Economic Update

Published 07 Dec 2022

− Global food insecurity is rising due to environmental, economic and geopolitical shocks

− Resilience to extreme weather is being prioritised as climate change advances

− Innovative food systems are helping countries meet sustainability goals

− The revival of traditional agricultural techniques and foodstuffs is boosting security

Food security became a central priority for many emerging markets in 2022, against the post-Covid-19 pandemic backdrop of supply chain shocks, natural disasters and high commodity prices.

While the second UN Sustainable Development Goal, promulgated in 2015, aims to end hunger by 2030, The Economist’s Global Food Security Index (GFSI) has fallen consistently over the last three years from a peak its 2019.

As of 2020 some 2.4bn people – approximately 30% of the world’s population – did not have access to adequate food sources.

Faced with these realities, several emerging markets have begun to take innovative steps to increase food security on a national, regional and global level.

Indeed, the fifth day of the COP27 UN Conference on Climate Change in Sharm El Sheikh, Egypt, which took place in November 2022, focused on adaption and agriculture, aiming to boost the resilience of food systems in the face of increased climate-change-driven natural disasters, most notably flooding in Pakistan and West and Central Africa.

Disaster resilience

While the pandemic highlighted the importance of global supply chains and Russia’s invasion of Ukraine exacerbated these problems, climate change-driven disasters – especially drought and flooding – caused the most damage to global food security in 2022.

Significant funding will be needed to help emerging markets develop disaster-proof agriculture sectors. According to a 2021 report by the Global Centre on Adaptation, sub-Saharan Africa will require $15bn in annual investment to adopt climate-change resilient food and agriculture systems.

The cost of inaction, however, would amount to as much as $201bn per annum, according to a 2021 report by the Global Centre on Adaptation.

Spearheaded by the African Development Bank (AfDB), the Africa Climate-Smart Agriculture Programme for Food Security, Adaptation and Mitigation in Africa 2018-25 aims to increase climate-smart agricultural practices across the continent, with the AfDB pledging to mobilise $25bn in financing between 2020 and 2025.

Some emerging markets are turning to technology to combat flooding, which has destroyed an estimated $21bn in agricultural products and livestock globally over the past decade.

Malaysia has become a world leader in deploying forecasting and monitoring technologies, with the country’s Department of Irrigation and Drainage rolling out its National Flood Forecasting and Warning System at the end of 2022.

Flood-resistant crops, such as the Submarino rice widely planted in the Philippines that can survive up to 14 days under water, have also helped limit food losses.

Floating farms provide further insurance against rising water. More than 6000 farmers in the deltas of south-western Bangladesh have begun growing fruits and vegetables on rafts of invasive hyacinths.

In a similar vein, farmers in Mexico revived the use of chiampas, farm islands that have been built on the shallow lakes near Mexico City for more than 700 years, to grow produce during pandemic-induced market closures.

Meanwhile, in more arid climates, the Kuwait Institute for Scientific Research and the International Centre for Biosaline Agriculture in Dubai are researching how to develop drought- and saline-tolerant crop varieties.

Securing supply

While climate-smart agriculture seeks to protect and increase yields, regional trade agreements and agro-processing developments are making food more accessible and affordable.

Following trade disruptions at the start of the pandemic, the GCC adopted a Kuwaiti proposal to set up special arrangements at border control and Customs posts that will facilitate the movement of food and medical supplies within the six-member bloc.

Elsewhere, the African Continental Free Trade Area (AfCFTA), which launched in January 2021, serves to facilitate cross-border trade for a market of more than 1bn consumers. Once AfCFTA has been ratified by all signatories, the continent will become the largest free trade area in the world.

According to the UN Economic Commission for Africa, by 2040 AfCFTA is projected to increase inter-Africa trade by 40-50%, making regional agricultural supply chains more resilient to the effects of climate change.

Domestic agro-processing can help some emerging markets capitalise on the value of their existing production levels while reducing the need for imports.

Looking to boost employment and value creation, Nigeria has turned to agro-processing to fuel economic expansion. Processing agricultural products in-country will also help lower food prices in the long term, which weigh on consumers despite agriculture comprising some 25% of GDP.

On a global level, the June meeting of the World Trade Organisation in Geneva saw a lifting of export restrictions on foodstuffs purchased for non-commercial humanitarian purposes by the UN World Food Programme, as well as an agreement to curb subsidies for illegal, unreported and unregulated fishing, which threatens global fisheries.

Innovations in agri-tech

A focus on agri-tech, water management and green energy characterises much of the move to bolster food production. Improvements in agricultural inputs and increased access to agri-tech have helped limit declines in the 2022 GFSI, with all regions besides sub-Saharan Africa performing above the global average.

In Africa, funding for agri-tech start-ups has risen from $4.3m in 2016 to $95.1m in 2021, with an increase of more than 60% occurring between 2020 and 2021. There are around 280 agri-tech companies on the continent that provide services ranging from manufacturing drones for agricultural purposes, to offering e-commerce platforms that connect farmers to vendors and distributors.

Russia’s invasion of Ukraine has underlined the importance of agricultural self-sufficiency, as it threatens some 29% of the world’s wheat supply, as well as a significant amount of the global supply of barley, maize and cooking oil.

The conflict has had an outsized impact on MENA countries due to the region’s dependence on imported food products. Prior to the pandemic, GCC countries imported roughly 85% of their food.

Between government plans and start-up solutions, various MENA countries are working to bolster food security. Saudi Arabia’s Sustainable Agricultural Rural Development Programme 2018-25 and Qatar’s State Food Security Projects 2019-23 plan are notable examples of public sector steps to ensure self-sufficiency.

According to Qatar’s roadmap, the nation aims to be 70% self-sufficient in eggs and greenhouse-produced vegetables, 95% self-sufficient in fresh fish, and 100% self-sufficient in fresh dairy products, poultry and shrimp by 2023.

Greenhouse infrastructure is a vital agricultural innovation in MENA, where arable land makes up less than 5% of the land area of most countries. The UAE in particular is looking to scale up its vertical-farming infrastructure, which offers a method for growing food in urban environments.

As food production accounts for 90% of freshwater usage, water scarcity poses a direct threat to food security.

Due to climatic conditions, all GCC members are seeking to boost their desalination capacity − often using renewables to lower costs and increase efficiency. China is taking a similar approach following a summer heatwave and drought.

In March the World Bank approved a $180m loan to Morocco to bolster water governance and irrigation technology, a programme set to help 16,000 farmers meet their water needs.

In Kuwait, a sustainable farm project is under way to reduce freshwater usage and increase output via technological innovation. The site, which is set for completion in 2025, will house solar-powered greenhouses, lakes for aquaculture and a recycling unit for agricultural waste.

Sustainable foods

Emerging markets are also promoting the adoption of a range of alternative foodstuffs, many of which offer a smaller carbon footprint.

The plant-based meat industry, for example, is projected to generate $16.7bn in revenue by 2026, led by start-ups such as Thailand’s NR Instant Produce, Brazil’s Fazenda Futuron and Chile’s NotCo.

Insect farming has significant potential in emerging markets, with 1 kg of insect protein requiring 10% of the water, energy and space and producing 1% of the greenhouse gas emissions of the equivalent amount of beef.

The cultivation of the black soldier fly for use as livestock feed in Kenya has improved returns and reduced dependence on feed imports, while Colombia is considering subsidising the practice to cut down on the illegal cultivation of coca leaves for cocaine production.

Aquaculture is another vital way to bolster food security in emerging markets, especially for products such as shellfish and seaweed, which require little space, no freshwater and remove carbon from the environment as they grow.

Aquaculture activity in sub-Saharan Africa has grown by 11% per year since 2000 – twice the global average of 6% − offering employment and sustainable food systems to a region with high rates of poverty and food insecurity.

The World Wildlife Fund projects that global seaweed aquaculture could expand by as much as 12% per year. Projects such as the Netherland’s Kelp Blue, a start-up aiming to plant sweeping forests of kelp off the coast of Namibia, and India’s Sea6 Energy, which focuses on tropical seaweed farming using a mechanised catamaran for harvesting and seeding, could expand the production of edible seaweed beyond its traditional markets in East Asia.