www.ifc.org/thoughtleadership NOTE 47 • OCT 2017 From Farm to Fork: Private Enterprise Can Reduce Food Loss Through Climate-Smart Agriculture More than a billion tons of food are lost annually across global food supply chains. Spillage, spoilage, insects, and rodents cause this post-harvest loss. Addressing it is a daunting challenge due to the complexity of the many factors involved. But it is a worthwhile challenge because of the potential benefits, including improved food security, nutrition, economic productivity, and response to climate change. Poor or nonexistent public infrastructure is often an underlying cause of food not being transported or processed effectively. And climate change damages existing infrastructure and increases losses. Despite the numerous environmental, economic, and socio-cultural barriers involved, there are many examples of private sector enterprises that have tackled post-harvest loss successfully. They focus on education, collaboration, and markets. In developing countries, losses in food supply chains of fruits, Estimates of the amount of food lost are staggering. Some vegetables, and grains take place predominantly during analyses estimate that one-third of global food production— production, post-harvest handling, storage, and processing or about 1.3 billion tons—is lost annually.1 Losses of that stages (Figures 1 and 2). Spillage and biological degradation magnitude compromise not only global food security, but of crops are the primary causes of losses, with biological also the world’s climate via greenhouse gas emissions. degradation usually responsible for the vast majority of Indeed, the production and biological degradation of 1.3 them. Spillage is mainly a problem during harvesting, billion tons of food results in emissions of more than 4 transportation, and processing, while biological degradation billion tons of carbon dioxide equivalent. That is greater occurs at all stages, particularly during storage operations. than the annual combined emisions of all countries other Biological degradation includes bacterial and fungal than China and the United States. 2 decomposition, insect infestations and rodent damage. There are also considerable economic costs related to post- Managing any of these factors requires in-depth knowledge harvest food loss. For example, the value of grains lost of what promotes them, what constrains them, and which annually in Sub-Saharan Africa alone has been estimated technologies can be employed cost-effectively to maintain at $4 billion (Figure 3). This exceeds the value of total the quality of the produce. food aid in that region over the last decade. So it is not Obtaining the required knowledge on biological surprising that reducing food loss has been hailed as an degradation and using it to reduce post-harvest losses is important way to increase food security, increase income challenging, particularly in developing countries. And streams for smallholder farmers, and mitigate climate careful scrutiny of potential benefits and pitfalls is required change. Solutions to the problem of food loss, however, to answer critical questions: How much food could are complex and elusive. Each country, region, farmer, practically be saved, and at what cost? And who would and food supply chain has a unique set of problems and benefit from the savings? potential solutions. 1 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. Importantly, the variability of post-harvest loss across Indeed, despite the proven efficacy of the technologies regions and supply chains makes it challenging to quantify introduced to Sub-Saharan Africa, there has been a accurately, particularly as losses in quality are difficult ‘deplorable lack of success’ according to a recent review to estimate. Despite this uncertainty, it is clear that of loss-reduction projects. Technologies are frequently smallholder farmers in developing countries stand to benefit abandoned by small-holder farmers, particularly after the most from reducing food losses. being introduced by donor projects.5 It is important to While large commercial farms tend to have the knowledge understand why this occurs and to apply lessons learned and finance need to reduce post-harvest losses, most that can inform future approaches. smallholder farmers do not. By deploying various Viewing value chain steps in isolation. One reason for the technologies and techniques, large farmers can reduce lack of success in the past is that single solutions have been losses to below 2 percent of their harvest, while the proposed and problems have been tackled in isolation. majority of smallholder farmers in developing countries What is often needed instead are multiple interventions regularly lose more than half of their crops to spillage, across the value chain. Although most losses occur during spoilage, insects, and rodents.3 storage and milling, each step in the chain can and often does result in significant losses that warrant remedies Technology and profits to the rescue? (Figure 1).6 The technologies available for reducing post-harvest food Furthermore, addressing only one step in the value chain is losses are varied and depend on the crop type and the main usually unlikely to achieve a major loss reduction. A cold factor to be averted, among other things. In some cases, storage chain is a good example of where the chain is only simple adjustments such as changing the containers used as strong as its weakest link, and a simple intervention to transport crops can significantly reduce spoilage and in one link is likely to be of little value if other links spillage. In other cases, investments into new storage and remain weak. Assessing the value chain of each crop as a processing solutions are required. whole is consequently of critical importance prior to any These include metal silos, sealed bags, threshing plants, intervention aiming at reducing post-harvest losses. and packaging facilities.4 The benefits of the technologies Ignoring the need for economies of scale. There are many available are clear, but effective implementation can be technologies available to assist in reducing post-harvest difficult and depends on a wide range of factors. FIGURE 1 Estimated losses from the post-harvest chain for rice in South Asia Source: Hodges, Rick J., Jean C. Buzby, and Ben Bennett. 2011. “Postharvest losses and waste in developed and less developed countries – Opportunities to improve resource use.” Journal of Agricultural Science. 2 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. FIGURE 2 Factors potentially resulting in Post-Harvest Losses in grain supply chains in developing countries Source: Kumar, Deepak and Prasanta Kalita. 2017. “Reducing postharvest losses during storage of grain crops to strengthen food security in developing countries, Foods.” ADM Institute for the Prevention of Postharvest Loss. losses (Figure 2).7 These include metal silos, new transport for storing grain should have a higher price than traditional systems, packaging facilities and processing plants. Such sack-cloth bags. Some farmers in Tanzania, for example, technologies, however, require economies of scale, large are unable to comprehend price differences between bags volumes of produce, and capital investment, and, therefore, that seem outwardly similar.9 are not readily available to the smallholder farmer. And third, although diatomaceous earth dust10 kills Even ostensibly low-cost options such as hermetically sealed insects by causing their cuticles to dry out, is non-toxic to bags have been perceived to be unaffordable by many small humans, and has long been used in China to protect grain farmers due to cash flow constraints, particularly at the from insects, it’s likely that some farmers will need to be time of the year when the purchase of bags is required.8 persuaded to mix their hard-won grain with what is, in Socio-cultural problems. Cultural norms and societal essence, a blend of earth and ancient algae. Socio-cultural perceptions also impede the uptake of low-cost technologies barriers to food loss remedies often seem obvious and easy that can reduce food losses. These factors are often simple, to solve in retrospect, yet identifying them can be difficult. yet they can require years to uncover unless there is a It is increasingly recognized that, in addition to traditional detailed social survey conducted before introducing a economic models, the use of behavioural models— technology. There may also be a need for ongoing technical generated from within the relatively new behavioural support and education. sciences —are essential for guiding the adoption of new Three examples highlight these problems. First, metal silos technologies by communities.11 for storing grain have not been used in some areas of Africa Climate change, pests and infrastructure. The expected because due to a strong cultural imperative to store grain in impacts of climate change across Sub-Saharan Africa the home. Second, in some countries it has been difficult for include increased frequency and severity of both droughts smallholder farmers to accept that hermetically sealed bags and floods. Crop growing seasons are also likely to shorten 3 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. and air temperatures will inevitably increase. All of these dry spells and intense heat, rodents will tend to leave the impacts are likely to increase post-harvest food losses in fields and move into human habitations looking for food. numerous ways, with potentially disastrous consequences Traditional storage systems in Africa are often not rodent- for food security and human health. Three examples proof and, consequently, large losses of stored crops can be highlight the dangers of climate change. expected during such plagues. First, bacterial and fungal spoilage of crops in storage And third, floods and landslides frequently damage will greatly increase in environments that become moister infrastructure used along food supply chains. A simple and warmer. Spoilage not only reduces income and food example is a road network used to access markets and availability, but may also result in severe negative impacts crop storage facilities. Poor infrastructure in developing on human health. countries already constrains transport and storage of For example, when fungi spoil grains they release food, and is often identified as the main factor underlying dangerous mycotoxins which are subsequently ingested by post-harvest food losses there.13 Climate change-induced consumers. The effects of mycotoxins on human health and flooding is thus a danger that threatens to greatly productivity can be extreme and should be seen as a matter undermine food security not only through damage to of grave concern by all participants in the value chain.12 agricultural productivity but also by increasing post- harvest losses. Second, insect and rodent outbreaks are also expected to increase as rainfall becomes more erratic. This is a result The examples described here are just a few of the of intense rainfall events causing wetter than normal soils. numerous effects of climate change on food supply chains. The combination of wet topsoils and warm temperatures Such effects will warrant careful analysis by any entities promotes the reproduction of insect pests that attack crops wishing to resolve post-harvest losses in developing both in the fields and in storage. countries. Climate-smart interventions will need to be honed for each effect. Growth and reproduction of rodents are also promoted by flushes of vegetation that arise on wet topsoils. Plagues While climate change affects post-harvest losses, the of rodents can easily arise in such circumstances. If the converse is also true, as noted above. Food products carry vegetation then dies back following climate change-induced an embedded carbon footprint, and food loss increases 5–10% 10–15% 15–20% 20–25% 25–30% 30–35% Wheat Sorghum Maize FIGURE 1Estimated cumulative post-harvest weight loss in 2007 in % from production of wheat, sorghum, and maize for countries in east and southern Africa Source: Hodges, Buzby, and Bennett. 2011. 4 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. this footprint unnecessarily. Additional land, water, and preferable system; here, crop harvests are offered as a agricultural inputs are needed to produce food that is guarantee for a cash loan. Microcredit can be issued ultimately wasted. against relatively small volumes of crops produced by Indeed, at a global scale, producing food that is subsequently smallholder farmers, while larger loans can be designed to lost requires an estimated 1.4 billion extra hectares of be accessible to farmer associations. agricultural cropland, land that could be and should be Although a lack of access to sufficient—or indeed any— supporting carbon-absorbing forests. Moreover, food waste credit frequently prevents smallholder farmers from that ends up in landfill sites produces methane, a greenhouse purchasing suitable technologies for reducing post-harvest gas with approximately twenty times more impact on food losses, in many cases simple skills in managing cash global warming than carbon dioxide. Reducing post- and taking investment decisions are the main barriers. harvest food losses, therefore, has considerable potential for For example, the purchase of hermetically sealed bags for contributing meaningfully to reducing greenhouse gases in storing grain was found to be a sensible as well as affordable the atmosphere. investment for smallholder farmers in Tanzania, but very few Lack of knowledge and skills. Technologies to reduce post- farmers opted to buy them when the first became available. harvest losses, whether they are simple like hermetically This was primarily due to the fact that farmers’ cash sealed bags or complex like large processing and packaging reserves were lowest at the end of the growing season facilities, require knowledge and skills to implement. As when the bags were needed, and also that a return on the one study noted, even the simple technologies for reducing investment two to three years after the purchase was a post-harvest losses are ‘precision-oriented’ requiring foreign and unwelcome concept. The farmers viewed the ‘careful attention to small details’.14 Providers of new investment in a more favourable light once the distributers technologies in Sub-Saharan Africa have often found that of the technology had invested time into explaining both the use of the technology is effective at the outset but that the long-term benefits of the investment and the advantages the efficacy and hence adoption of the technologies decline of purchasing the bags at the beginning of the growing through time. This is often because ‘attention to small season when the expenditure was more affordable. details’—such as ensuring hermetically sealed bags remain Successful navigation through the maze of PHL fully sealed—tends to decline in time unless technical support from the supplier is ongoing. Navigating the complex array of problems described above is a daunting prospect for any private sector entity wishing Inadequate knowledge and skills also often impede non- to contribute to solving the problem of post-harvest technical solutions to food loss. Warehousing, which includes loss in a particular food supply chain. As noted earlier, warehouse receipt systems (WRS) and related inventory interventions are often required along numerous links in credit, is an example.15 It allows farmers to store crops in a the chain. Economies of scale need to be created. centralised, managed warehouse and receive a transferable receipt. This provides farmers with much-needed liquidity, All social and cultural barriers need to be assessed and and stores crops effectively. However, despite their apparent appropriate interventions devised. Furthermore, skills simplicity, such systems have only been functioning well in and knowledge need to be imparted to ensure that all several countries in Sub-Saharan Africa. interventions can be sustainably managed and maintained through time. Innovative solutions to insufficient and ailing Although it remains unclear why such systems have had public infrastructure, including ways to connect remote only limited success, the most likely explanation is that smallholder farmers in a cost-effective manner to markets, stakeholders involved in warehousing and warehouse also need to be devised. receipts financing lack sufficient knowledge and have not been trained well enough to navigate the complexities Finally, the impacts of climate change on spoilage, pests of fluctuating market prices of the stored stocks.16 and infrastructure will need to be modelled and taken into Furthermore, the large throughputs of crops that are account when designing all responses to reduce food loss. required to make warehouse operations economically viable For example, technologies and infrastructure employed will often cannot be achieved by smallholder farmers. need to be climate-proofed. Despite the complexity of post- harvest loss, the private sector has risen to the challenge in For small-scale operations, inventory credit may be a 5 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. many different food supply chains and countries. Examples facilitated by Blue Sky. The farmers are paid promptly and are discussed below, from grain and fruit production in receive prices for their fruit. The prices are agreed upon Ghana to vegetation production in the Philippines and annually, they are higher than the costs of production, and coffee production in South America. The common themes they are adjusted for inflation. emerging from these success stories include the following. The company also reduced post-harvest loss by constructing First, there is a strong focus on educating all actors in the a local road network that links fields and processing plants, value chain on the importance of reducing post-harvest loss moving the production of fruits closer to the processing and how to employ solutions that do so. Second, there is plants, establishing a juice processing plant, building an emphasis on effective communication and collaboration packaging facilities, and managing the logistics of airfreight among different sets of actors. Collaboration among producers to ensure that their fresh-cut fruit arrives on the shelves of as well as between producers and buyers in particular has European supermarkets within 48 hours after harvesting. been found to greatly reduce costs by shortening the value Since its establishment in 1998, Blue Sky has grown by chain and improving the transfer of appropriate technologies scaling up its Ghanaian operations and replicating its model across the shortened chain. And third, there is a strong in Brazil, Egypt, and South Africa. In 2010 the company commitment to a market-orientated approach, as opposed to sold 3,800 tonnes of processed fruit and generated sales of using local cooperatives. While a market-orientated approach $24 million from its Ghanaian operations alone. ensures that actors are accountable for all costs, the use of Twinning commercial farmers with smallholder farmers local cooperatives frequently leads to a lack of accountability in the Philippines. The Northern Mindanao Vegetable and associated unnecessary expenditures. Producers Association, or NorMinVeggies, is a new type of Investments in the grain and fruit supply chains in Ghana. market facilitator linking smallholder vegetable producers Two companies in Ghana, Premium Foods and Blue in the Philippines to supermarket chains, hotels, fast food Sky Inc., demonstrate how education, communication, chains and export markets.19 collaboration, and a market-orientated culture can combine The association was established in 1999 by a group of effectively to reduce food loss in two different supply chains. farmers determined to capitalize on the emergence of Premium Foods has invested in an agribusiness centre that supermarkets across this Pacific archipelago. The farmers includes grain drying, shelling, and storage facilities that are comprised two distinct groups: smallholder and mid-size integrally linked with farmer organizations, banks, business farmers. Prior to the formation of the association, only the service providers, and input suppliers.17 mid-size farmers had access to capital, technical advice and Smallholder farmers using the agribusiness centre pay for technological solutions for PHL. Over time, the smallholder extension services and receive training on a wide range farmers learned new agronomic techniques and commercial of agronomic subjects. The centre receives grain from approaches from the mid-sized farmers. the farmers before it has been dried. The grain is then The benefit for all farmers was that production of all 12 processed and sold by the centre. Loans from the input different types of vegetables consistently reached critical suppliers to farmers are paid off by the centre. volumes that enabled NorMinVeggies to negotiate from Post-harvest loss is greatly reduced as a result of the shorter a position of strength with the supermarkets. To control time period required to dry the grain compared with quality, the association introduced quality assurance traditional methods. The reduction in drying time is also a schemes, production schedules and traceability systems. climate-smart agricultural approach because drying grain These were rigorously adhered to, with lead farmers is increasingly difficult for farmers under climate change coaching other farmers and acting as quality managers. conditions, which include increasingly erratic and intense PHL on smallholder farms was up to 25% greater before rainfall events. the association introduced quality controls. By 2011 more Blue Sky, a fruit processor, was established by an investor than 5,000 farmers were operating under the umbrella of with strong ties to supermarkets in Europe.18 The company NorMinVeggies. works closely with smallholder farmers and provides free Coffee value chain in Central America. Beginning in 2003, training, free technical support, and interest-free loans. this project funded by the Inter-American Development Bank Fair Trade and Ethical Trade Organic certification are also has selectively targeted cooperatives of smallholder coffee 6 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. producers who grew coffee at more than 1,200 meters above The bank also provided the project cooperatives with sea level, a requirement for speciality coffee.20 The model matching funds for investments in infrastructure such as implemented by the project had three core components: coffee washing stations, which reduced post-harvest losses. access to markets, access to training and coordination, and The success of the project was evident in the increase in building collaboration across the value chain. the number of participating producers, from 3,000 at the outset to 6,000 at the close of the project in 2009; in the increased productivity of producers; in the increase in BOX 1 Warehouse Financing in Tanzania quality of coffee produced; and in the higher prices secured as a result of having larger volumes to trade. Tanzania’s economy relies heavily on agriculture, and climate change is already affecting the pro- Recommendations: running the private sector ductivity levels of key commodities. Tanzania is gauntlet within a food chain committed to increasing yields through Climate Smart Agriculture by offering better input supplies It is an unfortunate reality that for every new private sector (seeds, chemicals, fertilizers, etc.), precision farm- enterprise wanting to address post-harvest food loss and ing techniques, and improved irrigation systems associated problems within a particular food supply chain to smallholder farmers. It also seeks to protect in developing countries, only a small fraction will succeed smallholder farmers against climate related risks, and become large profitable entities over the long-term. increase productivity levels through crop insur- Intense research on all the factors discussed in this note is ance, and the use of warehouse receipts through consequently crucial before investing in such a venture. approved efficient storage facilities. These allow A critical aspect of such research would be to undertake the agricultural supply chain to improve post-har- vest practices—improved transport and storage small-scale interventions—metal silos and hermetically facilities, better farm management, improved sealed bags for storing grain, for example—that are harvesting techniques, etc.—which will reduce specifically aimed at understanding the socio-cultural crop losses and help maximize the portion of the environment of a particular area. Once data is gathered on harvested output delivered to markets. actual interventions (as opposed to theoretical hypotheses), IFC’s invested project entails a $40 million credit investors in such technologies will be better prepared to line under the Global Warehouse Finance Program make informed decisions. (GWFP) to CRDB Bank Plc. in Tanzania. By using Large banking institutions need to be aware that successful warehousing receipts as collateral, CRDB can ex- large-scale interventions to reduce post-harvest food loss tend loans to medium-sized domestic traders and in a value chain may require a combination of making cooperatives, which typically have less financing sufficient finance available and ensuring that sufficient options than global agro-exporters. By increasing lateral thinking has been done. access to finance in the agri-business sector, the project will help integrate Tanzanian smallholder A recent example from West Africa illustrates this point. farmers into the global food supply chain, leverag- The onion food supply chain in West Africa experiences ing Tanzania’s existing trade channels in key export considerable post-harvest loss because processing of the cash crops such as coffee and cashew, and other onions is usually undertaken hundreds of kilometres away food crops. IFC has provided advisory services for from farms. Investors have considered the construction of collateral managers who monitor agri products in processing factories closer to production areas to address storage for CRDB, funded by the Government of the problem. Ultimately, however, such investments have Japan, to improve the monitoring techniques that tended to be constrained by unreliable power supplies. can potentially contribute to reduce post-harvest losses. Japan and IFC have common objectives to A potential solution to overcome such a barrier to investment reduce such losses in Sub-Saharan Africa by work- is a private sector investment in a large solar power plant ing with local bank partners, agricultural players that provides reliable electricity to both an onion processing including farmer cooperatives, small- and medi- plant and surrounding villages, irrigated farms, clinics, um-sized business aggregators, processors, and and schools. Addressing post-harvest food loss in this way traders, as well as collateral managers. could lead to virtuous cycles not only for food security and nutrition, but also the economy as a whole, health of 7 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. nearby communities, and education of school children. adoption of climate-smart agricultural practices. Where Even if interventions to address food loss are not twinned appropriate, agribusiness centres could partner with with electrical power, virtuous cycles for local economies microfinance institutions to offer farmers inventory credit. and communities may occur when successful private sector The resulting increased liquidity from cash loans would enterprises that reduce food loss are successfully established. allow farmers to wait for favorable market conditions. This The enterprises described above, from Ghana, the would further reduce food waste as seasonal market ‘gluts’ Philippines, and Central America, demonstrate this point. are avoided when cash-strapped farmers are no longer Incomes and skill sets of all the farmers involved with these forced to sell their crops at unfavourable prices. enterprises increased markedly. The infrastructure and Funding the modification of value chains. The multi- technologies supporting their food chains were modernised stakeholder nature of value chains makes modifying them a and maintained. Environmental management was improved, complex undertaking. However, there are existing NGOs and ensuring that ecosystems supporting their farming ventures other organisations that focus on reduction of post-harvest were sustainably managed. And, importantly, the volume and food loss by creating sustainable food value chains. Such quality of food produced for consumption within their value entities could potentially be supported by the private sector chains increased. Taking the above into account, what are the through a specialist fund that provides financing and tailored potential low-hanging fruit for private sector investment? technical support. Such a fund could provide the credit Providing appropriate technologies. Across Sub-Saharan for projects addressing an entire value chain and also be a Africa there are many successful enterprises producing knowledge broker for best practices on reducing food losses. food-loss reduction products such as storage containers Conclusion and hermetically sealed bags. Prior to investing in such For private sector investors, the examples from Ghana, enterprises, plans for overcoming local social and economic the Philippines, and Central America have considerable barriers need to be studied. Capacity building of local potential for replication within food supply chains across farmers, with respect to using and financing the products, the developing world. Intense analyses by multi-disciplinary are crucial. Furthermore, technologies—and supply chains teams will need to be conducted on socio-cultural factors, using them—need to be tailored to the infrastructure as well as consideration of appropriate technologies to available in a particular geographic area. address post-harvest food losses, the economic opportunities Over large parts of Sub-Saharan Africa, large private sector involved, and the likely climate change impacts. investments in modern technologies to reduce food loss first Once this knowledge has been acquired, the structure require investments in infrastructure by the public sector. and composition of potential private sector enterprises to In Kenya, for example, entrepreneurs in the avocado supply reduce food loss can be designed. For such enterprises to be chain only started investing in refrigerated containers after successful they will need to focus intensely on education, the government had provided appropriate port facilities collaboration, and market-oriented approaches that address to support a cold storage chain. 21 Similarly, private sector the many factors that reduce the supply of food traveling companies tend to construct large warehousing facilities for from farm to fork. grain storage in Sub-Saharan African where road networks to smallholder grain farms are relatively developed. The economic and humanitarian rewards of doing so cannot be overstated. Billions of tons of food can Establishing agribusiness centers. Agribusiness centres— potentially be saved, leading to improved food security, those established by Premium Foods in Ghana are an better nutrition, increased productivity, and greater example—can help to reduce post-harvest food loss by political stability in developing countries. n providing farmers with appropriate technologies and extension services. Such centers can become important ABOUT THE AUTHOR nexus points for individual farmers, connecting them to Anthony Mills is CEO of C4 EcoSolutions, Cape Town, South other farmers, agri-suppliers, and buyers. Africa, focusing on innovative and evidence-based solutions for Agricentres can also create economies of scale for adapting to climate change and resulting opportunities for the smallholder farmers, they can enable transport from the private sector. He is also Extraordinary Professor at Stellenbosch field to a storage depot, and they can guide farmers on University, South Africa. (anthony.mills@c4es.co.za) 8 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. ACKNOWLEDGMENTS Business Development, Climate Business, IFC; Thomas The author would like to thank the following colleagues Rehermann, Senior Economist, Thought Leadership, VP for their review and suggestions: Nina Zegger, Global Head, Economics and Private Sector Development, IFC, and René Schieritz, Kevin Emslie and Pierre Bégat, Environmental and Global Climate Business, Manufacturing, Agribusiness and Climate Change Consultants, C4 EcoSolutions. Social Services, IFC; Anup Jagwani, Principal Investment Officer, Agribusiness and Forestry, Manufacturing, Agribusi- ADDITIONAL NOTE ABOUT ness and Social Services, IFC; Ahmad Slaibi, Operations CLIMATE SMART AGRIBUSINESS Officer, Clean Energy & Resource Efficiency, Cross Cutting Advisory, IFC; Thomas Kerr, Principal Industry Specialist, This note is one of two EM Compass Notes about private Climate Policy Team, Climate Business, IFC; Makiko Toyoda, sector opportunities within Climate Smart Agribusiness. The Senior Trade Finance Officer, Trade & Supply Chain, Products second note focuses on how precision farming can enable – Financial Institutions Group, IFC; Tibor Kludovacz, Industry climate-smart agribusinesss and was concurrently published Specialist, Climate Business – Financial Institutions Group, as EM Compass Note 46. IFC; Marcene Broadwater, Global Head, Climate Strategy & For media queries, please contact Nadine Ghannam: nsghannam@ifc.org. ABOUT IFC AND WAREHOUSE FINANCING IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, IFC delivered a record $19.3 billion in long- term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit www.ifc.org. IFC aims to create markets for farmers and traders in emerging markets and has successfully launched the $500 million Global Warehouse Finance Program (GWFP) to allow farmers access to finance, reduce post-harvest losses, improve the stability of market prices, and encourage formalization of agri- businesses. Approved in 2010, GWFP promotes investment in warehouse receipts financing by working with partner banks, and offers advisory services. Warehouse financing is a secured lending technique that is especially beneficial for farmers and small- and medium-sized businesses, which are often otherwise unable to secure borrowing requirements due to a lack of sufficient conventional loan collateral. In order to reduce post-harvest food losses, GWFP also provides advisory services, funded by Global Agriculture Food Security Program and the Government of Japan, to help improve post-harvest practices at storage facilities. GWFP has financed more than $6 billion of commodity finance transactions involving a range of agricultural commodities in developing economies mainly in Sub-Saharan Africa. In addition, warehouse financing has reached more than 750,000 farmers and contributed to food availability for almost seven million people. 1 Gustavsson, Jenny, Christel Cederberg, and Ulf Sonesson. 2011. “Global 10 Mined from ancient deposits of diatoms – a form of phytoplankton. food losses and food waste - Extent, causes and prevention.” FAO Food 11 Daminger, Datta, and Guichon. 2016. and Agricultural Organization of the United Nations. 12 Kumar and Kalita. 2017. 2 These figures include emissions from associated agricultural inputs, deforestation and soil carbon declines in agricultural fields. 13 Rosegrant, Mark W., Eduardo Magalhaes, Rowena A. Valmonte- Santos, and Daniel Mason-D’Croz. 2016. “Returns to investment 3 Hodges, Rick J., Jean C. Buzby, and Ben Bennett. 2011. “Postharvest in reducing postharvest food losses and increasing agricultural losses and waste in developed and less developed countries – productivity growth.” Paper prepared for the 2016 Agricultural & Opportunities to improve resource use.” Journal of Agricultural Science Applied Economics Association Annual Meeting, Boston, Massachu- (149) 37-45; Kumar, Deepak, and Prasanta Kalita. 2017. “Reducing setts, 31 July – 2 August. postharvest losses during storage of grain crops to strengthen food security in developing countries,” Foods 6 (1), 8. 14 Daminger, Datta, and Guichon. 2016. 4 Kumar and Kalita. 2017. 15 World Bank. 2011. “Missing Food – The case of postharvest grain losses in Sub-Saharan Africa.” 2011. World Bank – FAO – Natural Resources 5 Affognon, Hippolyte, Christopher Mutungi, Pascal Sanginga, and Institute. World Bank Report 60371-AFR, 2011. Christian Borgemeister. 2015. “Unpacking postharvest losses in Sub- Saharan Africa – A meta-analysis.” World Development (66) 49–68. 16 World Bank. 2011. 6 Hodges, Buzby, and Bennett. 2011. 37-45. 17 World Bank. 2011. 7 Kumar and Kalita. 2017. 18 Neven, David. 2014. “Developing sustainable food value chains – Guiding principles.” FAO Food and Agricultural Organization of the 8 Daminger, Allison, Saugato Datta, and Dana Guichon. 2016. “Reducing United Nations, 2014. post-harvest loss – A behavioral approach.” Ideas42.org. 19 Neven, David. 2014. 9 Daminger, Datta, and Guichon. 2016. Manufacturers of the hermetically sealed bags have partially solved this problem by changing 20 Neven, David. 2014. the appearance of the bags and providing detailed infor-mation on the 21 World Economic Forum, “Enabling Trade: From Farm to Fork”, 2014. benefits of hermetic sealing on the exterior of the bags. 9 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group.