What are the potential impacts of climate change on the agriculture sector in Malawi, and how can agribusinesses respond?
This was the central question addressed during a recent BIF workshop held on 1st March in Blantyre, Malawi. The workshop, targeted at local agribusinesses, was delivered by members of PwC UK’s Sustainability and Climate Change team.
The event was well attended with representatives from Exagris, Universal Industries, GTC, Illovo, Eastern Produce, Nali, and Malawi Mangoes .Non business representatives included NASFAM, Concern Universal, VSO, EU Global Climate Change Alliance, Shire Highlands Milk Producers Association, and ASAP.
Malawi is already experiencing the physical impacts of climate change. Several participants reported that an increase in the frequency and intensity of heavy rains, and changes in seasonal rainfall patterns had disrupted business operations and impacted crop yields. The effect had been felt both on farm and through smallholder supply chains. With climate models predicting further warming (by as much as 2-5 degrees centigrade by 2050), increased irregularity in seasons and a general drying of conditions in the region, these types of impacts are set to get worse.
Climate change impacts are more than just physical, they are market related, operational, people related, and financial. Market conditions can change. For example reduced crop yields can impact market prices, while demand may increase for climate resilient products. Businesses premises and logistical operations may also be impacted. For example extreme weather events such as flooding may flood processing plants, or make transport routes impassable. Climate change can also impact people. A greater frequency of heat waves may reduce worker productivity, while smallholder customers may have reduced purchasing power as their own yields suffer. Financial impacts could include increased cost of insurance and new sources of climate finance, for example through carbon markets. All of this can impact a business’s bottom line.
Some participants had already identified key impacts to their agribusinesses and were considering, or had begun to, implement responses. For example: some had identified the likely increase in demand for production of drought resilient seed varieties; others were reducing insecurity of supply chains by supporting smallholder suppliers in adoption of climate resilient practices such as conservation agriculture; whilst others were exploring win-win renewable energy solutions, reducing dependence on unreliable electricity supply through the national grid, reducing operational costs, and looking for opportunities to secure carbon market finance through the Clean Development Mechanism (CDM).
These examples illustrate that developing a comprehensive climate change strategy not only ensures businesses are positioned to respond the increased risks of climate change, but also to take advantage of the opportunities as they arise. Businesses that sideline the issue of climate change risk their profitability, reputation and competitive advantage.
Please follow this link to access more information on the Climate Change Strategy Development Framework (CCSDF) developed by PwC to support SMEs when considering the impacts and responses on their business, and to access the slides from the workshop.