In 2012, nearly 870 million people worldwide suffered from chronic undernourishment. While cereal yields in developed countries average 5.1 tons per hectare, average yields in Africa are only 1.2 tons per hectare. To keep pace with the growing needs of the developed and developing world, creative solutions are needed to spur sustainable markets than can help close the yield gap.
In order to produce enough food to feed the world in 2050, developing countries need an annual $83 billion agriculture investment. Yet, in many developing countries, markets for agricultural inputs, products, and services are underdeveloped or non-existent, limiting private investment and slowing technological innovation.
Private sector agricultural research in developing countries accounts for only two percent of global spending on agricultural research and development. As a result, publicly funded research and extension services can neither meet the investment gap nor address all the market failures impeding sustainable markets in developing countries. In this landscape, there is an emerging consensus in favor of testing “pull mechanisms” that use public financing to incent agricultural innovation and build inclusive markets for agricultural goods and services that benefit smallholder farmers.
At the June 2010 G20 meeting, G20 leaders submitted the Toronto Summit Declaration, which called for the development of “innovative, results-based mechanisms […] to harness the creativity and resources of the private sector in achieving breakthrough innovations in food security and agriculture development in poor countries.” Later that year at the Seoul Development Consensus for Shared Growth, G20 leaders requested that international organizations “examine and recommend potential innovative results-based mechanisms […] for enhanced agricultural productivity.”
The concept of “pull mechanisms” for agriculture received its first explicit reference in the November 2011 Report of the G20 Development Working Group when G20 representatives stated that “to encourage public and private sector investment in agricultural research in developing countries, we support the implementation of the ‘Agriculture Pull Mechanisms’ initiative, and welcome pilots that embrace an innovative, results-based approach.” In Innovation with Impact, a report commissioned by the G20, Bill Gates stated, “I believe this concept of pull mechanisms has real promise in the agricultural sector.”
In response to these calls, a group of countries including Australia, Canada, the United Kingdom, and the United States, in partnership with the Bill and Melinda Gates Foundation, created AgResults, a $118 million multilateral initiative incentivizing and rewarding high-impact agricultural innovations.
AgResults incentivizes private sector innovation in the field of smallholder agriculture through prizes that promote the uptake of innovative technologies. These prizes are awarded to the private sector based on the achievement of pre-defined results and are intended to overcome existing markets failures that impede the development of sustainable commercial markets for such technologies. By enabling the private sector to promote new technologies, significant development outcomes can be achieved in heightened food security, increased smallholder incomes and improved health and nutrition.