It is clear from the findings of the FAO’s reports that to sustainably eradicate hunger, and guarantee food security, both private and public investment is required. This investment will raise rural and agricultural productivity and incomes, as well as promote more productive, sustainable and inclusive food systems.
According to the ‘Achieving Zero Hunger’ report, it has been estimated that to eliminate hunger by 2030 an average annual investment of US$267 billion from 2016 to 2030 will be required. This illustrates the sheer scale of investment necessary in agriculture and related industries over the coming years.
We envisage co-operative funding as a key conduit for enabling grass-root investment in agriculture. The pooling of resources in a co-operative allows farmers to achieve economic benefits they cannot achieve alone, not only by allowing for economies of scale, but critically by increasing their bargaining power. This translates into an ability to attract investment which individuals would not otherwise be able to access.
Co-operative structures will allow rural enterprises to access the funding needed to raise their productivity. By providing access to finance, as well as to agricultural inputs, information, and output markets, co-operatives have been shown to increase their member’s production and incomes.
The 2011 FAO report entitled ‘Dairy Development in Kenya’ shows how co-operative structures have been successfully employed in the Kenyan dairy industry. The country has close to 13,000 established co-operative units today, facilitating market access for more than 1.5 million dairy farmers. These co-operative structures have helped, and continue to assist farmers with access to loans and help address issues farmers may face with direct implications for milk production. The African Dairy Conference and Exhibition will be held in Nairobi, Kenya later this year, recognising the strength of the Kenyan dairy industry.
Co-operative structures can facilitate large-scale investment in small-scale agriculture, and ensure developing countries are able to take steps towards meeting their food security targets.
The need to attract funding also necessitates ensuring the investment climate supports both debt and equity support. A crucial factor influencing lenders’ ability to advance finance is the confidence they have in the security being taken. One way to instil this confidence in the agriculture and commodities sector is to ensure that secure warehouse facilities are available. When lending against the security of stored commodities, the availability of secure and reliable bulkstorage facilities is a key factor.
This can be illustrated through the role of the CBH Group in Australia. The CBH Group is a grain growers’ co-operative that handles, markets and processes grain from the wheat belt of Western Australia. Through developing secure and reliable bulk-storage facilities, additional financing has been made available to agricultural producers.
If these systems can be effectively introduced in developing nations, the more readily obtainable finance will allow small-scale producers the means to develop and, in turn, act to reduce food insecurity.