Agrifood System Development

The agrifood system comprises the actors engaged in agriculture and the related food industry and services, the activities they perform, and their enabling environment. The main actors include input providers, farms, agribusiness firms, distributors, and consumers (figure 1.1). They perform farming, processing, wholesale and retail distribution of food and related products, and consumption. The enabling environment for agrifood system development is the set of policies, standards, and investments that affects sustainable production and market access. Sustainable production may be influenced, for example, by policies to facilitate farms’ and firms’ adoption of technologies to improve the primary production and processing of agricultural products. Investment and trade policies and regulations, and managerial practices, may influence access to markets and consumer behavior. Specific policies, standards, and investments are needed to support sustainable production and marketing of safe and nutritious food. Access to finance and infrastructure are crucial to enable both production and access to markets, including of safe and nutritious food.

The evaluation will not cover nutrition and related health aspects of agrifood system development. As agreed with the World Bank Group management at the Approach Paper stage, we focus on three of the four outcome dimensions depicted in figure 1.1: productivity, inclusion, and sustainability. We do not directly address the fourth outcome: nutrition. We touch on nutrition and the associated health benefits for consumers as they relate to the other three aspects of agrifood system development.

Figure 1.1. The Actors, Activities, and Dynamics of Agrifood System Development

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Figure 1.1. The Actors, Activities, and Dynamics of Agrifood System Development

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Source: Independent Evaluation Group.

Note: Consumers and nutrition-related agrifood system activities and outcomes are shown for completeness but are not covered by the evaluation.

Agrifood system development increases productivity and inclusion, contributing to ending hunger and poverty and boosting shared prosperity. The agrifood system accounts for more than 30 percent of gross domestic product and 70 percent of all jobs in low-income countries (LICs; World Bank 2017c). About 80 percent of poor people and the chronically food insecure (820 million people in 2016) live in rural areas, and 65 percent of the working adults among them make a living through agriculture (Castañeda et al. 2016; World Bank 2017c). Growth in the agriculture sector is two to three times more effective than growth in other sectors at raising incomes among the poorest people (World Bank Group 2015a). Policies, standards, and investments that improve actors’ production and access to markets may, for example, lead to a shift from subsistence to market-oriented agriculture, a shift toward high-value products, or the development of value-adding activities that create off-farm jobs and generate multipliers for economic growth (de Janvry and Sadoulet 2019; FAO 2018; World Bank 2007, 2020a).

The development of agrifood systems is also critical for sustainability. The agrifood sector is responsible for more than one-quarter of global greenhouse gas emissions (Global Panel 2020; World Bank Group 2015a). Emissions from agriculture can be significantly reduced with climate-smart mitigation policies and investments, including the adoption of improved practices and sustainability standards by all relevant actors.

Several Sustainable Development Goals (SDGs) and global commitments for sustainable development capture the importance of agrifood system development. Agrifood systems contribute to almost all the SDGs, including decent work and economic growth (SDG 8); industry, innovation, and infrastructure (SDG 9); reduced inequalities (SDG 10); climate action (SDG 13); conservation of natural resources and vital ecosystem services (SDGs 14 and 15); and no poverty (SDG 1) and zero hunger (SDG 2; FAO 2018; World Bank 2020b; World Bank Group 2015a). Agrifood systems also play a central role in meeting commitments established as part of the 1992 Rio Earth Summit Conventions: the United Nations Framework Convention on Climate Change, the United Nations Convention to Combat Desertification, and the United Nations Convention on Biological Diversity.

The Challenges of Agrifood Systems and World Bank Group Support

Agrifood systems face many challenges that put agriculture-driven inclusive growth and sustainable development at risk. Agricultural productivity is low in many LICs, threatening efforts to reduce poverty and improve food security. For example, average cereal yields (for 2010–17) in Sub-Saharan Africa and LICs were one-third of those in upper-middle-income countries (UMICs) and one-quarter of those in high-income countries. Smallholders and small producers in LICs have particularly low productivity because their integration into local, regional, and global value chains remains limited, and they struggle to shift from subsistence to market-oriented agriculture, diversify their products, and develop value-adding activities. The current agrifood system also fails to deliver desired outcomes for climate and the environment (IFAD 2021). Agriculture accounts for 70 percent of water use and contributes to climate change, biodiversity loss, and environmental degradation. The agrifood system is a major source of greenhouse gas emissions, and climate change is projected to cut agricultural production, especially in the poorest and most food-insecure regions (World Bank 2010). Overall, the world’s agrifood systems—which have a market value of about $10 trillion per year—generate between $6 trillion and $12 trillion annually in hidden social, economic, and environmental costs (externalities).

These challenges risk putting the SDGs out of reach and making agrifood systems unsustainable. Gains in productivity and technological advances in agrifood systems have contributed to more efficient resource use, reduced farmland expansion into forests and other vital ecosystems, and helped feed growing populations. However, the dramatic successes made possible through innovations over the past century are increasingly unsustainable because of noninclusive approaches that do not reduce poverty or hunger and massive adverse effects on climate and the environment (Barrett et al. 2020; FOLU 2019; World Bank 2020a). The convergence of climate change, the coronavirus pandemic, conflict, and violence exacerbate existing weaknesses in current agrifood systems (World Bank 2020b).1

To address these challenges, the Bank Group has supported the development of the agriculture sector and the broader agrifood system using a variety of instruments. Through its successive Agriculture Action Plans, the Bank Group has developed a differentiated approach to increasing the productivity, inclusion, and sustainability of agrifood economies at three stages of agrifood system development—traditional, transitional, and integrated (World Bank 2007; World Bank Group 2013). As part of this effort, the World Bank provides lending and nonlending support to governments to enhance the enabling environment for agrifood systems and support public and private investments. The International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) typically support the value addition of medium or large commercially oriented farms and agribusiness firms through direct investments in the private sector (IFC), advisory services (IFC), and guarantees (MIGA). In addition, IFC supports agribusiness small and medium enterprises (SMEs) and smallholder farmers through financial intermediation.

Purpose, Scope, and Methods

The purpose of the evaluation is to assess how relevant and effective the Bank Group has been in developing more productive, inclusive, and sustainable agrifood systems. We focus on three evaluation questions:

1. How relevant is the Bank Group (to what extent is it “doing the right things in the right places”) in its support for raising productivity, inclusion, and sustainability in the agrifood systems of client countries? This question is addressed in chapter 2.
2. How effective is Bank Group support in making agrifood systems more productive, inclusive, and sustainable? (To what extent is the Bank Group “doing things right”?) And how effectively have the World Bank, IFC, and MIGA coordinated their efforts in their overall support for agrifood system development? These questions are addressed in chapter 3.
3. What factors of success explain the effectiveness of Bank Group interventions? This question is addressed in chapter 4.

We focus on Bank Group support for developing agrifood systems in client countries during fiscal years (FY)10–20; coverage of MIGA is limited because of its small portfolio. We examine agrifood sector interventions, including World Bank lending, IFC investments and advisory services, and to the extent that evidence was available, MIGA guarantees. The portfolio includes Bank Group projects approved during FY10–20 and draws from Project Performance Assessment Reports of projects closed during this period.2 World Bank analytics and advisory services are assessed partially in chapter 2 for their relevance to country needs. The limited number of evaluated interventions prevented an assessment of the effectiveness of MIGA’s portfolio. Chapter 2 touches on the relevance of MIGA’s work; chapter 3 includes a discussion on collaborative efforts among IFC, the World Bank, and MIGA; and chapter 4 draws on limited evidence on success factors from MIGA case studies. We refer to the “Bank Group” when our findings apply to all institutions (that is, the World Bank, IFC, and MIGA) or to the two involved institutions (in cases where two of the three institutions were active in a country). When our findings apply to one institution only, we refer explicitly to that institution (either the World Bank, IFC, or MIGA).

The Approach Paper was approved with the agreement that this would be a focused evaluation with a limited scope and depth. Because of considerations related to the limited time available to deliver this evaluation and the travel restrictions resulting from the pandemic, at the review meeting of the Approach Paper, the team was authorized to proceed with a focused evaluation (rather than a full thematic evaluation) of limited scope and depth. It was agreed that the effectiveness analysis would be based on project-level analysis rather than a mix of project- and country-level analyses. In addition, we would not conduct an in-depth or comprehensive causal analysis of interventions and their outcomes. Finally, we would produce forward-looking lessons and recommendations only in selected areas. The following paragraphs provide clarifications on these limitations.

We assess system-level effects of Bank Group agrifood system development interventions to a limited extent, and we do not assess long-term development impacts or the benefits to specific target groups. System-level effects—defined as those arising from jointly pursuing productivity, inclusion, and sustainability—were assessed to a limited extent. We do not assess long-term development impacts, economic growth and associated sector- or economywide effects, shared prosperity, or reduced hunger. We also do not analyze distributional issues, beneficiary effects, jobs, or income sources outside the agrifood system (such as in tourism and mining) or the benefits to specific target groups, such as youth, indigenous minorities, or people with disabilities. We partially assess gender-related issues in agrifood systems.

We do not assess whether Bank Group support for agrifood system development has reduced the productivity, inclusion, and sustainability gaps that client countries face. Only a few high-quality, comparable indicators that measure specific aspects of countries’ productivity, inclusion, and sustainability are available. These data (which are used for the relevance analysis) do not comprehensively document countries’ gaps in these three dimensions. We also could not quantify the Bank Group’s contributions to filling existing gaps because multiple factors influence macro-level outcomes on productivity, inclusion, and sustainability. The project-level data we used lack documented evidence attributing contributions toward closing these gaps. Therefore, the evaluation is limited to (i) determining whether Bank Group interventions have contributed positively to improving productivity, inclusion, and sustainability, especially in countries with the highest needs, and (ii) distilling contextualized success factors that could be adapted and replicated to scale up relevant and effective interventions and contribute to filling the existing gaps.

We address only environmental sustainability, on which there is evaluative data and evidence. Sustainability is a general concept that includes social, economic, and environmental dimensions (FAO 2018). This broad concept is encapsulated in the World Bank’s new vision for a sustainable food system of “healthy people, a healthy planet, and healthy economies” (World Bank 2020a) and in IFC’s definition of sustainability according to the IFC deep dive “Agribusiness—Mobilizing Private Sector Action to Address the Food Security Challenge with Sustainable, Inclusive Development,” presented to the Board of Executive Directors in 2017, which includes financial, environmental, and social sustainability. In its evaluability assessment, we determined it would not be possible to find rigorous evidence to adequately address financial and social sustainability. The relevance analysis focuses on where and how the Bank Group is addressing environmental sustainability (especially the threat of climate change). The effectiveness analysis concentrates narrowly on the uptake by farms and agribusiness firms of environmental sustainability standards (including sanitary and phytosanitary standards) and climate-smart practices (such as climate-smart agriculture) as intermediate outcomes.

We use a mixed methods approach derived from a range of data to generate evidence, success factors, and lessons. In the relevance analysis, we use multiple proxy indicators for each of the three outcomes to assess the alignment between the Bank Group portfolio and country-specific development challenges. We then review the Country Partnership Frameworks (CPFs) and Country Private Sector Diagnostics (CPSDs) and the Bank Group’s overarching vision and approach to agrifood system development. In the effectiveness analysis, we look at micro-level evidence (except in the case of MIGA) using portfolio review and analysis to assess the achievement of development outcomes. The portfolio review and analysis is enhanced through analysis of World Bank key performance indicators (KPIs) and of IFC environmental and social (E&S) Performance Standards. In the effectiveness analysis, we also use case studies of 17 operations (covering World Bank, IFC, and MIGA) to identify factors of effectiveness. Our relevance and effectiveness analyses benefited from (i) interviews with key Bank Group senior staff to assess the extent of internal collaboration and (ii) two structured literature reviews that were used to contextualize and interpret our findings. (See the methods overview in appendix A.) The relevance analysis and the case studies for the effectiveness analysis did not benefit from field missions; we conducted all consultations and interviews virtually because of the pandemic. Because of data constraints, our effectiveness analysis also does not consider countries’ transitions through different stages of agrifood system development as defined in the 2008 World Development Report (World Bank 2007).