Agricultural Investment Funds for Developing Countries

Topic :

This publication explores agricultural investment funds as a vehicle for financing agricultural projects. It looks at the capital needs of the different agricultural actors along the agricultural value chain and taking into consideration investment funds involving all kinds of investors (private, public as well as joint initiatives) and investment objectives. The publication draws heavily from a 2009 FAO-ConCAP research study “Agricultural investment funds for developing countries”(“the research study”), which identified a broad range of investment funds that target agriculture in developing and transition countries. The identified funds were classified according to various criteria such as geographic distribution, capital, shareholder and investor base, investment instruments, target group served and financial performance, as well as organizational and operational structure. In the context of the research study, 31 agricultural investment funds out of 80 funds identified were considered to match the selection criteria.

This publication concludes with recommendations to be considered when setting up agricultural investment funds as well as overall policy recommendations. PPPs can be a valuable tool to increase access to finance for the agricultural sector in developing countries.Due to very specific characteristics and risks related to the agricultural sector, public capital can play an important role to attract private investors, who otherwise might not be willing to risk investment in agriculture. Given the success of PPPs, the role of governments and international donors in agricultural investment funds should be reconsidered. To stimulate investments in agriculture, policies and regulations affecting agricultural production, the legal environment of the investment as well as the overall investment climate in the respective country need to be addressed.

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