H.E Dr. Bandar M. H. Hajjar President of the Islamic Development Bank
RESILIENT FARMS CAN REVERSE THE RURAL EXODUS
The pandemic’s uncontrollable nature has placed policymakers in the difficult position of making a choice between the health of the nation and the economy.
The impact of the lockdown has affected supply and demand on a global scale not seen in our lifetime, resulting in our first global depression. The effect will inevitably lead to an increase in inequalities and poverty, and the world may record its first increase in poverty since 1998.
During these critical times, actions taken by countries will determine their long-term success. It is therefore important that we look at the core industries in which certain states offer distinct competitive advantages.
Agriculture is one of the core industries in which our member countries have a competitive advantage.
These states have immense potential to be global leaders in cereal, horticulture, and meat production and processing. Focusing on this area will not only help tackle their short and medium-term issues, but it will also have the potential to increase their market share in the global economy in the long run.
Agriculture is recognised as a pathway for national transformation through socioeconomic development and as a crucial engine for growth.
Besides its obvious role in feeding humankind, agri-food has evolved into a diverse global sector whose operations range from farming to secondary processing, from small subsistence holdings to large multinationals. As such, it is a major factor in the overall economy, employment, investment and the environment.
Agri-food also plays a key role in achieving several of the United Nations’ Sustainable Development Goals, including the fight against poverty and hunger, to the demand
for decent work and economic growth, and also – in the case of dairy farming – the drive to boost gender diversity and equality.
However, the real value from agriculture in member countries lies largely untapped as most states concentrate on production.
This has resulted in nascent primary and secondary processing in the region, and IsDB member countries missing out on opportunities for higher value creation.
There are many trends and challenges that will profoundly impact the agri-food sector over the next decade. From the impact of the coronavirus pandemic, resulting in more transparent and diversified value chains, to the shift in consumer preferences, nutritional habits, and the emergence of new consumer groups.
At the same time, analysing the looming megatrends of a global population with an expected growth of 800 million in the next decade, will undoubtedly lead to increased demands for food.
AN INNOVATIVE, COLLABORATIVE APPROACH IS REQUIRED TO ENSURE THE BUILDING OF RESILIENT VALUE CHAINS.
Additionally, investigating the fundamental changes required in the agriculture landscape is needed now more than ever. After years of unsustainable farming, climate change, and resource-depleting agricultural practices that limit output and putting food security at risk. The solutions to these issues are entrenched in the aims of the SDGs, and working in tandem will be crucial for sustainable development.
Currently, IsDB countries are copious agricultural producers, but many show a structural weakness in food processing, causing them to miss out on the most lucrative segments of the agri-food value chains. Consequently, shrinking economic opportunities within the industry will continue to fuel a steady rural exodus in many countries, thereby planting the seed that will cripple agriculture production in the future.
Reversing rural exodus should be tackled by the creation of skilled jobs in the sector by encouraging mechanisation, workforce education, and improved infrastructure – a move that will directly address SDG 9.
The use of genetic engineering, automation, digitalisation and precision farming means that the current agri-food industry has become a technology-driven business in most developed economies.
However, member countries remain heavily dependent on manual labour; this in turn has made developed countries more competitive. With technology becoming cheaper and more applicable to any farm size, as well as the use of affordable, lowtech innovations, producers have a chance to catch up with their more developed competitors.
Failing to do so may significantly widen the productivity gap even further between the advanced economies and the developing and least developed ones.
The pandemic and ensuing lockdowns have exposed how the agri-food industry, like many other industries, is interdependent in complex value chains. The risks posed along the value chain, from input to output, requires countries and policymakers to take action in building a resilient agri-food value chain to prevent any prolonged and sustained negative effects.
Such negative outcomes may threaten the future prospects of both supplying and consuming countries.
Understanding the different stages and complexity of the value chains, and an innovative, collaborative approach, is required to ensure the building of resilient value chains.
In the highly volatile agriculture landscape we live in, IsDB member countries can create industry coalitions and partnerships to unlock their potential by leveraging their combined agri-food market of $650bn. Innovation and private sector involvement are crucial to improving the competitive position of IsDB member countries in the future.
The agri-food sectors in our member countries can attract private investors with fair risk-sharing and smarter allocations of capital, which in turn can foster innovation.
As the IsDB shifts towards this new business model, we will set clear goals to catalyse private and public investment and enhance the competitiveness in our member countries’ agriculture sector.
In doing so, we will deepen and widen value chains domestically, explore synergies between member countries, facilitate connectivity to the global markets, invest in science, technology and innovation, and ultimately build resilience for the future of our agricultural industry.