Only 4% of agricultural innovation spending in India has environment & social sustainability objectives

New Delhi:  With India expected to be home to an estimated 1.6 billion people by 2050, the country will need to almost double its food production keeping in mind both the growing population and the demand for higher quality food. This will be a key challenge since agriculture is already a major driver of water scarcity, biodiversity loss, and carbon emissions in India. Unless agriculture production methods change substantially with a greater emphasis on sustainable agriculture intensification (in terms of environmental impact, human & social impacts), India will not be able to meet its food goals without severe damage to its environment.  

This will require significant investments in sustainable agriculture systems in India and an urgent switch to more sustainable practices that are good for the environment, good for farming communities, and good for end-users in terms of nutritional outcomes. Budgetary outlays are a good leading indicator of things to come and presently, only about 4% of India’s agricultural innovation spending has clearly defined sustainability intentions and goals according to a new innovation investment study by consulting firm Dalberg Advisors in partnership with the Commission on Sustainable Agriculture Intensification (CoSAI).  

To our knowledge, this is is the most comprehensive study and perhaps the first attempt so far in understanding current patterns of funding in innovation in agriculture for the Global South, including estimating how much of this investment promotes SAI. The report deep dives into funding by the public and private sector, philanthropic and development donors, as well as venture capitalists and private equity players across the last decade (2010-2019) for the Global South. It provides evidence for shortfalls in funding for sustainable agriculture in the world. It  is particularly relevant for India and South Asia as a large fraction of the global population resides here with severe nutritional gaps as well as large environmental challenges.  

Some India specific findings of the innovation investment study include: 

1. India spends over USD 3 billion annually (~USD 25 billion for the period 2010-2018) on agricultural innovation, including investments by the government, development partners, private sector, and PE/VC firms. While this is substantial, the per capita spending on agricultural innovation here is less than USD 2.5 per person per year.  

2. Furthermore, only about 4-5% on this funding, has clearly defined sustainability outcomes (measured as a combination of environmental, social, human outcomes) and is estimated to be ~USD 120 million annually or about 10 cents per person per year. Most of this is driven by the Government.  

3. About 75% of the overall USD 3 billion in funding comes from National Government sources with more than 50% of this funding coming from the central Ministry of Agriculture & Farmers’ Welfare. The state governments and other ministries contribute the other 50%.  

4. Almost all public investment is directed to research institutes (50%) or government agencies (50%). 

5. Institutional investors contribute about USD 500-600 million annually and OECD bilateral/multilateral investors about USD 60 million annual for agriculture innovation targeting adoption. 

6. Areas that are underinvested for sustainable agriculture intensification include Natural Resource Management (soil health, sustainable water, biodiversity) as well as investments in knowledge management and financing for sustainable agriculture. 

Nirat Bhatnagar, Partner, Dalberg Advisors says, “Keeping in mind the environmental challenges of growing more food in India, substantially more innovation investments for sustainable agriculture are needed. Mandating frequent reporting of sustainable agriculture investments by different actors in a format that is transparent, consistent, and verifiable would be a first step towards ensuring we meet our climate and food security goals in parallel.” 

In addition to the India findings, the globally relevant results of the innovation investment study find: 

1. About USD 60 billion is spent for agricultural innovation in the Global South. This represents approximately 4.5% of the agricultural output for these countries. 

2. Out of this USD 60 billion, only about 7%, or about USD 4 billion has explicitly defined sustainability objectives (in terms of environmental, social, and human outcomes).  

3. National governments of the Global South are the largest contributor to agricultural innovation, contributing around 60–70% of total spending on agricultural innovations. China’s investment accounts for about half of the total investment from national governments. 

4. The private sector invests around USD 13 billion annually on agricultural innovation for the Global South (20–25% of the global total) with about half spent on developing crop inputs like seeds, pesticides, and farm machinery. 

Dr. P.V. Vara Prasad, CoSAI Commissioner, University Distinguished Professor and Director of the Feed the Future Innovation Lab for Collaborative Research on Sustainable Intensification at Kansas State University, USA, writes: “The investment balance must change if we are to successfully tackle the key global challenges of food security, malnutrition, and climate action as well as address the Sustainable Development Goals (SDGs) by 2030. In a world that is rapidly undergoing climate change, investments in innovation that fail to take environmental impacts into consideration will not change the trajectory of agriculture rapidly enough to meet sustainability and climate targets.” 

Download full report-Funding Agricultural Innovation for the Global South: Does it Promote Sustainable Agricultural Intensification? here.

Download India data-Case study: India’s investment in innovation for sustainable agricultural intensification here.