The Food and Agriculture Organization (FAO) of the United Nations, alongside its collaborators, reported in the illuminating 2022 edition of The State of Food Security and Nutrition in the World that, from 2013 to 2018, global public policy support for food and agriculture hovered around an astonishing USD 630 billion annually. This significant report, along with others of that year, urged a pivotal redirection—or “repurposing”—of these public funds to foster investments and incentives aimed at enhancing productivity, promoting sustainable practices, and endorsing healthy eating habits. The ultimate goal? Achieving harmonious prosperity for individuals, the environment, and economic growth. Yet, there exists a glaring void in the form of country-specific research that delineates how this repurposing could unfold in practice, turning theoretical gains into tangible realities.
What Can Be Repurposed in Lower-Income Countries?
The call for an expedited transformation of agricultural policies in developing nations grows louder. The plight of low-income countries (LICs) and lower-middle-income countries (LMICs) remains precarious, as they grapple with the challenge of evolving their food and agricultural sectors to secure nutrition and food security both today and for future generations.
Consider this: many nations in the sub-Saharan African region cling to the precarious reliance on a singular crop to sustain their food security. This reliance substantially influences rural populations’ caloric intake. Consequently, policymakers are ensnared in a labyrinthine conundrum as they strive for agricultural transformation that encompasses productivity growth, economic development, increased employment, and a significant reduction in poverty, hunger, food insecurity, and malnutrition.
To complicate matters further, agriculture continues to dominate the economic landscape, representing a staggering share of output and employment opportunities in these regions. The FAO’s revelations underscore the grim reality: countless African countries have yet to embark on a robust pathway to industrialization, with nearly 24% of the sub-Saharan population enduring undernourishment, and an alarming 72% unable to afford the costs of a nutritious diet. These figures are disproportionately high compared to the global scene.
“There is now global consensus that repurposing public policy support could help transform agriculture in more equitable and sustainable ways.”
Despite a global consensus on the viability of public policy repurposing for sustainable agricultural transformation, LICs—particularly in sub-Saharan Africa and, to some extent, within most LMICs—are not sufficiently provisioning their agricultural sectors through public spending.
A crucial FAO study sheds light on public financial allocations in sub-Saharan Africa, revealing that few nations have met the Maputo target of dedicating at least 10% of their national budget to agriculture and food systems—a commitment pledged under the Comprehensive Africa Agriculture Development Programme.
An indicator named the “nominal rate of assistance” starkly illustrates the challenges. This metric reflects the financial transfers aimed at farmers rooted in trade, market policies, and fiscal subsidies. It amalgamates the price discrepancies at the farm gate with fiscal incentives, painting a picture of historical neglect where LICs and LMICs have opted to shield impoverished consumers, thereby inadvertently penalizing their agricultural sector. Not only is there insufficient governmental support for agriculture, but prevailing trade policies also hinder farmers’ potential productivity.
In such a milieu, optimizing the paltry budget that governments allocate to food and agriculture becomes paramount—an urgent necessity if any meaningful transformation is to flourish rather than wither.
Is Optimizing the Budget the Agricultural Policy Breakthrough We Need?
The financial allocations for agriculture serve as the unwavering backbone of agricultural policies. In LICs and LMICs burdened by financial constraints, any transformative shift in agricultural policies must inherently require a thoughtful intra-sectoral recalibration of their budget. Such realignments must be strategically designed to meet concrete objectives for agricultural transformation, grounded in meticulous methodological frameworks.
“The budget that governments allocate to the food and agriculture sector is the backbone of agricultural policies.”
Through the Monitoring and Analysing Food and Agricultural Policies (MAFAP) program, the FAO channels this global consensus into actionable frameworks at the country level. Collaborating with governments across sub-Saharan Africa, FAO elucidates how to measure, analyze, and optimize public expenditures on agriculture. This initiative aims to generate scenarios that maximize the efficacy of domestic resources allocated to this critical sector, all while respecting the fiscal limitations binding government spending.
FAO experts have engineered a policy modeling optimization tool that, grounded in the principles of Pareto optimality, enables countries to mold their public budgets into optimal frameworks. This tool facilitates a delicate balancing act wherein policymakers can reallocate resources to meet various policy objectives without detriment to others. Initially focused on three pivotal objectives—maximizing agrifood GDP, spurring job creation in rural territories, and alleviating rural poverty—the tool now also encompasses minimizing the costs associated with a healthy diet.
Through MAFAP and this innovative modeling tool, African governments are perceiving the considerable benefits of optimizing their budgets, a discovery that should not be overlooked.
Potential Payoffs From Optimizing Budgets
A significant body of research, encapsulated in background analyses from The State of Food Security and Nutrition in the World 2024, builds a compelling case for reevaluating budgetary allocations across six sub-Saharan African nations: Burkina Faso, Ethiopia, Ghana, Mozambique, Nigeria, and Uganda. By employing the aforementioned policy optimization modeling tool, a scenario emerged, wherein the judicious allocation of public spending from 2025 to 2030 would bolster agrifood GDP, amplify off-farm employment opportunities, curtail rural poverty, and mitigate the expenses associated with a healthy diet. The prioritized support measures identified encompassed vital investments in extension services, fertilizer assistance, irrigation infrastructure, mechanization projects, rural electrification, transportation, research, and seed subsidies.
The distinctiveness in the effectiveness, reach, and unit costs of these allocations were scrupulously analyzed. This approach yielded an optimal budget output that most efficiently fulfilled the four primary objectives within the constraints of each economy.
Contrasting the results from this optimized scenario with a business-as-usual approach—wherein budgets remained static and allocations unchanged—painted a strikingly divergent picture of each nation’s fiscal landscape. Countries would need to adapt their spending strategies significantly, for example, reducing irrigation expenditures in Ghana, Ethiopia, Nigeria, and Uganda, while augmenting investments in seed subsidies in Ethiopia and Mozambique. Particularly noteworthy was the stipulation that extension services must receive elevated priority in selected countries such as Burkina Faso and Nigeria. The proximity of Uganda’s current budget to its optimal allocation suggests that minor budget reallocations would suffice for maximum efficiency.
The ramifications of these optimized budgets are staggering: substantial increases in public money value, significant efficiency gains in agricultural output, the creation of tens of thousands of off-farm jobs, and the lifting of millions from the grips of poverty. Interestingly, millions would gain access to healthy dietary choices for the first time by 2030. The short-term gains anticipated as early as 2025 signal a transformative potential: agrifood GDP might soar by 8% in Burkina Faso and Ghana, with Nigeria forecasting an impressive 11% increase.
Collectively, across the six nations, nearly one million off-farm jobs could materialize, uplifting 2.8 million individuals from poverty and allowing an additional 16 million people to afford a nutritious diet—achievements all within the confines of the existing budget. In essence, the astute repurposing of resources dedicated to agriculture in these sub-Saharan countries stands to yield remarkable dividends.
A Feasible Path for Governments to Transform Policies
The call for government repurposing and optimization of support in the food and agriculture sector emerges not just as a strategy but as a palpable opportunity. Nations are poised to reap substantial rewards—enhancing agrifood GDP, generating employment, fostering healthy diets, and effecting poverty reduction.
Through its MAFAP framework, FAO aids governments in sculpting these actionable scenarios to optimally allocate their public spending across various agricultural policy support measures while adhering to World Trade Organization guidelines for pricing incentives and fiscal assistance. This framework represents a pragmatic trajectory for LICs and LMICs, poised to enact transformative policies in agriculture while navigating the constraints of public funding.
The outcomes of FAO’s technical support are presently influencing numerous national development plans, sectoral investment strategies, and budget frameworks across sub-Saharan Africa. Yet, the journey forward mandates an amplification of this policy innovation. Indeed, the busy dance of reallocating budgets, fraught with challenges—particularly regarding the political dimensions of redistributing public resources—remains a central obstacle.
“The FAO policy modeling optimization tool was already impacting policy in 2023.”
Navigating this complex landscape involves UI-level collaboration: FAO is not merely building scenarios in isolation but actively engaging a diverse array of stakeholders in the process. It has been recognized that the FAO policy modeling optimization tool began making waves in policy discussions as early as 2023. Following the tool’s favorable reception in target countries within the MAFAP program during 2024, enhancements are underway to integrate climate and biodiversity considerations, further equipping FAO to aid governments in refining agricultural strategies while addressing the imperatives of climate resilience and ecological restoration.
Marco V. Sánchez serves as the Deputy Director of the Agrifood Economics and Policy Division at FAO.
