EBRD can support moves to combat price volatility, unleash untapped production potential

The FINANCIAL — EBRD President, Thomas Mirow, has called on the private sector to play a greater role in investments aimed at boosting agricultural productivity and freeing up untapped potential to combat food price spikes and volatility,according to EBRD.

In a speech to the Global Forum for Food and Agriculture in Berlin, Germany, President Mirow said the task of ensuring global food security was becoming increasingly challenging.

With food prices hitting new peaks in early 2011, there was every indication that such high and volatile prices could no longer be viewed as temporary. Global agricultural production needed to increase by 70 per cent over the next 40 years in order to provide sufficient food for an ever-growing world population, he said.

The President said the private sector played a critical role in reducing volatility and insecurity in food markets. Private sector firms could boost agricultural productivity, improve operational management across the food chain and address the key question of efficient use of resources, a major concern in a world of growing water scarcity.The EBRD is already leading the way in agricultural investment as the largest provider of finance to the sector with investments of close to €1 billion in debt and equity in 2011, and a portfolio of more than €3 billion. Strategic priorities include supporting primary agriculture, investing in trade logistics and increasing access to finance for farmers.

The aim of the new initiative is to promote private sector investments in food production, enable the implementation of technical assistance, and provide new financing to agriculture companies as well as fostering public-private policy dialogue.

In his speech, President Mirow explained that such policy dialogue is crucial for removing administrative obstacles to investment and for the creation of incentives that would promote more financing from the private sector. “A key ingredient for long-term food security is a policy that sets the right incentives and creates a transparent and enabling environment for private sector activity,” he said.

He added that effective investment would help increase productivity. Taking the examples of just Russia, Ukraine and Kazakhstan, he said these countries alone could supply almost half of the world’s grain export needs if they were to achieve their real production potential.