The Bank Group has been broadly relevant in responding to countries’ agrifood system development needs, but gaps remain in scaling up and better targeting support. Bank Group interventions supporting agrifood system development reached many countries that needed this support, including to increase agricultural productivity, improve social inclusion, and mitigate and adapt to climate change. However, support to increase access to agricultural finance, improve the enabling business environment, and enhance food safety standards did not reach many countries with relevant needs. Although the targeting of countries with relevant interventions works quite well overall, it could be improved. In fact, while the intensity of Bank Group support (the number of interventions per country) for enhancing food safety standards, social inclusion, and climate mitigation is commensurate with need, the intensity of Bank Group support to increase agricultural productivity, enhance access to agricultural finance, and improve the enabling business environment is not. In addition, only about two-thirds of countries with multiple constraints on agrifood system development received an appropriate mix of interventions.

The World Bank has generally been effective in supporting agrifood system development, but significant gaps remain in Western and Central Africa and in rainfed areas, and some gaps remain in countries at the traditional stage of development. Increasing adoption of more sustainable and climate-resilient practices also continues to be a challenge. The World Bank has been largely successful in supporting productivity gains in food crops (mostly major cereals) and livestock (for example, poultry and dairy). However, effectiveness of interventions remains low in Western and Central Africa and in high-risk rainfed areas with inadequate market access, which also have high levels of rural poverty and are affected most by climate change. In addition to project design and implementation issues, factors that undermined effectiveness include ineffective extension and service delivery systems, weak producer groups and implementing capacity, weak market infrastructure and underdeveloped supply chains, weak midstream value-adding sectors, and high risks resulting from climatic shocks or conflict. The World Bank’s inclusion investments have facilitated market access and smallholder farmer and SME participation, but challenges remain in countries at the traditional stage (including LICs and LMICs). Sustainability investments that promote climate-smart practices and regulatory standards have led to improved environmental sustainability, but hurdles remain in fostering maintenance and building on successful pilots.

IFC agribusiness investments contributed to market integration and increased productivity, but achieving inclusion objectives and meeting IFC’s E&S requirements was challenging. IFC’s investments enhanced market integration and productivity, even in LICs. However, IFC’s inclusive business investments—that is, investments that target the poorest people—face challenges in integrating smallholder farmers and SMEs into value chains. IFC’s investments also face challenges in implementing IFC E&S Performance Standards, especially in LICs and in traditional-stage countries, where only 25 percent of investments met the E&S requirements.

MIGA’s agrifood system portfolio of 21 guarantee projects has a strong focus on LICs (41 percent), the relative highest share of any Bank Group institution. Regionally, MIGA’s presence was strong in Sub-Saharan Africa. The effectiveness of MIGA’s interventions could not be evaluated, however, because of their small number.

Where market constraints affect productivity growth, agrifood system support that combined efforts to lift the productivity of agricultural production with efforts to improve markets access were most successful. Interventions that aimed at increasing the productivity of primary production (such as improvements to technology, inputs, and irrigation) helped close yield gaps. Complementary efforts to strengthen market access and value chains linking smallholder farmers with midstream firms (such as processors) ensured that the surplus generated through the increase in primary production could also be sold to the market at fair prices. This mix of supply- and demand-side interventions was particularly effective in countries at the traditional stage of agrifood system development where market access constrains productivity growth. However, ensuring such complementarity has been challenging in nascent markets, including in FCS, which require sustained and incremental support, including through sequenced operations and collaboration with relevant partners.

The World Bank’s productivity-enhancing investments are insufficiently diversified toward high-value, nutrient-rich food products that offer multiple benefits. Although Bank Group interventions to increase agricultural productivity reached many countries, the World Bank’s productivity-enhancing investments are insufficiently diversified beyond major staples and livestock toward high-value and nutrient-rich products in high demand. Diversification of food production, where feasible, toward high-value and more nutritious food products (for example, fruit trees, vegetables, and food legumes) using more resource-efficient (for example, conserving land and water) and climate-smart agricultural practices can offer multiple benefits to smallholder farmers and SMEs. Increased availability of undersupplied nutritious food can also benefit urban and rural poor people. Complementary public and private sector investments in market infrastructure, including collection points, cold storage, transport, and digital solutions to improve service delivery and adoption of sustainability standards, help increase market access and diversification to high-value, perishable food products.

The Bank Group has made significant efforts to strengthen internal coordination, but collaboration remains largely informal and bilateral. Although the Agribusiness Sector Working Group has contributed to improved internal alignment, collaboration is largely informal and bilateral (World Bank with IFC and IFC with MIGA), and it is hard to identify and assess joint Bank Group projects.

In conclusion, the current Bank Group approach to agrifood system development can be strengthened to address the continuing challenges that agrifood systems are facing and to fully support the Bank Group’s vision for sustainable agrifood systems. The Bank Group and its partners can enhance the focus of their interventions on increasing productivity, inclusion, and sustainability, especially in LICs, countries at a traditional stage of agrifood system development, and countries in FCS. Such interventions are expected to address the enormous climate and other challenges that agrifood systems continue to face and facilitate transformation while ensuring that agrifood system approaches safeguard the environment and support improvements in people’s nutrition and health. This, in turn, will contribute to ending hunger and improving the well-being of all. In light of this, we offer three recommendations.

Recommendations

Recommendation 1. To enhance its effectiveness in developing agrifood systems, the Bank Group’s efforts to support production technologies should be complemented by efforts to improve market access, especially in LICs and in countries at the traditional stage of agrifood system development. These complementarities can be pursued by enhancing synergies in Bank Group interventions or with partners. Pairing production with access to market support helps address the fragmentation of production activities and the insufficient market integration of various actors in agrifood systems. Production support entails strengthening research, extension, and input delivery systems to increase the adoption and adaptation of specific technologies, innovations (including digital solutions), and sustainable practices. Access to market support entails identifying buyers, developing the needed market infrastructure (for example, logistics and cold chains), and facilitating links between smallholder farmers and SMEs with potential buyers. Improving links, in turn, requires deepening support to agricultural producer groups and SMEs to enhance their capacity and business skills. Over time, this will help them adopt sustainability standards and potentially establish partnerships with larger private sector value chain actors—lead firms that have successful records in integrating small actors into value chains. Access to finance and support to improve the enabling environment to attract private investment at various stages of the value chain is critical to improve both production and access to markets. Supporting complementary interventions is particularly important in LICs and in countries at the traditional stage of agrifood system development, which often lack infrastructure for farmers and SMEs to access markets in urban areas. Complementarity can be achieved through synergies across the Bank Group using parallel or sequenced interventions, through partnerships with other donor agencies, or through client actions, and these expectations should be clarified in project documents.

Recommendation 2. To achieve more sustainable agrifood systems, where conditions permit, the Bank Group should support production diversification to meet the growing demand for undersupplied, high-value-added nutritious products while ensuring that smallholder farmers and SMEs benefit from the diversification. Although the World Bank should retain its support for staple crops and livestock that meet domestic needs, it should also seize opportunities to help smallholders and SMEs benefit from more sustainable agrifood systems by supporting increased production and marketing of higher-value nutritious products, such as fruits, vegetables, grain legumes, oil crops, small ruminants, dairy, fish, and poultry, where conditions permit. Higher-value products can have income-enhancing effects for smallholders and SMEs if constraints to entry are overcome; resource-efficient (for example, using less water and land) and diversified production can enhance climate resilience and sustainability; and highly nutritious products will also provide benefits to the overall household well-being. Successful production and marketing of higher-value products will require attention to (i) agricultural finance, so that farms and firms can invest in adequate technologies and processes; (ii) food safety standards to access competitive markets; (iii) capacity building; (iv) market infrastructure; and (v) aggregation and wholesale activities. These factors are particularly important for smallholder farmers and SMEs. Blended finance, including that provided by the Global Agriculture and Food Security Program, has been particularly effective at improving market access by helping smallholders in low-income and fragile contexts link with buyers and private sector investment. Illustrative examples of relevant diversification efforts that have benefited smallholders and SMEs include initiatives for diversifying cereal-based systems in Asia and efforts to increase access to small-scale irrigation and climate-smart agriculture in Africa, which allow smallholder farmers to integrate fruit trees and vegetables into their production activities. Similarly, IFC and MIGA could build on their successful experiences in the dairy, beef, and poultry sectors in Eastern and Southern Africa, where they provided access to finance paired with complementary investments in logistics infrastructure, capacity building, and marketing.

Recommendation 3. To enhance the contribution of IFC support for agrifood system development, IFC should pilot and adopt more effective ways to support clients to better meet E&S Performance Standards, especially in LICs. Progress in improving E&S performance was apparent when clients possessed the capacity and commitment to address E&S issues or when IFC was able to strengthen their capacity and commitment through loan covenants, tailored IFC advisory services, or blended finance. Improving the E&S performance of clients in LICs will require assistance to help them address recurring challenges (such as in wastewater management and occupational health and safety) and to support the implementation of E&S action plans and the Bank Group Environmental, Health, and Safety Guidelines.