Economy

For 17 years, govt investment in agriculture dips across the world

In contrast to popular belief, agriculture’s share in global economy has been increasing

 
By Richard Mahapatra
Last Updated: Thursday 25 July 2019
Agriculture’s contribution to GDP in the world has increased. Photo: Getty Images
Agriculture’s contribution to GDP in the world has increased. Photo: Getty Images Agriculture’s contribution to GDP in the world has increased. Photo: Getty Images

While the world grapples with the challenge to produce enough food for a booming population in the near future, it emerges very clearly that governments across the world are making no proportionate efforts to revive the agriculture sector.

Public investment in agriculture has been consistently receding for the last 17 years, showed an analysis of central governments' investments in agriculture across the world. The agriculture sector’s share in government expenditure globally stagnated around 1.6 per cent during 2001-2017, according to the Food and Agriculture Organization’s (FAO) latest assessment.

Countries in Asia-Pacific and Africa are spending relatively more on agriculture. But considering the agriculture sector’s contribution to the overall economy, it is not proportionate.

The FAO's Agriculture Orientation Index (AOI) tool measures government spending on agriculture and its share in a country’s gross domestic product. This indicates a government’s policy intent as expenditure is usually high in the sector that contributes most to the economy.

According to this index’s guideline: “An AOI of less than one indicates a lower orientation of the central government towards the agriculture sector relative to the sector’s contribution to the economy, while an AOI of greater than one indicates a higher orientation.”

At global level, the AOI declined to 0.26 in 2017 from 0.42 in 2001. Among regions, the AOI is the lowest for Sub-Saharan Africa. This also means the world is unlikely to meet one of the Sustainable Development Goals (SDG) that commits countries to increase investment in agriculture.

Barring the expenditure in 2008 — the year of unprecedented food price crisis — governments have been spending around 1.6 per cent of their central government expenditure on agriculture since 2001. Even in 2008, when government expenditure was the highest after 2001, it was only 1.85 per cent.

But at the same time, agriculture’s contribution to the world GDP has increased to 6.15 per cent in 2017 from 4.13 per cent in 2001. It means government spending is around one-third of the sector’s overall contribution to global economy.

According to the data accessed by FAO, countries in Asia and the Pacific region spend the highest among all continents on agriculture from central governments’ expenditure. But it is also coming down. It dipped to 3.03 per cent in 2017 from 3.85 per cent in 2001.

Similarly, in Africa, the expenditure on agriculture has come down to 2.3 per cent in 2017 from 3.66 per cent in 2001.

Expectedly, the developed regions of the world, including Europe and countries like Canada and the US, spend the least on agriculture. They spend around 1 per cent of their expenditure on agriculture.

Malawi spends relatively the most among countries on agriculture — 16.4 per cent of its expenditure. India’s three neighbours that are counted among the poorest countries in the world — Bhutan, Nepal and Bangladesh — feature among the top 10 countries spending on agriculture. In 2017, 13 per cent of Bhutan's expenditure and 8.7 per cent of Bangladesh's was on agriculture. 

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