How emerging markets are adopting green solutions

In light of the Covid-19 pandemic, supply chain disruptions and broader environmental concerns, many countries are looking to improve the efficiency of agriculture and reduce its carbon footprint. The drive for sustainable agriculture gained impetus in 2022 following Russia’s invasion of Ukraine, which curtailed exports of maize, wheat and cooking oil from key producers – raising broader concerns about food security. Moreover, a heat wave in India and Pakistan in April and May 2022 killed dozens of people and caused significant damage to crops and smallholder incomes – exacerbating climate change fears.

Sustainable Agriculture

While many countries have moved to shore up supply chains and improve agreements with suppliers, some are also looking towards sustainable agriculture. This usually involves practices that are focused on preserving soil fertility, preventing water pollution and protecting biodiversity, and can involve measures such as rotating crops, planting cover crops and eliminating tillage. Also important is the adoption of a green economic model, which refers to an alternative development model that is low carbon, resource efficient and socially inclusive.

Home to over 60% of the world’s uncultivated arable land, sub-Saharan Africa has a role to play in feeding the world’s growing population. While agriculture will certainly drive the industrialisation of African economies, a balance must be set between economic development and global climate change mitigation efforts. According to the Centre of Climate and Energy Solutions, the continent is responsible for 4% of global carbon emissions. As the agriculture and forestry industries are heavier polluters, it is important to focus on sustainable practices, otherwise the inefficient use of fertilisers or deforestation may lead to the exponential increase of emissions. It is therefore vital for the continent to transition towards a green economic model.

Sustainable agriculture uses up to 56% less energy per unit of crop produced and emits 64% less greenhouse gas per ha, according to a June 2021 report from the UN Environment Programme (UNEP). Although more sustainable methods require higher labour costs, the UNEP estimates that they have the potential to generate up to 30% more jobs than conventional farming, and noted that sustainably produced products generally command higher sale prices.

Role of Emerging Markets

Although developed economies lead the way in sustainable agriculture, emerging markets are increasingly adopting such practices. In April 2022 Indian agri-tech venture capital firm Omnivore launched a $130m fund – with up to $30m in investment from the US International Development Finance Corporation – that will focus on supporting start-ups that make farming in India more resilient, sustainable and profitable. Omnivore has invested heavily in the space since 2012, providing finance to start-ups that offer financial technology services, business-to-business marketplace platforms, and post-harvest technologies to boost efficiency and sustainability.

One such start-up is Fasal, which provides growers with precision agricultural equipment utilised in micro-irrigation systems. Using artificial intelligence and the internet of things (IoT), Fasal has installed soil moisture sensors across more than 16,000 ha of farmland in India to conserve water. Another Omnivore beneficiary is BioPrime AgriSolutions, which develops tailor-made biological crop inputs to enhance yields.

Elsewhere, the MENA region has been a leader among emerging markets in terms of adopting sustainable agricultural solutions. In 2020 Kuwait’s NOX Management teamed up with Hamburg-based agri-tech company &ever to open a commercial indoor vertical farm just outside Kuwait City. Spanning 3000 sq metres, the farm uses IoT sensors to digitally control seeding, germination, harvesting, temperature, humidity, emissions and airflow, using 90% less water and 60% less fertiliser than traditional farming. This comes amid regional reports that Kuwait is fast tracking the development of a sustainable farm project. Half completed as of June 2022, the farm aims to reduce fresh water usage in agriculture by using treated water and improve the efficacy of various agricultural practices through technological upgrades. The project will also use solar-powered greenhouses, develop six lakes for sustainable aquaculture as well as construct a recycling facility for agricultural waste.

Africa in the Spotlight

While agriculture in Africa accounted for 23% of the continent’s GDP in 2019, there has been little investment in local agri-tech start-ups and ventures. This can explain why the adoption of technology on the continent has lagged behind other regions where agriculture has been reshaped thanks to ICT innovations. Despite the lack of funding, Africa has around 280 agri-tech ventures that provide services from tractor hailing to soil mapping. These technological start-ups are mostly concentrated in countries such as Kenya, Nigeria, South Africa, Tanzania, Uganda and Ghana. They address challenges faced by African farmers and other local market players. For example, in Nigeria, Verdant AgriTech helps farmers access information and recommendations in real time about weather, soil and market conditions via mobile phone.

As agricultural practices have to adapt to the challenges that come with climate change, farmers face the dual hardship of having to increase agricultural output to feed a growing population, while reducing its impact on the environment. A potential solution is the sector’s implementation of climate-smart agriculture, an integrated approach to agricultural production that looks to improve resilience, boost productivity and mitigate climate change. An important aspect of this approach is the implementation of efficient irrigation systems, sustainable water and soil management. Other significant measures include mitigation techniques such as the reduction of fertiliser use.

In this sense, in March 2022 the World Bank approved a $180m loan to support water governance, improve irrigation services and implement water-saving irrigation technologies in Morocco. The World Bank reported that this came as the country’s water resources were witnessing increasing pressure due to climate change. The innovations included in the project, which aims to support 16,000 farmers, are seen as important for addressing water scarcity in the country.

Regenerative Agriculture

While incorporating many of the principles of sustainable agriculture, regenerative agriculture goes a step further by rehabilitating the environment to a state where it can naturally regrow food on its own. By increasing soil biodiversity and organic matter, regenerative agriculture renders soil more resilient, and therefore able to withstand the severe weather impacts of climate change.

According to a 2021 study by Bain & Company and Nature United, transitioning to regenerative agriculture could help farmers halve emissions and increase profits. However, the study cautioned that farmers would need four years on average to realise these benefits and would ultimately lose profitability during the transition.

Another study, by the Ecdysis Foundation, found that farms with regenerative practices were 78% more profitable than conventional farming, thanks to lower input costs for seeds and fertilisers, as well as the ability to sell to more lucrative end markets. To this end, in 2021 food and beverage giant Nestlé launched a regenerative agriculture plan to invest $1.3bn over five years to help 500,000 farmers and 50,000 suppliers around the world improve soil organic matter and fertility.

The project aims to help farmers retain water and improve drainage, protect and restore biodiversity, and sequester carbon. Nestlé is also developing more environmentally friendly crops, including higher-yielding coffee and cocoa varieties, and is co-investing in their adoption by farmers in an effort to assume some of the costs and risks of the transition.

At the multilateral finance level, the Inter-American Development Bank is supporting projects to regrow pine and cacay trees in Colombia. The project hopes to increase yields of pine resin and cacay nuts, thereby giving indigenous farmers new income streams while helping to reverse deforestation.

Elsewhere, smaller-scale projects are using regenerative approaches to fight deforestation and reduce carbon emissions and pollution. In Peru, the World Wildlife Fund runs 10 fieldwork projects in the Madre de Dios region to promote regenerative agriculture techniques among local farmers. In addition, more than 200 farmers in Madre de Dios are participating in the Alliance for Regenerative Ranching in the Peruvian Amazon. The programme aims to ensure greater sustainability in ranching practices by implementing an agro-ecological system that allows soil to recover without undermining livestock productivity.

The programme builds technical capacity and understanding of practices that interspace cattle farms with wooded areas in order to provide a buffer against deforestation. Farmers then have the benefit of earning additional income from harvesting products and ingredients that the Amazon naturally produces.