The food crisis that erupted in 2007 had barely eased when early signals of another crisis emanated from the financial market in the United States in the first quarter of 2008. The contagion then spread rapidly to Europe and the developing world with dire warnings of an impending global recession. The G-20 summit in Washington, DC in November, 2008, aiming to rescue the global economy from slipping into a recession, was followed by another in London in April, 2009, pledging $1.1 trillion to strengthen the global financial system. Whether these pledges will translate into coordinated action and tangible results time alone will tell.

Going by the declaration, the G-8 “L’Aquilla Food Security Initiative” — concluded on July 10, 2009 — has committed $20 billion for sustainable agricultural development in the developing world over the next three years. This is hailed as a major initiative to root out global hunger and poverty, prompted mainly by fears that the global slowdown has pushed 90 million people into extreme poverty. But, more importantly, it reflects a shift of emphasis from exclusive dependence on food aid to greater investment in agriculture as key to eradication of poverty — especially in a context of dwindling official development assistance for agriculture since the ‘80s. The bulk of the funding for this new initiative will come from the US and Japan ($3bn-$4bn each), and the rest from Europe and Canada.

While pledges matter — to the extent that they are implemented — the challenge of raising agricultural yields and expansion of productive employment opportunities in rural areas, where a large majority of the poor live, is a daunting one. Even if the flow of resources to agriculture is substantially enhanced, much will depend on how these resources are spent. Recent research conducted by IFPRI and World Bank researchers and by one of us offers useful insights.

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