ADB Needs to Leverage Private Sector Support to Address Challenges in Agriculture and Food Security in Asia: Independent Evaluation

News Release | 19 February 2019

MANILA, PHILIPPINES (19 February 2019) — The Asian Development Bank (ADB), as part of its new Strategy 2030, is well-poised to contribute more significantly to the agriculture, natural resources, and rural development sector in Asia and the Pacific. This was highlighted by a panel of experts at a knowledge sharing workshop to discuss findings of the independent evaluation of ADB’s support to the sector.

The panel recommended that ADB, which is rapidly becoming one of the largest multilateral lenders for agriculture in the region, should use this position to help set priorities for agriculture, engage in policy dialogue, and leverage additional financial resources to support sustainable agriculture to promote food security.

“Agriculture, natural resources, and rural development remain key for the long-term development of the region,” said Mr. Akmal Siddiq, Chief of ADB’s Thematic Group on Rural Development and Food Security. “Despite the transition of most countries from agrarian and rural economies to non-agricultural and urban, food and nutrition remain at the heart of the challenges the region will be facing in the years to come.”

The evaluation, conducted by the independent evaluation at ADB, assessed the bank’s  $12.2 billion loan support for sustainable agriculture to promote food security in Asia and the Pacific during 2005–2017. It found that interventions for improving agriculture productivity were largely successful except for irrigation, which needs more attention.

To meet the demand for more food, a 60% increase in agriculture production will be needed by 2050. Significant advances must be made in the efficiency and productivity of farming to achieve this in Asia and the Pacific, where 64% of the world’s hungry or about 520 million people, live. This challenge to improve productivity will be further complicated by climate change and the competing demands for scarce resources—water and land—from other sectors of fast growing Asian economies.

“Since the food shortages of 2007 and 2008 that caused prices to surge, governments have generally increased spending on agriculture, especially in Asia’s most populous economies, and ADB and other development partners have been stepping up their support for the sector,” said the Director General of Independent Evaluation at ADB Mr. Marvin Taylor-Dormond. “However, most of the resources needed to achieve food security and the other development goals for agriculture will have to come from the private sector. Therefore, the enabling policies that will be needed to attract these investments are not in place in many countries.”

Mr. Taylor-Dormond noted that ADB programs will need to engage more in policy dialogue to ensure that the enabling policies, institutions, capacities, and investments are in place to create the necessary enabling environment.

Because agriculture is essentially a private sector activity and increasingly centered on value chains—adding value to raw inputs along the supply chain—the private sector will have a greater influence on production and food security as well as the responsibility to manage the links between agriculture, natural resource conservation, and environmental quality. ADB has a small but growing agribusiness and value chain loan portfolio, and the role of these investments in the sector will likely increase significantly.

The evaluation refers to the example of the People’s Republic of China to illustrate the influential role private sector can play in the agriculture sector. It highlights that the country is “probably the best recent agricultural performer in the world.” This is partly due to government policies and investments promoting private sector participation in agriculture through tax exemptions and production subsidies, as well as expenditure on important inputs such as agricultural research.

Agriculture is also by far the largest water user in Asia and needs to be part of the solution to building resilience to climate change through more environmentally sustainable and climate-friendly farming practices. The evaluation acknowledges that awareness is growing on the need to use limited water and land resources more efficiently, and agriculture needs to play its part to reverse environmental degradation.

“The evaluation shows that project sustainability is the lowest-rated evaluation criterion for ADB’s activities in the sector. This holds an important lesson for all working on increasing agriculture production,” said the study’s lead author Mr. Andrew Brubaker. “Many projects targeted getting enough water to farmers, but the availability and reliability of water resources in the medium and long-term was rarely considered. Yet, climate change and greater competition for water from other sectors make it imperative that this gets more attention.”

Increasing spending on basic infrastructure to increase productivity will not be enough to tackle Asia’s complex and evolving food security and dietary challenges. Food production has so far managed to keep ahead of demographic changes, but dietary choices linked to rising prosperity is requiring new approaches to handle the demand for more animal protein, improve nutrition and food safety, and reduce food losses in agriculture systems.

“This means that support for agriculture by governments and lenders for development needs to be more comprehensive and take account of issues beyond production,” said Mr. Garrett Kilroy, co-team leader of the evaluation.

The evaluation recommendations to ADB include greater attention to agricultural activities, policy and institutional reforms, and more support for value chains, especially through sovereign and nonsovereign cooperation. Better design and implementation support are needed to improve performance, particularly on the sustainability of irrigation investments. Furthermore, given the influence climate has on the sector, actions to improve resilience requires accelerated efforts.

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About Independent Evaluation at ADB

ADB's Independent Evaluation, reporting to the Board of Directors through the Development Effectiveness Committee, contributes to development effectiveness by providing feedback on ADB's policies, strategies, operations, and special concerns in Asia and the Pacific.

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