Context

Agriculture is a critical sector within the global economy, particularly in low- and middle-income countries. According to World Bank data, agriculture accounted for 15.5% of GDP in low- and middle-income countries, employing over half the labor force. Agriculture is also an effective tool to help achieve zero hunger, SDG #2. Investment in the agricultural sector helps build resilience within the sector, reduces poverty and hunger, and promotes inclusive economic growth.

The agricultural sector faces interconnected challenges, from skyrocketing costs of fertilizer due to the war in Ukraine to unsustainable practices such as the overuse of fertilizers and pesticides, monoculture farming, and soil erosion. Moreover, these challenges are compounded by climate change, particularly in low- and middle-income countries, which are disproportionately impacted by climate-related damages. These risks to the agriculture sector contribute to global food insecurity and acute poverty.

In 2022, agricultural ODA funding totaled US$15 billion. With mounting risks on the agricultural sector and its sensitivity to the climate crisis, increased and debt-conscious donor funding is essential for achieving the SDGs, protecting livelihoods, improving food security, and building resilience to climate change.

Funding trends

What are key funding trends for agricultural ODA?

After peaking in 2020, agricultural ODA fell in 2021 before recovering in 2022. The de-prioritization of agriculture as a share of total ODA in 2021 could be related to reallocated donor spending during the COVID-19 pandemic.

What are the top sectors in agriculture?

Agricultural development, agricultural policy and administrative management, and rural development were the agricultural sub-sectors that received the most funding in 2022.

Top donors

Who are the top donors of agricultural ODA?

In 2022, Germany, France, and Japan were the largest donors to agriculture. Many major donors have placed an emphasis on food security and agricultural development in their development strategies. Germany was the largest donor in absolute terms, spending US$2.7 billion on agriculture. The German BMZ's special initiative Life without Hunger, which prioritizes climate-smart agriculture with a focus on LDCs and SIDS.

The US fell from third-largest to fourth-largest donor, spending US$1 billion on agriculture, a decrease from US$1.2 billion in 2021. The US food security program, led by USAID under the Feed the Future Initiative, is focused on strengthening agricultural growth, nutrition, and resilience. The Feed the Future Initiative also has a strong focus on Africa.

In terms of agriculture spending as a percentage of total ODA, South Korea, Luxembourg, and Iceland were the top three donor countries, though their absolute contributions were modest.

Key debates and topics

Increasing funding for agricultural adaptation to build smallholder farmers’ capacity to adapt to climate change: According to the World Bank’s 2016 report Shock Waves: Managing the Impacts of Climate Change on Poverty, climate change could push an additional 100 million people into extreme poverty by 2030 if no action is taken. Climate change could cause the incomes of smallholder farmers in Africa, South Asia, and Latin America to decline by up to 20%.

Accordingly, donors need to scale up funding for adaptation programs, such as providing access to climate-smart agricultural technologies, improving water management systems, and promoting diversification of livelihoods to increase the climate resilience of smallholder farmers.

In 2024, the World Bank announced plans to doubling annual investments in the agribusiness sector to US$9 billion by 2030, as part of a 'strategic pivot' aimed at generating jobs in LICs. Bucking the trend of swindling ODA commitments, the IFAD saw a record US$1.4 billion in pledges in 2024, a nearly 10% increase from its previous replenishment in 2021. The increase in pledges was attributed to IFAD's unique investment approach and focus on small-scale farmers.

Supporting food security and protect those impacted by malnutrition: In the wake of ongoing crises in Gaza and Sudan, food insecurity is projected to continue to worsen in 2025 with 1.9 million people already on the brink of famine and 733 million facing hunger in 2023, a steep increase from 2019. As such, the world is not currently on track to achieve SDG #2 by 2030. More funding is needed for agricultural development, food assistance programs, nutrition, as well trade support programs. Moving forward, donors should prioritize sustainable, long-term interventions that are evidence-based, context-specific, and designed to meet the needs of vulnerable populations as well as maximize the impact of each dollar spent.

As part of its G20 presidency in 2024, Brazil launched the Global Alliance Against Hunger and Poverty, which aims to eliminate world hunger by 2030. The alliance is intended to make it easier for countries to access existing resources.

Targeting agricultural sustainability as a lever for climate change adaptation: Despite the massive potential to mitigate climate change by making agriculture more sustainable, there is a lack of funding for agriculture sustainability initiatives, particularly in low- and middle-income countries.

As such, increased funding for the adoption of sustainable agricultural practices, such as conservation agriculture, agroforestry, and integrated crop-livestock systems is critical to developing sustainable agriculture systems while reducing greenhouse gas emissions and increasing carbon sequestration.

Advancing agricultural data as an important lever for reaching zero hunger: Sound agricultural data is crucial for effective policymaking in low- and middle-income countries and the achievement and evaluation of SDG #2. As such, advocates should promote the collection and analysis of agricultural data to inform policy and improve productivity, net outputs, and farmer income levels.