Photo credit: Flore de Preneuf/ World Bank
The performance of the global food system over the last century has been extraordinary. Farmers, processors, traders, retailers and all the other agents in the food system have been able to feed a global population that has increased from 1.6 billion in 1900 to nearly 7.6 billion in 2020 , while at the same time bringing down real food prices. Over that period, all four dimensions of food security improved – availability, access, reliability and nutrient adequacy.
That, at least, is what is seen on the surface.
The world’s food systems have a market value of around $10 trillion per year. However, they generate between $6 trillion and $12 trillion annually in hidden social, economic and environmental costs. Costs linked to animal extinction, malnutrition, pollution, foodborne illness - and more - will continue to rise under a business-as-usual scenario as we feed a growing global population. The challenge is even bigger considering the risks ranging from effects of climate change to pandemics, linked to ecosystem degradation, unhealthy and unsafe diets, and increasing urban density.
"Reforming how we produce, transport, process, trade, invest in, regulate, and consume food can help tackle the most critical challenges of our generation."
This week’s UN Food Systems Summit represents a critical moment to promote and scale initiatives and solutions that can transform food systems to benefit the world. Food systems must change rapidly and fundamentally to become more regenerative, resilient, and inclusive, while increasing food supply for an additional two billion people by 2050.
Many of the technical solutions are well known. Researchers at CGIAR and elsewhere have perfected methods to reduce methane from rice and livestock and store more carbon in the soil by better managing cropland and grassland. Integrating trees and shrubs on farms can provide organic fertilizer and feed, reducing the need for chemical inputs, while increasing yields, providing habitats for beneficial insects and sequestering carbon. And investments in improved roads, cold storage and the circular economy offer promising pathways to reduce food loss and waste.
As part of the UN Summit, the World Bank has collaborated with the International Food Policy Research Institute, and the Food and Land Use Coalition, to rethink the way food systems are financed. Together we identified five “food finance imperatives” which could unlock $4.5 trillion in new business opportunities every year. By laying out a roadmap of potential solutions and directing them at specific actors in the financial system, our hope is that these imperatives will help accelerate critical shifts for people and planet.
Transforming food finance will require a systemic approach, including repurposing public policies and support for agriculture and food to tackle health and climate challenges. According to the World Bank’s analysis of public support in 79 countries, governments spend about $570 billion each year supporting food production – mainly in the form of price support, input subsidies and direct payments to producers. While some of this money goes to research and development, food safety, and environmental programs, it is a small fraction and there is scope to be much more deliberate in the targeting of public spending to achieve development goals. The World Bank has a growing track record in this area , and we look forward to helping more countries where there is demand for change.
The private sector also has a large role to play to mitigate environmental and social risks. For example, banks can redirect investment toward more sustainable businesses, while large food companies can invest in the natural assets – healthy soil, water, pollinators, shade - needed to continue food production and work to eliminate deforestation in their supply chains. All told, changing the food finance architecture could help redirect some $2 trillion in private capital toward healthier outcomes.
"The potential for positive change is so large, we can no longer ignore food financing in our journey towards green, resilient and inclusive development."
One way forward could be to put in place a Global Food Finance Compact between governments and the private sector under which public financing would help “de-risk” private sector investments that meet higher social and environmental standards and support healthier, more inclusive and more climate-resilient outcomes.
Getting the financing of food systems right represents a huge prize. Doing so not only would help generate trillions in new investment opportunities but also significantly reduce the burden of diseases caused by malnutrition. New patterns of food financing would help limit global warming to less than 1.5°C by reversing the deforestation and degradation of carbon-rich ecosystems. And by directly confronting the drivers of poverty and hunger, better food financing would help build the resilience of families and countries to adverse shocks.
The potential for positive change is so large, we can no longer ignore food financing in our journey towards green, resilient and inclusive development.
Join the Conversation