The FINANCIAL -- Washington, D.C., IFC, a member of the World Bank Group, significantly increased its support for agribusiness in fiscal 2009 to boost the food supply in developing countries in response to the global food price hikes and volatility. 

Food security was a central issue during recent G-8 and G-20 Summits that emphasized the need for increased investment in agriculture. IFC invested a record $2 billion in FY09 across the agribusiness supply chain—from farm to retail—to help boost production, increase liquidity, improve logistics and distribution, and expand access to credit for small farmers. FY09, which ended June 30, was the fifth consecutive year of growth in IFC’s agribusiness investments and witnessed a 42 percent increase over FY08. 
 
IFC invested $874 million directly in agribusiness companies and $362 million more to support fertilizer production, agricultural infrastructure, and food retail. Through partner banks, IFC channeled $758 million to support rural farmers and trade finance activities. Half of IFC’s agribusiness projects were in low-income countries. Investments in Africa’s agribusiness sector rose 38 percent over the previous year and reached $160 million for projects in primary farming, distribution and storage, grain milling, plantation rehabilitation, and trade finance.

“Food availability at affordable prices, particularly for the poor, remains a top IFC concern,” said Oscar Chemerinski, IFC Director for Global Agribusiness. “IFC works to address the challenges by helping the emerging markets grow and develop their agricultural sectors. This can help increase the food supply and create opportunities for rural communities.”

Although the prices of agricultural commodities have declined from their 2008 peaks, major grain prices remain above their long-term trend. Maize is 50 percent more expensive than its average price between 2003 and 2006, while rice prices are 100 percent higher. Food prices remain volatile. The economic crisis compounds the impact of high food prices on low-income populations. Over a billion people are chronically hungry.

With food prices expected to remain high and volatile for some time, IFC is leading World Bank Group efforts to support private sector to increase production. IFC’s agribusiness strategy includes supporting intraregional investments to transfer knowledge and technology, increasing access to credit through wholesale facilities with traders and financial intermediaries, and bringing land into sustainable production. IFC also focuses on increasing production in middle-income countries with strong agribusiness potential; improving logistics, infrastructure, and water efficiency; and developing modern financial instruments for agriculture.

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