Commodity Shuttle: If the world is not agile, climate change will affect food production

If nothing is done, the effects of climate change will create a scenario of great challenges for Latin America and the Caribbean in the coming years.

The region will witness more constant droughts, more intense rains and greater floods. And one of the most affected sectors will be agriculture.

The concerns are from Javier Manzanares, deputy executive director of the Green Climate Fund, the world’s largest climate finance fund, created by the United Nations Framework Convention on Climate Change.

One of the main sectors among the most affected will be agriculture, with loss of productivity due to extremes of drought and cold.

Last year’s scenario already showed this. While some crops were punished by excessive heat and drought, others were harmed by intense cold, as happened with coffee.

For Manzanares, a change in management is necessary or the food production process will be affected. To respond to climate change, the fund wants to participate more in the Americas with investments in mitigating greenhouse gas emissions and in the search for greater climate resilience.

This Monday (18), when Manuel Otero assumed his second term as head of IICA (Inter-American Institute for Cooperation on Agriculture), the institute and the FVC announced an initiative to reduce the emission of methane gas in livestock, with resources from US$ 100 million. The FVC portfolio is US$ 20 billion.

IICA is one of the entities accredited by the fund to implement projects financed by its portfolio. In Brazil, Funbio, BNDES and Caixa Econômica Federal are also accredited.

Although agriculture is responsible for 25% of gas emissions, it is also a sector that is very sensitive to climate change, and ends up interfering with the economy as a whole, says Manzanares.
The sector is responsible for approximately 5% of the Gross Domestic Product and 23% of the region’s exports. In addition, it is responsible for 70% of the water consumed.

“This forces us to have a priority agenda in the assessment of these climate changes, and a more efficient administration of water”, says the deputy director of the fund.

But the region is not all problems. Thanks to its natural resources and biodiversity, it can become a world leader in conservation, according to Manzanares.

Green economies can play a central role, and the good use and stewardship of natural resources generates important geopolitical power. They are two parts of the same coin, he says.

The fund, through partner entities, finances projects aimed at reducing gas emissions and seeking to provide greater resilience to climate factors in developing countries. Brazil had seven projects approved, with financing of US$ 380 million.

Manzanares says that the projects approved in more than a hundred countries cover various sectors, including agriculture, forests, rational use of water, land use, industry and renewable energy generation.

The requirements for a project to be approved encompass a series of investment criteria defined by the fund.

These include the participation of beneficiary communities in project design, how much will be mitigated and at what cost, how the project benefits vulnerable groups, co-financing and estimates of environmental, social and economic benefits.

In addition, benefits generated for women, the indigenous population and acceptance of the project by the country’s government.

The FVC deputy director is not without concerns about the future of Latin America and the Caribbean. “If we are not able to develop more flexible and agile mechanisms to control the effects of the climate, we will not provide solutions for producers, especially for small ones”, he says.

Efforts must generate mechanisms to support farmers and ranchers, through a better flow of financing and the search for more efficient production processes.

Supporting entities, such as IICA, play a leading role in this regard, according to him. “If we don’t find a solution, the effects of climate change will increasingly affect agriculture and livestock.”

Café The 2022 harvest will yield 55.7 million bags of coffee, 17% more than in 2021. Despite the increase, production could have been even greater if it weren’t for the damage caused by drought and frost in coffee plantations last year.

Café 2 Arabica coffee production is expected to reach 38.8 million bags, according to the first harvest forecast by Conab (National Supply Company). If confirmed, the volume will increase by 23%, compared to 2021.

Café 3 The conilon coffee crop rose 4.1% this year, reaching 17 million bags. While the main production of arabica is in Minas Gerais (27 million bags), Espírito Santo has the lead in conilon (11.6 million bags).

Soy In January 2021, a soybean producer in Mato Grosso​ needed 12.1 bags to buy a ton of fertilizer. This month, you need 28.5 bags. The increase was 136%, according to data from MacroSector.

Soy 2 The bag went from R$170.72 to R$176.16 in the same period, with an increase of 3%. Compared to January 2020, however, the increase is 102%. About January 2019, it reaches 133%. The data are from Cepea.