Key insights on climate disruptions in agriculture - IDH

From oranges in Brazil to cocoa in West Africa, olives in southern Europe to coffee in Vietnam, permanently shifting weather patterns due to climate change are reducing crop yields, squeezing supplies and driving up prices.

On September 25, 2024, IDH and the Forest Positive Coalition from the Consumer Goods Forum organised the event “Responding to Climate Disruptions in Agriculture: Landscape Approaches for Resilient Farms and Forests.” With agriculture increasingly threatened by climate change, participants from across sectors gathered to discuss innovative solutions and share experiences on fostering resilience in global food systems. Speakers included Emily Kunen (Senior Director Agriculture & Forests at Pepsico), Kevin Rabinovitch (Chief Climate Officer at Mars), Nienke Stam (Director Restoration Finance & Capacity at WRI) and Daan Wensing (CEO of IDH).

By collecting and analysing data and insights on the effect of climate change on agriculture and by listening to our speakers and participants, we want to share the following key takeaways:

1. Climate change and environmental degradation are already disrupting global value chains.

For decades, global agricultural productivity has been growing. But for the first time, that steady growth trend seems to be ending. Extreme weather events resulting from climate change, such as droughts, storms, and heat waves, are disturbing agricultural production. Research shows that agricultural productivity in the global south is as much as 35% lower than it would be without climate change. This has a negative effect on farmers – who are seeing their yields and incomes decline, companies – who increasingly need to deal with volatile supply and price fluctuations, and consumers – who are confronted with sudden consumer price increases.

Research shows that the effects of climate change on staple crops are only beginning to unfold. By 2030, soy yields may decrease by more than 25% and wheat yields by 15% in the global south. By 2080, maize yields may be 20% lower, and rice yields in the global south may fall by nearly 25%. If we continue on this trajectory, there will not be enough food to support a growing population.

2. The growing impact of climate change is driving companies to adjust their procurement strategies.

Historically, businesses could manage supply chain risks by diversifying their sourcing and switching between regions when necessary. If one area faced a poor harvest, another could fill the gap. However, the increasing unpredictability of climate-related events means disruptions now occur simultaneously across multiple sourcing regions. In response, companies are realising the need to forge longer-term, more resilient relationships with farmers, enabling them to invest in sustainable practices.

3. Regenerative agriculture and protecting and restoring tropical forests have proven to contribute to resilient farms.

Regenerative practices such as agroforestry, crop rotation, and cover crops can improve soil health and yield and positively impact farmers’ incomes. For example, a partnership of public and private players in the Vietnam highlands supported farmers to implement regenerative agriculture, leading to a 10-19% yield increase, a 20% income increase, and 20% less water use.

In addition to on-farm practices, forest protection and restoration are key, as forests serve as a buffer against climate disruptions, creating a favourable microclimate. Data and technology innovations have proven the value of these approaches.

4. Landscape approaches are key to scaling climate-resilient solutions.

Value chain approaches alone are insufficient to tackle climate disruptions and environmental degradation. To tackle the problem at the root, this value chain work needs to be complemented with landscape-level action, where businesses collaborate with governments, civil society organisations, investors, and even competitors. This approach allows for pooling large investments, creating an enabling policy environment, and connecting to markets.

In Aceh Tamiang, Indonesia, a partnership between governments, businesses, and civil society is working on improving forest monitoring, restoring degraded ecosystems and building farmer resilience. This landscape initiative has yielded impressive results, including a 40% increase in palm oil yields, the protection of 100 hectares of forest, and the restoration of 929 hectares.

Companies are increasingly recognising the benefits of adopting a landscape approach and are seeking a common reference point to identify active landscapes, find investment opportunities and connect with stakeholders. SourceUp was put forward as a uniquely positioned platform, connecting buyers and other stakeholders in agri-commodity supply chains with landscape and jurisdictional initiatives in production areas. Through the platform buyers can identify investment opportunities and engage with landscape initiatives that match their priority commodities and sustainability targets

5. Farmers need to be supported to implement resilient solutions.

While regenerative and landscape-level solutions are promising, they require time and significant investment to implement. Farmers, who are on the front lines of climate change, must be empowered as stewards of the land. Speakers at the event emphasised the need for more investment in smallholder farmers—helping them access technology, training, and alternative income sources. Improved procurement practices, such as long-term commercial engagements and fair pricing, ensure farmers can continue producing sustainably while earning a stable income.

For example, the Sustainable Production of Calves Program builds pathways for sustainable land use and decarbonising value chains while ensuring smallholder inclusion and creating new opportunities for the private sector. The program enhances farmer resilience by providing training on best practices in calf rearing, improving access to quality resources, and facilitating connections to sustainable markets for fair pricing. It promotes risk management strategies and fosters collaborative networks among farmers, enabling knowledge sharing and community support. Through these initiatives, the program empowers farmers to adapt to challenges, ensuring their long-term viability and sustainability while contributing to environmental conservation and forest restoration efforts.