Chapter 3. Policy coherence and food security

The Sustainable Development Goals (SDGs) recognise that food insecurity can affect all countries through many different channels. Breaking down the silos that separate policy sectors is necessary in order to overcome inconsistencies and promote cross-sectoral synergies for achieving food security (SDG 2), while at the same time contributing to other SDGs. Ensuring food security also calls for a coherent approach among stakeholders at local, national, regional and international levels. To support governments in applying an integrated and whole-of-government approach to policy making, the OECD has developed a new conceptual framework for policy coherence for sustainable development (“the PCSD Framework”). This chapter (“module”) applies the PCSD Framework to food security.

  

Introduction

The application of a policy coherence lens to global food security shows that the main challenge of ensuring food security is to raise the incomes of the poor, and that both agricultural development and rural diversification are needed to foster economic growth and job opportunities. Increased productivity to close the yield gap between advanced and developing countries will require large increases in investment, including from the private sector and farmers themselves. Trade will also have an increasingly important role to play in ensuring global food security.

The Sustainable Development Goals (SDGs) recognise that food insecurity can affect all countries through many different channels. Therefore, ensuring food security calls for a coherent approach among stakeholders at local, national, regional and international levels. However, the global interconnectedness between different sectors increases the risks that actions in one area undermine efforts in another. Breaking down the silos that separate policy sectors is thus a key challenge in overcoming inconsistencies and promote cross-sectoral synergies for achieving food security (SDG 2), while also contributing to other SDGs.

The OECD has developed a new Framework for Policy Coherence for sustainable Development (“the PCSD Framework”) to inform policy making in the 2030 Agenda (see Chapter 2). This module applies the PCSD Framework to food security. It represents an update of the 2010 OECD Policy Framework for Policy Coherence for Development (“the PCD Toolkit”), and has benefitted from Finland’s pilot experience in implementing a coherent approach to food security in the framework of its 2012 Development Policy Programme. In addition, the module reflects recent lessons learned and incorporates the latest publications and research at the OECD as well as from other organisations (e.g. FAO) and firmly roots the policy response to food insecurity in the SDGs. It is written in a non-technical language for a non-specialist audience, and aims to support policy makers and other stakeholders to apply an integrated and whole-of-government approach to food security.

Part I: The “Toolkit” can be used by governments to examine their current policies and practices for achieving food security in ways that balance economic, social and environmental objectives and consider potential positive and negative effects. It includes a checklist of questions for policy screening that aim to help policy makers to:

  • Consider how domestic policies influence the four key dimensions of food security;

  • Identify policy inter-linkages of relevance to food security (horizontal coherence);

  • Reform or remove policies that create negative spill-over effects;

  • Ensure coherence of actions for food security at and between different levels of government (vertical coherence);

  • Consider diverse sources of finance to improve food security and ensure complementarities; and

  • Consider contextual factors and create enabling conditions for ensuring global food security.

Part II: The “Annotations” provide important background information corresponding to each section in the Toolkit, including in the context of the Sustainable Development Goals.

Options for tracking progress in PCSD are explored in Chapter 6.

Toolkit

Guidance

From 2012 to 2014, a total of 805 million people (one in nine people) was reported to be suffering from chronic hunger, in spite of the serious commitment and efforts by the global community (FAO, 2014a).

Food security is a common challenge for all countries. However, its implications and policy responses vary among countries depending on their specific national contexts. For this reason, this guidance provides a flexible tool for policy makers to identify and address the multiple elements of policy coherence for food security. It can be used in the elaboration or evaluation of policies that potentially affect food security outcomes at domestic or international levels, with relevance to the short or long term. Each section is complemented by a corresponding section in the Annotations which provide further in-depth information.

Table 3.1. Checklist: An overview of self-screening questions

1. Consider how domestic policies influence the four key dimensions of food security

Does the government:

✓ consider all four dimensions (availability, access, utilisation, stability) when designing policies?

✓ take into account the interactions between the four dimensions?

✓ consider how policies that target one dimension might impact on the other dimensions?

✓ consider context-specific factors (e.g. some countries might need to prioritise availability, while others might need to improve utilisation)?

2. Identify policy inter-linkages of relevance to food security (horizontal coherence)

Inter-linkages between SDG2 and other SDGs:

Does the government:

✓ consider SDG 2 as the overarching international framework for reducing food insecurity?

✓ consider the interactions between different goals and targets?

✓ align (political) interests and priorities with specific goals and/or targets, and is there coherence between them?

Inter-linkages between food security and other policy domains:

Does the government:

✓ have a good understanding of the many policy areas that impact on food security?

✓ promote climate-smart agriculture?

✓ promote sustainable and biodiversity-friendly agriculture?

✓ consider the pros and cons of different land usages (e.g. agriculture, forestry, biofuels production)?

✓ promote trade liberalisation in agriculture and fisheries? Does it provide social protection in cases where trade liberalisation has short-term negative effects on poor consumers and/or producers?

✓ promote sustainable fisheries?

✓ facilitate the transfer of technologies to enhance agricultural productivity?

✓ promote sustainable investment in rural infrastructure?

3. Reform or remove policies that create negative spill-over effects

Does the government:

✓ undertake impact assessments of its policies?

✓ carry out cost-benefit analysis of its policies?

✓ limit or remove policies that distort world markets, e.g. subsidies, tariffs and NTMs?

✓ consider the costs and benefits of biofuel mandates?

Is the government:

✓ moving towards more decoupled support mechanisms in agriculture and fisheries?

✓ phasing out fossil fuel subsidies?

✓ removing investment barriers?

4. Ensure coherence of actions for food security at and between different levels of government (vertical coherence)

Policy coherence at the local level:

Does the government:

✓ promote decentralisation and flexibility?

✓ consult with local stakeholders in the design and implementation of policies?

✓ help local authorities to increase or combine resources and capacities to formulate effective policy responses?

Policy coherence at the national level:

✓ Is there a national commitment to policy coherence?

✓ Does the Centre of Government have a good overview and ability to influence policies related to food security?

✓ Is inter-ministerial collaboration encouraged and facilitated?

Policy coherence at the regional level:

Does the government:

✓ promote and participate in regional co-operation for food security?

✓ engage in regional policy implementation with regard to shared resources?

Policy coherence at the global level:

✓ Is the government involved in international initiatives for food security? To what extent do these initiatives take into account the interests of developing countries?

Coherence between different levels of government:

✓ Are implementation responsibilities clearly divided among different levels of government, taking into account the distinct comparative advantage of each level?

✓ Are there effective co-ordination mechanisms that harmonise efforts across levels of government?

✓ What are the key tools and approaches for good multi-level governance for food security?

5. Consider diverse sources of finance to improve food security and ensure complementarities

Public financing:

✓ To what extent does the government fund activities that promote food security?

✓ Are the types of support coherent and do they support clearly established objectives?

✓ Are development co-operation programmes coherent with other (sectoral) policies?

✓ Do local governments have financial resources to enhance food security?

Private financing:

Does the government:

✓ facilitate private investment in agriculture, fisheries and/or rural development?

✓ promote responsible FDI in partner countries or are there any restrictions to FDI?

✓ adhere to and enforce the MNE Guidelines?

6. Consider contextual factors and create conditions for ensuring global food security

Enabling environments:

✓ Does the government actively foster enabling environments for food security, such as by increasing transparency and availability of information in food markets?

Systemic conditions:

✓ Does the government have a good knowledge and understanding of the systemic conditions that may hamper their food security efforts?

✓ Is the government taking any measures to reduce existing systemic barriers or helping people to adapt to them?

✓ Does the government address the root causes (e.g. poverty) rather than the symptoms of food insecurity?

Natural resource endowments and biodiversity:

✓ Does the government consider the sustainability of its policies, e.g. on land, water and biodiversity?

Consider how domestic policies influence the four key dimensions of food security

In its concluding declaration, the World Summit on Food Security (2009) set out a comprehensive definition of food security, which is being applied by various institutions (see, for example, FAO, 2013, 2015):

“Food security exists when all people, at all times, have physical, social and economic access to sufficient, safe, and nutritious food that meets their dietary needs and food preferences for an active and healthy life. The four pillars of food security are availability, access, utilization and stability. The nutritional dimension is integral to the concept of food security.”

This definition implies that food security is about more than food availability; it also encompasses access to food, food utilisation, and the stability of food supplies over time. Coherent policy making requires considering not only the impact of sectoral policies on each of these four dimensions, but also how each dimension is linked to the other three. For example, measures to increase crop production (availability) need to be accompanied by appropriate infrastructure investments (access) in order to avoid food waste. Specifically, policy makers will need to consider the impact of their policies on the determinants of each dimension (Table 3.2). The Annotations explore the four dimensions in more detail.

Table 3.2. Dimensions and determinants of food security

Availability

Access

Utilisation

Stability

  • Domestic production

  • Import capacity

  • Food stocks

  • Food aid

  • Income and purchasing power

  • Transport and market infrastructure

  • Food distribution

  • Food safety and quality

  • Health and sanitation

  • Diet quality and diversity

  • Weather variability

  • Price fluctuations

  • Political factors

  • Economic factors

  • Ecological factors

Questions for self-assessment:

Does the government:

  • consider all four dimensions when designing policies?

  • take into account the interactions between the four dimensions?

  • consider how policies that target one dimension might impact on the other dimensions?

  • consider context-specific factors (e.g. some countries might need to increase availability, while others might need to improve utilisation)?

Identify policy interlinkages of relevance to food security (horizontal coherence)

As further outlined in the generic module, mapping and taking into consideration the numerous interactions and interconnections of different policies is of fundamental importance for achieving policy coherence. This can be done at the level of (1) the SDGs, and (2) specific policy domains.

Interlinkages between SDG 2 and other SDGs

Sustainable Development Goal 2 “End hunger, achieve food security and improved nutrition, and promote sustainable agriculture” calls for an end to hunger and all forms of malnutrition by 2030. It aims to double agricultural productivity and the incomes of small-scale food producers, and to implement resilient agricultural practices that help maintain ecosystems and strengthen our capacity for climate change adaptation. SDG 2 and its targets are further elaborated in the Annotations.

The SDGs are indivisible in nature. This implies that in order to make progress on SDG 2, policy makers will need to consider inter-linkages and critical interactions between SDG 2 and all other goals. This involves identifying synergies with some goals (e.g. on poverty, health, education, gender and sustainable consumption and production patterns), as well as trade-offs with other goals (e.g. on water, energy, climate, oceans, land use, forestry, biodiversity and ecosystems). Table 3.3, which gives a schematic overview of the SDGs, illustrates this with three examples. A more comprehensive overview of the relationship between SDG2 and other SDGs is provided in the Annotations.

Table 3.3. Global Food Security: Examples of policy interactions across the SDGs and Targets
picture
  • Synergies: Ending all forms of discrimination against all women and girls everywhere (5.1) would ensure that men and women have equal ownership and control over land and other resources (1.4).

  • Trade-offs: Increasing the share of renewable energy (7.2) could potentially conflict with ending hunger (2.1) if food crops and biofuel crops compete for the same land and/or water.

  • Enablers: Achieving full and productive employment for all (8.5) would increase incomes and reduce poverty (1.1), enabling people to afford buying food.

  • Policy coherence for sustainable development (17.14) cuts across all goals and targets.

Source: OECD, 2015.

Questions for self-assessment:

Does the government:

  • consider SDG 2 as the overarching international framework for reducing food insecurity?

  • consider the interactions between different goals and targets?

  • align (political) interests and priorities with specific goals and/or targets, and is there coherence between them?

Interlinkages between food security policies and other policy domains

The diversity of policy domains impacting on food security creates a complex network of interactions. Decision-makers often face difficult policy choices in balancing immediate economic gains with the long-term sustainable and responsible management of natural and social resources. Policy coherence for sustainable development can help them to identify and maximise synergies, while at the same time minimise trade-offs.

Policy areas to consider in conjunction with the design and implementation of food security policies include agriculture and fisheries (e.g. input subsidies; crop insurance; IUU fishing); forestry (e.g. land availability; carbon sink); water and sanitation (e.g. irrigation; desalination); energy (e.g. energy subsidies; renewable energy); trade (e.g. tariffs, NTMs, preference erosion); investment (e.g. FDI restrictions); innovation (e.g. technology transfer; IPRs); climate (e.g. fossil fuel subsidies; biofuel mandates): and biodiversity (e.g. biological pest-control). Food security policies may also need to be complemented by strengthened social protection services in many countries, in particular for more vulnerable segments of the population (the poor, women and children etc.). Each of these areas are discussed at greater length in the Annotations.

Of course, this list is not exhaustive, and its content has to be determined in the context of a thorough assessment of a country’s specific conditions.1

Questions for self-assessment:

Does the government:

  • have a good understanding of the many policy areas that impact on food security?

  • promote climate-smart agriculture?

  • promote sustainable and biodiversity-friendly agriculture?

  • consider the pros and cons of different land usages (e.g. agriculture, forestry, biofuels production)?

  • promote trade liberalisation in agriculture and fisheries? Does it provide social protection in cases where trade liberalisation has short-term negative effects on poor consumers and/or producers?

  • promote sustainable fisheries?

  • facilitate the transfer of productivity enhancing technologies?

  • promote sustainable investment in rural infrastructure?

Reform or remove policies that create negative spill-over effects

OECD countries can accelerate the process of reforming policies that create negative spill-overs. Historically, the concern has been with high levels of support and protection that have the potential to undercut farmers’ livelihoods in developing countries. With the exception of tariff preferences given to some developing countries, tariffs on agricultural products remain several times higher than those levied on industrial goods. This restricts market access for developing countries’ farmers with export potential. Higher prices have historically led to the accumulation of production surpluses, which have been disposed of by means of export subsidies. These in turn depress international prices, making conditions more difficult for competitors in international markets and for import-competing producers in domestic markets. Policies to support farmers have also often been counter-cyclical, which stabilises domestic markets but exports volatility onto world markets (OECD, 2013b).

There have been important reforms, however, resulting in lower marginal impacts of support on developing countries. The reduction in the level of support has also been accompanied by a shift away from production – and trade-distorting forms of support (OECD, 2013b).

As world food prices have risen, concern has focused on policies that add upward pressure on prices, including the diversion of land to biofuel production. There are huge uncertainties over the scale of impact that biofuels will have on overall land use. Future developments in biofuel technology, the cost and availability of fossil fuels and the policy environment are hard to predict. The removal of policies that subsidise or mandate the production and consumption of biofuels that compete with food production would imply that these technologies come on-stream only when they are economically viable, and in the meantime do not jeopardise food security unnecessarily (OECD, 2013b).

Overall, the best response to global market instability is for countries to avoid distorting or protectionist policies. Such policies cause bilateral and regional trade flows to break down, and generate wider negative spill-overs when applied by countries with a larger presence in world food markets. Many of the 2007-08 food price spike responses were ineffective because of the collective impact of other countries applying similar measures. Countries can mitigate some of these risks by having a wider range of trading partners. See the Annotations for more details.

Questions for self-assessment:

Does the government:

  • undertake impact assessments (e.g. environmental) of its policies?

  • carry out cost-benefit analysis of its policies?

  • limit or remove policies that distort world markets, e.g. subsidies, tariffs and NTMs?

  • consider the implications of biofuel mandates?

Is the government:

  • moving towards more decoupled support mechanisms in agriculture?

  • phasing out fossil fuel subsidies?

  • removing investment barriers?

Ensure coherence of actions for food security at and between different levels of government (vertical coherence)

Enhancing or maintaining food security depends on coherent policy interventions across all levels of government and requires strong co-ordination and co-operation among political institutions and other stakeholders. Governments need to make better use of existing political structures and institutions. They also need to realign their policy frameworks and agendas with partner countries to expand the reach and improve effectiveness of their efforts.

Policy coherence at the local level

The intersections between policy areas are frequently most evident at the local level where policies are implemented. Too often, however, policy design and delivery continue to be carried out in a top-down, siloed manner, leaving potential synergies and complementarities unrealised. A co-ordinated and strategic local approach can help local stakeholders combine resources and capacities for collaboration in order to formulate more effective policy responses (UNDP et.al. 2014).

Devolution to the local governance level has been identified as an important step in enhancing policy coherence for sustainable development. The returns are not automatic, however. If not planned and executed properly, decentralisation can have negative unintended consequences, such as enhancing inequalities across local areas, political “capture” by local elites, and degradations in services (UNDP, 2010). Pairing enhanced flexibility or decentralisation with capacity building and accountability, or taking an incremental approach to flexibility, can help to offset these risks. See the Annotations for more details.

Questions for self-assessment:

Does the government:

  • promote decentralisation and flexibility?

  • consult with local stakeholders in the design and implementation of policies?

  • help local authorities to combine resources and capacities to formulate effective policy responses?

Policy coherence at the national level

In its Global Strategic Framework for Food Security and Nutrition (GSF), the Committee on World Food Security (CSF, 2015)2 recognises the important role of states in achieving food security. It recommends that all countries set up or strengthen inter-ministerial mechanisms responsible for national food and nutrition strategies, policies and programmes. Ideally, those mechanisms should be informed and co‐ordinated at a high level of government, consolidated in national law, and involve representatives from ministries or national agencies from all areas related to food security and nutrition. National strategies, in turn, need to be comprehensive and address all pillars of food security, i.e. availability, access, utilisation and stability.

Stakeholders at the national level could include central and subnational governments, civil society, the private sector, farmers’ organisations, women and youth associations, representatives of the groups most affected by food insecurity and, when appropriate, donors and development partners. See the Annotations for more details.

Questions for self-assessment:

  • Is there a national commitment to policy coherence?

  • Does the Centre of Government have a good overview and ability to influence policies related to food security?

  • Is inter-ministerial collaboration encouraged and facilitated?

Policy coherence at the regional level

Regional organisations can contribute to supporting national and local actions, e.g. by providing political incentives and technical guidance to promote response at the country level, to build regional markets, and to pool risks and responses of their members. They have an important role to address the need for shared management of trans-boundary resources such as rivers, pastoral lands and marine resources. Regional platforms (some of which are listed in the Annotations) can also provide space for dialogue and a useful interface between the global and national levels, facilitating common agreement on shared principles and paving the way for improved alignment of policies (CSF, 2015).

Questions for self-assessment:

Does the government:

  • promote and participate in regional co-operation for food security?

  • engage in regional policy implementation with regard to shared resources?

Policy coherence at the global level

The international community can provide important support to national and regional efforts to combat hunger, also ensuring that various actors are not duplicating activities. However, recent economic crises, including high and volatile food prices, have exposed the fragility of global mechanisms for food security and nutrition. Co-ordination between actors at national, regional and global levels has been inadequate (FAO/CFS, 2014). The Annotations provide more information on different international initiatives to build global food security.

Questions for self-assessment:

  • Is the government involved in international initiatives for food security? To what extent do these initiatives take into account the interests of developing countries?

Coherence between different levels of government

Relations across levels of government have changed over the last two decades. Decentralisation has made local and regional governments more powerful in formulating and delivering policy, thereby increasing their scope for improving the competitiveness of the regional economy and the well-being of residents.

This shift away from a centralised and vertical system has also made governance more complex by involving a wider range of stakeholders at different levels. Understanding this complex network of relationships, as well as developing effective collaboration between levels of government, is critical to enable efficient policy making and service delivery. OECD’s work on “multilevel governance” can support action along these lines (www.oecd.org/ regional/multi-levelgovernance.htm). See the Annotations for more details.

Questions for self-assessment:

  • Are implementation responsibilities clearly divided among different levels of government, taking into account the distinct comparative advantage of each level?

  • Are there effective co-ordination mechanisms that harmonise efforts across levels of government?

  • What are the key tools and approaches for good multi-level governance for food security?

Consider diverse sources of finance to improve food security and ensure complementarities

Substantive increases in investment in agriculture, infrastructure, and research and extension services, among other things, will be needed to achieve food security, to raise incomes and increase the supply of food sustainably, notably by raising productivity. Most of the investment will need to come from the private sector, especially from farmers themselves. Governments have an important role in establishing framework conditions that complement and encourage responsible private investment.

Increased investment in agriculture will involve new stakeholders in agricultural supply chains, as well as innovative financing mechanisms. While this is a positive development overall, policy makers need to be attentive to potential incoherencies between this growing number of diverse sources of finance. See the Annotations for more information.

Public financing

Governmental intervention in agriculture finance is often directed towards managing risks in the sector. This includes support to farmers in the form of payment of indemnities, reductions in social security contributions, tax exemptions and subsidising private insurance schemes. The government might also create credit guarantee funds or support private credit guarantee schemes; provide information on potential risks; or act as a facilitator without disbursing funds itself (IISD, 2015).

Official development assistance (ODA) supports only about one-quarter of the total financing needed for food and nutrition security. Developing country contributions cover another quarter, leaving a financing gap of about 50% (OECD, 2012a).

Questions for self-assessment:

  • To what extent does the government fund activities that promote food security?

  • Are the types of support coherent and do they support clearly established objectives?

  • Are development co-operation programmes coherent with other (sectoral) policies?

  • Do local governments have financial resources to enhance food security?

Private financing

Private investment is essential if agriculture is to fulfil its vital function of contributing to economic development, poverty reduction and food security. However, private investment still lags behind its potential in most developing countries, mainly because the sector is associated with high climatic and price risks and market failures. The OECD’s Policy Framework for Investment in Agriculture (PFIA) aims to support countries in evaluating and designing policies to mobilise private investment in agriculture for steady economic growth and sustainable development (OECD, 2014a). Innovative financing mechanisms and philanthropy need to be harnessed as well.

Questions for self-assessment:

Does the government:

  • facilitate private investment in agriculture, fisheries and/or rural development?

  • promote FDI in partner countries or are there any restrictions to FDI?

  • adhere to and enforce the MNE Guidelines?

Consider contextual factors and create conditions for ensuring global food security

Contextual factors can be divided into enabling environments which have a positive impact on sustainable development outcomes, and systemic conditions which have a negative impact. The role of policies is to strengthen enabling environments and to remove or minimise the effect of systemic conditions. See the Annotations for more information.

Enabling environments

Enabling environments (enablers) can be defined as the set of interrelated conditions in the political, legal, economic, and social domains that influence policy outcomes positively, such as good governance, strong institutions, research and development, health and education, social and legal protection, and gender equality.

It is ultimately household income that determines the ability of people to buy the food they need to lead healthy lives. Raising the incomes of the poor is therefore one of the main enablers for ensuring global food security. The basic requirement for poverty reduction is broad-based development and its underpinnings include peace and political stability, sound macro-economic management, strong institutions, well-defined property rights and good governance.

Open and transparent markets can also be considered an enabler for food security by alleviating information asymmetries. Trade enables production to be located in areas where resources are used most efficiently and has an essential role in getting products from surplus to deficit areas. It also raises overall incomes through the benefits to exporters (in the form of higher prices than would be received in the absence of trade) and importers (through lower prices than would otherwise be paid), while contributing to faster economic growth and rising per capita incomes.

Questions for self-assessment:

  • Does the government actively foster enabling environments for food security, such as by increasing transparency and availability of information in food markets?

Systemic conditions

Systemic conditions (disablers) conversely hinder countries’ capacities to achieve sustainable development objectives. They can include conflicts, pollution, climate change, price shocks, rapid urbanisation, etc.

Food and nutrition insecurity is becoming increasingly concentrated in conflict-affected countries. Conflicts often ravage the countryside, ruining harvests, claiming livestock and reducing the supply of food. Food insecurity is also often related to shocks, such as natural disasters, droughts and floods. Policies and interventions that build resilience to these shocks can help strengthen national-level governance systems and institutions, contributing to improved food security outcomes (IFPRI, 2015).

High and volatile food prices in recent years have aggravated food insecurity in many countries. Consumers, especially poor consumers, are adversely affected by high prices. Producers, on the other hand, are instead more concerned about low prices, which may threaten their living standards as well as their longer term viability when income is too low to provide for the farm family or for the operational needs of the farm. Uncertainty may result in less than optimal production and investment decisions. In developing countries, many households are both producers and purchasers of agricultural products. For this group the impacts of price volatility are complex, with net outcomes depending on a combination of many factors (FAO et al., 2011).

Trade in itself is beneficial to food security (see above), but not all trade rules were designed to ensure food security and may therefore be perceived as sometimes inconsistent with positive food security outcomes. This can work against developing countries, many of whom lack the legal and administrative capacity to effectively navigate the complex rules framework (Elliott and Burnett, 2015).

Questions for self-assessment:

  • Does the government have a good knowledge and understanding of the systemic conditions that may hamper their food security efforts?

  • Is the government taking any measures to reduce existing systemic barriers, or helping people to adapt to them?

  • Does the government address the root causes (e.g. poverty) rather than the symptoms of food insecurity?

Natural resource endowments and biodiversity

Agriculture (and food production) has a significant position with respect to the environment due to the amount of land and water it uses, in contrast to a much smaller role in the overall economy. It produces both positive (e.g. carbon sequestration) and negative (e.g. water pollution) environmental externalities. Addressing the twin policy challenge of ensuring global food security and improving environmental performance will require raising the environmental and resource productivity of agriculture; enhancing land management practices; minimising pollution discharges; curtailing damage to biodiversity; and strengthening policies that avoid the use of production and input subsidies damaging to the environment (OECD, 2013c).

The relationship between changes in the volume of agricultural production and agricultural land area can provide a broad indication of the environmental performance of agriculture. Increases in agricultural production and land use often signify greater pressure on the environment, as may the intensification of production on a reduced area farmed. Environmental pressure, however, will depend on the extent to which farming practices limit the pressures, such as improving resource use efficiency (OECD, 2013c).

Managing water resources in agriculture includes: irrigation to reliable water supply across the production season; management of floods, droughts, and drainage; conservation of ecosystems; and meeting societal, cultural and recreational needs linked to water. For those regions reliant on irrigation to supplement rainfall, water is mainly drawn from surface water (rivers, lakes, reservoirs) and groundwater (shallow wells and aquifers), and only to a limited extent are recycled wastewater and desalinated water used (OECD, 2013b).

Agriculture is inextricably linked to biodiversity, as agriculture produces both food and non-food commodities, and provides environmental services for society more broadly with potential scientific, recreational, and ecological value. Conversely, honey bees, for example provide important pollination services to agriculture, while nutrient cycling serves to move organic and inorganic matter back into the production of living matter. The loss of significant biodiversity from many production systems has left these systems impoverished, vulnerable and dependent on continuous use of external inputs. This loss limits the future capacity of agriculture to respond or adapt to changes such as increased urbanisation, reduced land, water and resource availability and climate change (FAO, 2011).

There is a need for policies to manage both land and water resources sustainably, for example by strengthening land tenure system and introducing water charges or tradable water rights (OECD, 2013b).

Questions for self-assessment:

  • How does the government consider the sustainability of its policies, e.g. on land, water and biodiversity? Are current efforts effective in ensuring sustainability?

Annotations

Consider how domestic policies influence the four key dimensions of food security

According to common definitions, food security exists when the conditions for four key dimensions are fulfilled: i) access to food; ii) availability of food; iii) utilisation of food; and iv) stability of food (World Summit on Food Security, 2009). The following paragraphs elaborate on the meaning of each of these dimensions.

First, the principal obstacle to the attainment of global food security is poverty, which constrains peoples’ access to food. Most of the world’s hungry are chronically hungry as a consequence of poverty. The basic requirement for poverty reduction is sustainable development. The underpinnings are mostly well-known but often elusive. They include peace and political stability, sound macroeconomic management, strong institutions, well defined property rights and good governance. In addition, the food and agriculture sector has a key role to play in alleviating global poverty. More than half of the world’s poor depends, either directly or indirectly, on agriculture for their livelihoods. Policies which affect the functioning of the food and agriculture sector can have a strong impact on the incomes of this constituency.

Second, governments can increase the availability of food via measures that increase supply sustainably or restrain demands that do not translate into improved food security outcomes. There is great scope for fundamentally altering supply conditions by raising productivity growth, improving the efficiency of natural resource use, reducing post-harvest losses and adapting to climate change. Equally, changes on the demand side, including reduced over-consumption and less consumer waste could substantially ease the supply side challenge. Because of the wide scope for change in each area, there is a danger of looking for a “magic bullet” in one single area while neglecting other areas. However, actions are needed across multiple policy domains.

Third, the chief requirements to improve the utilisation of food are complementary policies. Improvements in education and primary healthcare can strengthen income growth, and – along with other investments, notably in sanitation and clean water – improve nutritional outcomes. Direct nutrition interventions can also be effective.

The fourth way in which policies related to food and agriculture can improve food security is by ensuring stability, such that the incomes of farmers and consumers used to buy food are resilient to shocks. This means helping the food insecure manage domestic risks (such as weather related risks in the case of farmers) and international risks (such as extreme price swings and trade interruptions).

The four channels are inter-connected, with potentially important complementarities. For example, policies which raise agricultural productivity strengthen the incomes of farmers and rural communities and thereby improve food access. They also increase food availability, benefiting consumers (and increasing their access) to the extent that domestic prices are lower than they would otherwise be. They can contribute to reduced income and price risk, ensuring greater stability of access for producers and consumers. Finally, by raising the real incomes of both producers and consumers they may lead to healthier diets and improved utilisation.

In its Strategy on Development (OECD, 2012c), the OECD committed itself to support global development through the analysis of key PCD issues, including global food security. The current focus on food security in the global agenda arose as a result of an improved understanding of the causes behind food insecurity. Traditionally, the focus was on the adverse impact of agricultural policies in OECD countries on the terms of trade for developing countries, endangering their food security. However, agricultural reforms and the consequences of the 2008 food crisis suggest that the main challenge of ensuring global food security is raising the incomes of the poor, and that both agricultural and rural diversification are needed to foster economic growth and job opportunities.

Identify policy interlinkages of relevance to food security (horizontal coherence)

Food security is a basic condition for human life and its absence seriously hampers development possibilities. Consequently, fighting hunger and poverty were both part of MDGs. Despite good or even excellent global progress in achieving this objective, the achievements are unevenly distributed across countries and regions, and conditions actually worsened in some (UN, 2015). Food security thus remains a key challenge in the 2030 Agenda: undernourishment is still a reality for about 795 million people worldwide (FAO, IFAD and WFP, 2015) despite economic growth in many parts of the world and technological advances in food production (OECD, 2013a).

Interlinkages between SDG 2 and other SDGs

Sustainable Development Goal 2 and its targets aim at achieving the four dimensions of food security (Box 3.1). A comprehensive and coherent approach could help governments focus on the dimensions where their population is most vulnerable. Notably, meeting SDG 2 will require increased investment in rural infrastructure, agricultural research and extension services, technology development, and plant and livestock gene banks to enhance agricultural productive capacity in developing countries. It will also require the correction and prevention of trade restrictions, distortions and support policies in world agricultural markets, as well as the adoption of measures to ensure the proper functioning of food commodity markets to help limit extreme food price volatility.

Box 3.1. SDG 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture

2.1 By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round.

2.2 By 2030, end all forms of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant and lactating women and older persons.

2.3 By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment.

2.4 By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality.

2.5 By 2020, maintain the genetic diversity of seeds, cultivated plants and farmed and domesticated animals and their related wild species, including through soundly managed and diversified seed and plant banks at the national, regional and international levels, and ensure access to and fair and equitable sharing of benefits arising from the utilization of genetic resources and associated traditional knowledge, as internationally agreed.

2.a Increase investment, including through enhanced international co-operation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries.

2.b Correct and prevent trade restrictions and distortions in world agricultural markets, including through the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round

2.c Adopt measures to ensure the proper functioning of food commodity markets and their derivatives and facilitate timely access to market information, including on food reserves, in order to help limit extreme food price volatility.

Source: UN, 2015.

Food security outcomes will also be affected by pursuing other SDGs and vice versa (Table 3.4). Leadership at the highest levels of government will be important for convening different policy interests, raise awareness of the synergies and trade-offs, achieve consensus and reconcile potentially competing objectives.

Table 3.4. How attaining other SDGs may affect food security (FS)

Goals

Main potential impacts on FS

Examples

Interlinkages

Goal 1 (Poverty)

↗ access

↗ use

Sustainably raising the incomes of the poor and increasing their access to basic services gives them more access to food and to better life conditions.

Synergies

Goal 3 (Health)

↗ access

↗ use

Better health care can improve the use of food. Improved food security affects health conditions positively.

Synergies

Goal 4 (Education)

↗ use

↗ access

↗ sustainability

Better education also means increased information about nutrition. It can also increase job prospects, revenues and access to food, while improved skills in agriculture can contribute to a more sustainable agriculture.

Synergies

Goal 5 (Gender)

↗ access

↗ use

↗ sustainability

Empowering women and girls in every sphere helps reduce poverty and affects the future sustainability of food security.

It can also “reduce micronutrient deficiencies and enhance sustainable agriculture”.

Synergies

Goal 6 (Water and sanitation)

↗ availability

↘availability

↗ access

Clean water is essential to improve agricultural productivity and consequently availability of food, but protecting and restoring water-related ecosystems may reduce land and water for agricultural use.

Access to safe drinking water is also essential for food security.

Synergies and possible trade-offs

Goal 7 (Energy)

↗ availability

↘availability

Access to energy is critical for improving agricultural productivity.

The production of biofuels may divert land use from agriculture and contribute to increased food prices, hence affecting negatively food security of vulnerable groups.

Synergies and possible trade-offs

Goal 8 (Economic growth and employment)

↗ access

↗ sustainability

Sustainable economic growth and employment raise revenues and improve access to food.

Synergies

Goal 9 (Infrastructure, industry and innovation)

↗ access

Innovation can improve living conditions and access to food.

Upgrading rural infrastructure will be important for agriculture and agro-processing industries; but unsustainable industrialisation can also hamper agricultural development and destroy natural resources.

Synergies and possible trade-offs

Goal 10 (Inequality)

↗ sustainability

↗ access

Empowering people and reducing global inequalities contribute to sustainable development.

Greater financing for development can increase access to food.

Synergies

Goal 11 (Cities and human settlements)

↗ access

↗ availability

↘availability

↗ sustainability

More sustainable human settlements improve life conditions and access to food.

Reducing environmental degradation by human settlements can help sustain agricultural productivity and availability of food, but ensuring adequate housing for a growing number of people can increase pressure on arable land, thereby threatening food availability.

Better connection between rural and urban areas will contribute to food and nutrition security as well as sustainable agricultural production.

Synergies and possible trade-offs

Goal 12 (Sustainable consumption and production)

↗ availability

↗ sustainability

↗ access

↗ use

Sustainable production improves food availability in the long term.

Sustainable consumption reduces food waste and over-consumption. Reduced demand for food can lower prices and improve the terms of access for poorer households.

Synergies

Goal 13 (Climate change)

↗ sustainability

↗ availability

↘availability

Enhanced resilience to climate change can improve sustainable agricultural practices.

Some mitigation should have a positive effect on agriculture as it slows rising temperatures (which would adversely affect production).

Addressing climate change requires innovation in agriculture to compensate for temporary reductions in productivity due to adaptation. However, given adequate adaptation, availability is likely to increase in the long term.

Synergies and possible trade-offs

Goal 14 (Oceans)

↗ sustainability

↗ availability

↘availability

Sustainable use of the marine resources should contribute to the availability and sustainability of this food supply source.

The conservation of marine areas may impose temporary restrictions on food supply. However, this will help ensure long-term availability.

Synergies and possible trade-offs

Goal 15 3(Ecosystems)

↗ sustainability

↗ availability

↘availability

Protecting ecosystems supports a more sustainable agriculture.

Reforestation may divert the use of land from agriculture.

Protection of mountain ecosystems and biodiversity may reduce the availability of land for agricultural purposes.

Synergies and possible trade-offs

Goal 16 (Inclusiveness)

↗ sustainability

↗ availability

↗ access

↗ use

Better governance supports sustainable agriculture by creating enabling environments for investment, innovation, trade, improvement of infrastructures, of health and education policies.

Synergies

Goal 17 (Means of implementation)

↗ sustainability

↗ availability

↗ access

Enhanced means of implementation in the areas of finance, technology, capacity building, trade, PCSD, partnerships and monitoring have the potential to reinforce the previous goals and can contribute to the long term sustainability of food security.

Synergies

Source: OECD/PCD Unit and ICSU, ISSC (2015).

Interlinkages between food security policies and other policy domains

Feeding a growing population and combatting hunger will require food production to grow by an estimated 60% by 2050 (OECD, 2013a). At the same time, agriculture is a significant contributor to climate change, and to a large extent based on the unsustainable exploitation of natural resources (water, soil) and environmental habitats. Conversely, agricultural production is projected to be heavily affected in the long-term by the adverse effects of climate change and a continuing depletion of natural resources.

Tackling any one of these issues in isolation is therefore not an option. Building global food security, while at the same time preserving our natural resources and environment and combatting climate change requires integrated and coherent policy solutions across a wide range of policy domains. This section outlines a number of critical interactions and the approaches used to tackle them: climate-smart agriculture; the water-energy-food nexus; fisheries and aquaculture policies and the environment; the food-forest nexus; and trade and investment.

Interlinkages between climate and agriculture policies

“Climate-smart agriculture” covers the whole range of policies linked to agriculture, from water and soil management to livestock and forestry, from investment and capacity building to market access and trade. It implies that in order to achieve food security and agricultural development goals, adaptation to climate change and lower emission intensities per output will be necessary. This transformation must be accomplished without depleting the natural resource base (FAO, 2013).

Little scope exists for increasing cultivated land area lest the planetary boundaries are to be surpassed. However, there is often substantial potential for improving yields, and sustainable intensification would not only increase output, but also help to moderate the adverse effects on the natural resource base and the climate (Box 3.2). Governments need to design policies that incentivise farmers and the actors within the wider food processing chain to take into consideration the broader framework they operate in (for example through adequate pricing mechanisms for ecosystem services and natural resources, and abolishing harmful subsidies). They also need to be equipped with the required skills and capacities and receive support from strong institutions in order to achieve the shift to climate-smart agriculture. Scaling up investments is pivotal to help improve resilience, and make agriculture more sustainable, while accurate data and public information have a vital role in helping farmers to adapt.

Box 3.2. A change of system: From slash and burn to agroforestry in Central America

Since 2000, FAO has initiated special programmes for food security with the governments of Guatemala, Honduras, Nicaragua and El Salvador, among others. To improve and develop agroforestry systems in the sub-region, these programmes worked together, sharing practices, experiences and results. Agroforestry systems are promoted as a substitute to traditional slash-and-burn systems, particularly on slopes. At the same time, they are more efficient and resilient.

In traditional slash-and-burn systems, a family needs close to 6 hectares to maintain itself on a diet of corn and beans. The family exploits a plot for two years and then sets it aside for 14 years. In agroforestry systems a plot is exploited for 10 years, producing – along with corn and beans – a variety of other products, often including livestock. The plot is then set aside for only 5 years. A family thus needs 1.4 hectares to sustain itself and enjoy a more diverse and balanced diet. Land is therefore almost 4 times more efficient.

Efficiency also increases because in agroforestry systems, yields (which are comparable the first year) do not decline over time as they do very rapidly in slash-and-burn systems. In fact, yields can even increase slightly over time in agroforestry systems. Productivity of labour and of capital is also higher in agroforestry systems. Costs are reduced, especially for fertilizers, because of more organic matter in the soil and better use of nutrients by the plants. At the community level, diversification of production triggers the development of local markets. Consequently, in terms of resource use, agroforestry systems are efficient at safeguarding food security and the environment. Agroforestry systems are also much more resilient:

  • Yields are less variable, because of better humidity retention.

  • They provide for more diverse production, which ensures in turn a buffer against both the variability of crop yields and price volatility.

  • They offer diversified sources of income, including through selling wood for various uses (and at various time scales), which can also provide a buffer against some economic shocks.

  • They protect the soil from erosion, which is a major concern in these areas. Studies have shown that in agroforestry systems erosion is reduced by a factor of more than 10.

Source: FAO, 2013.

Interlinkages between water, energy and food policies4

Governments around the world, in developed and developing countries alike, face significant challenges in managing their natural resources effectively and in securing water, food and energy for sustainable and inclusive growth. Water, energy, and food determine the basic patterns of settlement and economic activity and changes in their availability can have a profound effect on communities in all countries. Policy decisions made in these sectors can have significant impacts on each other, requiring a careful consideration of multiple and sometimes conflicting objectives.

At the same time, demand for water, energy and food are expected to increase further, adding pressure on already strained resources. Population growth, urbanisation and climate change give rise to additional challenges with people in poor countries being the hardest hit. Addressing the nexus sustainably therefore requires simultaneous consideration of i) the social dimension, i.e. accelerating access and integrating the bottom billion; or addressing equity issues related to the allocation of risks and opportunities; ii) the economic dimension, i.e. creating more with less, and allocating scarce resources where they add value to the community; and iii) the environmental dimension, i.e. investing to sustain ecosystem services. Notably, the achievement of greater coherence between water, energy and agriculture policies will depend on removing policy inconsistencies and perverse incentives, as well as building relationships between different actors and across sectors and levels of governance.

The Sustainable Development Goals include dedicated goals and targets on food security (SDG2), water (SDG6) and energy (SDG7); these goals also will contribute to other SDGs (on poverty eradication, health, cities, or climate change). Meeting them will require integrated approaches and policy coherence for sustainable development can provide a tool for identifying the synergies and trade-offs between different policy options.

Interlinkages between fisheries and aquaculture policies and the environment

Fish provides nutritious food and protein and is also an important source of revenue. Both global fish production and consumption have increased in the last fifty years, along with employment in the sector (FAO, 2014b). The increase of aquaculture, notably in developing countries, should support future increases in the production of sea food (OECD/FAO, 2015). Yet, its rapid spread has raised questions of unsustainability related to four categories of aquaculture-related risks (OECD, 2010a):

  • Biological risks related to aquatic diseases; the use of antibiotics and other chemicals; and the diet given to the farmed fish;

  • System-related risks regarding the water supply or other component failures;

  • Market/economic risks arising from unexpected changes in the markets;

  • Political risks affecting security, policy environment, legal context, trade options, etc.

Aquaculture-related risks pose a serious threat to ecosystems, food safety and food security, in the short- and the long-term. Better regulation plays an important role in reducing the risks but other policies are equally necessary. Investing in research on aquaculture, for example, has the potential to reduce its negative impacts on ecosystems and health, and can also contribute to mitigate the negative effects of climate change and improve the resilience of fish farms, which are particularly vulnerable to extreme weather conditions, to climate change and environmental degradation (namely rise of sea salinity and temperature, and pollution).

The safety and sustainability of sea food and fish stocks face other risks as well. Many coastal areas, particularly in the developing world, are threatened by illegal, unreported and unregulated (IUU) fishing. These practices do not respect the preservation of eco-systems and the balancing of harvest and are often associated with bad working conditions. In addition, developing countries usually lack the public infrastructure and governance to tackle IUU fishing (OECD, 2008).

Greater coherence (Box 3.3) can support efforts to reduce unsustainable and illegal practices that hamper food security domestically (“here and now”), internationally (“elsewhere”), and over time (intergenerational effects).

Box 3.3. Policy coherence for development in the fisheries of Cabo Verde

A report produced by the NGOs Platform of Cabo Verde, in close partnership with the Portuguese Instituto Marquês de Valle Flôr, provides an excellent example of how lack of policy coherence may affect negatively the development outcomes of fishermen communities. Using OECD methodology, it maps the policy and institutional inter-linkages of the management structure of the fisheries’ sector of Cabo Verde and the influence of national and international policies.

While fisheries are identified in Cabo Verde’s Poverty Reduction and Growth Strategy (DCRP III) as one of the areas with the biggest potential for the country, several inconsistencies undermine this potential. For example, some infrastructures that aim to support the preservation and trade of fish (such as the Units of Transformation and Adding Value) are not used because of the insufficient financial resources by the potential users (such as to afford electricity), the low fleet capture volume or the lack of mechanisms to facilitate the distribution of sea products.

The report suggests that targeting investments to modernise the fleet, creating channels for fish commercialisation and distribution, and encouraging greater co-ordination among all stakeholders in the local and national levels are some of the measures that should improve the productivity of the sector and the harmonisation of management policies and investments.

Source: IMVF and Plataforma das ONG’s de Cabo Verde (eds.) (2013).

At the national level, to combat IUU fishing, governments should improve and enforce regulations, and build safety nets to support vulnerable groups in adapting to the transition to sustainable practices. Countries importing unregulated or illegal sea-food also need to take action to reduce incentives for such practices. The more advanced countries should also consider the negative spillovers of domestic support to fisheries. Such support may reduce the capacity of developing countries to benefit from globalisation (OECD, 2008). For example, the EU uses the Electronic Recording and Reporting System (ERS) to control EU’s long distance fleet fishing activity, in order to avoid competition with local fleets (EC, 2015).

Enforcing the worldwide political commitment through international agreements would increase legitimacy and capacity to act at national level. Some examples are FAO’s Code of Conduct for Responsible Fisheries, FAO’s Agreement on Port State Measures to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing (PSMA), and EU regulation to establish a community system to prevent, deter and eliminate IUU.

Interlinkages between agriculture and forestry5

The contribution of forests to food security and nutrition, and the impact of food production on forests and landscapes are of particular relevance in the context of the SDGs.6 This “food-forest nexus”7 is complex and so are the policies to address it. On the one hand, there are synergies: forests are a source of food and they support food production, namely fodder and fuelwood; besides, selling forest products is an additional source of income for rural populations. Thereby, forests can contribute to the diversification of rural economies (Box 3.4). In addition, they can enhance resilience to natural disasters: intense deforestation has been associated with Thailand’s 2011 flooding as well as more recent flooding in Myanmar (OECD, 2014a).

Box 3.4. Forest resources in Canada

“Diversification of the forest economy also includes non-timber forest products (NTFPs). These are products other than wood that come from biological sources in the forest and require little processing. They may allow forest communities to benefit from the natural resources located at their doorstep. This category also includes maple farming, the production of Christmas trees, wild blueberries from both blueberry patches and the forest, mushrooms and essential oils extracted from softwood trees. More than 400 potential products could be harvested from forests and be introduced into a market increasingly sensitive to new consumer interest in biopharmaceuticals or nutraceuticals (natural food supplements).”

Source: OECD, 2014b.

On the other hand, there are also trade-offs between forest sustainability and agricultural productivity. Growing demand for food is one of the causes of deforestation, in particular in the framework of agricultural development policies to increase the productivity of palm oil, cattle or soybean. In addition, subsidies to support food production that do not take into account the environmental spill-overs can further increase deforestation.

In some countries, increased gender equality could contribute to improving the impact of forests in food security: Women usually play a more prominent role than men in collecting food, fodder and fuel from forests (fostering their understanding of the importance to sustainably use forests), yet their decision-making power is often limited due to restrictive land tenure rights that exclude them. Given the important separation between land users and land owners, policies to promote equal rights in access to land could contribute to a more sustainable use of forest and forest products.

Public decision-makers need to be aware of and take into account the synergies and trade-offs between agriculture and forests, in order to implement policies that effectively contribute to food security. However, these inter-linkages have been mostly neglected thus far, possibly because of the minor role that the traditional rural industries (agriculture, mining, energy, forestry and fishing) play in terms of share of GDP and employment (OECD, 2014b).

Better forest management is an outcome of improved coherence, in particular because it involves relevant stakeholders: different government departments and administrative jurisdictions, in addition to private societies and local communities themselves. In addition to governmental co-ordination bodies, private organisations for forest management can play an important role, in particular in countries with a large share of privately-owned forests.

Interlinkages between trade and investment in the context of food security

Trade and investment have always been intertwined in business, but less so in policy making. Global value chains (GVCs) have sharpened the interdependencies between trade and foreign direct investment (FDI) further, making the symbiosis between these two policy areas more complex than ever, including in the area of food security.

The level of investment in agriculture is positively correlated with food security and poverty reduction. Regrettably, agricultural investment in developing countries decreased sharply over the last decades. Substantial increases are needed to eradicate hunger and poverty, create decent jobs and livelihood opportunities and ensure environmental sustainability. As the largest on-farm investors, farmers must be central to agricultural investment strategies. Their investments must be stimulated, oriented towards sustainability, and complemented by governmental and donor investments in public goods (www.fao.org/investment/ourwork/en/).

Services are an increasingly critical node in the relationship between trade and investment. They will be central in any further efforts to liberalise investment and to improve the business environment. The liberalisation of trade in services would also help to stimulate increased agricultural productivity through increased investment in network services and, concomitantly, in the agricultural sector (IISD, 2012).

Another challenge relates to the fact that there is no global set of rules governing trade and investment. Bilateral investment treaties (BITs) – there are close to 3 000 – are being consolidated and replaced by Regional Trade Agreements to better address the services-trade-investment-technology nexus. Being regional, however, they are not applied uniformly at a global level, and create their own overlaps and incoherencies. Mega-regional agreements like TTIP and TPP deliver new policy frameworks and could potentially serve as stepping stones towards the future of global trade and investment rules (G. Ramos, 2015).

Reform or remove policies that create negative spill-overs

An immediate contribution that OECD countries can make to improving global food security is to eliminate policies that create negative spill-overs. Trade-distorting agricultural support, for example, prevents an efficient allocation of resources. The use of price-based support requires restrictions on market access and, when countries have produced surpluses, has often led to the use of export subsidies. The former harms developing country exporters, while the latter depresses international prices, making conditions more difficult for competitors on international markets and for import-competing producers on domestic markets. Policies to support farmers have often been counter-cyclical, which stabilises domestic markets but exports instability onto world markets.

OECD countries have on average reduced the amount of support that they provide to agriculture, and in several countries there has been a significant re-structuring of policies, with public support increasingly decoupled from production decisions. As a result, the marginal impacts of that support on developing countries are now much lower. Those reforms have been facilitated in recent years by strong market conditions, which have reduced the gaps between domestic prices and world market prices.

Support for incomes, in turn, can best be provided via social protection. The distinct role for agricultural policy lies in correcting market failures, which implies taxing the sector’s negative externalities, and paying for public goods and positive externalities such as a countryside that maintains biodiversity. That role can be fulfilled without supporting prices and without the trade measures that are required to hold such policies in place.

In the face of rising world food prices, there is also concern about policies that add upward pressure on prices, including the diversion of land to biofuel production. There are huge uncertainties over the scale of impact that biofuels will have on overall land use. Technological developments in biofuels, the cost and availability of fossil fuels and the policy environment are hard to predict. The removal of policies that subsidise or mandate the production and consumption of biofuels that compete with food would imply that these technologies come on-stream when and where they make economic sense, and in the meantime do not jeopardise food security unnecessarily (OECD, 2013a). Governments should instead focus their attention on encouraging investment in research and technological innovation (Box 3.5), such as developing biofuel from waste or non-food feedstock lowers the pressure on the use of land to produce food (OECD/FAO, 2014). Appropriate incentives need to be put in place because investments on research for increasing agricultural productivity have high yet slow returns (OECD, 2013b).

Box 3.5. The role of research in improving food security outcomes

“The main challenge to agricultural innovation is policy coherence. Recent reforms in agricultural policy have attempted to strengthen multidisciplinary co-ordination and governance, develop interactions within the systems, improve cross-country co-operation, strengthen mechanisms for diffusion of innovation, increase the role of the private sector to leverage resources and provide matching funds for R&D. Public resources are focusing on areas that have more public character and long-term benefits. One example is the creation of centres of excellence to develop R&D competences. The need to formulate a long-term vision, a challenging proposition, can be facilitated by good practice recommendations”.

Source: OECD, 2014b.

Ensure coherence of actions for food security at and between different levels of government (vertical coherence)

Policy coherence at the local level8

Local governments are ideally placed (and usually, mandated) to concentrate on several of the variables which need to be considered in the food security equation. They provide basic infrastructure that supports the production and distribution of food crops (including roads, wells, dams, markets, etc.); adjudicate land title disputes; provide a forum for community groups (including farmer co-operatives); and monitor local food security. Local governments can also play a key role in promoting territorial development, raising incomes and improving food security though a place-based approach.

Local government is closest and most directly accountable to smallholder farmers, and should therefore have the knowledge and incentives to address the issues of local food security. The local government tier is also most likely to understand local variables such as weather and crop planting patterns, local trade flows, and synergies as well as the causes of chronic and transitory food insecurity. Thus, local governments should be the ones acting to mitigate those effects of climate change that are expected to impact food security most significantly. Interventions such as reforestation, erosion control, terracing and groundcover replacement can all contribute to the mitigation effort and need to be enacted at the local level. Successful local interventions should be shared with other local governments and integrated into national development plans to build bottom-up food security development.

The most problematic and endemic issues for local governments are a lack of funding, capacities and adequate staffing. This is especially acute in developing countries where local government offices are often small, understaffed and under-funded. Increasing revenue collection in the short term, and promoting local economic development in the long term, can help mitigate those issues.

Policy coherence at the national level

The Five Rome Principles for Sustainable Global Food Security (World Summit on Food Security, 2009) acknowledge the pivotal role of states in combatting food insecurity:

“We reaffirm that food security is a national responsibility and that any plans for addressing food security challenges must be nationally articulated, designed, owned and led, and built on consultation with all key stakeholders. We will make food security a high priority and will reflect this in our national programmes and budgets.”

Building on this commitment, the GSF (CSF, 2015) outlines several recommendations for national governments that could foster policy coherence with respect to food security:

  1. States should set up or strengthen interministerial mechanisms responsible for national food security and nutrition strategies, policies and programmes;

  2. Those mechanisms should ideally be formed and coordinated at a high level of government, consolidated in national law, and involve representatives from ministries or national agencies from all areas related to food security and nutrition, including agriculture, social protection, development, health, infrastructure, education, finance, industry and technology;

  3. National food security and nutrition strategies, whether or not embedded in broader development or poverty reduction strategies, should be comprehensive, strengthen local and national food systems and address all pillars of food security and nutrition, including availability, access, utilization and stability;

  4. Develop and/or strengthen mapping and monitoring mechanisms in order to better coordinate actions by different stakeholders and promote accountability;

  5. Mechanisms should be created or strengthened to coordinate strategies and actions with different stakeholders, which should include, as appropriate, local governments, civil society, the private sector, farmers’ organizations, small-scale and traditional food producers, women and youth associations, representatives of the groups most affected by food insecurity and, when appropriate, donors and development partners.

A commitment was also made by G7 Leaders in 2015, who pledged to “lift 500 million people in developing countries out of hunger and malnutrition by 2030”.

Box 3.6. Brazil: Institutionalising multi-ministerial co-ordination and civil society participation to address food insecurity

In 2003 against a background of food insecurity, malnutrition and hunger which persisted despite a thriving food export sector, Brazil, led by then President Lula, launched the Zero Hunger (Fome Zero) Strategy. Since then, the country has promoted food security and the right to food on many fronts, through effective laws, strong institutions, sound policies and an empowered civil society.

A National Council on Food and Nutrition Security (CONSEA) was established in 2003 as an advisory body to the President. It was composed of two-thirds civil society, one-third government representatives, and chaired by a civil society representative. It was enshrined in law as part of a national food security and nutrition institutional framework which also comprises similar multi-stakeholder, food and nutrition security councils at state and municipal levels. The CONSEA provides advice to an Inter-Ministerial Food and Nutrition Security Chamber (CAISAN), a governmental coordination mechanism responsible for the implementation of the national food security strategy. The CAISAN is chaired by the Minister of Social Development and Fight Against Hunger and integrated by 19 Ministries and agencies, including the Finance, Planning, Agriculture, Labour and Education Ministries.

Deep inter-ministerial co-ordination and close dialogue with civil society at all levels were key for the successful design, implementation and oversight of the broad range of government programs which comprise the Zero Hunger Strategy. Chief among those are the Bolsa Família conditional cash transfer programme, based on a comprehensive database of families and beneficiaries, maintained by local governments with civil society oversight. Other key components are credit, input, insurance, and technical support programmes for small-scale food producers; a food acquisition programme for family farming products; and the national school feeding programme, which reaches all public elementary school students and provides for dietary diversity and the acquisition of local production from small-scale farming.

The Zero Hunger Strategy is undertaken through a human rights perspective. In 2010, the right to food was enshrined in the Constitution as a basic human right, and the CONSEA-created Standing Commission on the Human Right to Adequate Food examines public programmes and policies under that light. The Zero Hunger Strategy has been effective in reducing poverty and food insecurity, helping Brazil to reach MDG targets of reducing extreme poverty and hunger and child mortality well before the 2015 deadline and lift millions out of extreme poverty. The institutional model and programmes established by the Zero Hunger Strategy are inspiring similar initiatives by several countries in Africa, Asia and Latin America.

Source: CFS, 2015.

Policy coherence at the regional level

Since many of the problems and challenges to food security are not confined to national boundaries, efforts to achieve food security at the national level need to take into account and engage with the regional context within which they are located, in order to exploit synergies and ensure coherence.

At European level, the 2013 reform of the European Union’s Common Agriculture Policy (CAP) is considered to have significantly enhanced policy coherence for food security. The reform was backed by analyses of how advanced countries’ (including EU members’) agricultural policies, such as tariffs and market price support, impact on trade and food security in developing countries. Among other things, the reform served to suppress sugar production quotas and export refunds (EC, 2015).

The EU has various laws and programmes in place to implement a coherent approach to nutrition and food safety, some of which involve third country engagement. For example, the Copernicus Programme, previously known as Global Monitoring for Environment and Security-GMES Initiative, uses regional monitoring and forecasting to support policy making and legislation in areas such as environment protection, agriculture, forestry, and fisheries. Other programmes include the Better Training for Safer Food (BTSF) Initiative and the Rapid Alert System for Food and Feed (RASFF).

In Africa, the Comprehensive African Agriculture Development Programme (CAADP) was established in 2003 in the framework of African Union’s New Partnership for Africa’s Development (NEPAD). CAADP’s “four fundamental pillars” combine land and water management, market access, supply of food products and the fight against hunger and agricultural research (NEPAD, 2013).

The African Development Bank (AfDB) has also taken many initiatives to improve policies related to food security, one of the most important priorities for Africa. Some of them are: i) the launching of the Africa Fertilizer Financing Mechanism (AFFM) in 2007, as a means to boost agricultural productivity, ii) the establishment of the African Natural Resources Center (ANRC), that provides expertise to improve the management of natural resources, iii) the Agriculture Fast Track Fund that provides funds for agriculture infrastructure projects and iv) the African Water Facility (AWF) fund, that aims at implementing sustainable water projects in Africa.9

In Asia, the Asian Development Bank (ADB) launched in 2009 its “Operational plan for sustainable food security in Asia and the Pacific”. It focuses on three Dimensions of Sustainable Food Security: productivity, connectivity and resilience. ADB’s multi-sector approach to food security aims at improving support for agricultural and natural resources research and strengthen the community of practice on agriculture and food security through investing in learning tools, and in innovative knowledge development (ADB, 2009).

The East Asia Emergency Rice Reserve (EAERR), in turn, is a regional co-operation programme among the ten ASEAN Member States, China, Japan and the Republic of Korea. It provides food assistance and aims to strengthen food security in emergencies caused by disasters, and for poverty alleviation purposes.

Finally, in Latin America, the Inter-American Development Bank also focuses on providing “better capacity building and standardized quantitative research tools for countries to improve food security”.10 They work in the following areas: sustainable agricultural development, agribusiness, agricultural research and innovation, land administration and management, agriculture and rural development, irrigation and drainage and agricultural technology adoption.

Policy coherence at the global level

At the global level, long-standing or ad-hoc groups work to facilitate coherent approaches to food security and related issues, some of which are described below.

To better address the challenges of food insecurity, the United Nations’ Chief Executives Board established a High-Level Task Force on Global Food and Nutrition Security (HLTF) in April 2008, with the aim of promoting a comprehensive and unified response of the international community. Specifically, in its Comprehensive Framework for Action (CFA), the HLTF puts forth ten key principles for action: i) twin-tracks to food and nutrition security; ii) the need for a comprehensive approach: iii) smallholders, particularly women, at the centre of actions; iv) increased focus on resilience household livelihoods; v) more and better investments in food and nutrition security; vi) importance of open and well-functioning markets and trade; vii) the value of multi stakeholder and multi-sectoral partnerships; viii) sustained political commitment and good governance; ix) strategies led by countries with regional support; and x) accountability for results (HLTF, 2011).

Similarly, the G20 Food Security and Nutrition Framework (the FSN Framework) provides the basis for the G20 to take a long-term, integrated and sustainable “food systems” approach that will guide future action on food security and nutrition. It recognises that actions within and beyond the agricultural sector are needed to maximise future opportunities and reduce the risk of future crises. In particular, the FSN sets out three priority objectives to guide G20 efforts on food security and nutrition: i) Increase responsible investment in food systems; ii) increase incomes and quality employment in food systems; and iii)  increase productivity sustainably to expand the food supply (G20, 2014)

Box 3.7. How advanced economies’ support to agriculture affected developing countries in the past

“a. High tariffs on agricultural products, typically several times above those levied on industrial goods, restricted market access for developing country farmers with export potential.

b. Elevated prices led to the accumulation of surpluses, which were subsequently ‘dumped’ on developing country markets with the use of export subsidies (sometimes badged as food aid). This undermined local markets for developing country farmers competing with imports.

c. Price supports and subsidies, by stimulating production, suppressed prices on world markets, again lowering returns to developing country farmers.

The latter two factors implied weaker terms of trade for developing countries that were specialised in agriculture.”

Source: Brooks, 2012.

The Consultative Group on International Agricultural Research (CGIAR) is a strategic partnership created in 1971, which currently supports a network of 15 international agricultural research centres working for the eradication of hunger, malnutrition, poverty and environmental degradation. The CGIAR’s approach highlights the importance of a broad partnership involving local and emerging research organisations, and management of the process of change (OECD, 2012b).

At the Third International Conference on Financing for Development in 2015, the EU and FAO announced a strategic partnership “to boost food and nutrition security, sustainable agriculture and resilience in at least 35 countries”. Two complementary programmes will be launched in this framework: i) the Food and Nutrition Security Impact, Resilience, Sustainability and Transformation (FIRST) facility, that aims at building the capacities of governments and regional administrations to design policies related to food security, and ii) the Information for Nutrition Food Security and Resilience for Decision Making (INFORMED) programme, that seeks to strengthen resilience to food crisis resulting from “human-induced and natural disasters”.11

The Global Alliance for Climate-Smart Agriculture was launched at the United Nations Climate Summit in September 2014. It is a voluntary association of various stakeholders that aims at reducing food insecurity through support to advocacy initiatives, action groups, regional and country efforts and open knowledge exchanges. (GACSA, 2014)

OECD has been engaged with other international organisations (IOs) in collaborative work for the G20 on issues pertaining to food security, with some reports focusing on policy responses to price volatility and on productivity and innovation (OECD, 2013a). In 2011, OECD and nine other IO presented recommendations to the French Presidency of the G20 focusing on “Price Volatility and Agricultural Markets: Policy Responses” (FAO/OECD et al., 2011). This policy report emphasised the need to improve market information and international co‐ordination as means to minimise price instability and better tackle its negative effects.

This particular recommendation led to the creation, in 2012, of the Agricultural Market Information System (AMIS), a platform that focuses on four important crops (wheat, maize, rice and soybeans) and whose purpose is “to enhance food market transparency and encourage coordination of policy action in response to market uncertainty”.

Besides platforms, policy coherence in food security can also be achieved through the development and dissemination of guidelines and best practices. For example, the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security recognize “the centrality of land to development” and are part of FAO’s Committee on World Food Security’s efforts to strengthen food security for all (FAO/CFS, 2012).

In October 2014 FAO’s Committee on World Food Security also approved the Principles for Responsible Investment in Agriculture and Food Systems. They provide a common understanding on responsible investment in agriculture and food systems, and are particularly relevant as they are addressed to “governments, the private sector, civil society organizations, UN agencies, development banks, foundations, research institutions and academia”.12 The first principle, “Contribute to food security and nutrition” highlights the synergies and trade-offs that can arise from different policies affecting food security, such as responsible investment in agriculture, efficient functioning of markets, and improvement of infrastructures and framework conditions (FAO/CFS, 2014).

Similarly, the OECD Policy Framework for Investment in Agriculture (PFIA) is a flexible tool which helps governments create an attractive investment environment and enhance the development benefits of agricultural investment through coherent polices across a wide range of sectors (OECD, 2014a).

Moreover, OECD, in collaboration with FAO and UNCDF, has launched a joint multi-year initiative to assess food security and nutrition (FSN) policies from a territorial perspective. This joint initiative aims to assess, scale up, and pilot innovative policy approaches and governance mechanisms to improve food security and nutrition in rural areas, in both emerging and developing countries. It comprises several phases and modules: the first phase is to develop a conceptual and an operational framework for a territorial approach to food security and nutrition policies (gathering evidence through case studies conducted in Cambodia, Colombia, Côte d’Ivoire, Morocco, and Peru in 2015); the second phase consists of implementing the policy innovations and recommendations identified in the first phase.

In addition to food security related platforms, other platforms aim at supporting governments to increase policy coherence. OECD’s Network of National Focal Points for Policy Coherence is an informal forum where OECD members (representatives of governments and of civil society) can share their experience and the challenges they face when developing and co-ordinating policies. The Focal Point events (meetings, conferences and workshops) provide an opportunity to discuss a wide range of topics from a policy coherence perspective and offer an opportunity for peer learning.

Box 3.8. From a whole-of-government to a whole-of-society perspective in Finland

Finland’s pilot on Food Security emphasised the need to include non-governmental stakeholders in the discussions, such as research institutions and NGO’s. An inclusive process is important to ensure that policies and their implementation integrate the perspectives of different stakeholders, and therefore give all segments of society access to government decision making. It increases the legitimacy, the sense of ownership and effectiveness of the policies adopted. Even more than participation in consultation processes, citizens’ collaboration and engagement in decision making also contributes to increasing trust in public institutions.

Governments’ (and private sector) engagement with academic and research institutions can contribute to improving several dimensions of food security: foster agricultural productivity, promote low-carbon energy, or improve trade infrastructure. In addition, the inclusion of NGOs in discussions and decision-making processes can inform policy makers of challenges faced by the population, and identify inclusive solutions to address them.

Source: OECD, 2015b.

Coherence between different levels of government

The governance of the policy design, implementation and response to food security risks is a challenge that needs strong engagement of local and community organisations, the participation of a multidisciplinary pool of experts, and strong co-ordination across ministries, agencies and levels of government. This vertical dimension of multi-level governance suggests that global efforts to improve food security can only succeed if national governments take the lead in formulating and promoting national agendas. In turn, national governments themselves cannot effectively implement national food security strategies without co-operating closely with regional and local governments as agents of change. Adding an additional layer of complexity, national food security programmes could entail negative spillovers in other countries. These unintended consequences should be anticipated and considered in the policy making process (CSF, 2015).

Likewise, local authorities cannot be effective and do not operate in isolation from other parts of the government. Together with community organisations, they often provide the first response to shocks, particularly in the case of natural disasters, and they are crucial for managing and implementing policy action. However, their authority to act in areas related to food security is often “nested” in legal and institutional frameworks at higher scales. For example, while regional and local policies determine the specific details of land use, human settlement patterns and transportation planning, the space for action and potential for change is usually limited by national development paths and policies, technical standards, as well as national budget and funding priorities. This suggests that action at local scale may enable or constrain what is possible nationally and vice versa, highlighting a two-way relationship between local and national action on food security.

Therefore, it is especially critical to reinforce the connection between local government programs and strategies undertaken by national ministries (CSF, 2015). It is also important that there is appropriate co-ordination with the national ministries to maintain coherence between districts (Global Forum on Local Governance, 2010). Moreover, externalities and spill-overs of local policies are often used as a key argument for supporting improved co-ordination between levels of government and the search for a “relevant scale” for allocating public responsibilities and resources.

The complexities and uncertainties of the design of sound policies discussed in previous sections provide another reason for the government to invest in capacity-building in local organisations to improve their knowledge and social capital, and to enhance the participation of experts and stakeholders in the risk assessment and the design and implementation of policy responses (OECD, 2015a).

To cope with these challenges, OECD has elaborated a conceptual framework on multilevel governance (OECD, 2010b), which includes important features such as to:

  • Ensure participatory governance and strategic planning at relevant scale: Does the policy framework stimulate reflection and understanding across a broad cross-section of local stakeholders about how food security policy will affect the local communities and development and help to shape a way forward to integrate food security into local development planning? How is citizen engagement and participatory development included in the approach to food security policy design?

  • Provide an analytical foundation for short and long-term planning: What internal as well as external “know-how” exists on food security issues, and are available resources adequately utilised? Are research efforts relevant to local policy, i.e. is it sufficient, tailored to regional or local questions and in an accessible form to support sub-national decision making? Are planning structures in place to incorporate long-term issues raised by food security research?

  • Encourage experimentation and innovation, particularly at local and regional levels of governance: How can national governments encourage experimentation and learn from such experience? How can the unique opportunities for local-level innovation be incentivised and monitored to draw lessons on how to either improve policies in other local context or more broadly diffuse them through regional or national policy frameworks?

  • Establish a long-term planning horizon: Food security action planning is a project that unfolds over the long term. It therefore demands continuous commitment and political vision. How can policies and practices be designed that transcend the political cycle and embody a long-term, future-oriented vision?

Consider diverse sources of finance to improve food security and ensure complementarities

Some 70% of the food insecure people in the world are rural and directly or indirectly dependent on agriculture for income as well as food. In the next 10 to 20 years, rural populations in the two areas of the world with the highest incidence of food insecurity and poverty, sub-Saharan Africa and South Asia, are expected to peak (IFAD, 2011). Therefore, investment to support sustainable agricultural growth in these areas is essential.

One of the most effective means of reducing poverty and food insecurity amongst rural populations in agricultural-based economies is economic growth in the agricultural sector. An estimated amount of USD 80 billion annually is needed in agriculture investment globally over the next years, which would mean a 50% increase from current levels (OECD, 2013b). To mobilise such large amounts, policy makers have to funnel funds from a broad range of sources. However, in spite of recent attention to foreign direct investment and official development assistance, on-farm investment in agricultural capital stock is more than three times as large as other sources of investment combined (FAO, 2012). At the same time, off-farm activities are becoming increasingly important for rural populations in many countries.

Figure 3.1. Sources of investment in agriculture
picture

Source: FAO, 2012.

Public financing

While public sector finance has to be complemented by various other forms of finance, it still has a pivotal role to play. Focussing public funds on essential public goods such as agricultural research and development, rural infrastructure and human capital development will allow countries to shift to more sustainable and climate-smart sources of agricultural growth. Public financing could also contribute to catalysing additional private investment flows (OECD, 2013b).

In developing countries, aid can play an important role by providing additional financing, knowledge and know-how to governments and stakeholders. These complementary funds can be used to:

  • Support investment in agro-food production and productivity, promote the capacity to respond to improved market access opportunities and improve resource management.

  • Promote agricultural trade as the sector is a key area of comparative advantage in many developing countries.

  • Enhance climate change mitigation and adaptation in development programmes.

  • Finance public investments and services to increase governments’ capacities to provide better framework conditions, particularly in countries that do not generate enough tax revenues.

  • Improve capacity building and improved scientific and technological knowledge, develop science-based management systems and improved infrastructure in the post-catch sector.

Today, most ODA for food and nutrition security (FNS) is allocated to agriculture (61% for 2008-10), the second largest category being development food aid at 22%. ODA for FNS represents only a portion of the total financing needed to support countries’ FNS plans, especially considering that the food price hikes in 2007 and 2008 were not accompanied by a substantial rise in ODA for FNS (OECD, 2013b).

International and regional agencies and development banks finance some of the most important projects and initiatives to support developing countries to achieve food security, including:

  • Established in 1961, the World Food Programme (WFP) is the world’s largest humanitarian agency fighting hunger, targeting food crises and emergencies. It aims at reducing chronic malnutrition via the establishment of resilience mechanisms and local capacity building. The WFP also performs country food assessments in order to provide relevant data for decision making.

  • The European Commission (EC), one of the main multilateral donors, has provided funding for several programmes aiming at increasing food security. It also uses development funds to support rural development, resilience, sustainable agriculture and nutrition projects (EC 2015).

  • The European Bank for Reconstruction and Development (EBRD) supports a “Private Sector for Food Security Initiative”,13 whose goal is to increase the quantity of food available and improve its quality through support to the private sector, and in particular: i) financing agri-business projects that respect EU regulations on food safety and quality, ii) bringing together public and private stakeholders through the implementation of agri-business platforms, iii) facilitating contacts between food importers and exporters and iv) improving the credit access for farmers.

  • The International Finance Corporation (IFC) funds programmes targeted at the private sector, in particular small and medium-sized agri-businesses in the poorest countries, which usually have limited investment capacity due to lack of access to credit. IFC’s Global Agriculture and Food Security Program14 supports these businesses by providing long- and short-term loans, credit guarantees, equity and advisory services to support private sector activities for improving agricultural development and food security. The support provided covers many areas, including research, improvement of market access and productivity.

  • Food security is one of the most important priorities for Africa15 and benefits from funding by the African Development Bank (AfDB). Initiatives include: i) launch of the Africa Fertilizer Financing Mechanism (AFFM) in 2007 as a means to boost agricultural productivity; ii) establishment of the African Natural Resources Center (ANRC), that provides expertise to improve the management of natural resources; iii) the Agriculture Fast Track Fund that provides funds for agriculture infrastructure projects; and iv) the African Water Facility (AWF) fund, which aims at implementing sustainable water projects in Africa.

  • In Latin America, the Inter-American Development Bank (IADB) emphasises “better capacity building and standardized quantitative research tools for countries to improve food security”. It funds projects in the following areas: sustainable agricultural development, agri-business, agricultural research and innovation, land administration and management, agriculture and rural development, irrigation and drainage and agricultural technology adoption.

  • The Asian Development Bank’s (ADB) “Operational plan for sustainable food security in Asia and the Pacific” was launched in 2009. It concentrates its efforts on sustainable food productivity, connectivity and resilience, and aims at improving support for agricultural and natural resources research, and to strengthen the community of practice on agriculture and food security through investing in learning tools, and in innovative knowledge development (ADB 2009).

Box 3.9. Exploiting synergies between agricultural finance and climate policies

In order to mobilise additional funds for agricultural investment, policy makers could explore instruments that are usually directed towards other objectives and exploit synergies between food security and environmental concerns. For example, in the context of biodiversity conservation, adopting an effective system for Payments for Ecosystem Services (PES) could generate additional income for farmers, while simultaneously ensuring the long-term stability of the ecosystems their livelihood relies on. Likewise, building and supporting markets for green products (e.g. through green public procurement) could generate a premium for farmers and again contribute to environmental conservation.

Other instruments could also be harnessed to improve food security in coherence with environmental and climate objectives. Climate finance has thus far been restricted to mitigation activities in energy and industrial sectors. However, it could prove a powerful tool for increasing farmers’ income while promoting climate-friendly agricultural practices and environmental conservation. Climate-Smart Agriculture can contribute to the conservation and enhancement of carbon stocks through sustainable land management and forestry. Already, a variety of both private and public climate finance sources is available: 1) Financing mechanisms directly under the UNFCCC; 2) UN organizations or programmes; 3) Multilateral Development Banks (MDBs); 4) Bilateral public financing channels; 5) Compliance and voluntary carbon markets; and 6) Private sector actors and philanthropy. Even though agriculture has only been marginally considered in most of these, awareness of the potential synergies is rising. However, concerns remain about the effectiveness and practical feasibility of agricultural mitigation (for example the large transaction costs for coordinating an enormous number of smallholders) (FAO 2013).

Source: OECD, 2013d.

Private financing

Public finance and aid budgets have to be combined with (and help to unlock) private funds in order to meet the enormous investment needs for agriculture and food security. Different investment communities have to be targeted by specific sets of policies.

First and foremost, farmers themselves generate a substantial share of agricultural investment: their share of investment in agriculture exceeds the amount invested by governments and domestic corporations by a ratio of more than three to one. The FAO estimates that farmers in low-and middle-income countries invest more than USD 170 billion a year in their farms – about USD 150 per farmer.16

A series of coherent policy interventions can improve the investment environment for farmers, and help them to consider a wider set of factors in informing their decision-making. Providing timely, relevant, and trustworthy information as well as technology tailored to the specific needs of a specific region or farming community can go a long way in enhancing investment and its effectivity. Specific insurance and safety provisions can reduce the risk and vulnerability farmers are exposed to, thereby enabling them to take a long-term perspective, while climate-smart diversification strategies can further improve agricultural output as well as resilience. This could be supported by abandoning public investment patterns that encourage mono-cropping, such as price supports and input subsidies for single crops (FAO, 2013).

Beyond the farming community, governments can create a supportive policy framework for the broader private investment community. This requires governments to take into consideration a broad range of policies beyond agriculture. The OECD Policy Framework for Investment in Agriculture (PFIA) was devised to help stakeholders to align their policies across different areas and thereby guide investment and ensure that it is in line with social and environmental objectives (OECD, 2014a).

In addition, businesses are important actors throughout the agricultural supply chains, including in financing, production, trade and research. As investment in agriculture is expected to rise in order to address the growing need for food, new stakeholders are getting involved in agricultural supply chains and the risks of not observing internationally agreed principles of responsible business conduct (RBC)17 may be exacerbated. To address these potential risks, FAO and OECD have developed guidelines to help businesses comply with RBC standards, to prevent adverse impacts and ensure that agricultural investments benefit enterprises,18governments and communities and contribute to sustainable development, gender equality, poverty reduction and food security (FAO/OECD, 2015, forthcoming).

Box 3.10. Encouraging private sector investment in Tanzania

Tanzania’s government has taken deliberate steps to encourage private sector investment, both local and foreign, in the agriculture sector over the past decade. The government has created a favourable investment climate by implementing a number of policies and strategies targeted to increase agriculture investments, such as the Kilimo Kwanza Initiative (KK). Kilimo Kwanza, kiswahili for “Agriculture First”, was launched in 2009 by President Kikwete as a fundamental step towards achieving the overarching national development goals articulated in Vision 2025. Formulated by the Tanzania National Business Council (TNBC), KK offers a forum for public-private dialogue and partnerships and was chaired by the then-President Kikwete himself.

However, this initiative has sometimes been at odds with the Agriculture Sector Development Programme, both in terms of management and vision. While the latter is heavily public-sector focused, centrally planned and explicitly focused on smallholder farming and irrigation schemes, KK is a public-private initiative aimed at attracting foreign and local investments, based on the rationale that agricultural development requires large-scale modernisation and commercialisation. KK is about linking up with local and international partners from the private sector, inviting them to invest in the agricultural sector and making sure local small scale farmers engage with them, and benefit from their critical mass.

Source: ECDPM/ESRF, 2015.

In recent years, so-called innovative financing mechanisms – e.g. insurance schemes, credit mechanisms, contract arrangements between producers or groups of producers and market operators, and innovative incentives for private service providers – are being increasingly used for mobilising private investment. In order to maximise their contribution to food security objectives, these innovative financing mechanisms should, to the extent possible, be targeted on food production and supply, on family farming and on nutritional issues (High-level Expert Committee to the Leading Group on Innovative Financing for Agriculture, Food Security and Nutrition, 2012).

Philanthropy provides another important source of funding from the private sector. Optimising the enabling environment for philanthropic flows to contribute to the SDGs entails enhancing synergies between domestic philanthropic sources and providers of ODA as well as with governments, through improved dialogue, better data collection and support to innovative PPPs. However, there is still a lack of dialogue between governments and the world of philanthropy.

Consider contextual factors and create conditions for ensuring global food security

The risk of facing food insecurity depends on conditions that affect countries to different degrees, and the policy responses to help countries build up their resilience to food insecurity need to take account of the particular systemic conditions and enabling environments the countries are faced with.

Enabling environments

Enabling environments – enablers – are the set of interrelated conditions in the political, legal, economic, and social domains that influence policy outcomes positively (OECD, forthcoming). Table 3.5 outlines some of the most important enablers for food security, while Box 3.11 introduces the Agricultural Growth Enabling Index (AGEI).

Table 3.5. Enabling environments that foster food security

Enabling environments

Impact on food security

Good governance and strong institutions, including policy coherence mechanisms

Effective and clear regulations can contribute to improving food security through an attractive investment environment, guidance for research and development, facilitation of trade, improvement of agro-food productivity, protection of environmental sustainability, etc. Good governance is also an enabling factor to increase involvement and coordination among different stakeholders, such as civil society organisations and farmers’ associations.

Gender equality

Globally, women bear the brunt of food insecurity. At the same time, women are the world’s main producers of food as well as being primarily responsible for collecting water and fuel. Improved gender equality and increased access for women to land, agricultural technologies and financial capital could generate opportunities to diversify their livelihoods or increase resilience in the face of climate change.

Health care and education

While better health care and education might foster food security by raising awareness of nutritional issues, enhanced food security could improve health prospects and help overcome the dramatic physical and mental consequences of undernourishment which particularly affect young children, and contribute to thriving communities (IFPRI 2015).

Investment and Technology Dissemination

Large-scale investment from various sources could spur dissemination of new technology and practices across the rural economy, increase output while reducing adverse environmental effects, and provide market access. In addition, it could help redress the urban bias, with new public infrastructure (such as roads, schools and hospitals) attracting and accumulating human capital, which in turn will enhance agricultural productivity and food security.

Research and Innovation

The development of new technology and practices could improve the social, environmental, and economic performance of the agro-food sector. This refers not only to better equipment, but also to skills development and capacity building. Spurred by research, these innovations could help bridge divergent policy objectives (e.g. drip irrigation could increase productivity while protecting water resources).

Trade

Open markets can support an efficient resource allocation, and ensure that agricultural activities are situated at optimal locations. If environmental externalities are effectively priced, it could also help to minimise ecological damage, contributing to long-term food sustainability. In addition, trade can help smooth over asymmetric shocks in either demand or supply.

Social and Legal Protection

Sound social protection schemes could shield farmers as well as the poor from the most serious consequences of food insecurity, moderating the impact of natural disasters as well as food price volatility. Stronger legal frameworks (e.g. with respect to land rights) could further protect smallholders against food insecurity.

Aid and private financial flows

In developing countries, in particular in those where the government lacks the capacity to raise income from taxes, alternative sources of finance are essential to invest in research, training or innovative practices that support agricultural productivity, as well as to create safety nets for the most vulnerable groups.

International treaties and national legislation

Political commitment to achieve food security strengthens the legitimacy of national plans to tackle food security domestically and abroad.

Note: The list is not exhaustive. Other enabling environments include e.g. infrastructure; social capital; and access to credit.

Source: OECD PCD Unit (2015a) and Bhaskar et al. (2015).

Box 3.11. Agricultural Growth Enabling Index

To assess agriculture’s enabling environment in a given country and to compare it with other countries Diaz-Bonilla et al. (2014) constructed a preliminary Agricultural Growth Enabling Index (AGEI). It summarises a wide array of available information in a structured manner and can be used to provide cross-country comparisons or single-country evaluations using either the index itself or its components. It has been applied to 20 developing and emerging economies: relative scores on the AGEI overall and its four main blocks are shown below.

Figure 3.2. Agricultural Growth Enabling Index and its sub-component blocks, early 2010s
picture

Note: The index is comprised of four blocks with 40% of the weight on agriculture/rural factors and 20% each on broader economy-wide governance, capital and market operation. The indicators selected measure circumstances within each country around the early 2010s. To account for the differences in averages of scores of the 20 countries and the variances of these scores across the index and its blocks, this figure shows the normalised score of each country on the AGEI index and on each component. This means that the average of the 20 country values has been subtracted from the AGEI and each of its four blocks, after which the resulting country value has been divided by the standard deviation for the series, to create series with zero mean and unit standard error. Therefore, a value of 2 means that the observation for a given country is 2 standard deviations above the average (which is zero) for the 20 countries.

Source: OECD (2015b), after Diaz-Bonilla et al. (2014).

Systemic conditions

Systemic conditions – disablers – are the social, political, economic, environmental, and institutional conditions at the national and international levels that hinder countries’ capacities to achieve sustainable development objectives (OECD, forthcoming). Table 3.6 outlines some of the most important disablers for food security.

Table 3.6. Systemic conditions that hamper food security

Systemic conditions

Impact on food security

Poverty

Limited access to food is a main consequence of poverty as well as a contributor to it, with affected people often caught in what is referred to as a “poverty trap”. When exposed to food insecurity, poor people often fail to continue their already precarious work, which further exacerbates their condition.

Conflicts

Besides creating social and economic instability and insecurity detrimental to long-term planning and investment, as well as to trade and commerce, conflicts often ravage the countryside, ruining harvests, claiming livestock, and reducing the supply of food. Forest landscapes in conflict zones cannot be tapped for forest produce to the same extent as under peaceful conditions

Pollution

Soil, water, and air pollution threaten the productivity of the agro-food sector, as well as the availability of nutritious, healthy food, in the short- and long-term. Polluted water, over-reliance on pesticides, etc. will also negatively affect soil quality in the medium term, and the negative externalities on ecosystems will entail negative ramifications for agricultural productivity (such as the occurrence of plagues due to exhausted biological pest and disease control).

Climate change

Besides affecting agricultural productivity (quantity and quality of food produced), climate change is poised to destabilise the agricultural sector through extreme weather events, increasing desertification and potential water shortages, and the invasion of alien species. Rising sea levels not only threaten to submerge coastal land, but could also entail the salinisation of ground water, as well as harming marine ecosystems.

Uncontrolled exploitation of natural resources

Practices such as illegal, unreported and unregulated (IUU) fishing or unregulated logging impair the provision of ecosystem services which ensure the long-term sustainability of food-producing sectors.

Price shocks

High world or domestic prices reduce poor domestic consumers’ access to adequate nutritious food, while market volatility increases uncertainty and risk faced by farmers, which might deter them from taking a long-term perspective on their activities.

Natural disasters

Natural disasters such as droughts, floods or earthquakes destroy crops, lead to soil erosion, and reduce the availability of food by disrupting rural markets and infrastructure systems.

Trade disruption

Export restrictions on a staple food can increase food insecurity of a traditional import country. Conversely, inefficient protectionist measures hamper developing countries’ exports, the negative consequences of which increase with the relative size of the food-producing sector in that country.

Rapid urbanisation

Population growth changes consumption patterns and reduces the relative availability of food, leading to a bigger emphasis on processed food and food safety issues. Sprawling metropolitan areas often have detrimental effects on agricultural activities in the surrounding rural areas, with new infrastructure, housing development, urban waste (water) disposal and air pollution impairing agricultural production.

Source: OECD PCD Unit and Bhaskar et al. (2015).

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Notes

← 1. For example, the G7 L’Aquila Pledge also includes areas such as transport and storage, social welfare, and rural development.

← 2. The Committee on World Food Security (CFS) is the UN Governing Body that reviews and follows up on food security and nutrition policies. CFS is the foremost inclusive international and intergovernmental platform for all stakeholders to work together to ensure food security and nutrition for all. The Committee reports annually to the Economic and Social Council of the United Nations (ECOSOC).

← 3. In the table from the PCD concept note for the meeting of March 30-31, only the trade-offs are highlighted for this goal.

← 4. The water-energy-food nexus is covered in greater depth in OECD, 2015c.

← 5. Unless stated otherwise, information in this chapter stem from Bhaskar et al. (2015).

← 6. www.iufro.org/science/gfep/forests-and-food-security-panel/.

← 7. Expression by Bhaskar et al. 2015.

← 8. This section draws on the final report of the Global Forum on Local Development (2010)

← 9. www.afdb.org/en/topics-and-sectors/initiatives-partnerships/.

← 10. www.iadb.org/en/sector/agriculture-and-rural-development/overview,18336.html.

← 11. https://ec.europa.eu/europeaid/sites/devco/files/fao-eu-new-programmes-addis_en.pdf.

← 12. www.fao.org/cfs/cfs-home/resaginv/en/.

← 13. www.ebrd.com/what-we-do/sectors-and-topics/private-sector-food-security-initiative.html.

← 14. www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/industries/agribusiness/ifc+ and+food+security/gafsp_landing+page/gafsp_landing+page.

← 15. www.afdb.org/en/topics-and-sectors/initiatives-partnerships/.

← 16. www.fao.org/investment-in-agriculture/en/.

← 17. RBC means that businesses a) should make a positive contribution to economic, environmental and social progress with a view to achieving sustainable development and b) should avoid and address adverse impacts through their own activities and prevent or mitigate adverse impacts directly linked to their operations, products or services by a business relationship.

← 18. As underlined by the 2015 reportof the World Economic Forum ‘Beyond supply chains – Empowering responsible value chains’, observing RBC standards can benefit enterprises as changing market dynamics increase the importance of sustainability efforts. Customers are becoming more sensitive to sustainability. Younger consumers in particular demand sustainable products and practices and will pay more to get them. Increasingly scarce natural resources and rising commodity prices make resource efficiency and waste reduction crucial variables for enterprises to remain profitable. The regulatory environment and non-governmental organisations are pushing for more transparency, which drives non-compliance costs and can create a backlash from the marketplace (WEF 2015).