World Bank doubles agribusiness investment to $9B in strategy shift

The World Bank will double its commitments to the agribusiness sector to $9 billion each year by 2030 as part of a “strategic pivot” that also aims to create jobs in lower-income countries, the bank’s President Ajay Banga said Wednesday. The announcement during the bank’s annual meetings in Washington, D.C., comes as the institution navigates growing pressure to invest in reducing emissions from agrifood systems, which account for a third of all human-made global greenhouse gas emissions. Meanwhile, Banga said, the agriculture sector itself faces threats due to climate change. Major shifts underway in agribusiness “arrive at a time of extraordinary opportunity as global food demand is set to increase by 50 to 60 percent in the coming decades,” Banga said in a speech in the sunny atrium of the bank’s main building. This increased investment will entail a more holistic, “ecosystem approach” to transforming agribusiness and securing food systems, Banga explained. Finally, by investing in the agribusiness sector, the bank would be helping create jobs in the countries where it works. Job creation has been a key focus for Banga at this year’s meetings. “The effort to transform agribusiness is not only about securing the food systems of tomorrow—it is fundamentally a jobs initiative,” he said, noting that some 1.2 billion young people in lower-income countries will enter the workforce over the next decade, but only 420 million jobs are expected to be available. Critics of the bank’s approach to agriculture argue that the institution has long favored industrial farming at the expense of the small-scale food producers central to its overarching anti-poverty mission — and that this agribusiness-focused approach is worse for the planet. Supporters of the vision, however, say that large-scale farming is the most effective way to feed the largest number of people. A new approach The strategy shift will incorporate the strengths of the bank’s various institutions. The International Bank for Reconstruction and Development, its arm that lends to middle-income countries, along with the International Development Association, its fund for the lowest-income countries, will help governments develop regulations, advise on issues including land tenure and irrigation, and build infrastructure. “In the area of climate finance, they can help governments repurpose some of the $1.25 trillion of fossil fuel, agriculture, and fishery subsidies to incentivize greener practices, unlocking a significant source of financing for the agricultural sector,” Banga said. Meanwhile, the bank’s private sector arm, the International Finance Corporation, can mitigate risk with guarantees and simplify access to support through the bank’s new, simplified World Bank Group Guarantee Platform, Banga said. To carry out the increased investment in agribusiness, the bank aims to coordinate across its various institutions and resources. That will be made easier by earlier groundwork the bank has laid throughout Banga’s tenure to streamline the bank’s internal processes. “This strategic pivot is made possible because of the work we have done over the past 16 months to become a better, simpler, more coordinated institution,” Banga said. “It moves us beyond fragmented efforts to a constellation of solutions that includes everything from warehousing to logistics to production, but with smallholder farmers and producer organizations at the center.” Conversations about environment and climate change dominated the panel discussions following the announcement. “A lot more climate finance from donors should reach the farmer,” Anne Beathe Tvinnereim, Norway’s minister of international development, said on stage. Focus on food security The initiative appears to be a reflection of the bank’s growing focus on food security and nutrition — but it is unclear where exactly the increased investments will go and the extent to which they will focus on climate-friendly policies. “One of the things that will be discussed in Washington is what are the techniques to get more climate finance to be applied to people working in agriculture and food?” David Nabarro, strategic director of the 4SD Foundation, who has worked extensively in food security and nutrition, told Devex. “There have been many signs that the new president of the World Bank, Ajay Banga, takes the issue of food and nutrition security very seriously,” Nabarro added. Since Banga took the helm in June 2023, the bank has been scaling up its response to food and nutrition security crises worldwide as hunger and prices are on the rise. The bank has identified food and nutrition security as one of eight “global challenges” it will focus on in the coming years under Banga’s leadership. Details on that initiative are yet to be released. More recently in July, Banga announced that the the bank would be the lead “knowledge partner” for the soon-to-be-launched Global Alliance Against Hunger and Poverty — a major initiative of Brazilian President Luiz Inácio Lula da Silva as his country presides over the Group of 20 largest economies this year. As part of that partnership, Banga said, the bank will make financing available from IDA to help countries implement policies to reduce hunger and poverty. Banga pledged that the bank would work to support half a billion people in need by 2030. Recipe for a livable planet Meanwhile, the World Bank has become increasingly vocal about addressing the environmental impacts of agriculture. In a major, first-of-its-kind report published this May, Recipe for a Livable Planet: Achieving Net Zero Emissions in the Agrifood System, the bank underscored the significant role agriculture plays in greenhouse gas emissions. The report — meant to be a road map for countries — called on them to shift away from environmentally harmful agricultural subsidies, reduce demand for high-emission foods, expand clean energy, and reduce losses and waste, among many other recommendations. Agrifood systems are responsible for a third of human-made greenhouse gas emissions, surpassing those from heat and electricity production combined. But the payoff of investing in sustainable agrifood systems would far exceed the costs, the report found: Annual investments would need to increase by 18 times to $260 billion each year in order to halve current agrifood emissions by 2030 and get the world on track for net-zero emissions by 2050, the report said. The benefits could be as much as $4.3 trillion by 2030 — a 16 to 1 return on investment costs. Despite this, efforts to curb agricultural emissions are chronically underfunded: “Project-level climate financing for the agrifood system stands at only 4.3 percent, or $28 billion, of global climate finance for mitigation and adaptation in all sectors … Mitigation finance for the agrifood sector was even more anemic, reaching only $14.4 billion in 2019–20, or 2.2 percent of total climate finance and 2.4 percent of total mitigation finance,” the report said. In terms of the financing at the bank — specifically IBRD — the “climate co-benefits,” or share of financing dedicated to adaptation in agriculture, have increased sharply: to $3 billion in 2023, from just $326 million in 2013. Most agriculture-related lending on climate from donors in general, the report noted, is focused on adaptation and/or resilience, without focusing on reducing emissions explicitly. Funding industrial agriculture But there is some tension between the bank’s call to reduce agrifood emissions and its support for large-scale, commercial agriculture, experts said. A report last year examined the bank’s policy and funding around agriculture found that the bank “is more interested in ensuring private finance flows towards a broken food system based on industrial agriculture than it is in reducing hunger.” The report’s author, Ruth Segal, policy lead on food systems at the Catholic Agency for Overseas Development, said, “The program that they have about repurposing harmful subsidies is positive but it’s quite small compared to their overall agriculture portfolio.” CAFOD is a vocal critic of the bank, arguing that it prioritizes the success of large-scale agribusiness over that of small-scale farmers. Segal also called for clearer commitments from the bank to phase out environmentally harmful fertilizers and pesticides while promoting the development of organic inputs. A simulation by the World Bank and the International Food Policy Research Institute cited in the bank’s Recipe for a Livable Planet report, however, suggested that while reducing fertilizer use or shifting to organic farming could lower emissions by 15%, it could also lead to a 5% drop in agricultural production and 13% increase in food prices. Segal also called on the bank to be more specific and explicit on how it would reduce emissions — arguing that its emphasis on “climate-smart agriculture” was not enough. “Climate-smart agriculture is a very wooly term that isn’t very clearly defined. It can cover a multitude of sins. It would be much more helpful if the bank was clearer,” she said, calling for a more measurable and scientific definition. Other critics were even harsher: “The emission from the agriculture sector is coming more from industrial agriculture … Climate smart agriculture will not create a ‘livable planet.’ It is just a concept to help agro business industries to continue the business as usual and not to phase out from the fossil fuel model,” said Ange-David Baïmey, who works in the Africa program of GRAIN, an agricultural NGO that advocates for sustainability and food sovereignty. Another contentious issue is the bank’s ongoing support for factory farming, the large-scale, industrialized production of livestock for food. The Stop Financing Factory Farming Campaign on Monday revealed that the World Bank Group invested $1.5 billion in animal agriculture in 2023, including $750 million in factory farming. Critics argued that these investments contradict the bank's own recommendations to reduce subsidies for red meat and dairy. “Factory farming is a leading driver of greenhouse gas emissions, deforestation, biodiversity loss, animal cruelty, and water pollution,” Merel van der Mark, head of the animal welfare and finance program at Sinergia Animal, said in a statement. “Development banks have all pledged to align their investments with the Paris climate agreement, yet are failing to make the kinds of investments needed to keep the goal to limit global temperature rises to 1.5°C within reach.” Still, it is important to keep in mind the massive successes that modern farming techniques have made towards the goal of increasing the availability of food, Nabarro said. And shifts such as increased emphasis on sustainability are indeed happening, but it is important to ensure that the needs and interests of farmers are centered throughout, he added.