Agricultural and Rural Economics

Agricultural and Rural Economics

Comparative Study of the Investment Situation in the Agricultural Sector in the World (with Emphasis on Iran)

Document Type : Scientific Paper

Authors
Koohsar Khaledi 1
Abolghasem Bagheri 2
1 Assistant Professor, Agricultural and Food Policy Research Group, Agricultural Planning, Economic and Rural Development Research Institute (APERDRI), Tehran, Iran
2 Assistant Professor, Department of Agriculture, Payame Noor University, Tehran, Iran.
10.30490/etr.2026.367572.1070
Abstract
Introduction: Excessive reliance on natural production resources (water and soil) in generating agricultural value added-i.e., resource-based rather than productivity-driven growth-has, over recent decades in Iran, weakened fundamental production resources, increased agriculture’s vulnerability to climatic conditions, destabilized agricultural value-added growth, and reduced the contribution of factor productivity to the sector’s economic expansion. Given the impossibility of expanding natural production resources (agricultural water and land), the necessity of preserving existing resources, the need to reduce agriculture’s sensitivity to climate variability, and the importance of enhancing factor productivity and moving toward sustainable agricultural growth, an effective and practical strategy is required. In light of these challenges and considering the documented impacts of capital on key agricultural macro-variables (Mirzaei, 2022; Khaledi, 2024; Nikandam Modabber et al., 2024; Zhoghipour & Gholizadeh, 2024; Bakari & El Weriemmi, 2022), the development of agricultural investment has increasingly been adopted as an influential policy approach worldwide. One distinguishing feature of the present study is its simultaneous examination of agricultural investment indicators across regions and countries. This approach not only provides a comparative picture of the level, growth, and share of agricultural investment at national and global scales, but also helps illustrate the implications of agricultural investment policies within Iran. Accordingly, the study aims—using the most recent international data for the period 2010–2023—to assess agricultural investment trends across world regions and selected countries, with a specific focus on Iran.
Materials and Methods: This study adopts a descriptive–analytical approach with the aim of comparing the status and trends of key agricultural investment indicators-including the level and growth of agricultural investment, the share of agricultural investment in total investment and agricultural value added, and the Agricultural Investment Orientation Index (IAOI)-across five world regions and selected countries (both developing and developed). The findings are presented in two separate sections: (1) a comparison of agricultural investment indicators across global regions, and (2) a comparison of these indicators among selected developing and developed countries. The data used in this study were obtained from the Food and Agriculture Organization of the United Nations (FAO).
Results and Discussion: Asia, with an annual average of USD 296 billion (2015 = 100), ranked first in agricultural investment and accounted for more than half of global agricultural investment (approximately 55 percent annually). Among the selected countries, China (USD 144.5 billion), the United States (about USD 61 billion), and India (USD 55.3 billion) recorded the highest annual averages. In contrast, agricultural investment in Iran amounted to about USD 4 billion per year. The highest Agricultural Investment Share (AIS) was observed in Africa, with an annual average of 7.3 percent. As expected, -given the structural differences in total investment between developed and developing economies—the AIS tends to be higher in developing countries than in advanced economies (Pakistan: 20.5%, Afghanistan: 12.6%, United States: 1.6%, United Kingdom: 1.5%). Iran’s annual average AIS during the same period (3.8%) exceeded the global average (2.8%) as well as the averages for Asia, the Americas, Europe, and Oceania. Nevertheless, agricultural investment in Iran remains misaligned with the sector’s strategic importance in the national economy. Asia and Oceania recorded the highest and lowest annual agricultural investment growth (AIG) rates—4.5% and 2.2%, respectively—between 2010 and 2023. During the study period, the global Share of Agricultural Investment in Agricultural Value Added (SAIVA) averaged about 16 percent. While Europe, Oceania, the Americas, and the world as a whole invested roughly one-third, one-fourth, one-fifth, and one-sixth of agricultural value added back into the sector each year, this ratio in Iran was less than one-tenth. Considering Africa’s lower level of economic and agricultural development, Iran’s relatively low SAIVA indicates a significant underinvestment in agricultural value creation. As expected, the Agricultural Investment Orientation Index (IAOI) in developed regions—Europe, the Americas, and Oceania-was close to or above one. Globally, the lowest and highest IAOI values in 2023 were recorded for Angola (0.04) and Luxembourg (9.8), respectively. Among the selected countries, Iraq (0.26) and the United Kingdom (2.69) reported the lowest and highest IAOI values during the study period. Comparatively, Iran’s IAOI (0.39) fell below the global average (0.65) as well as the averages for Asia (0.42) and Africa (0.48).
Conclusions: their global and regional benchmarks-alongside the relatively high capital depreciation rate in the sector, and considering the necessity of preserving agricultural production resources, mitigating the adverse effects of climate change, moving toward sustainable agricultural value-added growth, enhancing factor productivity, and shifting production processes toward more capital-intensive methods, it is essential that the government adopt a national program for strengthening agricultural investment in Iran. To this end, investment development in the agricultural sector should be prioritized by:
1)      reforming the terms of trade within the Iranian economy and restructuring the current monetary and financial system;
2)      designing and implementing a targeted agricultural investment acceleration program;
3)      utilizing modern financial instruments and mechanisms (such as crowdfunding, innovative financial tools, and Islamic finance methods);
4)      managing the supply and demand of financial resources;
5)      establishing an appropriate institutional framework within the Ministry of Agriculture Jihad (e.g., an Agricultural Investment Organization).
Keywords
Investment
Agriculture
Selected Countries
Iran.
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