Investing in small scale farmers and rural entrepreneurs is a compelling business case and a geostrategic imperative
At the World Economic Forum Alvaro Lario, president of the International Fund for Agricultural Development and Sabrina Dhowre Elba, IFAD goodwill ambassador, will deliver a powerful message to global leaders and business executives: investing in small-scale farmers and rural entrepreneurs at the first mile of food value chains is a crucial strategic and economic opportunity – one that can drive greater prosperity, resilience, and global stability.
“Investing in small-scale food producers and rural entrepreneurs is a triple win: it drives economic growth and jobs, unlocks business opportunities, and strengthens stability. For governments, investors and businesses alike, resilient rural economies are not only a development priority. They are a geostrategic imperative for stable global food value chains in an era of rising climate, environmental and geopolitical volatility,” said Lario.
Producing one third of the world’s food, small-scale farmers are critical actors in the global food ecosystem. Failing to support their climate resilience and productivity can not only compromise local livelihoods and rural development, but also risk destabilizing global commodity markets, driving up food prices and import bills for food-deficit countries, and exacerbating social instability.
“We must move faster to use public and concessional finance to mobilise private capital, and to scale innovative solutions that crowd in investment to rural economies. Partnering with the private sector is not optional. It is a catalyst for sustainable and inclusive growth, resilience and long-term development,” said Lario.
At WEF, IFAD president will outline how de-risking solutions such as investment platforms, guarantee instruments, impact funds with first-tranche losses can drive private sector investments to rural economies.
Transforming food systems offers massive economic potential, with business opportunities worth up to US$4.5tn a year by 2030. In a context of growing global demand for food, in Africa alone, the food and beverage markets are expected to reach US$ 1tn by 2030.
In addition, investing in the rural economies leads to higher food production, stronger food value chains, higher incomes for farmers, new employment opportunities, and overall economic growth.
IFAD experience shows that investments deliver strong economic outcomes — across a sample of IFAD-financed projects, participants saw incomes rise by 34%, while production and market access increased by 35%. Between 2022-2024, nearly 390,000 jobs were created through IFAD invested projects.
Lastly, by tackling the root causes of instability, such as poverty, vulnerability to climate shocks, and social exclusion, investment in small-scale farming strengthens global security. Such investments help reduce conflicts, foster the conditions for lasting stability and provide viable alternatives to migration.
Evidence from IFAD’s work illustrates this clearly: in Ethiopia, IFAD research found that increases in land productivity linked to IFAD projects were associated with significant reduction in conflict. In Mali, areas where IFAD invested experienced an 8% decline in conflict.
Small-scale farmers and rural entrepreneurs form the backbone of both local and global food systems. Yet, too often these farmers remain trapped in subsistence farming and live in poverty. They are under-invested with official development assistance hovering at just US$10bn annually in recent years – far below what is required – and projected to decrease in 2025. At the same time, rural SMEs, despite their significant capacity to generate employment, remain largely underserved by financial institutions.