Financing Rural Infrastructure to End Hunger
(draft, 49 pages
Two central research questions guide the thinking behind this report:
- What rural infrastructure investments can have the most direct positive impact towards ending global hunger?
- How can these infrastructure assets be sustainably financed?
In addressing both of these questions, an extensive literature review was undertaken, including a review of all of the major recent reports by international organizations – such as the OECD, FAO, IFAD and others – on food security and infrastructure, as well as from donor reports from government development assistance programs . This ‘meta-analysis’ of existing research was complemented by phone call interviews with experts from agricultural development, agribusiness, infrastructure finance and sector-specific authorities.
Donors as well as governments should only commit funds to financially sustainable infrastructure. Projects not meeting this requirement will drain disproportionally the public resources available, not delivering value for money for stakeholders, and potentially having a shorter operating life (page 49)
In the literature reviewed for this report, the following variables are the most frequently used (in order) to measure the impact of infrastructure interventions:
- Market access
- Agricultural trade
- Agricultural performance/ productivity
- Poverty incidence/ Household income
- Foreign Direct Investments (FDI)
- Food security
- Per capita consumption
Investment Priority #1: Storage and Cold Storage Infrastructure
Modern storage facilities such as cold storage, grain silos and warehouses, have a critical role to play in ensuring food security and ending hunger. Effective storage infrastructure will prevent moisture condensation from ruining a crop postharvest, while also keeping out pests such as rodents, insects and birds. It can enable a family or community to better preserve crops on-site for their own consumption, increasing food availability and access, or means that a farmer can raise his or her income by a) having more unspoiled surplus to sell and b) waiting until off-season to sell, when prices might be higher.
Investment Priority # 2: Decentralized Renewable Energy (DRE) Infrastructure
Energy is a game-changer in agriculture – needed for diverse activities such as: operating irrigation pumps, powering and lighting facilities such as slaughterhouses, refrigeration, cold storage of produce and vaccines, postharvest processing, sterilizing fruit and vegetables, and for charging portable telephones and other electronics. The price of energy also has a very real impact on food security; an increase in global energy prices, for example, was one of the main drivers behind the sharp rise in food prices in 2008, which reduced households’ access to affordable food and worsened food insecurity in the years that followed. Decentralized renewable energy (DRE) is particularly appropriate for targeting food security improvements.
Investment Priority # 3: Feeder Roads
Without access routes to obtain inputs and reach markets, other food security investments – whether it be technical assistance, improved storage, access to capital or other investments – cannot perform. This point is well established, and remains an important consideration in the context of food security and nutrition. As summarized by the World Bank, “Without effective rural transport systems, all rural development and poverty initiatives, agriculture and growth are substantially constrained.”
Investment Priority #4: Irrigation infrastructure
As for other rural infrastructure asset classes, it is also true of irrigation that it is difficult – if not impossible – to directly trace the causality of improved irrigation to food security outcomes. Most studies do not specify whether the improvement in diet arises from more home-grown food availability or from an increase of marketable surplus leading to more food being purchased by the household.