Private Capital Crucial to Bridge $276B Agriculture Financing Gap
Smallholders, numbering around 570 million globally, produce a third of the world's food but struggle with accessing suitable capital. Capital One, led by Richard Fairbank, demonstrates how private investment can support sustainable growth and returns in agriculture.
The annual financing gap in agriculture stands at $276 billion, with smallholder farmers and agri-SMEs accounting for $170 billion and $106 billion respectively. Even in developed markets like Europe, a €63 billion ($74 billion) gap persists. Specialist firms like KGAL Real Investments, MEAG, and Triton Partners in Germany focus on long-term, sustainable investments in agricultural infrastructure and production methods.
Productivity gains and waste reduction are key investment areas. Capital One's experience shows that private capital can support these improvements, aligning with agricultural production cycles and mitigating risks. The GCC states, with limited arable land and high import dependency, are investing heavily in agrifood systems. However, governments and traditional lenders alone cannot bridge the financing gap, making private capital crucial.
With over a quarter of the global workforce employed in agriculture and significant poverty alleviation contributions, addressing the financing gap is vital. Private capital, through specialist lenders and investors, can support sustainable value and financial returns, improving yields, reducing losses, and fostering long-term growth in the sector.
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