Could tariffs and capital drought threaten climate adaptation efforts in Asia-Pacific?

This was key thread of the opening session at the Asia-Pacific Agri-food Innovation Summit​ in Singapore, with industry heavyweights from Olam Agri, Rabobank, Temasek, Thai Wah and the International Rice Research Institute (IRRI) having their say.

The session, chaired by AgTechNavigator's editor-in-chief Gary Scattergood, focused on three key areas: climate adaptation, geopolitics and industry investment.

Climate adaptation: are we going backwards?

When it comes to a resilient agri-food supply chain, the panel highlighted concerns that current efforts to mitigate the impacts of climate change are not going far enough to ensure a secure and stable supply of produce.

Laurence Jassogne, Olam Agri’s vice president and head of nature and climate solutions, said she is concerned that the ‘adaptation gap’ in APAC is growing, and disproportionately affecting women and the poorest in the region.

Key to tackling this, she argued, is working hand in hand with farmers: “One of the main action points for us is to improve resilience by working with farmers on sustainable practices,” she said.

"For example, we have worked with rice farmers to reduce water use, while at a food system level, we also need to be able to respond to consumer needs for the reliable and affordable supply of food. We need to be able to respond to the climate shocks by having flexible supply chains to mitigate disruption in one country, or one region, by sourcing from another. But this flexibility really requires building resilience at the farm level.”

This view was echoed by Ho Ren Hua, director and CEO at agri-food major Thai Wah, which has undertaken much work to decarbonise ‘at source’.

“This is particularly the case at the soil level and around agri-inputs, which has really accelerated over the last year. Of course, because of harvest cycles, all these things take time, usually six to nine months. But we are definitely seeing innovation accelerate. So looking ahead, we need to continue to focus on affordability for the consumer, and decarbonising at source.”

In relation to rice, Yvonne Pinto, director general at IRRI, concurred that a lot of effort is being devoted to decarbonisation, necessitated by the increasing frequency and intensity of climate shocks.

“I think there is really a need for greater adaptation, and both investment in R&D and innovation. For rice, it isn't just about drought-resistance and tolerance etc, but also disease resistance and indeed creating more nutritional produce too. But scaling is a very challenging thing to do, and it has to be a multi-stakeholder transition, along with creating profitability that ultimately goes to farmers, because they are taking the most risk.”

Diane Boogaard, global head of food system transition at Rabobank agreed, adding that the whole supply chain needs to come together to drive decarbonisation and protect nature: “Farms can’t do this alone,” she said. “We have to help farmers with better soil health to upgrade land and produce better and more healthy food. The consumer needs to change habits too, and that’s not often said, if we want to save the planet.”

Geopolitical factors: big trouble ahead?​

Thai Wah’s Ho reiterated that the agri-food sector has been hit by global price hikes and inflation across the supply chain in the past year. He predicted this isn’t going to subside any time soon.

“Going into 2025 we are going to have to price in a lot more uncertainty,” he warned. “I think there will be two things we need to do. As a major agri-food supplier, one is to improve value for our customers because they are going through a tough time due to inflation and global macroeconomic factors.

“At the same time, if we look at the midstream level, over the next year we will look at how we can reduce the cost of water and the cost of energy. We have ramped up our solar panel systems and we have looked to reduce water costs by half with circularity systems. Finally, we are definitely seeing supply chain shifts between China, the US and South East Asia, and I think this will happen more over the next 6-9 months.

In relation to that last point, Temasek’s Anuj Maheshwari, head of agri-food and managing director of investment, directly addressed “the elephant in the room” – namely the risk of tariffs from the incoming US administration​.

Back in 2018 the US and China engaged in a tit-for-tat tariff war after the US imposed levies of 25% on some agricultural products. This time around, President-elect Trump has threatened tariffs of 60%.

“Most of the people in this room know the US is the biggest exporter of agricultural produce in the world, valued at $170bn,” said Maheswari.

“The biggest partner for exports outside of Mexico is China. And China is the biggest importer of agricultural goods in the world, largely from the US and Brazil. That harmony is going to go through severe disruption. While China has been stocking up, and has been open to GM innovations in soy and corn, we all know that its appetite continues to grow. As we discuss resilience, we need to acknowledge that we might be going backwards the next few years and all the discussions on decarbonisation might take a backseat as the focus turns to how can people get enough food.”

Investment winter: any sign of a thaw in APAC?​

The last 18 months has seen a significant drop-off in venture capital and growth equity investment in the region​.

While Rabobank’s Boogaard said that she was seeing signs of progress in operational expenditure investment in certain sectors, aided by banks reassessing their risk thresholds and costs for sustainability-driven projects, as well as building long-term relationships with farmers and producers.

However, Temasek’s Maheswari, predicted the VC chill will continue​.

“There is no doubt that the last 12-18 months have been tough in the venture capital and growth equity space,” he said. “That’s partly driven by the high global interest rate environment and the public stock markets doing so well. Generally, investment into venture capital and growth equity has been less, so this then trickles down. We know food and agriculture have been hit particularly hard.”

One silver lining, he added, is that a lot of capital has gone into energy transition in the past 18 months, aiding global sustainability efforts.

“I expect the next year to continue with this trend,” he said. “Also, the real appetite to put back more capital into the food and agriculture sector will come as some of the early innovators and start-ups are able to show they have scaled-up, can be commercially successful and list themselves on public markets. This will give investors the confidence there is money to be made, because we can’t just expect it to flow in regardless.”