The Asia Food Challenge Report 2023
PwC, Rabobank, Temasek, and Terrascope launched the third edition of the biennial Asia Food Challenge Report, focused on the opportunity to decarbonize the agri-food value chain in Asia.
The report identified a combination of over 20 readily available technologies and practices that can have an immediate impact in the sector with the potential opportunity to achieve an approximately 12% reduction in carbon dioxide equivalent emissions from Asia agri-food sector (equivalent to 840 Mt CO2e). This scale of reduction will require approximately US$125bn of investment in farm-level equipment and machinery on rice and cattle farms, in addition to wider investment in infrastructure and other farm types. Crucially, it will also require stakeholder alignment to measure Scope 3 emissions and improve sources of incentivization for some technologies and practices.
The investment opportunity is particularly apparent in the supporting technologies, such as micro irrigation to support changing rice cultivation practices, on-farm machinery suited to the Asian agri food landscape of smallholder farms, and digital smallholder engagement platforms – which provide advice, inputs, and financing to farmers, amongst other things.
The high technology readiness level of the technologies addressable to agri-food means this can be done today and should be prioritized for investment over with a longer time frame. Agri-food has the potential to represent a better carbon return on investment than other sectors, such as energy, which is more dependent on technological advancements in engineering and chemistry, as barriers to action are largely financial and social, which we have a greater potential to overcome in the near-term.
Summary Points from the 2023 Asia Food Challenge Report
The Opportunity for Decarbonization in Asia’s Agri-food Sector
● Agri-food is a significant source of carbon dioxide equivalent emissions globally, accounting for approximately 34% of all carbon dioxide equivalent emissions. Agri-food emissions are significant across Asia – Asia is responsible for approximately 42% of all agri-food emissions globally despite only being home to around 35% of arable land, and in parts of South East and South Asia agri-food accounts for 50% and 45% of all carbon dioxide equivalent emissions respectively.
● There are multiple geographical, environmental, social, and political reasons for such a high proportion of emissions from agri-food. These reasons include the high number of smallholder farmers, which can be less efficient than large, mechanized farms; the importance of rice in Asia; and the focus of historical investment into technologies and machinery designed for Western mega-farms, that may not be applicable to the Asian agri-food sector.
● Around half of the carbon dioxide equivalent emissions in Asia are from five key emissions areas: rice cultivation, fertilizer use, rearing of ruminant livestock and swine, food loss and waste, and deforestation.
● There are more than 20 technologies and practices that are available today to address this. Together these technologies and practices have the potential to reduce carbon dioxide equivalent emissions in the Asian agri-food sector by approximately 12% by 2030 – a reduction of nearly 840 Mt CO2e emissions – if all stakeholders take action. This is equivalent to the emissions from the entire global aviation industry in 2022.
Investing in actionable technologies
● Implementing the technologies and practices we have identified across just rice and cattle farms in Asia would require US$125bn of investment in physical farm-level technologies and assets, in addition to wider investment in infrastructure and other farm types.
● This investment has the potential to improve farm-level gross margin by up to 16 ppt.
● The investor opportunity is particularly apparent in the supporting technologies, such as micro-irrigation to support changing rice cultivation practices, on-farm machinery suited to the Asian agri-food landscape of smallholder farms, and digital smallholder engagement platforms – which provide advice, inputs and financing to farmers, amongst other things.
Agri-food has the potential for significant emissions reduction quickly vs. other sectors
● These actionable technologies and practices should be prioritized over those at a lower level of technological readiness that may have an impact in the future. Action ahead of 2030 is particularly important given any reduction in emissions will have an outsized impact in meeting climate change targets.
● To date agri-food has received less focus on emissions than other large emissions areas like energy – this needs to change if the world is to meet its decarbonization targets.
● The forecast reduction in emissions from agri-food requires significantly less investment than is required to have the equivalent impact in reducing emissions from the energy or aviation sectors.
● Additionally, the limiting factors in reducing carbon dioxide equivalent emissions in agri-food are largely social and financial – the technologies and practices exist to have an impact today. This is not the case in the energy sector, which requires engineering and technical advancements to reduce emissions in many cases.
Engagement of stakeholders across the value chain
● Many of the actions need to be taken at the farm-level. The prevalence of smallholder farms in Asia means stakeholders need to consider how best to support smallholders to make this transition. To do so needs actions from all stakeholders – government, large corporations, investors, academic institutions, farmers and consumers.
● This is not just a smallholder farmer problem. Large corporations are increasingly under focus to act on their Scope 3 emissions, including indirect emissions in their value chain. Lower emissions can also mean lower costs (e.g. from less fertilizer used) or more revenue (e.g. by extracting value from waste), which adds another incentive to act now.
Ed. Article photo by Adrian Infernus on Unsplash.
