In decades to come global food production needs to rise by almost 60% to keep up with the growing world population and this without any extra agricultural land available. The quality of a third of agricultural land has already deteriorated and agriculture is increasingly vulnerable to climate change. New technologies and use of data are making it possible to produce more from the same amount of land. Rabobank is a key driver of this new green revolution.
Planet Earth is getting busier. Recent United Nations forecasts suggest that in 2050 world population will be almost 9.8 billion people — a rise of more than 2 billion on current levels. Even further into the future the tally will rise to over 11 billion. Population growth will be particularly high in Africa, due partly to improved health care, better sanitation and better food.
The United Nations Food and Agriculture Organization (FAO) calculates that by 2050 we will need 60% more food compared to 2005 production levels. That’s equivalent to 110 per cent more grains, 135 per cent more meat, and 140 per cent more soybeans. It’s not just the number of mouths to feed that are increasing, but also the number of people shifting to a ‘Western’ diet, eating more calories, particularly from more meat and dairy products.
Agriculture versus nature
Using more land to produce food comes at the expense of nature. In the past 50 years in the Brazilian Amazon alone, a fifth of the forest has been sacrificed to agriculture and raising livestock. The Atlantic Forest, another valuable biotope along Brazil’s coast is also at risk of deforestation. Now around a third of the global land mass (excluding mountain chains, deserts, ice sheets and tundras) is used for agriculture and raising livestock. Almost everyone agrees that we should in fact be decreasing the percentage of land under cultivation, not increasing it.
‘Meeting the growing need for food while reducing environmental pressure is one of the biggest challenges of this century.’- Gilles Boumeester, Head of RaboResearch Food and Agribusiness
Better and smarter
What we really need to do is to make better and smarter use of the agricultural land available, believes Gilles Boumeester, Head of RaboResearch Food and Agribusiness: ‘Literally we have to get more out of the land. Currently about 30% of the land in use is degraded to some extent. We must reverse this trend.’
Common soil problems are the leaching of key nutrients, salinisation (a rise in the salt content of the soil), and subsidence which prevents air getting into the soil — perhaps because the water level is too low or because of excessive movements of heavy machinery on the land. What is even more problematic is that the most rapid deterioration in soil fertility is in Asia and Africa, the two most densely populated parts of the world.
‘In emerging economies too many small farmers use their land to survive. These smallholders are less efficient than bigger farmers,’ says Gilles Boumeester. ‘If those countries are sufficiently developed economically, some smallholders could choose different ways to earn a living. And the remaining farmers could increase their scale.’
New green revolution
Following the Second World War, a series of technical innovations generated a ‘green revolution’ in agriculture. Farmers obtained much better yields per hectare after the invention of artificial fertiliser and new pesticides, the development of more resilient wheat- corn- and rice crops, and wide-scale mechanisation of harvesting processes. The revolution started in the late 1940s in North America and Europe and spread to South America and Asia in the 60s and 70s. In Mexico the Wheat Improvement Project generated a seven-fold boost in the wheat harvest over 20 years. India and Pakistan doubled their wheat harvests in the 1960s.
Today we are on the threshold of a new technological revolution in agriculture. Increasingly smart agricultural technologies, combined with data-driven precision agriculture, are helping farmers reduce costs, increase yields and maximise profits.
High-tech farming business
Farms are increasingly becoming high-tech environments making rapid progress in using sensors and scanners which give real-time information on soil quality. The farmer can obtain comprehensive information on the chemical composition of his soil, without the need to send a soil sample to a laboratory. Some potato farmers are already planting sensors out in the potato fields. Not just to get information on the soil quality, but making them part of the harvesting process as well, checking that the lifting machinery is properly set. Farmers also use drones to check how their crops are doing and precisely target fertilisers or apply pesticide if they see signs of disease.
‘We’re on the threshold of a new technological revolution in agriculture’- Gilles Boumeester, Head of RaboResearch Food and Agribusiness
As a knowledge partner, lender and network partner Rabobank drives innovation in the food and agri sector in different ways. Together with Wageningen University in the Netherlands, Rabobank has set up the international FoodBytes scheme, known as F&A Next in the Netherlands. Both initiatives provide a pitching-platform that brings food and agri start-ups into contact with investors. One of the start-ups which obtained funding from this platform has now been acquired by a bigger company. And recently the ‘smart farming’ start-up Arable raised 4.25 million dollars via FoodBytes to further develop solar-powered sensors. These sensors can collect up to 40 different types of data which is automatically sent to the farmer’s computer or mobile phone. ‘If farmers can measure more, they can make the best possible use of their soil,’ says Gilles Boumeester. ‘These sorts of technology are going to help us raise the quality of production and with it the quality of the soil.’
Checklist for lending decisions
The bank is keen to talk to farmers about new technologies and the best possible ways of using scarce land. Gilles Boumeester: ‘In Brazil we developed a manual together with WWF (World Wildlife Fund) to help farmers do business in a socially responsible way. It gives them information on topics such as more sustainable water management, and how to apply the forest code (Brazilian legislation to combat Amazon deforestation). We make agreements with every client that they structure their business according to this manual. We use a pretty extensive checklist. For instance, we want farmers to tell us how they dispose of the waste water after they’ve cleaned equipment used to spray pesticides. Do they let it run off or do they collect it? We take their answers to the checklist into consideration in our lending decisions.’
Education on land diversification
It is well known that monoculture is an unsustainable form of land-use. In relative terms the soil quickly becomes exhausted, meaning that more land is needed, meaning more deforestation. It’s much smarter to diversify land use. Which is why Rabobank runs information campaigns for farmers on specific forms of land diversification, known as the Integrated Crop-Livestock-Forest (ICLF) system. This means that farmers switch between different uses for the land, for instance growing soy and eucalyptus, and then using the land for raising livestock and for forestry. Rabobank and WWF research shows that this type of land use, which was introduced in Brazil in the 1990s, ensures higher yields with lower investments. For instance, farmers spend less on fertilisers since the land is fertilised naturally by the cattle. The fact that the ground is more productive makes the crops more resilient to the emergence of climate-change related phenomena such as disruptions in rainfall and drought. Perhaps the biggest benefit is that this form of farming substantially reduces the amount of land needed - by up to 6 times.
Farming social network
Rabobank encourages farmers to share knowledge and best practices. And now they can do that online on GlobalFarmers.com. A social network set up by Rabobank a year ago. The bank’s farming customers can create a profile and consult each other. Just like on Facebook and LinkedIn, they can also create subgroups for specific themes or regions. The community now has over 1,000 members from all over the world. One of these is dairy farmer Kees Hemminga from Terband in the Dutch province of Friesland. He joined Global Farmers to stay in touch and share knowledge with the farmers he met during a trip through Australia and New Zealand. Kees Hemminga regularly visits the Global Farmers website to find relevant information. ‘It’s a good, practical source full of information about developments in agriculture which it would take me much longer to find from other sources. And when I ask a question on the forum, the answers are really useful.' Kees van Merwe, who runs an organic farm in Mozambique, is also enthusiastic about Global Farmers: ‘I share my knowledge on the platform and meet other farmers from all over the world who think the same way.’
Innovation doesn’t come cheap. Although working smarter and more efficiently brings benefits in the long term, it often requires substantial investment up front. This is where the bank comes in, explains Gilles Boumeester. ‘Our long history in the agricultural sector means we’re uniquely placed to understand the funding needs of farmers and other entrepreneurs in the food and agri sector.’
The bank doesn’t just grant loans, it advises farmers on risk management. For instance, how to cover the potential risk of price fluctuations through a hedging contract: they agree fixed prices with customers for some or all of their harvest. The bank also helps farmers by pre-financing seeds, fertiliser or machines at the start of the harvest season.
In developing markets, the issues are more basic. Many smaller farmers find it hard to gain access to funding. Rabobank tries to do something about this with Rabo Development, for instance by taking a minority share in a local bank. Rabo Development’s mission of ‘Reaching the unbanked’ means it works with these partner banks on plans to make financial services accessible for large groups of private individuals, farmers and small and medium-sized businesses.
New Green Revolution?
Who knows what the next few years will bring? Will we succeed in sparking a new ‘green revolution’? The answer will depend largely on how we use the land. Gilles Boumeester: ‘In the ideal scenario we would reward users for good land management. We could do that by providing financial incentives. But you can only do that if you have a good system in place to measure soil quality, and which takes several factors into consideration. That system doesn’t exist yet. So as far as I’m concerned, the development of a quality standard is the highest priority. As a bank, we have an influence on a lot of land in the world. So, let’s use that influence.’
Predicted growth of total world population (according to UN):
2017: 7.55 billion
2030: 8.55 billion
2050: 9.77 billion
2100: 11.18 billion
Current and estimated food consumption (average per person measured in kcal p/day):