encourages the deployment of organized financing.
JOINING FORCES TO TRANSFORM FOOD SYSTEMS
Enhancing food security and transforming food systems requires a collaborative effort involving various stakeholders. The role of the private sector is critical for long-term sustainability. Governments, the UN and development partners need to work together to establish an enabling environment for responsible private financing. The private sector plays a crucial role in driving innovation, investment, and efficiency within the food system. Local businesses – including small-scale farmers, food processors, distributors, and large-scale manufacturers – have a direct impact on food security and good nutrition. A public-private model involving innovative, blended financing and shared technical expertise can leverage stakeholders’ strengths, to address food security challenges effectively and sustainably.
Governments play an important role, by creating policies and regulations that provide a baseline conducive to transforming food security and food systems. These include promoting sustainable agricultural practices, ensuring access to land and resources, and establishing effective market systems. They can ensure a fair and straightforward regulatory environment, and provide incentives for private investment in development-related sectors, to ease doing business. The UN and development partners can contribute to formulating and designing policies, as well as to implementing them – through technical assistance, financing, building, and knowledge sharing – and monitoring scalable solutions.
THE CHANGING GLOBAL CONTEXT
Beyond countries’ humanitarian needs, urbanization and other trends will influence achieving SDG 2, foregrounding financing responsibility for cross-border issues such as climate change and migration. Addressing these issues will require global cooperation and private sector partnerships. The private sector will play a vital role in driving climate action, through sustainable practices, renewable energy investments, and eco-friendly technologies. Due to the rapid global urban population growth (68% by 2050), understanding food and dietary patterns will help the private sector meet the demand and promote healthy choices.
The private sector plays a crucial role in improving food security and supporting the transformation of food systems. By driving innovation, strengthening value chains, promoting sustainable practices, and mobilizing financial resources, we can create a resilient, inclusive food system. The World Food Programme remains committed to fostering responsible partnerships with the private sector and to harnessing collective power to ensure a world where no one goes to bed hungry.
“FARM Private sector”, an initiative to promote sustainable food systems
AFD Group and Bpifrance financing solutions are aimed at all players involved in the agricultural value chain in Africa from start-ups and micro-businesses/SMEs to mature agribusinesses. Between 2011 and 2021, agriculture and agri-businesses have benefited from direct and indirect financing from Proparco totalling €1.6 billion (114 projects) and more than 55% of this investment has been in Africa. However, financing needs are insufficiently covered, especially seed funding for small innovative projects, which are traditionally considered to be very risky. Food system production capacity, particularly in vulnerable areas, can only be strengthened if the most sustainable agricultural and agri-food solutions are scaled up.
To meet this challenge, France has launched the first phase of the "FARM Private sector" initiative, rolled out by Proparco and Bpifrance, and developed in partnership with French businesses. Initial funding of €40 million is aimed at providing direct financing for agri-food businesses that have difficulty accessing credit as well as agricultural SMEs and micro-businesses. This will be done by financing banking partners and microfinance institutions so they can meet the needs of small borrowers. While Proparco already invests between
Consequently, Proparco is now even better equipped to support less financially sound agri-food businesses with very little collateral, and to support businesses affected by raw material price increases and logistics and transportation problems. Proparco also has a
Thanks to "FARM Private sector", Proparco is extending its support for these innovative agricultural SMEs and agri-businesses into high-risk geographies.