Results November 29, 2017

Climate-Smart Agriculture

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Cocoa and chocolate producing countries and companies take action to end deforestation.

Challenge and Opportunity

Growing enough safe and nutritious food for more than 9 billion people in 2050 in a changing climate will stretch our resource endowments and require enormous ingenuity.  Climate change’s impacts are already being felt in the form of reduced yields and more frequent extreme weather events that affect crops and livestock. Substantial investments in adaptation to climate change will be required to maintain current yields and to achieve food and nutrition security. 

Agriculture must be part of the solution to develop a low-carbon economy: currently, agriculture, forest loss and land use changes generate a quarter of the world’s greenhouse gases—and about 80% of deforestation worldwide is driven by agriculture. Without action, deforestation and forest degradation could rise substantially as farmers encroach on forestland to compensate for falling yields. 

Recent experiences have demonstrated that it’s possible to boost agricultural productivity, increase climate resilience and lower greenhouse gas emissions through climate-smart agriculture.

The World Bank is a leading financier of agriculture, with $4 billion in new commitments in Fiscal Year 2017. It works with countries, helping introduce innovation, and providing infrastructure and resources so that the food and agriculture sector is climate-smart, improves livelihoods and creates more and better jobs, includes inclusive and efficient value chains, and produces safe and nutritious food. The Bank has partnered with the International Center for Tropical Agriculture (CIAT) and Climate Change Agriculture and Food Security (CCAFS) to provide detailed country and region climate-smart profiles for a growing number of countries, and seeks to generate adaptation and mitigation co-benefits throughout its portfolio. For example, in China, the $313 million Integrated Modern Agriculture Development project supports the adoption of improved irrigation systems and other climate-smart agricultural practices in six provinces, helping about 380,000 rural households become more resilient to climate change. And in Uruguay, a World Bank-financed project is helping roll out sustainable farming and livestock practices that are climate smart – such as soil management plans, supervised by satellite, to curb erosion and increase carbon sequestration.

The International Finance Corporation (IFC) is investing in agribusiness projects in developing countries that increase productivity, enhance resilience and adaptation to climate change, and reduce greenhouse gas emissions. For example, IFC delivered a $40 million loan to Anyou Biotechnology Group in 2016 to scale up its innovative animal feed operations, whose formula cuts down on feed costs while reducing animal waste discharge and associated emissions by 30 %. And a joint IFC-Société Générale investment of €70 million to Burkina Faso’s biggest cotton company, SOFITEX will help farmers in its supply chain address productivity, water scarcity, and climate resilience concerns.  In the 2017 Fiscal Year alone IFC arranged over $800 million in financing for climate-smart agribusiness projects.

 

Transformative Action

Food companies facing supply chain disruptions are also taking notice of climate change and seeking to minimize volatility and insecure crop yields through more efficient and resilient agriculture.  Cocoa is a case in point. Rising global demand for chocolate combined with poor agricultural practices, underinvestment, and decreasing productivity in existing cocoa plantation estates are driving deforestation and forest degradation. Cocoa is naturally a shade loving species, requiring planting under a canopy of retained forest trees.

To address this challenge of growing cocoa demand and diminishing forests, the Cocoa and Forests Initiative, brings together top cocoa-producing countries Côte d’Ivoire and Ghana with leading chocolate and cocoa companies for concerted action to end deforestation from cocoa production. This coalition, led by IDH the Sustainable Trade Initiative, the Prince of Wales’s International Sustainability Unit and the World Cocoa Foundation, includes companies such as Nestlé, Mars, Ferrero, Hershey, Touton, Mondelēz, Olam, Ecom Group, Barry Callebaut, Cargill, CEMOI. There are currently 22 companies committed to the Cocoa and Forests Initiative.

Côte d’Ivoire and Ghana have announced plans to introduce a new approach for improved management of forest reserves, based on the level of degradation of the forests. Up-to-date maps on forest cover and land-use, as well as socio-economic data on cocoa farmers and their communities will be developed and publicly shared by the governments. The chocolate and cocoa industry agree to put in place verifiable monitoring systems for traceability from farm to the first purchase point for their own purchases of cocoa, and will work with the governments of Côte d’Ivoire and Ghana to ensure an effective national framework for traceability for all traders in the supply chain.

The governments of Ghana and Cote d’Ivoire and companies have agreed through Frameworks for Action to accelerate investment in long-term sustainable production of cocoa, with an emphasis on “growing more cocoa on less land”. Key actions include provision of improved planting materials, training in sustainable agricultural practices, and development and capacity-building of farmers’ organizations. 

The World Bank’s agriculture, forest and climate teams are working together with the Cocoa and Forests Initiative.   The World Bank is providing analytical and strategic support to Ghana and Cote d’Ivoire together with the Program on Forests (PROFOR), the BioCarbon Fund Initiative for Sustainable Forest Landscapes, and the Forest Carbon Partnership Facility. 

The public and private resources required to transform the West African cocoa sector are in the order of several billion dollars. 

 

Expected Results

Ghana and Côte d’Ivoire are the world’s two largest cocoa producing countries, contributing 60% of global cocoa supply.  In both countries, cocoa contributes significantly to GDP and provides livelihoods for about a quarter of the population.

The Cocoa and Forests Initiative could improve the lives of millions and generate positive environmental returns. As an example of the potential impact, investments in sustainable cocoa in Ghana could increase cocoa yields by 50 %, generating significant benefits for farmers and the government.  

 

Key Facts & Figures

  1. Agriculture can help reduce poverty, raise incomes and improve food security for 80% of the world's poor, who live in rural areas and work mainly in farming. Climate-smart agriculture refers to a range of proven and innovative practices that increase productivity, strengthen climate resilience and reduce agriculture’s greenhouse gas emissions.  
  2. Currently, agriculture, forestry and land use changes generate about 24% of the world’s greenhouse gases – and about 80% of deforestation worldwide is driven by agriculture. Rising food production will also increase the use of water by 40 – 50% in the coming decades.
  3. The World Bank is a leading financier of agriculture, with $4 billion in new commitments in Fiscal Year 2017. IFC investments were $3.8 billion.
  4. Meeting growing global demand will require an estimated 50% increase in food production between 2012 and 2050, with large potential for job creation in the food sector in developing countries.