Sustainable Palm Oil Agriculture
With the growing population and increasing demand on supplies, the world needs a more sustainable agricultural sector. Improved productivity levels – and new technology – are key, says Mike Scott
Crisis point
t is hard to overstate the importance of the agriculture sector to the global economy and societies around the world, yet it is a sector that is often ignored or taken for granted. “Food is one of the basic human needs and vital for a stable development of the global economy,” says the Dutch co-operative bank Rabobank, a specialist in financing agri- culture projects.
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The security of food supplies is under threat from a range of factors that includes climate change, water and land availability, the increased use of biofuels and higher oil prices. The United Nations Food and Agriculture Organisation (FAO) says that an increase in production of 70% will be needed to feed the world’s growing population by 2050 and it is not just that there will be more mouths to feed – in many of the fastest-growing developing countries, the emergence of a middle class that wants to enjoy the same standards of nutrition enjoyed by those in industrialised countries is changing people’s diets, with demand increas- ing for meat, for example, which is not just expensive but also very resource- and water- intensive as well as a major contributor to global methane emissions.
This is not just about the availability of steaks for the newly wealthy, though. Higher food prices have a devastating impact on poorer people, for whom food makes up a significant proportion of their expenditure. Price rises were the trigger for much of the unrest currently seen in the Middle East and North Africa, and the roots of these price rises can be traced to last summer when the La Nina weather phenomenon caused drought in Russia, hitting grain production and prompt- ing the Kremlin to impose an export ban. According to a report by HSBC, wheat and corn prices increased 65% and 59% respec-
tively in the year to February 2011, while the FAO reported that food prices had hit a new high in March, exacerbated by high oil prices. “The imbalance between the demand for
and supply of food is expected to grow, and in order to bridge the food gap local and global food supply chains must be integrated and operate more efficiently,” says Rabobank chairman Piet Morland.
High prices are not the only concern in the agriculture sector. The global food system is on an unsustainable track, which poses a threat to long-term food security, Morland adds. “The global food system needs to be transformed in order to secure the long-term food supply.”
“The imbalance between the demand for and supply of food is expected to grow. Global supply chains must be integrated”
A report for the UK government high- lights the fact that at the same time as almost 1B people are going hungry and perhaps another billion are thought to suffer from ‘hidden hunger’, in which important micronu- trients are missing from their diet, “the global food system is consuming the world’s natural resources at an unsustainable rate”. Without change, says the report, The Future of Food and Farming, “the global food system will continue to degrade the environment and compromise the world’s capacity to produce food in the future, as well as contributing to climate change and the destruction of biodi- versity”. There is heavy reliance on fossil fuel- derived energy for synthesis of nitrogen ferti- lisers and pesticides, while “food production systems frequently emit significant quantities
6 | Sustainable Business | Sustainable Palm Oil | June 2011
of greenhouse gases and release other pollut- ants that accumulate in the environment,” the report contends.
The relationship with climate change works both ways, says Nick Robins, head of the Climate Change Centre of Excellence at HSBC. “Since agricultural productivity is strongly determined by both temperature and precipitation, in the longer term, we also expect climate change factors to act as a ‘threat multiplier’ for yields, so that where regions are already vulnerable to floods and droughts, climate change exacerbates the impacts.” Other issues for the sector include soil erosion, loss of soil fertility and salination. In many places, rates of water extraction for irrigation are exceeding rates of replenishment and this overuse of resources extends to the oceans, where over-fishing is a concern. Investors and businesses are starting to wake up to these issues and to respond accordingly. Funds such as Agro-Ecological, for example, are investing in organic farms in response to increasing demand for more sustainable food, while some of the world’s biggest food sector companies from all parts of the food value chain, including Unilever, SABMiller, Coca- Cola, Monsanto and Cargill, have signed up to a new World Economic Forum frame- work called ‘Realising a New Vision for Agriculture’. The aim is to “pre-empt poten- tial operational, cost and reputational risks that may arise from soft commodity resource shortages,” according to Robins. The keys to a more sustainable agricul- tural sector are to improve productivity using both existing knowledge and new technology and agricultural techniques. However, HSBC points out that simply eliminating waste, or food efficiency, would save between 30% and 50% of all food grown worldwide.
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