ESG proposed what it described as ‘innovative finance solutions’ to support sustainable rice production in its fresh paper, Financing Sustainable Rice for a Secure Future, which was published today with support of the UN Capital Development Fund (UNCDF), the Sustainable Rice Platform (SRP), the food and agribusiness company Phoenix, the World Business Council for Sustainable Development (WBCSD), and the Swiss Agency for Development and Cooperation (SDC).
“Rice is critical to global food security; however, it has been largely overlooked as an investment opportunity,” Wyn Ellis, executive director, SRP, said.
Through the report, Ellis said the partners are working to develop ‘innovative financial mechanisms’ that will help drive adoption of ‘proven climate-smart best practices’ and ‘catalyze wide-scale adoption among the world’s 144 million rice smallholders’ to achieve ‘sector transformation’ contributing to the SDGs and climate targets.
Proposed financial mechanisms include a ‘rice bond’ to finance rice value chains. Tony Siantonas, WBCSD director, explained: “Mobilizing innovative finance—such as a 'rice bond'—to support the sustainable transformation of rice-based landscapes is vital for productivity, livelihoods, climate and nature.”
ESG noted that 2020 is a ‘key year’ for the growth of green bonds in the agriculture sector, as highlighted by the Climate Bonds Initiative. A rice bond would enable a global rice processor, trader, or retailer to provide farmers with capital to transition to sustainable production, improve farming practices, increase yields and revenue, and become more resilient to climate risks, the report suggested.
Coming ahead of the 2019 UN Climate Change Conference (COP 25) in Madrid, ESG recommends leveraging international climate finance to attract private sector investment for climate-smart rice production.
Country pledges that include rice in their Nationally Determined Contributions (NDCs) would be ‘the first place to start’, the organisation suggested. At present, forty-eight countries include in their NDCs the commitment to reduce greenhouse gas emissions from rice paddies but have not yet outlined how they plan to incentivise the private sector to achieve these targets.
Climate breakdown will hit rice production
Rice is vital to the food security of over half the world’s population - 3.5 billion people. It is also the source of 10% of global anthropogenic methane emissions.
Under a business-as-usual scenario, the Intergovernmental Panel on Climate Change (IPCC) anticipates that rice production will fall across the world due to climate pressures. Asia will be particularly hard hit due to a convergence of land degradation, climate change, and water scarcity, the IPCC predicted.
“The failure of global food systems due to climate change is one of the biggest security challenges we face,” Alejandro Litovsky, CEO of ESG, warned.
“A radical overhaul of existing rice production systems is needed in Asia – the epicentre of global rice production and consumption – as well as Africa, which is now also increasingly depend on rice imports to ensure food security. Our report is a call to action for global impact investors to put ‘climate-smart’ rice farming practices at the centre of their impact investment strategies and for governments to use climate finance to attract private investment towards more resilient agriculture systems.”
Larger rice-producing countries such as India and China, will have more space to shift rice cultivation to cooler areas that will become suitable for growing rice. However, smaller producers and importers in the tropical belt, such as countries in Southeast Asia and West Africa, lack such flexibility to adapt.