Agricultural investment funds for development: Descriptive analysis and lessons learned from fund management, performance and private–public collaboration
Agricultural investment funds are experiencing significant growth in numbers and volume, underscor- ing the private sector’s interest in agricultural investment and the public’s interest due to the fact that they help to address the resource constraints for achieving food security and rural development. The attractiveness of agricultural investments as profitable business ventures — due to higher food prices and growth trends, natural resource scarcity, and improved business climates that favour longer-term invest- ments — however is tempered by the risks associated with such investments. Agricultural investment funds are an investment structure to channel investment while mitigating risks to investors in the sector. This publication builds on the 2010 FAO document “Agricultural investment funds for developing coun- tries”, which provided a broad description of private, public and private–public agricultural investment funds and case examples from Africa and Eastern Europe. It was the result of a comprehensive research study undertaken in collaboration with ConCap Connective Capital of the Frankfurt School of Finance and Management, which later formed the Finance-in-Motion fund management company.
This publication concludes with recommendations to be considered when setting up agricultural investment funds, as well as overall policy recommendations regarding public and private investment. Public private partnerships (PPPs) can be a valuable tool to increase access to finance for the agricultural sector in developing countries due to its specific characteristics and risks. Public capital can play an important role to attract private investors who otherwise might not be willing to risk investment in agriculture.