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Asian Development Outlook Update, September 2021

Transforming Agriculture in Asia

The theme chapter discusses opportunities and challenges for agriculture in developing Asia, recommending policies to improve food security and reduce rural poverty by making the agricultural sector more productive, sustainable, and resilient against risks including climate change.

Summary

  • Asia must transform its agriculture to tackle challenges from three ongoing trends: changing demand, changing demographics, and a changing and fragile environment.

    Food demand is increasing and shifting toward animal products, requiring more resource-intensive agricultural production. But Asia’s agricultural productivity is hindered by a rural population that is shrinking and aging. And the sector is exposed to risks from a changing climate, and from agricultural practices that are environmentally unsustainable.

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  • Innovation can help farmers increase agricultural productivity and meet evolving demand in a sustainable way.

    New approaches have emerged to help Asia’s smallholder farmers access agricultural machine services and increase labor productivity. Improved technologies and practices are helping farmers increase productivity while reducing overuse of chemical inputs and water. And rapid but regulated expansion of aquaculture production in Asia can provide consumers animal protein from seafood products.

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  • Support systems are needed for Asia’s farmers.

    Early warning systems and insurance programs can mitigate impacts of extreme weather shocks on farmers and rural communities. Expanding value chains will allow farmers to diversify their production to high-value crops. Digital technologies can assist farmers and traders reach new markets, just as they helped urban consumers during the COVID-19 pandemic. Government policies should focus less on traditional production support, and instead encourage market-oriented innovations.

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Changing demand and continuing food insecurity

Rising incomes and urbanization are transforming regional food consumption.

Demand for food in Asia has shifted away from basic staples toward more resource-intensive animal-based products.

Daily energy consumption per capita is expected to increase from 2,612 kilocalories in 2012 to 2,844 by 2030. Meanwhile, demand for food in Asia has shifted away from basic staples toward more resource-intensive animal-based products. Asians are also the biggest consumers of fish per capita in the world. Asia’s agriculture sector must be productive enough to meet these increases and shifts in demand.

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Despite the region’s growing prosperity, malnourishment persists.

In the past two decades, developing Asia has made remarkable progress in reducing undernourishment and micronutrient deficiency and improving child health.

Despite these gains, 86.8 million children in Asia under age 5 still suffer stunting. While insufficient agricultural production used to contribute to undernourishment in Asia, at present economic access to nutritious food is a bigger concern. Even in countries that have achieved high average calorie intake per capita, malnutrition persists as micronutrient deficiency. In addition, obesity and related noncommunicable diseases are rising steeply as healthy traditional diets yield to imported and processed food.

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Shifting demographics pose a challenge to agricultural development

Asia’s rural communities are rapidly shrinking, feminizing, and aging.

A predictable feature of modern economic development is a population shift away from agriculture. Higher-paying manufacturing and service jobs in cities draw workers out of rural areas, steadily eroding the share of rural population from 80% in 1970 to 52% in 2020 and a projected 38% by 2050. With many men migrating to cities, agriculture relies increasingly on female workers, who often have less access to resources and finance. The share of older farmworkers has also increased, with farmers aged 50 or older becoming majorities in Sri Lanka and Thailand.

The environmental challenges facing agriculture in Asia

Climate change poses ever greater challenges to agriculture in Asia.

Crop growth and yields are highly sensitive to significant changes in temperature and rainfall.

Extreme weather such as storms, floods, and droughts have frequently battered Asia’s agriculture sector in the past. In 2013, Typhoon Haiyan dealt Philippine agriculture over $1.4 billion in losses. With climate change, the frequency and scale of such events is escalating, as is the damage they cause. In South Asia, monsoon rains are likely to increase by 6.4% even as droughts lengthen and occur 5–10 times more frequently.

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The agriculture sector also faces environmental challenges of its own making.

The Green Revolution succeeded in part through heavy use of chemical fertilizers and pesticides.

The use of fertilizer subsidies lowered chemical input prices and encouraged their overuse, causing environmental pollution. Water scarcity is also worsening. About 70% of the world’s irrigated farmland is in Asia, but weak collective actions among farmers impede irrigation management. And in Asia’s rapidly growing aquaculture sector, sustainability issues revolve around mangrove destruction, salinization of land, groundwater depletion, and the effects on human health of residual chemicals in fish for consumption.

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Innovations and improved regulation can make agriculture and aquaculture in Asia more productive and sustainable

Access to machines for smallholder farmers can be improved.

Small and fragmented landholding inhibits mechanization for many farmers in Asia.

Innovative arrangements have emerged that enable some of Asia’s 350 million smallholder farmers to hire machine services to work on consolidated fields of farmer groups. Modernization of outdated laws and regulations and other agriculture factors can help these innovative approaches to realize their potential.

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A well-regulated aquaculture sector can support Asian consumers’ seafood consumption.

With many marine fisheries already overfished, increased aquaculture production will be critical to satisfy Asian consumers’ large appetite for seafood.

Aquaculture provides 52% of fishery production worldwide, and Asia dominates global aquaculture with an 88% share. Increasing availability of seafood helps consumers in Asia improve their nutrition.

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Improved practices can help farmers reduce environmental damage.

Chemical inputs can be optimized and reduced by promoting such innovative techniques as site-specific nutrient management and environmentally sensitive integrated pest management.

Improved modern irrigation systems, such as volumetric water tariffs, lined canals, and remote water sensing and control facilities, can help farmers to use water more efficiently. Potential exists for the private sector to play an important role in providing the farm extension and advisory services that are critical to making agriculture more sustainable.

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Support systems are needed for Asia’s farmers

Early warning systems offer efficient protection from weather risks.

Advanced spatial information systems are critically important in developing early warning systems that can help mitigate farmers’ exposure to climate risks and protect their livelihoods.

In 2019, timely information on monsoon floods in northern Bangladesh helped communities and the government prepare and secure necessary supplies, slashing economic losses by two-thirds. Advanced spatial information systems are critically important in developing early warning systems able to mitigate farmers’ exposure to climate risks and protect their livelihoods—as is strengthened national and local capacity to integrate these systems. Farmers can improve their climate resilience by adopting crop varieties that can cope with weather shocks.

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Innovative crop insurance builds resilience in farm communities in Asia.

Crop insurance schemes exist in over three-fourths of the countries in developing Asia.

Crop insurance schemes exist in over three-fourths of the countries in developing Asia but are fully operational nationally in only four: India, the Philippines, the PRC, and Sri Lanka. Insurance programs use spatial information systems to speed crop damage assessments and expedite claim settlement. Enhanced spatial information systems can expand coverage of insurance programs.

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Value chains evolve as farmers diversify into high-value crops.

With high-value crops providing 32% of agriculture production value, surpassing that of cereal crops at only 26%, contract farming is used to facilitate production and procurement.

Although contract disputes often arise because of unclear agreements and weak contract enforcement, contract farming can benefit farmers in Asia with advanced agreements on output prices and technical assistance to reach high-value food markets.

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Digital technologies can expand inclusive growth to farmers in remote areas.

In recent years, digital technology has helped farmers acquire technical and market information and improved supply chains, connecting farmers in remote areas with traders and consumers.

Under the COVID-19 pandemic, the expansion of e-commerce for agricultural products and food deliveries mitigated the pandemic-induced food demand reductions from the eating-out industry.

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Agricultural policy should support the transformation of agriculture and food security through innovation, markets, and technology.

Traditional agricultural policies have directly supported agricultural production to achieve and maintain self-sufficiency.

However, such policies can induce overproduction and distort markets. A better approach decouples rural welfare support from agricultural policy, which properly invests in research and development, encourages innovation, and pursues market-oriented development. Policies should also promote a balanced and nutritious diet for all.

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