Agriculture in Asia: Challenges and Opportunities

1. Agriculture in Asia: Challenges and Opportunities Mark W. Rosegrant, Claudia Ringler, Timothy B. Sulser, Siwa Msangi, Tingju Zhu, Rowena Valmonte-Santos, and Stanley Wood Presented during the Conference on “Agricultural and Rural Development for Reducing Poverty and Hunger in Asia: In Pursuit of Inclusive and Sustainable Growth”, Asian Development Bank, Manila, Philippines, August 9-10, 2007

2. Overview • Key Messages • Challenges for Agricultural Technology and Policy • Scenarios for Agricultural Technology • Strategic Policy and Investment Directions Page 2

3. Key Messages • Cereals and meats - real world food prices projected to rise 20-40 percent • Price increases driven by both demand and supply factors • Population growth and regional economic growth - increased growth in demand for food and changing composition of demand • Biofuel demand - competes with land and water resources used for food • Growing resource scarcity, particularly of water • Climate change and variability - reduced production growth in the poorest countries and regions Page 3

4. Key Messages • High commodity prices create investment and income opportunities but threaten poor consumers • Despite rapid economic growth, Asia remains home to the world’s largest number of poor and hungry people • Agriculture in Asia increasingly influences • global agricultural markets and developments • large and growing export and import volumes of food (including fish) and feed Page 4

5. Key Messages • Resource competition and environmental degradation require new focus on integration of growth and sustainability policy • Crop breeding has failed to achieve significant impacts in risk-prone or resource-poor areas, which will likely expand in size • Innovative research and development in agricultural technology will be crucial to address these challenges and pressures on food systems Page 5

6. Types of Asian Farming System Rice-Wheat system house largest number of stunted children in Asia Marginal upland areas house small numbers but largest concentration of poor Source: Hyman et al. forthcoming Directly related to malnutrition outcomes Page 6

7. Water Scarcity and Drought Stresses in Asia Proportion of failed growing seasons for rainfed cultivation, 100 year weather simulation • Drought • lowers average expected yields • Increases production risk, reducing technology adoption of poor farmers Source: Hyman et al. forthcoming Note: The figure illustrates 100 year weather simulation based on historic data analysis

8. Water Scarcity and Drought Stresses Irrigation water availability is declining Page 8

9. Climate Change • Exacerbates stresses on agricultural production • particularly for low- and mid-latitude developing countries, including those of Asia • Will adversely affect wheat productivity in the Indo-Gangetic Plains [CIMMYT] • Will reduce rice yields from increased nighttime temperature [IRRI] • Increases demand for water Page 9

10. Agricultural Research and Technology • Increasing crop productivity: water management, agricultural research and rural investment • Emphasis on crop breeding for both irrigated and rainfed agriculture • genetic modifications to develop stress tolerant materials to address water scarcity, salinization and groundwater contamination • Water harvesting, minimum tillage, integrated soil fertility management • Rural infrastructure investment to improve access to markets, credit, inputs Page 10

11. Biotechnology for Agriculture • Significant progress is being made on drought tolerance, salt tolerance, and nitrogen use efficiency • Largest benefits could be in rainfed and marginal environments, increasing crop yields and income and reducing pressure on irrigated environments • Must still resolve public acceptance and biosafety issues and transfer of technology • Public-private partnerships for development and commercialization of biotech/GMO varieties Page 11

12. Biofuels: Pro-Poor Pathways • Production processes for biofuels can bring benefits to the poor • Need to design production systems that will integrate rural households into the value chain • Allow for on-farm addition of value, rather than just extracting raw biomass (scale economies?) • More straightforward for the ‘first generation’ processes for producing biodiesel and ethanol, compared with emerging ligno-cellulosic technologies • Mitigation and adaptation funding to support bioenergy transitions in developing countries Page 12

13. Create and Expand Markets in Natural Resources • Establish economic incentives for water use • Create water rights for users, pay irrigators to use less water • Develop markets for agricultural and forest carbon , generating new value streams in rural areas • Expand markets for environmental services (watershed management, biodiversity) Page 13

14. Scenarios for Agricultural Technology • Business-As-Usual Scenario • High investment in agricultural research and knowledge (ARK) • Low investment in ARK • ARK ++ plus complementary investments • Irrigation expansion and water use efficiency • Rural roads • Access to water • Secondary female education Page 14

15. Sources of Food Production Growth, BAU, 2050 Page 15

16. Sources of Food Production Growth, ARK_high, 2050 Page 16

17. Projected Food Prices under Alternative Scenarios, 2050 Page 17

18. Projected Child Malnutrition Trends, Alternative Scenarios, Asia Page 18

19. Strategic Directions for Policy and Investments • Value chains start at the farm level • new production technology embedded in improved management systems is crucial for pro-poor growth • Biotechnology, including GMOs, is likely to central to development of technology adapted to less-favored areas • Staple food crops remain essential for poverty-reducing growth Page 19

20. Strategic Directions for Policy and Investments • Need full integration of policies aimed at growth and environmental sustainability • Dealing with scarce land and water resources and trade-offs with environment can only be met by bringing externalities into the growth equation  • Create markets and new value streams for agricultural ecosystem services Page 20

21. Thank You! Page 21