Opening remarks by Roberta Casali, ADB Vice-President for Finance and Risk Management, at the Asia-Pacific Rural Development and Food Security Forum 2022, 22 March 2022

Good afternoon, good evening or good morning to our distinguished panelists, colleagues, and guests.

It is my pleasure to welcome you to the Asia Pacific Rural Development and Food Security Forum 2022. This Forum is taking place at a time when the world is facing escalated food and nutrition risks, and the hunger and nutrition related achievements of the last two decades or so are showing reversal. We need to protect the current food system from further disintegration and transform it into a climate-smart and green one to meet the future demand for food.

Vulnerabilities of food supply chains

As we all know, the global food supply system is facing unprecedented challenges in recent times. In addition to usual perennial challenges, it has been deeply affected by the Covid-19 pandemic and ongoing conflicts, which have immediate impacts and leave profound scars behind.

Food security becoming increasingly uncertain in DMCs

Most developing countries are facing at least 2 out of 3 key food insecurity risks, namely (i) extreme weather and climate change, (ii) economic shocks, and (iii) political crisis and conflict, as assessed by the World Food Program. Although there were indications of slight improvement towards the end of last year, like a small decrease in Food Price Index, estimated by the FAO, it has begun rising again since the beginning of this year, and the Russian Invasion of Ukraine is very likely to escalate the global food prices even more. Russia is the world’s largest exporter of wheat, and Ukraine is the fifth largest, and together, they make up more than one-third of global cereal exports. Russia is also the global lead producer and supplier of fertilizers. Globally, there are about 50 countries that depend on Russia and Ukraine for 30% or more of their wheat supply. Laos PDR imported more than 98% of its wheat from Ukraine in 2020. Supply chain and logistical disruptions on Ukrainian and Russian grain will have significant global food security repercussions, more so on countries like Laos PDR.

Meeting nutrition target in Asia at bay

High incidence of malnutrition was a matter of concern even before the onset of the pandemic. In 2020, 149 million children were stunted, 45 million wasted, and 39 million overweight globally. According to the Global Nutrition Report 2021, progress to global nutrition targets is slow. Less than two thirds achieved the target on childhood overweight. In case of meeting the targets for male obesity, 100% are off track. In case of women diabetes, only 3 countries, or 6%, are on track.

Agricultural resources on decline

While the temporal challenges are formidable, we cannot forget the old problems that have been constantly affecting food production in developing Asia. According to World Bank statistics, per capita agricultural land in 2018 was only 0.11 hectares in South Asia, and 0.10 hectares in East Asia and Pacific. This compares to 0.54 hectares in North America and 0.28 hectares in OECD countries in the same year.

When it comes to potable water, of which about 70% is used by agriculture, the overall situation is even more alarming. Available per capita water decreased from 40,000 cubic meter in 1800 to 7000 cubic meters in 1997 and is projected to decrease to 4,700 cubic meters by 2025. In some parts of Asia, it is already less than 2000 cubic meters, below which an area is called water stressed. An analysis of the OECD (Water Risk Hotspots for Agriculture) in 2017 concluded that water risks in Northeast China and Northwest India could have significant food security consequences.

Future of agriculture in Asia faces climate change-related challenges

According to a McKinsey report, (Climate Risk and Response in Asia, 2020), by 2050, parts of Asia are likely to see increasing average temperatures, lethal heat waves, extreme precipitation events, drought, and changes in water supply. Asia is also confronted with increased number of mouths to feed and simultaneously decreased number of hands to produce food. Climate warming is already increasingly disrupting natural phenological patterns and the risks, I just mentioned, are already creating immense pressure on the agricultural sector. With constantly decreasing agricultural land available, farmers are forced to produce more. Use of natural and synthetic fertilizer are, however, not a sustainable solution. Their increased use only reinforces the emission of greenhouse gases. We need to break this vicious cycle. Asia will face a huge problem for food production due to phenological shifts in crops due to escalated average temperature.

Way forward: Accelerating food system transformation through diversified investments and knowledge solutions

The most pertinent question for us is how do we build a resilient and sustainable food system withstanding the temporal and perennial problems? Not only that we have to invest more in agriculture, a qualitative change in our investments is also crucial.  The investments must be strategic and science-based; and we need to focus on innovative technologies that offer nature-positive solutions.

I am pleased to share that ADB’s investments in agricultural and rural development increased by five times during the 2011-2021 period. The portfolio mix of our investments is also getting more diversified, covering different aspects of our food system.   According to our 2021 Annual Evaluation Review, the diversified investments in agriculture, natural resources, and rural development, were largely successful in addressing poverty and inequalities and in promoting gender equality.

Importantly, ADB also scaled-up its knowledge work in support of food system transformation. For example, we completed a cross-country analysis to promote the production of fruit and vegetables—and reduce postharvest losses—in Bangladesh, Indonesia, Nepal, Pakistan, and Viet Nam. We also studied the Korean model of rural and agricultural development to devise customized, country-specific, and context-aware policy recommendations for our DMCs.

Experience-sharing and knowledge exchange through this Rural Development and Food Security Forum will promote pragmatic solutions to the evolving challenges faced by the agriculture sector.

Way forward: Towards a novel, natural resource-conscious financing strategy​

Going forward, ADB is in the process of developing an Innovative Natural Capital Financing Facility to attract natural capital investments and offer knowledge solutions to build better food systems and promote a more balanced diet.

The facility has 3 pillars—a Natural Capital Lab, an Agribusiness Service Platform, and a Natural Capital Fund. The lab is a living and virtual platform to incubate, accelerate and expand natural capital investments. It leverages existing accounting tools to quantify the ecosystem service value of green agricultural value chains. It also strengthens eco-compensation for ecological services, which in turn incentivizes farmers to adopt new practices.

Thank you!

To conclude, ADB is committed to working with all partners to step up support for climate-smart agriculture across the entire agriculture and food value chains, including the blue economy, via policy and technological interventions, using nature-based solutions where appropriate.

Let us work together to promote a resilient and sustainable food system for future generations. Thank you for your attention.