Agri-food accounts for over a third of all carbon dioxide equivalent emissions globally. In South and South East Asia, it can be up to 50% of emissions. It is also an area with existing technologies and practices that can be implemented ahead of 2030 to reduce emissions and improve farm-level profitability. This represents both an investment opportunity and an opportunity to create a more sustainable food system.
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Agri-food is a significant contributor to global emissions, accounting for about 34% of all emissions. This dynamic is even more pronounced in some regions in Asia, such as South and South East Asia, where it is up to 50% of total emissions. Agri-food is therefore a key consideration when looking to decarbonise Asia.
Technologies and practices are available today to reduce emissions, improve farm-level profitability and provide attractive investment opportunities. Implementing these available technologies and practices ahead of 2030 can have big results, fast.
The challenge lies in aligning stakeholders across the value chain, reaching a diverse group of smallholders and creating alternative revenue streams through carbon markets and targeted incentives. To do so will require coordination and collaboration.
In the third edition of The Asia Food Challenge, we highlight the scale of agri-food emissions in the region and the opportunity for action to decarbonise, while increasing the productivity and resilience of the agrif-food value chain, and improving farmer livelihoods.
We highlight five key traditional problem areas in agri-food in Asia that contribute to half of all emissions from Asia’s agri-food sector. Many of these problem areas are related to Asia’s farming landscape and geography – it is a diverse region with a high proportion of smallholder farmers. However, these problem areas also have available solutions to reduce emissions today.
These problem areas have readily available solutions. We have identified over 20 technologies and practices available today that work across the areas above. If implemented as we forecast, these solutions have the potential to reduce carbon from agri-food in Asia by approximately 12% by 2030 - a reduction of around 840,000 Mt CO2e, equivalent to the entire global aviation industry's emissions in 2022.
Acting to reduce these emissions also offers an attractive investment opportunity from the technology and infrastructure these practices require to succeed, such as micro-irrigation to support changing rice cultivation practices, technology to support the variable rate application of farming chemicals, and storage infrastructure with continuous cold chain. There is further opportunity in the emergence of digital platforms to engage with smallholder farmers, which are enabling farmers to access new markets and better inputs, and allowing big food organisations to work with the farmers growing the food to tackle their emissions.
Implementing these technologies and practices on addressable rice and cattle farms in Asia is forecast to require a $125bn investment in on-farm equipment and machinery, in addition to wider investment in infrastructure and other farm types. However, this is likely to result in a greater emissions reduction per dollar spent than action in energy or aviation, as these technologies and practices are readily available – they face social and financial barriers to use, rather than the technological barriers to use faced in the solutions to decarbonise energy and aviation.
There are significant hurdles to decarbonising Asia’s agri-food sector, from aligning actions among all stakeholders, to the challenges of providing sufficient and appropriate financing and incentives for smallholders to adopt new technologies, and of reaching the smallholders.
One common challenge, particularly for downstream organisations like producers, processors and retailers, is the difficulty of mapping and measuring emissions accurately, as well as the challenge of prioritising the optimal actions for decarbonisation. These organisations should follow a clear, tested process to identify their emissions in the Scope 1, 2 and 3 areas; prioritise actions based on their business needs and the potential impact in their operations, and set out an action plan, which should include ongoing measurements and reporting.
Despite the barriers, there are grounds for optimism that Asia’s agri-food industry can realise strong opportunities for rapid, significant decarbonisation.
There are several tail-winds supporting action on emissions in agri-food in the near-future:
The third edition of our Asia Food Challenge report delves into the scale of agri-food emission in the region and the potential pathways towards decarbonisation. This report is officially released by PwC, Rabobank, Temasek and Terrascope.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 151 countries with over 364,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com/sg. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
Rabobank is a Dutch cooperative bank and one of the largest financiers in the global food industry and agriculture. Enabling the change to a more sustainable food supply chain by working together is core to our mission of growing a better world together’. Our aim is to bridge the gap between “food” and ‘”finance” by providing access to our knowledge, networks in 37 countries and financing solutions. Our efforts are focused on addressing the four most pressing food issues: increasing the availability of food, improving access to food, promoting a balanced nutrition and increasing stability of food supply chains. Measured by Tier 1 capital, Rabobank Group is one of the world's largest financial institutions with high credit ratings by all rating agencies and is ranked by Sustainalytics in the Top-5 best performing banks in environmental, social and governance (ESG).
Read more about Rabobank at www.rabobank.com.
Temasek is a global investment company with a net portfolio value of S$382 billion (US$287b) as at 31 March 2023.
Our Purpose “So Every Generation Prospers” guides us to make a difference for today’s and future generations.
As an active investor, forward looking institution and trusted steward, we are committed to deliver sustainable value over the long term.
Temasek has overall corporate credit ratings of Aaa/AAA by rating agencies Moody’s Investors Service and S&P Global Ratings respectively.
Headquartered in Singapore, we have 13 offices in 9 countries around the world: Beijing, Hanoi, Mumbai, Shanghai, Shenzhen, and Singapore in Asia; and London, Brussels, Paris, New York, San Francisco, Washington DC, and Mexico City outside Asia.
For more information on Temasek, please visit www.temasek.com.sg.
Terrascope is an end-to-end decarbonisation SaaS platform that enables enterprises to measure and reduce their Scope 1, Scope 2 and Scope 3 emissions. Terrascope is an AI-assisted platform that leverages data science, machine learning, and sustainability expertise to aid large companies in decarbonising both their business operations and supply chains, guiding them on their net zero journey.
Publicly launched in June 2022, Terrascope works with customers across sectors, from agriculture, food & beverages, manufacturing, retail and luxury, to transportation, real estate and TMT. Globally headquartered in Singapore, Terrascope operates in major markets across APAC and EMEA, and is a partner of the Monetary Authority of Singapore’s ESG Impact Hub.
Learn more at https://www.terrascope.com/.
Asia accounts for around 60% of global nitrogen fertiliser usage despite having only 35% of the world's agricultural land. Although nitrogen application is the single most effective tool to increase crop yields, Asia's yields are only two-thirds of the highest wheat yields and half of the highest corn yields globally. Fertiliser overapplication is a particular challenge in Asia, partly in response to degraded soil quality, creating a continuous cycle of soil degradation as fertiliser overapplication can then further contribute to this cycle. Additionally, if fertiliser is overapplied at a point in time, fertiliser run-off, leaching and denitrification means some of the nitrogen applied will not be available for crop uptake, requiring further application at a later date to meet the needs of the crop throughout the growing cycle.
Asia produces nearly 90% of the world’s rice.
Rice is a significant source of methane emissions, in large part due to the practice of flooding rice paddies, which allows methane-producing microorganisms to thrive. Methane is a particularly potent greenhouse gas (GHG) – it has a global warming potential (GWP) 28 times higher than carbon dioxide over a 100-year period.
The burning of rice straw and stubble following harvest releases significant carbon. It can also lead to haze, which is a social issue. This has made rice straw burning a current focus of many local and national governments.
Asia is home to approximately 40% of the world’s cattle. The vast majority of these are in India, which rears about a third of the world’s cattle. Up to 60% of the cattle farms in India have herds of five cattle or fewer.
Ruminant livestock have unique digestive physiology compared with other livestock. They ferment hard-to-digest plant material in a rumen or foregut, which allows them to extract nutrients. Digestion is supported by the microbiota in the rumen, some of which produce methane, a potent greenhouse gas (GHG) Untreated animal is a notable sources of nitrous oxide emissions, another potent GHG.
Globally, about a third of the food harvested is not consumed – this is also the case in Asia. Food loss is defined as food lost between the point of harvest and retail, while food waste is food wasted at the retail or consumer level. Food loss is a particular challenge in Asia due to less developed storage, transportation and cold chain infrastructure. However, food loss and waste vary by region within Asia – parts of Asia where food is more scarce have very little waste (although still have high proportions of food loss). Other regions in Asia have high food waste. According to the FAO, Asia accounts for over 50% of the world’s total food waste.
Deforestation for agricultural purposes has historically been a problem area in Asia. The demand for palm oil from Indonesia and Malaysia led to the destruction of primary rainforest and peatlands, to be replaced by palm oil plantations. However, significant progress in managing land use change has been made, in particular since 2015-16.
Asia’s significant emissions reduction in this area since 2015-16 is largely due to the positive progress made on sustainable palm oil, which now serves as a positive example for other sources of deforestation in the region.