Climate-smart rice production is an untapped investment opportunity, says environment body

28 Nov 2019 --- Leveraging finance to scale climate-smart rice production is the cornerstone of global food security and is urgently needed to avert civil unrest, a new report by Earth Security Group (ESG) has found. This research stresses that rice is a “largely overlooked” investment opportunity, with a “radical overhaul” needed in Asia and Africa. ESG’s findings are being presented to an audience of policymakers at the upcoming 2019 United Nations Framework Convention on Climate Change (COP 25) in Madrid, Spain.

“We are catalyzing the development of a 'rice bond' with leading agribusinesses, banks and donor funders. In addition, we are set to engage investors in early 2020 to promote the uptake of the recommendations more widely among the impact investing and climate finance communities. We are also working with UN entities on climate-smart agriculture policies and investment to develop practical pathways for public-private collaboration,” Alejandro Litovsky, CEO of ESG tells FoodIngredientsFirst.

Click to Enlarge 2020 is a key year for the growth of green bonds in the agriculture sector, notes Climate Bonds Initiative.Proposing three innovative finance solutions to support sustainable rice production in line with the Paris Agreement climate targets, Financing Sustainable Rice for a Secure Future has been published with the support of the UN Capital Development Fund (UNCDF), the Sustainable Rice Platform (SRP), the leading food and agribusiness company Phoenix, the World Business Council for Sustainable Development (WBCSD) and the Swiss Agency for Development and Cooperation (SDC).

“The failure of global food systems due to climate change is one of the biggest security challenges we face. A radical overhaul of existing rice production systems is needed in Asia – the epicentre of global rice production and consumption – as well as Africa, which is now also increasingly dependent on rice imports to ensure food security. Our report is a call to action for global impact investors to put ‘climate-smart’ rice farming practices at the center of their impact investment strategies and for governments to use climate finance to attract private investment towards more resilient agriculture systems,” asserts Litovsky.

The rice bond that lies at the core of ESG’s policy suggestions will finance sustainable rice value chains taking advantage of 2020 being a key year for the growth of green bonds in the agriculture sector, as highlighted by investor-focused global non-profit Climate Bonds Initiative. A rice bond would enable a global rice processor, trader, or retailer to provide farmers with capital to transition to sustainable production, improve farming practices, increase yields and revenue, and become more resilient to climate risks.

Click to EnlargeRice has been largely overlooked as an investment opportunity, stresses Sustainable Rice Platform.“Rice is critical to global food security. However, it has been largely overlooked as an investment opportunity. SRP’s tools, metrics and guidance can help governments and supply chain actors drive adoption of proven climate-smart best practices. Through our partnership with ESG, we are developing innovative financial mechanisms that will catalyze wide-scale adoption among the world’s 144 million rice smallholders and achieve sector transformation contributing to the SDGs and climate targets,” says Wyn Ellis, Executive Director, Sustainable Rice Platform (SRP).

Coming ahead of COP 25, to be held on December 2 to 13, ESG recommends leveraging international climate finance to attract private sector investment for climate-smart rice production. Country pledges that include rice in their Nationally Determined Contributions (NDCs) would be the first place to start, it notes. At present, 48 countries include in their NDCs the commitment to reduce greenhouse gas (GHG) emissions from rice paddies but have not yet outlined how they plan to incentivize the private sector to achieve these targets.

At the World Economic Forum in Davos, Switzerland, held in January, a prevailing sentiment pointed to a mainstream shift in global business and investor communities toward thinking about climate change and its implications.

“Building sustainable food systems will require leading global companies that help to scale a new way of growing crops: increasing food security and farmer livelihoods while decreasing agriculture’s resource footprint,” says Gaurav Dhawan, Executive Chairman of Phoenix.

Fortifying a stapleClick to EnlargeSmaller rice producers in the tropical belt lack the flexibility to adapt to climate change, as temperatures rise.
Rice is vital to the food security of over half the world’s population (3.5 billion), with Asia accounting for 90 percent of global rice consumption. In lower-income countries, such as Bangladesh, Cambodia and Vietnam, up to 70 percent of people’s dietary energy comes from rice, ESG underscores. The commodity is the source of 10 percent of global anthropogenic methane emissions. In Southeast Asia – the world’s rice bowl – rice cultivation accounts for up to 33 percent of the region’s methane emissions, and up to 20 percent of its overall greenhouse gas emissions.

Under a business-as-usual scenario, the Intergovernmental Panel on Climate Change (IPCC) anticipates that rice production will fall across the world. Asia will be particularly hard hit due to a convergence of land degradation, climate change and water scarcity.

Larger rice-producing countries, such as India and China, with extensive territories that cover a range of climatic zones, will have more space to shift rice cultivation to cooler areas that will become suitable for growing rice. However, smaller producers and importers in the tropical belt, such as countries in Southeast Asia and West Africa, lack such flexibility to adapt.

“Sustainable rice has the potential to improve lives and livelihoods in many of the world’s poorest countries, where we are currently at work. ESG has shown their unparalleled ability to combine rigorous, well-researched insights with pragmatic action items, as well as the convening power to bring the right partners to the table to move from talking to doing. We are proud to be pioneering new financing vehicles that will help attract private sector capital to support SDG- and climate-positive investments, particularly for those countries most in need,” concludes Esther Pan Sloane, Head of Partnerships, Policy and Communication, UN Capital Development Fund (UNCDF).

Click to EnlargeFonio by Aduna.Alternatives to intensive mono-culture farming
The diversification of diets has been pegged by environment proponents as a means of promoting sustainable food production, toward the long term improvement of climate health. While rice is indeed a mainstay staple across continents, alternative grains have been spotlighted as a means of relieving some of the pressure from intensive global farming practices.

In the UK, health food brand Aduna is introducing a fast-growing and drought-resistant ancient grain marketed as an alternative staple to intensively farmed cereals. Fonio, an ancient African “super-grain” is pegged by the company as the “new quinoa.”  Prized for its nutty flavour and light, fluffy couscous-like texture, fonio has been voted “tastiest ancient grain” in the US in a survey of 1,500 consumers by Oldways Whole Grains Council. The product is set to launch in WholeFoods and Planet Organic outlets in January 2020.

“Seventy-five percent of total food consumption on the planet as a whole is concentrated on just six plant species and three animal species. That intensive mono-culture is really destroying the planet. It’s imperative that we do shift to alternative foods like fonio and many others,” Andrew Hunt, CEO of Aduna tells FoodIngredientsFirst.

By Benjamin Ferrer

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