Rural Agricultural Finance and Food Security

World hunger is increasing. The Food and Agriculture Organization (FAO) estimates that the number of hungry people topped one billion in 2009. While several factors are responsible for this increase, high domestic food prices, lower household incomes, and increasing unemployment have significantly reduced access to food by the poor. The recent food crisis and depletion of global reserves has led to increased awareness of, and greater emphasis on, household food security. Research has shown that a healthy agricultural sector has the potential to provide an economic buffer in the form of needed employment during economic crises. Furthermore, if due attention is paid to the non-farm sector in conjunction with the agricultural sector, this can provide a pathway for people to move out of poverty and food insecurity [1].

In the mid-1990s, the International Food Policy Research Institute (IFPRI) made a strong case for the connections between rural finance and food security [2]. The study found that financial services that respond to the food security needs of rural households can lead to more successful outreach and have a greater impact on the poor [3].
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