Episode 2 – Securing Food and Nutrition in 2022
Reduced fertilizer consumption in 2022 raises the risk of significantly lower crop yields in the next harvest. That means lower food production and ultimately more people at risk of hunger and starvation.
In this second part of our Securing food and nutrition in 2022 podcast, Ben Valk - Global Head of Food and Agri Partnerships for Rabobank - speaks with IFA CEO/Director General Alzbeta Klein about emergency measures to ensure resilience - including short-term finance for farmers and hotspot country interventions such as the Sustain Africa Initiative.
In part one of the podcast, featuring Dr. David Nabarro - the World Health Organization's Special Envoy on Covid-19 – Klein and Nabarro discussed the evolving nature of the food crisis and what is being done to bridge farmers’ access to fertilizers, seeds and nutrient use efficiency advice.
Hello everyone, welcome to part two of the IFA podcast on ‘securing food and nutrition in 2022.’ My name Alzbeta Klein, I’m the CEO / Director General of the International Fertilizer Association (or IFA).
Earlier this month, in part one of this podcast, I spoke to Dr. David Nabarro - the World Health Organization's Special Envoy on Covid-19- about the evolving nature of the food crisis and what is being done to help.
Today, we’re recording this podcast while the United Nations General Assembly is happening in New York. The sense of urgency so far has been palpable. There is the climate crisis, the war in Ukraine, a cost-of-living crisis and an emerging food crisis, to name just a few.
But UN Secretary-General António Guterres said this: “ … let’s develop common solutions to common problems.” I think that’s a fitting segue to our guest. It’s with great pleasure that I welcome Ben Valk to this podcast.
Ben is the Global Head of Food and Agri Partnerships for Rabobank -- the globally leading Food and Agri bank. Ben has worked extensively in domestic and international banking. The throughline of Ben’s career is agriculture and food system transformation. For example, he brought about the first 60% of investment in the AGRI3 fund for forest conservation and sustainable agriculture. And Ben has contributed to the Food Action Alliance, the UN Food Systems Summit 2021, Covid-19 response and Food Systems for the Future.
And on top of that, Ben is a great friend of mine. Ben, thank you for joining us today. So, Ben, we're going to get started. What got you into banking? And what got you into banking, the agriculture sector in particular?
Yeah, thank you so much. It's great to be on this podcast. I got into banking because I studied math and IT. And banks are just wonderful IT environments. And that's what I did, basically, for the first seven years.
Then I got really into banking as a banker, in my home country, the Netherlands for 10 years, and I just wanted to break out of that environment, at some point. So, I really made a total switch to banking in developing countries, still very much on the finance side of things, not on the Food and Ag side of things. But increasingly, Food and Ag just caught my attention. That's basically brought me where I am now.
That is great. And when you switch to AG banking, compared to regular banking, did you feel that it was just closer to being real, closer to banking something that you can see grow? And that you can see people engaged? Did you see the difference?
You can bank, Ferraris, or Rolexes, or nuclear power plants, or whatever fancy things there are in the world; there are many invented and derivative, financial instruments and markets. But food is that most basic need for human people and that has really always attracted me. I had a few years when I was doing banking, but not so much yet in Food and Ag sector, and I was really jealous, I was envying my colleagues who were into that space. And I'm so privileged, I've been able to roll into it and accumulate my knowledge to where I am now.
That's great. So, your bank, Rabobank, is obviously the leading bank in Ag and Food and you have an excellent platform to work there. But you actually combine that with partnerships. So, it's not just banking the clients of the bank, but actually thinking through and creating partnerships.
So, before we get into the current situation in a world with global food crisis around us, can you just tell us a bit about what partnerships you've worked on? And what are the sort of hallmarks of the partnerships that were successful for you in the past?
Now, first of all, the Food and Ag sector is not an easy sector. It's highly informal. Two thirds of food systems globally are extremely informal, don't have legal entities, don't have land rights, don't have - in many cases - even personal identities. And banks are basically risk avoiding. First you have investors with lots of equity, family offices, and then after all that, and after the business has been developed for maybe a few years, then banks finally dare to kind of creep in behind the risk of others.
So honestly, to do banking, in the Food and Ag sector, but basically in many industries, banks need to merge with others with equity investors with others that are better in managing certain risks like country risk or political risk or whatever. So, partnerships is basically name of the game in banking, honestly, but in the Food and Ag sector, particularly.
It's even more relevant. So, let us move into today's world and I was wondering Ben what you and your bank as seeing in the markets today. So obviously, in the COVID, in a pandemic, the food sector performed in a certain way, because it was essential. And now we've got a war in Ukraine and we've got a number of other factors that provide huge pressure on food and Ag sector, what are you seeing in the world today?
Now, I'm thinking back of 2008, when there was a food crisis, and with high volatility and uncertainty and political interventions, export bans, that also brought a lot of volatility in the market. And that was really a crisis that I witnessed from nearby. I remember the rice price in West Africa, tripling, in those years, from 400 to $1,100 a tonne on the international trade, which made rise the basic food for many West Africans, unaffordable. And then, we worked two years ago on the UN Food System summit and launched a lot of good ideas for more sustainable food systems. But it didn't really flow that well. And I was asking myself by that time two years ago, do we need another crisis to understand what's really necessary to move food systems? But I couldn't have figured, of course, it would come so quickly. Now, at this moment, we are again, in situations of extreme volatility, of uncertainty. Even within industry sub sectors, within the food and ag space, some companies are posting record profits, others cannot keep up with developments and with economic market situations. So, it's an extremely uncertain time. I'm not saying that profits are immediately under pressure. For some, but by and large, not necessarily directly, but the uncertainty is extremely high. And of course, prices are going up. And that's hitting the poorest countries and the poorest people in those countries.
Absolutely. So, we are seeing huge pressure on Africa and when it comes to farm inputs, especially fertilizers, we are seeing some of the forecasts, including our own, where Sub Saharan Africa is facing quite a shortfall in food, in plant nutrients, in plant inputs and in farm inputs, etc. So, what are you seeing and what are you doing as a bank? And what are your clients doing in those affected regions?
The news came in, of course, early this year the terms food crisis and fertilizer crisis or farm inputs crisis, but fertilizer mostly, were mentioned again and again. And so, it actually caught my attention and I started to try to understand what the impact would be. And we have all kinds of market intelligence and there was a lot also on fertilizer, but it was mostly on the major users globally. So, there were lots of numbers on Brazil, on US, on Australia, on Europe. The volumes in Sub Saharan Africa and not that big, of course, so they kind of were hidden in that research. But by and large, I started to understand more and more and the humanitarian effect of any disruption in fertilizer supply to Sub Saharan Africa is probably higher there than anywhere else than anywhere else. We ended up with estimates on growing hunger that are really, really concerning. In Sub Saharan Africa, we think that hunger will increase this year by 50 to 80 million people and next year, with at least that number again, if not more. So that's extremely concerning. And in that sense, we need to do our utmost to see to what extent and how we can remedy that situation.
Absolutely, it is the small numbers but with a huge impact. So maybe you can touch on what some of your clients have been already doing. And I'm sure you have witnessed, Yara doing quite a bit of work in Africa and maybe some others. Can you highlight a few things that you already worked on over the past few weeks in the region.
What we saw is that there will be a lower uptake of fertilizer of a few million metric tonnes. African Development Bank has launched research that mentioned 3.9 million metric tonnes. We'll see how much exactly, but we can calculate, of course how much food that is for people. And that is exactly in the middle of that range of 50 to 80 million people - 62.5 if you use our assumptions.
So, Yara indeed had kind of set the stage already at the beginning of the pandemic by doing a few fertilizer programs, where especially in countries with little or no subsidized fertilizer schemes, where they would, for instance, do an action like buy to get one. Simple action but combined with extensive services with probably other assistance to farmers. They did that basically by themselves, very courageous action, I think.
But in the course of, as I said, early this year, we started to research this and thought, can we do this with more partners? And then IFA International Fertilizer Association came in, other companies came in, we now have really a crosscut of the industry interested in this. Companies like OCP, ETG, there will be many more, and not just on the fertilizer side, but also on seeds and crop protection on technical assistance to farmers.
So, we've now basically built this out to a coalition under the name of Sustain Africa. And that coalition is growing by the day because we work country by country, and with each new country that we add, we also add new partners. So new seed suppliers, local suppliers like Seed Co are on our list. We have added local banks to finance or prevent bank guarantees in place, the whole supply of farm inputs. So, it's actually a very exciting platform, Sustain Africa, that we've been able to build together with a lot of international partners.
Absolutely, this is really very exciting because I very much see the modularity in your approach - country by country and for every country a set of partners who can actually scale it up. So, it's a very approachable way to tackle what is actually a fairly large problem. But if it's broken into 10,000 tonnes a country or 20,000 tonnes a country, it’s much more doable. So very good to see.
The Sustain Africa program treats two topics in priority and that is availability of fertilizer and affordability of fertilizer. But of course, we cannot forget the sustainability aspect of the industry. And I think the message of the moment is treat soil and agriculture as the battery of life. And we have seen that this is indeed the battery of life. And I know that you have been a strong supporter of sustainability in our industry.
Rabobank has been a strong supporter of sustainability industry. So, what do you think can be done to make our soils healthier and help farmers feed the world sustainably? And also, what are you doing in sustain Africa to bring into weaving sustainability into the program?
Now first of all, Sustain Africa is indeed broader than just fertilizer and I'll say a few things later on about that, but even in the field of fertilizer, there's actually a lot that we can do. First of all, of course making sure that we exactly use the right and right amount of fertilizer, which means that we need to do soil testing or soil mapping. And there's actually a lot of information available for Africa, but it's not always used, it is very often not used honestly. So that is one we can do. So, that leads to much better use of also knowing about crop varieties of course that are planted.
Then, there is the option to go the route of adding bio fertilizer, which increases fertilizer uptake by plants or even see where the use of organic fertilizer is possible. Then, there is the option to go the route of adding bio fertilizer, which increases fertilizer uptake by plants or even see where the use of organic fertilizer is possible. And in a broader sense, you know, just doing better soil management and soil care
A lot of lands are degenerated in Sub Saharan Africa, as we also know from our practice in Latin America by the way, and to some extent it is possible to revitalize those lands by using fertilizer, but certainly also by using organic material by other tillage methods.
So, there's actually a whole lot we can do there and through Sustain Africa, we can supply that knowledge to farmers, step by step. So, the good thing about the pros I think of Sustain Africa is its short-term intervention focused on making sure that enough food gets produced. But at the same time, it's links to those more sustainable production practices. And outside the field of fertilizer that can also be done for instance, through offering more seeds from different crops and crop varieties. So, we can work on crop diversification. Take a country like Mozambique, right. Most farmers would grow white maize there, some would go paddy for rice, but there's a lot of child stunting. In some areas of Mozambique, still more than 50% of the children under three are stunted.
So, adding a vegetable package with few vegetable seeds makes so much more sense. Just imagine your plate if there's only maize cookies, or maize soup or, you know, whatever you do with the mighty white maize. Or you have the same plate, but with two or three types of vegetables, what is the better meal, right? In a country like Madagascar, we can look at drought tolerant seeds.
So, the Sustain Africa program is modular country by country, but it's also modular, what are the additional things we add to the fertilizer support to bring in to grow more sustainable food production.
So Ben you are touching two really important issues, which is nutrition and biodiversity. And actually the two go hand in hand, because if the farmer gets a variety to plant, you are ensuring that that you have some biodiversity on the field and you also ensuring that the nutritional profile of that meal is going to be very, very different. So that that's really interesting.
So, let us step now for a moment away from Africa and look at the global food system. What would it take Ben to get us to 2050 where we can feed the world sustainably and with good nutrition? What does it take? What are the two or three things that need to move to make that system viable?
That's a big question you're asking me. And a lot of people are breaking their heads around it. To be very honest, in food systems, a whole, whole lot has to happen and that really ranges from, indeed more sustainable production, but also other ways of processing, to eventually also, diets that are too one sided in many parts of the world. And each part of the world has its own kind of bias. You know, some countries are really consuming way too much animal protein. And we are not saying certainly as a bank, we are not saying to do away with animal protein, but it has to be consumed more responsibly and in quantities that are sustainable, globally. Some parts of the world will still see their animal protein consumption increase, of course, and that has to be balanced by others that will be more moderate and will be integrating at least more plant-based components into their meats, while still having the benefit and the privilege of having access to animal protein and dairy products.
So, it's basically the whole range and what I said in the beginning, also the informality of food systems. It doesn't look like that is ultimately the way forward. So, at Rabobank, we are super committed to develop smallholder farmer finance models, extension services and technical systems models. We develop digital platforms that finally can reach them one on one.
We also work with many aggregation models, including cooperatives, of course, as a cooperative bank. But eventually, one of the things that we very often overlook is that also that mid segment of family farms, commercial farms, emerging farmers, has to be developed. In some countries, you see a whole extensive range of smallholder farmers, millions of them, then a whole time nothing, and then big plantations.
The real growth, and the healthy support and provisioning of food to the world basically comes from mid-sized farms. And so, we also need to help countries raise the level of their industry, especially of their smaller farmers to that level. So, there are many, many interventions that we need to do we have specific climate focused and forest conservation and preventing of further deforestation initiatives, but it's a long agenda. It's a long road, honestly.
It's a long and winding road, Ben, this is this is actually indeed very, very complex. So let me try to recap what we just talked about, as we're going to wrap up this episode. So we started with partnerships, and Ben, as a Head of Partnerships, has created many and continues to create the one that is very powerful for the global situation today and that is Sustain Africa. And what is very special about this is the modularity of the approach and building it one country at a time tailored to the needs of the population and tailored to the needs of today. And then we went through what else is needed in a global food system so that it's sustainable and so that it can feed all of us by 2050. And here, obviously, looking at it holistically, looking at it as a system and building those partnerships that start with the farmer and ends with the nutrition profile that we would like to see for the population. That is where the future most likely lies overlaid with sustainability in all its facets, whether its biodiversity, whether its climate solutions, whether it's solid carbon and many, many others. So Ben, I would like to thank you for joining me today and looking forward to continuing our work on many aspects of the global food system. Thank you.
Thank you Alzbeta. It was better be my pleasure.