Chile to Improve Food Security by Strengthening Agricultural Services

The Inter-American Development Bank (IDB) has approved a $50 million loan to strengthen Chile's public agricultural sector and boost food security in the country. The operation will help increase the effectiveness of the pest and disease control and prevention programs run by the Agriculture and Livestock Service and protect plant and animal health in the country.

The financing will strengthen the Agricultural Development Institute (INDAP)'s capacity to support family, small-scale and indigenous agriculture. It will also enhance the role of the Ministry of Agriculture (MINAGRI) in disaster risk management for agriculture by improving governance, information systems and control tools.

The loan will benefit an estimated 300,000 farming households, including 162,000 producers served by the INDAP.

Moderate or severe food insecurity is estimated to affect approximately 17.4% of Chile’s total population. This rate is significantly below the average for Latin America and the Caribbean, but it has increased substantially in the last decade, and today over three million Chileans face food insecurity.

The loan, which has been approved by the IDB's Board of Executive Directors, will also make it possible to update the Institute's program offerings, design sustainable agricultural development plans for INDAP's beneficiaries, modernize the extension model with the support of digital tools, and implement a model for monitoring and evaluating the digitalization of internal processes. The project strategy will include a gender focus to promote economic empowerment of INDAP's female beneficiaries.

Additionally, the project expects to help the Agriculture and Livestock Service prevent and control pests and diseases more efficiently by incorporating new technologies and control systems. These measures include creating a plant and animal health intelligence center and an early warning system for plant health emergencies in order to manage risks effectively.

To enhance cross-cutting agricultural risk management services, the project seeks to bolster the regulatory framework and develop the policy instruments needed for efficient disaster risk management in the sector. Among other measures, the project will implement an information system to support decisions about disaster risk management, as well as expand the coverage of the National Agro-Meteorological Network.

For family, small-scale and indigenous farmers—who are the most vulnerable segment of Chile’s population—access to food is linked to their levels of agricultural productivity. Productivity increases are limited by factors like low adoption of efficient technologies and practices, scant participation in farmers’ associations or lack of access to credit. As a result, per-capita income in this segment has grown at a slower rate than in the rest of the economy, and 79% of farmers are in the bottom 50% of Chile’s household income distribution. In addition, Chile's large size, the length of its land borders and its high volume of agricultural trade all increase the risk of introducing diseases and pests, some of which are favored by rising temperatures and climate change.

The IDB loan has a 25-year repayment term, a 5.5-year grace period and an interest rate based on the Secured Overnight Financing Rate (SOFR).