In countries such as Myanmar, there is tremendous opportunity to empower smallholder farmers through mobile technology. Photo: Reuters
Business Times (Op-ed by Vivek Pathak)
The World Bank predicts that food demand is projected to rise by at least 20 per cent globally over the next 15 years, with the largest increases anticipated in sub-Saharan Africa and Asia, driven by population and income growth, a burgeoning middle class and rapid urbanisation. To achieve food security and agriculture-related sustainable development goals (SDGs) by 2030, the pace of investment must more than double in developing countries, and the investment needed to achieve this from 2015-2030 is US$480 billion every year. Addressing such ambitious SDGs requires the government and the private sector to align, coordinate and target their investments towards a shared goal of sustainable and inclusive growth.
Asia also needs to leverage research and encourage the continued convergence of new scalable technologies and innovations in the agribusiness sector, such as mobile tools, data analytics, blockchain, genetics, robotics, novel farming systems, traceability and renewable energy. Innovation across the entire value chain is crucial to managing challenges and transforming the agricultural sector in emerging Asia.
For example, in the animal protein sector, my organization, the International Finance Corporation (IFC), has invested considerable resources in advisory services to improve food safety in the value chain and to ensure resource efficiency through a more efficient use of water and power, including the use of alternate energy sources such as solar and biogas. Our equity and debt instruments are supporting the improved operational performance of primarily the pig and poultry industries, through investments in improved nutrition and superior genetics.
As the Asia-Pacific hub for trade in agricultural commodities, Singapore already contributes to more than 20 per cent of global commodity flows, so its private sector can be critical in finding new solutions to unlock the door for farmers to improve their livelihoods in a sustainable manner.
Development partners can work with companies in Singapore to significantly lower risks, help unlock new markets and enable integration into regional and global value chains. With IFC's support, Singapore-based agricommodity trader Agrocorp is expanding new pulse and rice processing facilities in India and Bangladesh, which are expected to help boost the overall efficiency of the industry, improve food security and hundreds of farmer livelihoods.
In neighbouring countries such as Myanmar, where agriculture is the primary source of livelihood, and where mobile penetration is around 90 per cent, there is tremendous opportunity to empower smallholder farmers through mobile technology. Leading agribusinesses such as the Myanmar Awba Group are using data analytics and algorithms to develop mobile technology platforms for farmers which will provide real-time advisory services, to help farmers mitigate risk and increase productivity.
Last year, IFC supported Myanmar Awba Group through a convertible loan to build a modern crop chemicals processing facility to support the improvement in productivity of Myanmar farmers and create much-needed jobs along the agricultural value chain. By focusing on improving Myanmar's agricultural competitiveness, we hope to create potential markets for its agricultural products through exports and serve its growing domestic market in an efficient manner.
Multilateral organisations and development partners can help the private sector diversify their portfolios by creating markets in competitive frontier countries such as Myanmar, where agribusinesses can be profitable while at the same time create tremendous opportunities for promoting inclusive and sustainable economic growth.
They can enhance the value of these companies by helping them tap new markets, allocate their resources more efficiently, gain access to new resources, skills and the building of their brand. In turn, other countries in the region and across the globe also stand to benefit from access to capital, the introduction of new products, increased employment and better environmental, social and governance standards. In 2015 alone, our investments helped our clients reach some 3.5 million farmers.
One exciting initiative in this space is the Global Agriculture and Food Security Programme or GAFSP. GAFSP is a multilateral mechanism designed to assist in the implementation of pledges made by the G-20 governments to help the world's poorest countries reduce poverty and improve food security. The programme's Public Sector Window (US$1.2 billion) provides critical grant funding to support country-led efforts to boost agricultural sectors.
The GAFSP Private Sector Window - totalling US$356 million in funding - is managed by IFC. It provides investment and advisory services to private-sector companies in agribusiness and financial institutions. The results - in terms of financial support and impact - have been phenomenal. As at September last year, 36 GAFSP projects have been approved for a total amount of US$186 million in 21 countries.
Developing new business models that provide more access to finance and allow the private sector to collaborate with smallholder farmers is important. Equally important is for governments to be part of the solution, as they have the greatest reach to smallholders. Governments must effectively collaborate with businesses and multilaterals to innovate and improve sustainable food production. They should incentivize producers to convert to sustainable growing practices through tax incentives and reform, and should continue to reduce trade and tariff restrictions on commodities in the region.
More importantly, establishing open and transparent agricultural trade policies can continue to facilitate cross-border agricultural trade, improve private-sector investment and innovation and help farmers thrive in the region.
Finally, to enable smallholder farmers be more competitive and successful, governments should encourage them to adopt collective risk-management strategies, or provide crop insurance and other social protection measures to address market failures.
The past decade has seen much progress and has proven that the public and private sectors can work together. To realise agriculture's potential at a critical time in developing Asia, we must now work smarter, continuously innovating and improving the partnership structures that have brought us to where we are today.
Such a transformation will also require greater political, policy and financing commitments from across the public and private sectors. I'm confident that by embracing new technologies and unlocking the potential of the private sector for growth, Asia will be on a much stronger footing to successfully continue to improve the lives of millions of people. IFC looks forward to working with its governmental partners in Singapore, including International Enterprise Singapore and the Economic Development Board, the vibrant private sector and other neighbouring Asian countries to take the next steps, delivering the scale of investment, innovation, technological development and job creation required to ensure the sustained growth that the world needs.
The writer is director for East Asia and Pacific at International Finance Corporation, a member of the World Bank Group.
“This was first published in The Business Times on 12 Oct 2017.”