Inside the World Bank's new trust fund for food systems

WASHINGTON — The World Bank has launched a new trust fund aimed at leveraging public financing, private sector investments, and consumer spending to transform food systems. The Food Systems 2030 Trust Fund intends to raise — and spend — $1 billion by 2030 to support new agriculture and food models that jointly improve the health of people, economies, and the planet. “The gap that it’s filling is one in terms of approach. You need to think beyond agriculture to think about food systems transformation if you want to have food systems for healthy people, a healthy planet, [a] healthy economy. So this trust fund could actually help in putting this comprehensive approach in place,” said Martien Van Nieuwkoop, global director of the Agriculture and Food Global Practice at the World Bank. “The trust fund then will compliment the bank financing, but by doing so unlock a lot of other financing, public sector and private sector, as well as shift incentives and market signals in the right direction where we think food systems transformation needs to go.” The idea for a multidonor trust fund grew out of last year’s United Nations Climate Action Summit, where Van Nieuwkoop said there was collective recognition the current food system would not promote achievement of the Sustainable Development Goals by 2030. The “hidden” cost of the current system is estimated to be $12 trillion per year, including costs caused by the number of hungry and overweight people, rates of land degradation, water scarcity, biodiversity loss, agriculture and land use emissions, food loss and waste, and poverty rates of rural farmers. Food Systems 2030 was formally launched by the World Bank over the summer but just received its first contribution this month, $15 million from Germany. The fund will be spent on nine different areas: better diets; prevention of zoonotic diseases; improved food safety; reduction in greenhouse gas emissions; reduction in pollution; improved land, water, and food loss and waste management; promotion of productivity growth; increased job creation; and maintaining trade flows. “The idea is that we will use the trust fund to engage with client countries to repurpose their public support to agriculture.” --— Martien Van Nieuwkoop, global director, Agriculture and Food Global Practice at the World Bank A spokesperson for the German Federal Ministry of Economic Cooperation and Development, or BMZ, told Devex the country hopes its contribution will strengthen the One Health approach that recognizes interconnection of the health of people, animals, and the environment. “A sufficient supply of safe, healthy food is the basis of health and development,” the spokesperson said in an email. “Food systems are at the heart of the human-animal-environmental interaction. No other sector is more closely linked to this interface and no other sector is more vulnerable to climate change, land degradation, or biodiversity loss.” The BMZ spokesperson also said the One Health approach was particularly important in light of COVID-19 for the prevention of future zoonotic diseases. “COVID-19 has demonstrated what happens if you ignore the complex interactions of life on Earth,” the spokesperson said. The World Bank’s current lending for agriculture and food is about $4 billion per year, Van Nieuwkoop said. But the estimated cost for food systems transformation between now and 2030 is $300-350 billion per year. “The bank will never be able to put those kinds of resources on the table. As global director I would like to see our lending doubled in that portfolio, but even that won’t be enough. So the trust fund will actually help us leverage the bank’s $4 billion a year in lending,” Van Nieuwkoop said. “The idea is that we will use the trust fund to engage with client countries to repurpose their public support to agriculture.” Government subsidies of agriculture are a serious problem, he said, because current spending is so high yet very inefficient. The World Bank estimates that governments spend about $500 billion a year on public support for agriculture, with about half being spent in Organisation for Economic Co-operation and Development countries and the other half in World Bank client countries. Improving the efficiency of how money is spent will help eliminate some of the hidden costs of food systems, Van Nieuwkoop said. The German government said it is encouraging others to pledge funds for the trust fund. Van Nieuwkoop said the World Bank is in conversation with other potential donors to the fund, but is not yet ready to announce additional contributions. He said COVID-19 is putting a strain on donor resources around the world. “We think we have a very credible proposition here that would allow the global food transformation agenda to be translated at the country level where the action is, and actually by unlocking this leverage that ... be able actually to do this at scale. That’s the proposition that we’re putting forward to our donors to put resources in,” Van Nieuwkoop explained. “COVID-19 is reinforcing those points, although at the same time also the effect of COVID-19 and the fiscal stress that it’s causing doesn’t make the fundraising environment easier.”