Farming furore: World Bank launches new agriculture fund

15 February 2010

The Bank’s new multi-billion dollar agriculture trust fund has got off the ground while its recent agriculture strategy signals a renewed attempt to push the controversial policies of the 2008 World Development Report.

In September last year, responding to a G8 promise of $20 billion for sustainable agriculture, the Bank created an agriculture trust fund, pledging $1.5 billion of its own resources (see Update 68). In January this year, the Bank’s board agreed a donor-dominated structure for this ‘Global Agriculture and Food Security Program’ (GAFSP): donors who contribute get board seats, and can select which developing country counterparts sit with them.  At present it is unclear whether the Bank’s attempt to capture the G8’s promised cash will pay off. Only a few donors have signalled an interest, led by the US, Canada and Spain, while others such as the UK and Germany have declined to contribute.

The GAFSP will provide funding for national plans through intergovernmental group NEPAD’s Comprehensive Africa Agriculture Development Programme which has been criticised for being developed with little civil society input. These plans will also have to be screened by a technical advisory committee, the composition of which remains unclear.

Anne Jellema, of NGO ActionAid International noted that, “by giving the technical secretariat role to the World Bank along with convening power and a seat on the decision-making body, the proposal would undoubtedly give the Bank a great deal of influence on what is actually funded.”

Controversial approach

In July 2009, the Bank released its Agriculture Action Plan for 2010-12 intended to ‘operationalise’ the Bank’s 2008 World Development Report (WDR) on agriculture (see Update 61).  The plan’s five broad “areas of action” will allow any number of activities to be funded but the Bank  intends to focus on core “business lines” including “irrigation, land tenure, and research and extension.” It says that “agricultural markets and trade related programmes are increasingly demanded by client countries.”

Like the WDR, the strategy contains a mix of approaches, but the overall thrust is to support “concerted efforts to integrate smallholder farmers into growing agricultural markets and supply chains.” This market-focussed approach downplays the role of government, and entails significant support for agribusiness and foreign investment.  Emphasis is given to property rights and the need to “strengthen land rental and sales markets” – which will give ammunition to those critical of the Bank’s involvement in ‘land-grabbing’ (see Update 68)). The environmental focus is more on allowing the Bank to “tap into carbon markets” than integrating environmental considerations across the Bank’s agriculture portfolio. On a global scale, the Doha trade round is emphasised, as part of a drive to facilitate “access to developed country markets” for developing country agricultural producers.

The strategy’s approach to food crises is largely to provide emergency support with little attention paid to underlying causes except to “better understand the extent and drivers of food price volatility” and to continue to develop “innovative insurance products” which controversially link farmers to global financial markets (see Update 67).

Lim Li Ching of the Third World Network said: “the same failed World Bank policies on agriculture do nothing to address the root problems of food insecurity, including the collapse of many agricultural sectors due to structural adjustment, declining terms of trade, asymmetrical trade rules and financialisation of food commodities.”

The strategy emphasises that it will “strengthen and leverage donor partnerships,” suggesting that the influence the Bank exerts on policy-making and on other donors could be more important than the size of of its agriculture portfolio. Total World Bank Group support for agriculture and related sectors is predicted to rise to $6.2 – $8.3 billion annually; up from an average of $4.1 billion in the three preceding years, an increase from 12 to 13-17 per cent of total Bank lending. . This increase is largely therefore attributable to the overall projected increase in Bank lending (see Update 66).