Adapting to climate change

How are smallholder farmers impacted by climate change?

The world is under immense pressure to secure a stable food supply. Climate change has severely strained global food systems and shocks ranging from droughts to floods have increased in frequency. These environmental impacts, combined with armed conflict, price volatility, and resulting economic inequalities, pose an existential threat to agricultural production, food systems, and greater global stability.

Smallholder farmers, providing roughly one-third of the global food supply, are at the heart of a sustainable and climate-resilient food system. They have consistently found ways to adapt to varying weather conditions and maintain biodiversity by keeping native vegetation alive. Despite this, our rapidly changing climate is far outpacing smallholder farmers’ ability to adapt, and they find their income, food security, and livelihoods constantly under threat.

While climate change affects everyone, smallholder farmers and their communities are experiencing its consequences on a much different scale. They are faced with increasing demands on their already limited time, and while working harder than ever to till more, yields are diminishing year after year or being wholly wiped out by sporadic climatic events or pest infestations.

Women smallholder farmers, who contribute most of the needed labor in the sector in Africa, are particularly affected by the increasing demands climate change imposes on them. Historically, they have had more limited access to resources, such as finance, land, inputs, and training, which results in lower yields and overall lower resilience to climate change, increasing socio-economic inequalities.

There is mounting evidence that smallholder farmers are particularly vulnerable to climate change requiring scaled-up adaptation efforts. The FAO found that extreme weather events caused more than half of all crop production shocks in recent years, reinforcing concerns about arable systems' vulnerability to climatic shifts. Drought was the most significant cause of agricultural production loss, accounting for 82% of total losses. Between 2008 and 2018, the agriculture sector in LICs and LMICs absorbed 26% of all economic damage and losses caused by medium- to large-scale disasters.

Climate-smart Agriculture in Practice: Accelerating the Impact of CGIAR Climate Research in Africa - Dompoase, Ghana

“I got excited about the climate-smart agriculture pilot project and that is the reason why I offered my farmland to be used. Also to help women in the community. We started by planting maize. My family depended on it. Now we have planted cowpeas and potatoes. At the end of the season, my children will have some to eat.” - Yaa Boatemaa, smallholder farmer, Ghana

In Ghana, 52% of the labor force is engaged in agriculture, predominantly as smallholders. Agriculture makes up 54% of Ghana’s GDP and accounts for over 40% of its exports, while additionally providing over 90% of its food needs. Individuals in the country benefiting from the initiatives of organizations and agencies at the forefront of delivering agricultural adaptation solutions highlight the challenges climate change already poses, but also the extreme benefits of climate-smart agriculture and related agricultural adaptation efforts.

The Ban Ki-moon Centre for Global Citizens recently visited a climate-smart agriculture demonstration plot by the Accelerating Impacts of CGIAR Climate Research for Africa in Dompoase, Ghana. The program seeks to make climate information services and climate-smart agriculture more accessible to small-scale farmers across Africa to realize optimal health outcomes for people, animals, and plants. The Dompoase site is part of a project covering about 22 communities, 12 districts, and 31 demonstration sites in the Upper East and West, Northern, Bono East, Greater Accra, and Central Regions in Ghana.

On the demonstration field in the main town of the community, women smallholder farmers are trained in three selected climate-smart agriculture practices:

• Promotion of stress-tolerant maize varieties and hybrids,
• Sweet potato weevils/pest management demonstration, and
• Integrated soil fertility management.

“The moment we involved the women in the practices on the demonstration field with different crop varieties and techniques, they became enthused. (...) These women are calling on the municipal agriculture department to support them with whatever facility they need to go out into their own communities and replicate these climate-smart practices.” - Victoria Danso Abankwa, Municipal Director of Agric, KAE

Considering Ghana’s high economic dependence on agriculture, the country is facing severe challenges confronting climate change. Adapting to climate change is fundamental to Ghana’s economic, environmental, and societal health. However, data shows that Ghana currently receives only a minimal amount of principal ODA funding for agricultural adaptation, indicating lower quality of finance for the sector. (Figure 1.3)

What piece of the ODA pie goes to climate-smart agriculture?

The agricultural sector employs a significant portion of the labor force in developing economies and is critical to food security and economic and rural development. Up to 80% of food in sub-Saharan Africa and parts of Asia is grown by smallholder farmers, who are predominantly women. Aside from the pressing need for increased productivity due to global population growth, the agriculture sector must adopt sustainable practices to adapt to climate change. These adaptation practices require mid- to long-term investments both for implementing existing technologies and further R&D. It is essential that finance in agricultural adaptation is significantly increased to meet these critical demands.

ODA plays a vital role in financing agricultural development in many LMICs, particularly in the early stages of new technologies, until the private sector further scales up these innovations. Total ODA from official donors to all sectors reached an all-time high of US$178.9 billion in 2021, up 4.4% in real terms from 2020, as donor countries stepped up to assist LICs and LMICs struggling with the COVID-19 pandemic. Despite the increase in ODA, this has not been reflected in agricultural development, including agricultural adaptation. Using development assistance to agriculture as a proxy for donor priorities (as the list of top donors to agriculture closely mirrors those investing in agriculture adaptation) there has been a significant decline in international assistance to agriculture since the 1970s and 1980s, when it accounted for 15 to 20% of total ODA. While some argue that the extent of the decline has been exaggerated due to the limitations of the methods used to classify agricultural assistance, others point to the factors responsible for this decline, such as a shift in donor priorities, and a lack of evidence of its contribution to increasing productivity.

Beyond a decrease in overall agricultural ODA relative to total ODA, the latest data shows that, in recent years, ODA to agricultural adaptation has not increased in lockstep with increases in total ODA to climate change adaptation (Figure 1.1). This is particularly visible considering the ODA development for agriculture adaptation after 2017, the year when total climate finance including mitigation & adaptation increased significantly. Diminished investment in agricultural adaptation can be linked to a variety of factors, including shifting donor priorities. The recent sharp incline in global food insecurity has drawn attention to the interconnectedness of global food supply chains and their inherent fragility when exposed to global shocks, including climate. In the coming months, we need to examine how acutely the global food crisis will affect financing towards agricultural adaptation.

Figure 1.1: Bilateral ODA from DAC donors to agricultural adaptation, 2011-2020

According to a review of the top donors to agricultural adaptation, France, Germany, EUI, Japan, and the Netherlands are the top five donors in terms of total dollars allocated, whereas Iceland, France, Belgium, Italy, and the Netherlands are the top five in terms of the share of their overall ODA (Figure 1.2). France's position as a top donor can be attributed to its emphasis on climate-related programs, and more specifically its climate adaptation agenda. Additionally, French President Emmanuel Macron announced the organization of a climate summit at COP27 to ensure a financing mechanism for the most climate-vulnerable countries, which could potentially result in an even greater ODA increase to agriculture adaptation.

Figure 1.2: Top 15 DAC donors to agricultural adaptation (absolute and as a share of bilateral allocable ODA), 2020

The quality of ODA varies across recipient countries. Principal funding is explicitly targeted and designed to fulfill the main objective, in this case agriculture adaptation, compared to significant funding where activities address a different prime objective, and the climate component has been added in. While five Asian countries are in the top seven ODA recipients for agricultural adaptation, Cambodia is the only one to receive a high share of principal funding. For sub-Saharan Africa, the share of principal funding to agricultural adaptation is in most cases disproportionately small, except for Nigeria, Niger, and Kenya. An increase in principal funding towards agricultural adaptation is needed to ensure a high quality of funding and direct correlation to the sector’s development.

Figure 1.3: Top recipients of bilateral ODA to agricultural adaptation, 2020

Climate-smart Agriculture Investment: Germany

In 2020, Germany spent US$1.8 billion of its ODA on agriculture, making it the largest OECD DAC donor to agriculture in absolute terms. However, it is only the second-largest donor to agriculture adaptation and this spending only represented 6% of Germany’s total ODA.

The German government stands out among other countries in terms of its investment in agriculture adaptation. Overall, it is one of the few countries that has met the 0.7% target, allocating 0.74% of its GNI to ODA. In 2021, Germany was the fourth-largest donor in relative terms. In recent years, Germany has taken on a leading role in the global fight against hunger, investing in agriculture and stepping up climate financing. Germany is the world's second-largest source of humanitarian assistance and funding to the WFP, with an annual investment of roughly €2 billion in food security and rural development. Germany spent US$1.8 billion of its ODA on agriculture in 2020, making it the highest absolute donor to agriculture among OECD DAC countries. According to a statement from the BMZ on October 20, 2022, Germany increased its international climate finance to €5.3 billion (US$5.2 billion) in 2021 from €5.1 billion (US$5.0 billion) in 2020. Furthermore, nearly half (49%) of its climate finance in 2021 supported climate adaptation.

Despite Germany’s strong support for climate finance, it is only the second-largest donor to agriculture adaptation and this spending represented a small 6% of Germany’s total ODA in 2020. Furthermore, Germany has been criticized for failing to meet its commitment to increase financial assistance to LICs and LMICs to cut emissions and adapt to the worsening climate crisis. This proposed increase was supposed to increase climate adaptation financing from €4.3 billion in 2021 to at least €6 billion per year by 2025. In 2022, there was no climate finance increase in Germany's federal budget, compared to 2021. German Finance Minister Christian Lindner's draft federal budget for 2023 maintains climate finance at the 2021 level.

How do countries channel agricultural adaptation ODA?

The OECD states how support for adaptation overall focuses more on sectors closely linked to the ecosystem, such as agriculture, forestry and fishing, or water supply and sanitation, unlike in the case of mitigation where the focus goes to reducing greenhouse gas emissions, such as transport. ODA allocations to ecosystem subsectors provide quality insight into the levels of financing for agriculture adaptation and how this funding is prioritized.

In the context of agricultural adaptation, donors have placed priority on agriculture development, which refers to integrated or crosscutting agricultural projects and farm development. Over the last ten years, 38% of funding to agriculture development has gone to projects with climate change adaptation as a principal objective.

While agriculture development is the highest-funded subsector, agricultural education/training and agricultural extension (i.e. agricultural advisory services) rank much lower on the priority list. Considering that training is key to ensuring sustainable implementation of climate-smart technologies and empowering smallholder farmers and communities, understanding this funding gap and urgently scaling up existing initiatives is an essential next step for improving agricultural adaptation.

Figure 2.1: Bilateral ODA to agricultural adaptation by subsector, 2020

Figure 2.2: Bilateral ODA to agricultural adaptation by top seven subsectors, 2011-2020

Most ODA for agricultural adaptation is channelled through the public sector, which represents 59 percent of the share. LICs and countries in sub-Saharan Africa received the most ODA for agriculture adaptation in 2020.

What’s next for ODA to agricultural adaptation?

A critical lens must be applied to the way in which the globe collectively alleviates the pressures on smallholder farmers and their communities, which despite their minimal contributions to climate change, now shoulder the burden of its impacts. As a result, conversation around negative trends in financing and ODA patterns to agricultural adaptation is both timely and necessary.

Outside of a spike in financing in 2017, agricultural adaptation as a share of climate change adaptation ODA has remained stagnant, even as overall ODA is increasing. It is also well documented that the share of overall climate financing has not been in lockstep with financing towards climate mitigation. These funding gaps adversely impact how effectively agricultural adaptation and sustainable farming practices, in particular for smallholder farmers, can be implemented.

As much as the scale of financing is crucial, so should the quality of the finance. While almost 70% of agricultural adaptation ODA in 2020 was channeled through the public sector, donors’ use of loans to fund agricultural adaptation has increased in recent years, with implications for the debt burden of recipient countries.

While a large financing gap remains, COP27 made some breakthroughs on adaptation financing, which could signal a shift in agricultural adaptation financing trends. Governments agreed on how to advance the Global Goal on Adaptation, which will inform the first Global Stocktake, an important means for increasing focus on the needs of the most vulnerable, including smallholder farmers, and US$230 million in new commitments were made to the Adaptation Fund. Ideally, these, and future commitments, will assist many more smallholder farmers to come who are adapting to climate change, particularly women and youth, through increased R&D and implementation efforts in the most vulnerable communities.