Louis van Ravesteyn, Head Agri Business, Business and Commercial, Standard Bank Group.
A combined approach of investment in infrastructure, education, access to affordable technology and financial solutions is required
As climate change sweeps across the globe unleashing extreme weather events, Africa — being a continent where economies are dominated by agricultural activities — finds itself at a crossroads. It faces a future where the investment required for adapting to climate change and building resilience is still a major challenge.
Africa is particularly vulnerable to droughts, floods and other climate-related extremes, with climate change already disrupting traditional agricultural practices and threatening food security.
Currently farmers and food producers across the continent must contend with the adaptation, transition, and physical risks that climate change poses in order to realise the full benefits of sustainable agricultural practices. Transitioning is hampered by a lack of access to key resources such as finance, infrastructure, improved climate-resilient inputs and technologies that support efficiencies across the value chain.
Access to important resources such as finance, infrastructure, improved climate-resilient inputs that can withstand climate change and technologies that improve the value chain is limited. This makes transitioning difficult.
Thousands of African farmers face a basic dilemma when it comes to climate change. They must remain financially viable, yet in some cases find that, due to the cost of transitioning, they cannot do so if they try to move away from conventional agricultural methods.
There are many modern technologies that allow for adaptation to climate change. These include precision farming techniques using drought-resistant seeds, remote sensors, production-enhancing data, smart equipment, and smart machinery, all of which are commonplace in many developed countries but still remain out of the financial reach of thousands of African farmers.
Given the present situation and the possibility of added transition risk, farmers might face an export market crisis, an example of which is being triggered by developed regions like the EU. This market is demanding more climate-related trade regulations, such as traceability and additional green certification that many African farmers cannot provide, but which will result in a new holistic approach to African agriculture.
Action must cross all levels of society and involve stakeholders ranging from governments to organised agriculture bodies, development institutions, financial institutions, farmers, and agriculture value chain players.
Poor infrastructure, such as roads, storage facilities, and unsuitable transport and logistic systems, needs to be addressed. It hinders the distribution of agricultural produce, affects quality, increases waste, and makes it difficult for producers to access markets, improve efficiencies, and obtain fair prices for their crops.
As the awareness of the importance of regenerative agriculture grows, improved access to education, research and training on climate-smart agricultural methods will be required as these will assist in the process of moving from conventional farming practices to more sustainable and restorative agricultural models.
The increasing number of farmers attending Standard Bank-supported regenerative agriculture events shows that these requirements are necessary and becoming an important component of the agriculture sector. Coupled with this is the growing awareness that consumers are demanding that food be produced more organically with fewer chemicals and pesticides and according to more sustainable farming styles.
As production costs rise, farmers are seeking practical ways to build resilient farms that can remain sustainable through climatic events and commodity cycles while also complying with more complex market access and border tax regulations.
A commitment to doing the right business in the right way means that financial institutions must use their resources to promote sustainable agricultural methods. Participation must include partnerships between banks, industry bodies, producer organisations, governments, and development finance institutions (DFIs), with the objective being to support their clients by promoting sustainability, resilience and food security for present and future generations.
The focus of financial institutions must be on the following imperatives:
• Promote food security by encouraging the use of climate-smart agricultural practices that include crop diversification, inter-cropping, and agroforestry where suitable, and precision agriculture. This also incorporates the adoption of appropriate technologies and effective energy and water management methods. These measures allow for the protection and enhancement of natural resources (soil, water, flora and fauna) and ensure their sustainability into the future.
• Develop finance packages for appropriate technologies that operate through the agriculture value chain and reduce food wastage while improving productivity.
• Introduce green financing packages to assist with a switch to green practices attractive to commercial and small-scale farming operations.
• Play a more active role in formalising and promoting carbon credit financing and trading of credits.
A shared duty is the joint goal of governments, business leaders and societies throughout the continent to offer actions and solutions that aim to reach net zero by 2050, in accordance with the Paris Agreement signed at the UN Climate Change Conference in 2015.
In Southern Africa, notable success has already been achieved through the financing of farm-based solar installations and other traditional water and energy sources. Although large parts of Southern Africa are water-scarce regions, farmers relying on irrigation already invest in solar power as a form of renewable energy. This has helped build capacity and increase crop production and will significantly benefit the country by allowing it to meet export standards that will increasingly focus on the use of clean, renewable energy for growing crops.
Educating and supporting farmers through sponsored events, farmer’s days and participation in key national and provincial agricultural events and seminars will also help broaden the climate change agenda.
Finally, optimising the use of digital platforms and launching initiatives such as the Standard Bank OneFarm Share food relief programme encourage active participation and emphasise the promotion of food security and food waste reduction.
There is no doubt that the climate change challenges posed to Africa can be met. However this can only be done by a combined approach of investment in infrastructure, education, access to affordable technology and financial solutions. Supported by governments driving policy reforms and improving infrastructure, change can then be facilitated by all the stakeholders in the agriculture value chain.
Together, industry players can build a future in which producers work together to promote resilient farming methods that can mitigate climate change in Africa.
For more information, visit: https://www.standardbank.co.za/southafrica/business/products-and-services/business-solutions/industry/agribusiness?cid=EP_Md878
Louis van Ravesteyn is Head of Agri Business, Business and Commercial, Standard Bank Group