The International Finance Corporation , the World Bank’s private sector arm, will boost lending to agribusiness by up to 30 per cent in the next three years, as it promotes the role of the private sector in the fight against hunger.

The move comes as the IFC reports today that it lent agribusiness a record $2bn in its 2009 fiscal year, which ended in June 30, up from $400m five years ago. It said the huge increase in lending was a response to “the global food price hike.”

World leaders meeting at last month’s Group of Eight summit of rich countries in L’Aquila, Italy, agreed to put an “emphasis on private sector growth” to tackle global hunger.

“We support public-private partnerships, with adequate emphasis on the development of infrastructure, aimed at increasing resources for agriculture and improving investment effectiveness,” the G8 said as leaders pleaded for $20bn for farm investment over the next three years.

Oscar Chemerinski, IFC director of global agribusiness, said that the 2007-08 food crisis had heightened food security concerns and said the IFC planned to increase lending to agribusiness by up to $2.4bn in its 2010 fiscal year.

“We aim for a 20-30 per cent increase in lending over the next three years on a global basis,” he told the Financial Times in an interview, adding that there was “an increased recognition of the role of the private sector” in fighting malnourishment.

Mr Chemerinski said the IFC wanted to increase global agriculture production by helping the private sector to achieve higher yields and improved productivity with investment focusing on high yielding seeds, irrigation projects, fertiliser factories or bringing fallow land into production. “Ideally, long-term investing in agribusiness would made food aid redundant over the long term,” he said.

The US and Japan, the world’s two largest food aid donors, have signalled a shift in focus from providing emergency aid to one of long-term investment in farming, although they have nonetheless promised to continue funding food aid.

Mr Chemerinski warned that the drive to raise food output needed to take into “account environmental and social issues, such as climate change, overuse of pesticides and scarce water resources.” Half of the IFC’s agribusiness projects in the 2009 fiscal year were in low-income countries, he said.

The number of chronically hungry people has surged above 1bn this year as the impact of the crisis compounds the effect of high food prices, according to the United Nations’ Food and Agriculture Organisation. The Rome-based FAO has called a World Food Summit in November to discuss “the total eradication of hunger from the world by 2025”.

Copyright The Financial Times Limited 2009