Financing for Development is key to fight hunger, accelerating progress across the Sustainable Development Goals
At the 2023 ECOSOC Financing for Development Forum, FAO discussed the importance of mitigating and preventing food crises, increased and sustained financing in agrifood systems as a pathway to eradicate hunger, reduce poverty, empower rural women and unlock an inclusive industrialization.
Together with its partners, FAO stands ready to leverage and foster new approaches and strategies to elevate the role of financing for development to mitigate and prevent food crises and promote agrifood systems transformation. These strategies must be inclusive, environmentally sustainable, promote food security and nutrition, and ensure that no one is left behind. This was the resounding call from FAO during the ECOSOC 2023 Financing for Development Forum (FfD Forum), which convened in the United Nations headquarters in New York, from 17 to 20 April.
As the ECOSOC platform for inclusive, multi-stakeholder dialogue to address the current global challenges and advance policies for financing long-term sustainable development priorities, the 2023 FfD Forum convened also saw the adoption, by consensus, of an outcome document entitled, ‘Follow-up and review of the financing for development outcomes and the means of implementation of the 2030 Agenda for Sustainable Development’.
To mitigate and prevent food crises, transform agrifood systems, policy coherence, increased investments and multilateralism are key
Leading the FAO delegation at the FfD Forum was David Laborde, Director of the FAO Agrifood Economics Division, who participated in panel discussions on remaking the international financing architecture to achieve the SDGs and on the role of multilateral development banks in the context of leveraging development cooperation to build long-term resilience.
On the critical importance of repurposing agricultural policies, subsidies and incentives towards public goods, Laborde touched on how these efforts must be coupled by increased official development assistance (ODA) that prioritizes agriculture and rural development. “Agrifood systems are the backbone of all of society, and they should not be the last to benefit from increased financing,” he said.
In this respect, FAO strongly believes that official flows to food crisis response must be more cost-effective, including by prioritizing direct agricultural livelihood support, building resilience and investing in anticipatory actions, before crisis mount to far more deadly and far more costly proportions.
When only 4 cents per day per person of ODA funding are going into agrifood systems, Laborde explained, this is clearly not enough in the face of rising numbers of people in chronic hunger.
In the face of rising food insecurity and hunger levels, Laborde also touched at a parallel panel discussion on safeguarding food security through multilateralism, trade and national actions on the importance of spending available funding more strategically, including on “global public goods” and with a more proactive focus on responding to the needs of smallholder farmers, who are crucial to safeguarding global food security.
Laborde also delivered a statement on behalf of FAO at the FfD Forum General Debate segment, underscoring that “investing in food and agriculture is an effective strategy to alleviate poverty, fight hunger, boost productivity, tackle gender inequalities, and accelerate structural transformation and inclusive industrialization”. A prioritization of financing for agrifood systems is likewise a necessary strategy to fight climate change through mitigation and adaptation, while also safeguarding biodiversity, he added.
Financing support to the net food-importing developing countries is critical
In the last three years, agrifood systems were hit by two consecutive shocks: COVID-19 induced supply chain disruptions and severe food and fertilizer shortages and energy price increase, including those related to the war in Ukraine. Higher food and input prices have increased the global food import bill to an estimated all-time high, surpassing USD 1.94 trillion and adding an additional USD 180 billion over the previous record. This has stressed further the balance of payments of countries, especially net-importers of food.
Against this backdrop, the FAO-led side event, ‘Exploring approaches and strategies on how to bring the role of finance for development on mitigating and preventing food crisis and promoting food systems transformation with a focus on the FAO Global Food Import Financing Facility (FIFF)’ included the FAO Chief Economist Máximo Torero Cullen to speak on the FIFF as an FAO proposal calling for a subsidized credit line for food-specific balance-of-payments support to improve food access for 1.77 billion people across 61 countries – equal to 8 percent of the global food import bill. Watch the event recording and revisit the presentation by the FAO Chief Economist.
This was echoed by Adriano Campolina, Senior Policy Officer at the FAO Agrifood Economics Division and also part of the FAO delegation at the FfD Forum, in his intervention at a panel discussion on aligning financing mechanisms with the right policy choices to assist countries facing surges in food import bills to prevent food insecurity and macroeconomic crises.
Campolina spoke on how blended finance of various types is crucial to help finance agri-micro, small, and medium enterprises, including by mobilizing private sector investors as strategic resource and implementing partners. Public resources are also important, he added, as they are essential to help de-risk agrifood investments, especially in the earlier stages of enterprise development.
Food and agriculture as climate solutions
Campolina also spoke at a panel discussion on the risks faced by smallholder farmers and rural communities against the backdrop of the climate crisis. He explained that with only 1.7 percent of global climate finance going to smallholder farmers, “it is urgent to ensure that green, sustainable and inclusive finance reaps small holder farmers and Micro-, Small and Medium-sized Enterprises (MSMEs).
Financing not keeping up with rising needs, says the 2023 Financing for Sustainable Development Report
The 2023 Financing for Development Forum also saw its discussions informed by the 2023 Financing for Sustainable Development Report, launched ahead of the Forum and to which FAO provided inputs to majority of its Chapters focusing on the critical thematic of preventing and mitigating food crises and transforming agrifood systems.
The report finds that SDG financing needs are growing, but development financing is not keeping pace. Against a backdrop of converging factors – including the war in Ukraine, sharp increases in food and energy prices, and rapidly tightening financial conditions – rising hunger and poverty levels have translated into reversing progress on many SDGs.
Recordings of FAO interventions and statements at the FfD Forum
- General Debate of the FfD Forum
- Panel discussion 1: Coping with cascading crises and investing in sustainable development: How to make the right policy choices?
- Panel discussion 2: Remaking the international financial architecture to achieve the SDGs.
- Panel discussion 3: Development cooperation: Long-term resilience and the role of multilateral development banks
- Panel discussion 7: Climate financing for adaptation and the SDGs
- Panel discussion 9: Safeguarding food security through multilateralism, trade and national actions