Despite technological advances in agriculture and food production, a large proportion of the world’s population still suffers from food insecurity and malnutrition. In 2022, approximately 29.6% of the world’s population – equivalent to 2.4 billion individuals – experienced moderate to severe food insecurity. This represented an increase of 391 million people from 2019. Food insecurity and malnutrition significantly lower people’s physical development, cognitive development and learning, resulting in lower productivity as well as political and economic instability.

Many factors contribute to these challenges, including poverty, conflict, climate change and unequal distribution of resources, but they are also a consequence of the global food system’s reliance on monoculture, intensive farming practices, and industrial-scale production. Food systems have for too long been geared towards producing large quantities of cheap food, in turn generating high externalised environmental, social and health costs. Pressure on smallholder farmers to produce low-priced food and compete with cheap imports from the Global North creates unsustainable and unjust lock-ins.

Monoculture and industrial production systems have led to a loss of biodiversity as large-scale farming, focused on single crops, has undercut diverse ecosystems, reducing food systems’ resilience against environmental shocks and stresses. The current food system also contributes to climate change, with agriculture and livestock production accounting for a third of global greenhouse gas emissions. If we do not implement agroecological production practices, reduce food waste and start to eat healthier diets, the methane emissions from agricultural production alone will push increases in world temperatures above 1.5C. The industrialisation of food systems also erodes local food cultures and knowledge systems.

Women too bear an unequal share of the burden associated with food systems. For example, women in Africa produce around 70% of the continent’s food, but they face significant challenges in the agricultural sector, such as lack of land and profit ownership, limited access to finance, constrained decision-making power and restricted access to markets. At the same time, women are more affected by food insecurity than men in every region of the world, and climate change impacts them disproportionately.

Food prices do not currently reflect the environmental, social and climate impacts of food systems. The estimated market value of all the food consumed globally totals USD 9 trillion. However, food systems’ external costs to the environment and society total at least USD 10 trillion, according to the FAO’s State of Food and Agriculture 2023 report. This represents about 10% of global GDP. And including health care, these costs are as high as USD 19.9 trillion – comprising USD 7 trillion of costs to the environment, USD 11 trillion in terms of human life and USD 1 trillion in economic costs – according to a WWF study. These costs include the large and growing burden of hunger, malnutrition, lost productivity, ill health and environmental damage, which is largely borne by the public sector. Consequently, the price we pay for food covers only one third of its actual cost. And not included in these numbers are subsidies of about USD 385 billion, which result in harmful environmental outcomes. We urgently need to re-value common goods in our economic system.

In light of these challenges, it is clear that the current global food system is failing to meet the needs of people and the planet. Major global financial institutions also consider climate change, biodiversity loss, and income inequality material risks to investor portfolios. There is an urgent need for transformative and systemic change in our food systems, to promote more sustainable, equitable and resilient approaches to agriculture and food production and more prosperous local and national economies. It will not be enough to address some of these challenges in isolation, as they are all interconnected. We need a systemic approach that also addresses their root causes.

The modern science, practice and movements of agroecology and regenerative approaches, which draw from and build upon indigenous wisdom and expertise, offer significant opportunities to address these challenges. By strengthening food systems that increase food security and sovereignty, reduce biodiversity loss, and enhance our ability to manage the impacts of climate change, we can improve the health and well-being of people and the planet and offer future-proofed investment opportunities for funders.

Agroecology /ˌæɡ.roʊ.iˈkɑː.lə.dʒi/

Agroecology is a comprehensive and integrated framework and practice that factors in ecological and social principles and concepts when designing and managing sustainable food and agricultural systems. In addition to addressing the need for socially equitable food systems that give people choice over what they eat and how and where it is produced, agroecology aims to maximise interactions between plants, animals, humans and the environment. Agroecology as a concept has developed over the past few decades, moving away from a focus on fields and farms to include the entirety of agriculture and food systems. It is simultaneously a science, a body of practices and a social movement. It is now a transdisciplinary field that covers all aspects of food systems, from production to consumption, including their ecological, sociocultural, technological, economic and political dimensions.

Agroecology has various definitions, which also differ by geographic location. However, in 2019 the High Level Panel of Experts on Food Security and Nutrition (HLPE-FSN) published the 13 principles of agroecology. These complement and align with the 10 elements of agroecology, which were approved by 197 countries during a multi-stakeholder process organised by the Food and Agriculture Organization of the United Nations (FAO) to guide its strategy on agroecology. The main difference between the two frameworks is that the 13 principles include explicit references to soil and animal health, and that they distinguish between biodiversity and economic diversification.

The 13 principles of agroecology 

FAO Agroecology Knowledge Hub

Further definitions of agroecology

The Global Alliance for the Future of Food: evidence & FAQs on agroecology

Comparison of organic agriculture, regenerative agriculture and agroecology

Associated concepts

In light of the interconnected crises facing today’s global and regional food systems, ‘business as usual’ will no longer work. Agroecological enterprises – such as entrepreneurial farms and cooperatives, food processing companies, input providers and marketing initiatives – offer a vital alternative to the status quo. They have a key role to play in supporting the agroecological transformation towards resilient, equitable and healthy food systems, in which food is produced, processed and consumed in harmony with people and nature.

However, our financial system, as it is currently set up, represents further obstacle to this transformation. Agroecological enterprises are often overlooked by financiers that focus on conventional agricultural models. And lack of access to suitable finance prevents them from growing and scaling.

We created this agroecology investment guide to synthesise key evidence about agroecological enterprises’ social and environmental impact in emerging economies, to showcase interesting funding models and to present new ways of thinking about financing AEEs’ holistic approaches.

As the world continues to change, interdependent environmental and social considerations must be factored into investment decision-making. We must act fast to fundamentally change how we approach agriculture and food systems – before it is either too late or mandatory regulations force us to. Investing in agroecological enterprises represents an opportunity for financiers to support the shift towards sustainable, resilient and just food systems, while still making profits.

Rex Raimond, Director, Transformational Investing in Food Systems (TIFS)

Purpose of this investment guide

Who is this guide for?

This guide was developed for donors and international financial institutions, impact investors, fund managers and asset managers, and serves them in the following ways.

The guide focuses on evidence mainly from emerging economies. Due to Biovision’s and our partners’ focus on Africa, examples we showcase often stem from this region.

Furthermore, this resource references evidence and literature that specifically focuses on agroecological enterprises, as well as on challenges and barriers that AEEs share with many small and medium-sized agribusinesses more generally. Where relevant, lessons and conclusions from other frameworks, such as regenerative agriculture or the circular economy, are considered.