Hot Commodities: Crops And Climate

Farmers

Hot Commodities

Crops And Climate

Hi all,

Climate change analysis and discussions took this year’s World Economic Forum Annual Meeting Davos 2020 by a storm. From the “Greta Thunberg” effect to stakeholder capitalism and what’s in stake for the future of agriculture and food.

Climate Change and the Future of Food

The “Greta Thunberg” Effect

The “Greta Thunberg” effect of the six-teen-year-old Swedish activist has shined a light on youth’s concern for climate action. Notably, at Davos 2020, Thunberg said that its critical to not surpass the global average temperature as “even at 1-degree people are dying from climate change”. Through her speeches and weekly climate marches, Thunberg has pushed for all actors whether small or large to fight for change.

Climate Change

Shareholder vs Stakeholder Capitalism

Shareholder capitalism focuses on profit as the main goal of a company. However, the discussion at the Davos 2020 conference with climate change as a top priority for many consumers shifted the discussion from shareholder to stakeholder capitalism to answer these environmental problems from a multi-level actor approach.

Stakeholder capitalism ensures private corporations’ main goals are to fit the needs of its stakeholders whether it be their customers, employees or other key players. Not only was this model brought up at Davos, but also at “the US Business Roundtable, America’s most influential business lobby group, announced this year that it would formally embrace stakeholder capitalism“.

For these reasons, the Forum has attempted to create clarity for these corporations interested in sustainability through their “ESG ecosystem map” pictured below. What remains in the upcoming developments of these changing discussions is to see how and what this model will look like for varying industries and corporations as there is no one-size fit all answer.

ESG Ecosystem Map

The Future of Agriculture and Food

At Davos 2020, the future of agriculture and food became a hot discussion with the context of climate change and stakeholder capitalism underlying three main necessities for its future: environmental sustainability, food security, and economic opportunity.

Environmental Sustainability

It’s no time like the present that environmental sustainability is greatly needed, as we currently “risk losing the world’s topsoil within 60 years”. Climate change is resulting in daily burdens for farmers trying to battle with the heavy unexpected changes like hail storms or fire outbreaks. While farmers are trying to adapt to these changing impacts, simultaneously, outside pressures are pushing them to opt for greener solutions. Not only are these innovations often expensive, but they are also time-consuming to learn and perfect a new method of production. For that reason, most farmers would need to have an incentive, most likely economic, to push them to take on this extra endeavor towards sustainability.

Food Security

The critical threshold of food security must not be forgotten when considering how climate change is affecting the future of the agricultural industry. Not only do we need to increase the production of food, but maintain the threshold for nutritionally valued foods. The “post-harvest losses and waste account for up to 50% of total calories available from farm to fork;” thus, to reach the United Nations Sustainable Development’s Second Goal of Zero Hunger by 2030 food systems need to be revamped to ensure a concrete solution.

Economic Opportunity

Certainly, environmental disasters are impacting all types of farmers around the world; however, policies must ensure that rural communities are supported while they tackle new environmentally sustainable projects. Additionally, steps towards the future of agriculture must consider educational opportunities for farmers to have a smooth transition. Therefore, to have a proactive response to climate change in the agricultural industry there must not just be the “Greta Thunberg” effect, but it must be economically viable for farmers.

Farmers

Rising Temperatures For Coffee Growers

Coffee has become so embedded in people’s lives, but it may become a greater delicacy as coffee becomes more difficult to grow and more expensive for day-to-day consumption. According to the Inter-American Development Bank, “rising temperatures will reduce the area suitable for growing coffee by up to 50% by 2050“. Therefore, as seen in the image below re-published, also by the Inter-American Development Bank, the coffee industry will be one of many that will be affected by an increasingly hot planet. For example, the heavy-rainfall tropics which is ideal for growing coffee are being impacted by an increasingly hot planet, increasing their probabilities of droughts.

Hot Planet

Additionally, according to the Inter-American Development bank, researchers have been looking into creating a coffee bean that will be able to resist these changes in weather. As of now, there are over one hundred known species of coffee worldwide, but only two of those are what is most commonly drank: Arabica and Robusta. The Arabica coffee species is “between 60% and 80% of the world’s coffee production” making it the most popular; however, it does not react well to change in temperatures while the Robust species is more adaptable.

Under these current considerations, researchers “aim to identify genes linked to heat- or disease-resistance”. Regardless, it will take decades of research and implementation before the world may see a climate-resistant coffee bean species which by that point will be decades too late for responding to these environmental changes.

Overall, according to the International Coffee Organization, global coffee demand increased by 2.2% over the last 4 years to a total of 169,337 thousand 60-kg bags. At the same time, global production of Arabica coffee is still the most popular in 2018 with 102,725 thousand 60-kg bags, while the Robustas coffee production had 69,726 thousand 60-kg bags.

Although, as seen in the graphic below that is composed with data from the International Coffee Organization, Robustas is seeing a greater percentage change than Arabica. In other words, farmers are beginning to look towards the more heat resistant bean even if Arabica coffee is a top favorite. Therefore, consumers may tell a change in the quality of coffee before seeing a change in the quantity of coffee, unless appropriate measures are addressed towards combating climate change.

Crop Year Production

The Future For Ethiopian Coffee Farmers

The coffee industry is a highly important commodity for Ethiopia’s economy accounting for “about 30 percent of Ethiopia’s exports and employs nearly 15 percent of the population.”

According to the iDE, most Ethiopian farmers rely on rainfall, but rising temperatures are making it more volatile to depend on. Coffee plants will not flower appropriately without the proper amount of water, or in turn, will be at a higher risk for mold with an excess of rainfall. Alternatives to rainwater do exist like irrigation methods, but they are an expensive additional cost for farmers. Large coffee growers will most likely be able to change to this environmental demand, however, small producers will be more and more presented with the consideration of whether or not investing in expensive technologies will be economically sustainable for them in the future.

In 2017, as an alternative for small coffee growers, the iDE with the support of the David and Lucile Packard Foundation, began promoting diversification projects for Ethiopian coffee farmers. They realized the positive affect of producing coffee and honey simultaneously as the “honey bees pollinate the coffee flowers and in turn get the sugars they need to make honey.” Rather than their full economic dependence relying on expensive irrigation technologies, diversifying their farms was seen as a viable option for small coffee growers looking for stability among environmental changes.

Coffee and Honey

Takeaways

The World Economic Forum Annual Meeting Davos 2020 discussion on climate change left the agriculture and food industry with various points to consider about the future. The “Greta Thunberg” effect has and is continuing to enlighten many about the reality of our future if business-as-usual is continued, certainly, consumers will see the result of these raising temperatures in their daily morning coffee.

For that reason, stakeholder capitalism has become an empowering option for those looking to play a changing role in the climate change effects as it won’t be curtailed by just one actor, but all actors will need to be prepared to take proactive actions to see a clearer future.

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-Editor, Elena Lopez Del Carril