The world’s next breadbasket

13 October 2010, Istanbul - The countries of Central and Eastern Europe and Central Asia have vast untapped agricultural resources and can play a vital role in improving world food security, the FAO and EBRD said at the opening of a two-day meeting in Istanbul today.

With global demand for food, feed and fibre set to double in the first half of the century as the world expects a population increase of 2.3 billion people while facing daunting environmental challenges, agriculture must become more productive and more sustainable, the organisations urged. According to FAO estimates, the world will need to produce 70 per cent more food by 2050 to meet increased demand.

At the meeting in Istanbul representatives from international financial institutions, development agencies, donor governments, the private sector and government officials are going to discuss how targeted investment and improved policies could help unleash the region's agricultural potential while protecting the natural resource base and the welfare of producers and consumers.

Huge potential

"The region has huge land reserves and enormous potential to increase yields substantially," says Charles Riemenschneider, Director of FAO's Investment Centre. "At the beginning of economic transition there was an initial sharp drop in production, but since then we have seen slow, but steady progress."

This progress has accelerated since the 2007-2008 world food crisis, when higher prices spurred production increases. Russia's wheat production in 2007-09 was 27 per cent higher than its 2004-06 average, peaking at 64 million tonnes in 2008, according to Russian statistics. The country then became the world's third largest exporter of wheat. The sudden and sharp rise in international wheat prices in the summer of 2010 following severe droughts in the Black Sea region and subsequent export shortfalls serves as a reminder of the region's major role in the global grain market today.

This is further underlined by estimates by FAO and EBRD according to which, in Kazakhstan, Russia and Ukraine alone, around 13 million hectares of land could be returned to agricultural production with no major environmental cost. Increased land use, coupled with improvements in the productivity of both land and labour, will be crucial in realising the region's full potential.

"Quick returns can be obtained at the farm level by investing in technology and management," said EBRD First Vice President Varel Freeman. "These countries have even better soils than many other major producers, yet their yields remain low and volatile. What is crucial is investment and how it is being used."

Huge challenges

Mr Freeman named inefficient farming techniques, inputs and agricultural machinery along with insufficient transport infrastructure and storage facilities as key challenges. EBRD investments are targeting the development of local supply chains to increase efficiency along with continued institutional and policy support, he said.

IFAD's Assistant President Kevin Cleaver stressed the importance of getting small farmers and small agribusinesses on board of modernised supply chains as the livelihoods of large number of rural dwellers were at stake.

Other topics on the agenda in Istanbul include investment opportunities in Turkey's agriculture sector, agriculture and rural development in the Western Balkans and the promotion of farm mechanisation in low- and middle-income countries to speed up the pace of modernisation and improvement of farm incomes. FAO and the World Bank will present a study on farm mechanisation, which recommends to increase access to finance, improve the business environment, and increase foreign investment in manufacturing and distribution, especially for small-scale, low-cost farm machinery.

Environment-friendly, profitable solutions

Participants will also explore win-win situations where environmentally sustainable agriculture practices can lead to greater profitability. "Our role is to assist governments in the formulation of climate-smart policies that ensure agricultural development without additional pressure on natural resources and the environment," said Dina Umali-Deninger, Sector Manager at the World Bank.

The Istanbul meeting is being organized by EastAgri, a network of funding institutions, including private banks, committed to improving agribusiness investment portfolios through information sharing and partnership. EastAgri was founded by FAO, the EBRD and the World Bank and is managed by FAO's Investment Centre.