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Economy

Asian farmers can't meet rising food demand: Rabobank

Dutch lender joins UN in $1bn campaign to alleviate problem

A boy harvests rice in Babelan village in the Bekasi district of Indonesia's West Java province.   © AP

HONG KONG -- Asians may be getting wealthier, but their money may not be able to buy them all the food they need, as the region faces a lack of arable land and low agricultural productivity, according to Dutch cooperative lender Rabobank.

"Although the population growth has slowed down quite a lot in China, the demand for food is still increasing very, very much because of the wealthier population, the mid-market that is existing now," Diane Boogaard, CEO of Rabobank Asia, told Nikkei Asian Review.

Rabobank Asia CEO Diane Boogaard

She noted that there was not enough land to satisfy the demand for more food by the Asian middle class, despite the region being home to the biggest rice producers in the world -- China, India and Indonesia. "Asia imports most of their food and agri products," said Boogaard.

Three-quarters of the world's farmers are in Asia but the region has on average less than one hectare of arable land per person to feed its population. This compares with five hectares per person in the U.S., according to Boogaard, who suggested the problem was exacerbated by low productivity due to low adoption of advanced technology.

"The land is being degraded by overutilization, by having farmers [moving] from good soil to less effective soil," said Boogaard. "They are affected by not using the best technology techniques."

She added: "It's a chicken-and-egg situation. If a farmer does not adopt the best practices, it's not out of luxury, it's because of poverty."

She pointed out that a lot of the farmers in the region are smallholders or subsistence players struggling with land rights. Without these rights, farmers have no means to offer collateral for financing, which is crucial for them to improve productivity.

"You need funds to invest in good seeds, good technology, even machines," said Boogaard. "Currently, the state is that farmers are too poor and are over-utilizing the land for too low a productivity for the people of tomorrow. To bring prosperity to the rural area is the beginning and the end."

In October, the Utrecht-based food and agricultural lender, together with United Nations Environment, launched a $1 billion worldwide initiative called "Kickstart Food" in the hope of addressing food-related issues such as land degradation, product wastage, crop price fluctuation, and malnutrition.

Under the three-year program, Rabobank will help advance agricultural technology in less developed regions by providing financing facilities while engaging its clients from around the world to share their technical know-how. It is also seeking to drive food and agricultural innovation by funding startups.

The efforts, said Boogaard, dovetail with the U.N.'s call to raise food production by 60% by 2050, while reducing the sector's environmental footprint by 50%. Agricultural activities contribute roughly a quarter of the world's total annual greenhouse gas emissions.

"We are going to kick-start many more things in order to reach farmers," said Boogaard, adding that urban farming and food safety are the bank's goals in Asia. There are currently five projects in the pipeline under the Asian chapter of the "Kickstart" campaign, which includes a replanting program in Indonesia and an initiative to support dry rice production with a Singapore-based company.

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