2023-Public-Sector-Perspectives

Countries should also consider prioritizing their spending; expenditure on the AgTech sector can deliver significant returns. For instance, the adoption of drought tolerant varieties of seeds can increase productivity, improve yield stability, and reduce the impact of variable weather. A study carried out across 840 farms in Uganda found that the adoption of drought-tolerant maize varieties increased yields by 15% and reduced the probability of crop failure by 30%. 10 Ethiopia is also benefiting from AgTech, with satellite mapping being used to help farmers fine-tune their fertilizer application; there has been a 40–80% reduction in fertilizer waste (benefiting the environment and lowering costs), while yields grew by as much as 200% due to better targeting of fertilizer. 11 Similarly, installing solar-powered walk-in cold-storage rooms in markets helps farmers to prevent spoilage. This reduction of food production waste is particularly beneficial in developing countries: in Nigeria 40% of the country’s food production is lost, for example. Financial solutions also offer farmers a way to mitigate risks from crop price volatility. Implementing a hedging strategy can ensure more consistent profits, by establishing either a price floor or a price ceiling. Both food producers and food importers can lock in a price to offset against volatility in a given direction and lower price risk. A successful hedging program could also be advantageous for the World Food Program, which saw the cost of its aid programs jump by 46% in 2022 compared with 2019. It is important to note that the public sector will not be able to solve the food security crisis alone. Blended finance is a critical tool that demands a concerted partnership between both the public and private sectors. It is most often used to lower the risk of an investment, through guarantees, insurance, provision of a first-loss tranche or offering technical assistance. It can also enhance returns through incentives, interest rate subsidies, and directly topping up returns, as well as addressing high transaction costs through donor-funded transaction advisory services, and promotion and convening. Recently, blended finance has been critical to mobilizing commercial investment for agricultural companies across geographies, project cycle stages and business models that would otherwise have struggled to attract financing. Blended finance, however, does not fit every project or investment scheme and must be structured in a way most suitable for the project at hand. In the longer term, multilateral development banks (MDBs) must focus their investments on the development of stronger and more sustainable global food system infrastructure. There must be tandem investments in logistics and rural infrastructure so that food is grown, cultivated, stored, and transported efficiently. There must also be increased investments in projects to expand fertilizer production and access, more efficient use of modern fertilizers, and innovation to produce more sustainable fertilizers. Investments in AgTech centered around capacity, adaptation, smallholder farmers, and climate-smart technologies should also be a priority. Finally, MDBs must become less risk averse, and leverage their balance sheets and innovative financing structures to provide much needed capital to revamp the current global food system infrastructure. 10 Impacts of drought-tolerant maize varieties on productivity, risk, and resource use: Evidence from Uganda — ScienceDirect 11 USAID Administrator Power on the State of Global Food Security and Nutrition | Center for Strategic and International Studies (csis.org) Citi Perspectives for the Public Sector 25