How can we protect food systems against global shocks?
Food, agriculture, land and ocean systems are the backbones of society, providing the sustenance that is essential to life. They are also central to the global economy – representing $10 trillion or over 12% of global GDP today and over 40% of all jobs.
Agri-food systems alone are responsible for a third of global greenhouse emissions, over 70% of freshwater use and 80% of tropical deforestation and habitat loss. Even global consumption calculated at $9 trillion does not reflect the true cost of food, which when taken as a complete picture is double that – nearly $20 trillion including human health, environment and economic costs.
Global shocks such as conflicts in Ukraine and elsewhere, the pandemic’s disruption on lives and livelihoods, market volatility from rising food and energy prices, extreme weather caused by climate change, have become the new norm and reinforce the urgency to strengthen the resiliency of agri-food systems.
Now more than ever we need sustained and committed leadership, collective action to support global and regional priorities, new business models and bold investment in the transformation of agri-food systems to lead the race to net-zero.
These measures would buy the world time in the fight against climate change, safeguard nature and biodiversity, improve healthier diets and food security, and build more inclusive and resilient economies.
‘Invest in farmers and ranchers as the eco-work force of the future’
Erin Fitzgerald, Chief Executive Officer, U.S. Farmers & Ranchers in Action, USA
In 2020, during the midst of a global pandemic, over two billion photos were taken of dinner plates. Why do you think that was? Americans have always turned to their dinner tables when times get tough. In the US, we have a whole holiday dedicated to honouring the harvest: Thanksgiving.
By 2050, we must produce as much food as we have produced in all of mankind up until now to feed the growing world. This is fewer than 30 years away, but for our farmers and ranchers, we have fewer than 30 harvests – just 30 growing seasons, 30 chances. For farmers and ranchers, each growing season and harvest is a chance to meet the scale and reverse the course of climate change. The stakes have never been higher. As leaders, we must ask, what does it mean to honour the harvest in the 21st century?
Eight out of the last 10 harvest seasons, our farmers and ranchers have been faced with extreme and episodic events: the world continues to recover from the effects of COVID-19, Russian forces invaded Ukraine – a leading producer of the world’s wheat, in addition to an ongoing drought in the US – resulting in unstable market conditions impacting food stability and challenging economics.
Right now, our farmers are in the fields continuing to plant it forward for this season and beyond, facing incredible market pressure and constraints. Nature does not wait, spring does not wait, planting our fields does not wait. Climate change poses a threat to our food security and the agriculture sector stands at the ready. Farmers and ranchers adapt and are committed, but they can no longer be taken for granted.
The time is now to invest in our farmers and ranchers, as the eco-work force of the future, with boots on the ground and the green ingenuity of nature-based solutions. Plants are the only living machine that can suck carbon out of the air. Investing in our harvest underpins a thriving economy. Honour our harvest and invest in our farmers. This spring at Davos, let the leadership seeds be sown with ambition for the next 30 harvests.
‘It all starts with the soil and how we reward farmers financially’
Svein Tore Holsether, President and Chief Executive Officer, Yara International, Norway
The biggest market risk is that trade flows dry up. The food system is global and interconnected, with significant geopolitical risk built-in. Keeping trade corridors open is crucial to avoid a worsening food price crisis and hunger crisis. One of the biggest structural risks is the lack of farmer incentives to adopt regenerative farming practices. Today, we only pay farmers for volume. We’re not rewarding them for reduced environmental impact or carbon sequestration. This must change.
In the short term, every leader must see how they can support organizations such as World Food Programme (WFP) to alleviate the ongoing crisis. In Yara, we have donated $50 million of premium fertilizers to WFP, in order to help produce food in the areas where it is needed most. In the longer term, I would like to highlight the need to think across the whole value chain. It all starts with the soil and how we reward farmers financially. We can’t expect them to bear the extra burden alone. The whole food value chain must step up and accept its responsibility.
An example of how this can be done is Yara’s work with Lantmännen in Sweden. We are providing low-carbon and fossil-free fertilizers to them, and their farmers are compensated financially. The end result is that the consumer gets a product with dramatically reduced carbon footprint at a negligible higher cost.
‘Double down on actions to transition to a sustainable and healthy food system’
Paul Bulcke, Chairman of the Board of Directors, Nestlé, Switzerland
Several immediate and concurrent shocks – pandemic, geopolitical crisis – are compounding well-known longer-term structural pressures on food systems. There are direct effects such as disruptions to raw material provision, and follow-on effects such as higher prices, that need appropriate responses. The choices we make in the coming months will have long-term consequences.
First considerations must be humanitarian – we must get food to those who need it now. This is a sine qua non. We must provide the necessary assistance to farmers so they can deliver the raw materials required this year and beyond. We must make sure we can move available food around and get it to where it is needed. Food producers must look for efficiencies along the whole value chain and focus on providing continuous and affordable access to food everywhere.
At the same time, we must double down on actions required to transition to a sustainable and healthy food system. Current disruptions can provide openings to drive medium and longer-term ambitions. At Nestlé, we are actively looking for synergies that simultaneously address the immediate challenges and our longer-term net-zero and other objectives. This includes moving faster to apply climate-specific interventions to different locations, thus diversifying sourcing; working closely with farmers to drive global best practice and increase yields; looking for ways to accelerate the adoption of regenerative agricultural practices, including reducing dependence on oil-based fertilizers; or intensifying our R&D initiatives to deliver climate-friendly recipes that also address commodity bottlenecks.
The ambitious agenda we have collectively set ourselves to transform the food system cannot be set aside, even temporarily. To ensure we maintain momentum in the face of intense disruption, it is even more essential to work together to frame the best response, taking account of the short, the medium and the long-term.
‘Appeal to commodity firms not to speculate and horde agricultural commodities’
Ajay Vir Jakhar, Chairman, Bharat Krishak Samaj (Farmers’ Forum, India)
The war in Ukraine has disrupted access to agricultural commodities, fuel and fertilizer supplies, swelling the number of hungry and the poor by millions worldwide. Restrictions on trade in agricultural commodities is compelling countries to scramble to secure supplies.
Countries are responding in different ways to the crisis with some banning exports and adding restrictions, while others see it as an opportunity to build markets. Restriction on agricultural exports is an indirect tax on farmers in countries where the ban is imposed as farmers are unable to benefit from rising commodity prices while having to pay higher input costs. Farmers will respond by using less fertilizer and sowing different crops and the impact will last for years beyond the war.
Since the beginning of the invasion, speculation by investment funds in agricultural commodities and inputs has significantly aggravated the human tragedy, forcing prices of edible oil, wheat, fertilizer and fuel to rise by record percentages. Consequently, nations are confronted with higher inflation and the world is beginning to see the potential for social unrest. It was expected but it did not have to be, as markets are human constructs and can be made to work for all stakeholders.
Adversity leads to innovation in decision making and it is time to appeal to market players to not speculate in food and work collaboratively while also seeking a moratorium on mandates for ethanol use in automobile fuels.