Agrifood system development increases productivity, inclusion, sustainability, and nutrition, in turn contributing to reducing hunger and poverty and to improving shared prosperity. The agrifood system comprises the actors engaged in agriculture and the related food industry and services, the activities they perform, and the enabling environment (policies, standards, and investments) that shapes its dynamic development. In low-income countries (LICs), the agrifood system accounts for more than 30 percent of gross domestic product and about 70 percent of all jobs; in middle-income countries, it accounts for more than 15 percent of gross domestic product and about 30 percent of all jobs.

Agrifood systems face several challenges that put inclusive growth and sustainable development at risk. Weak market links, fragmentation of production, and insufficient market integration of various actors contribute to low productivity and lead to low incomes and precarious living conditions for smallholders and small producers, especially in LICs. LICs’ high reliance on production of low-value commodities for local markets also limits their potential to respond to the growing global demand for higher-value products (for example, fruits and vegetables). Current agrifood systems also face the challenge of—and contribute to—climate change: the agrifood sector is responsible for more than one-quarter of global greenhouse gas emissions, accounts for 70 percent of all water use, and is a major source of biodiversity loss and environmental degradation. Yet climate change is projected to cut agricultural production, especially in the most food-insecure regions (Jägermeyr, Müller, and Ruane 2021; World Bank 2010). The convergence of climate change, the coronavirus pandemic, and conflict exacerbate the challenges that agrifood systems are facing.