- Local report calls for incentivising innovation, building literacies, harnessing social/natural capital, and adopting holistic food system risk mgmt. systems whilst enhancing farmers’ resilience
Climate change-related risk is one of the defining challenges of the 21st century. As part of a landscape of compounding and cascading risks, it poses a complex challenge for food systems and other key sectors in Sri Lanka and countries across the world. Farmers and other actors in the food system are aware of this challenge and already face climate-related impacts as well as production and market-related risks. However, they often lack the necessary awareness, knowledge, technical expertise, equipment, or resources to adequately manage these risks and enhance their livelihood resilience.
Noting this, a research report titled “Strengthening Sri Lanka's ecosystem for climate and disaster risk management and finance” – released recently by the think tank SLYCAN Trust – explained that in order to deal with the above-mentioned situation, Sri Lanka should take swift and scientific actions with a focus on, among other steps, incentivising innovation, building literacies, harnessing social and natural capital, and adopting holistic food system risk management systems. Moreover, the report identified several priorities in food systems that need to be enhanced.
Challenges faced by food systems
According to the report, enhancing risk management frameworks and climate and disaster risk finance and insurance (CDRFI) solutions in Sri Lanka's food systems can prove pivotal for building the resilience of vulnerable groups and communities. However, to be effective, these solutions should connect to existing institutional structures (such as extension officers, agro-advisory systems, databases, and data collection mechanisms); be based on evidence and data; respond to actual needs; have clear beneficiaries; and ensure equitable access, affordability, accountability, and transparency in their modalities. The report further added that adequate access to funding and other means of implementation is needed to sustain these mechanisms and respond to emerging needs caused by increasing climate-related impacts and climate-induced loss and damage.
The key risks for Sri Lanka’s food systems include direct climate and disaster-related risks, such as increasing temperatures, water scarcity, unreliable rainfall patterns, pests and diseases, soil degradation, and extreme weather events, as well as indirect or compounding risks, including market volatility, supply chain disruptions, the rising cost of living, food waste, and human-wildlife conflict.
Key challenges related to climate risk and risk management in Sri Lanka’s food systems highlighted by the report included, high dependence on weather and natural resources and a low degree of modernisation and mechanisation, a weak connection between farmers and markets, gaps in existing infrastructure, gender-related challenges and inequities, the lack of interest of youth in farming, the need for an overarching CDRFI policy and specific regulatory frameworks, and the lack of comprehensive monitoring and evaluation systems for climate risk.
The report went on to emphasise other challenges, including those related to financial, risk, and insurance literacy and financial inclusion; the need for enhanced access to and better availability of weather-related data, projections, risk analytics, and other key information; the low willingness of farmers to adopt new practices and methods and limited trust in CDRFI solutions; a difficult environment for CDRFI solutions among smallholder farmers due to structural constraints and characteristics; delays between impact and compensation payouts due to indemnity-based schemes; and limited access to external funding.
The report further pointed out gaps in institutional coordination, policy coherence, capacities, exchange, transfer, and vertical and horizontal integration, as well as limited cooperation, knowledge exchange, and partnerships between different actors, as challenges.
Based on inputs from key actors, the report listed a number of priorities for enhancing food system resilience and CDRFI solutions. Among them were a risk-aware, climate-smart, and resilient food system that provides livelihoods and entrepreneurship opportunities; a consistent and transparent institutional policy and regulatory environment that enables inclusive and participatory CDRFI solutions; universal basic financial, political, and economic literacy as well as a pool of qualified human resources; modernised livelihoods that leverage emerging technologies and foster innovation towards enhanced risk management and resilience; a national financial system that is stable, transparent, and efficient with consistent and predictable policies and which allows access to stable foreign exchange flows; and a paradigm shift from agricultural credit to a more dynamic and robust rural financial system with a range of available financial products and services.
The way forward
To close the identified gaps and work towards the above-mentioned priorities, the report presented main recommendations for a number of areas.
Regarding “innovation”, the first area, the report said that innovation aims to create an enabling environment that incentivises innovation and enables different actors to introduce new technologies and mechanisms. This also included strengthening access to information across the supply chain and tightening linkages between producers and markets, as well as enhancing access to rural credit and loan facilities.
This area paid attention to three matters; namely, incentivising innovation, enhancing market access, and overhauling the rural credit systems. Among the recommended actions were creating innovation hubs and regulatory sandboxes to attract innovators, supporting innovators and investors, establishing a commodity market where farmers can advertise productions and deal directly with potential buyers, providing marketing support to smallholder farmers, and to scale up local farmer market initiatives. In addition, digitising existing data on land, livestock, cultivation extent, yield, or cropping intensity (such as data collected by agrarian service centres across the island) and relating it to climatic parameters (such as rainfall data collected by the Department of Meteorology) to create a reliable indicator for risk assessments was also recommended.
A “mindset shift” is another area of priority. The report explained that to overcome challenges of low literacy and trust, this pathway focuses on mainstreaming climate risk into the education and training system as well as public awareness creation to foster key literacies related to climate risk, finance, and insurance. It also included greater acknowledgement of food system livelihoods and the formal recognition of environmental benefits and social capital.
This area of priority includes building literacies and harnessing social and natural capital. Among the recommended actions were incorporating awareness-creation and capacity-building measures on risk, financial, and insurance literacy into the education system, introducing climate change content in all grades in the school syllabus, strengthening school level clubs and societies for sustainable awareness, conducting trainings and skills development to enhance individual and institutional capacities of the relevant agencies, enhancing text message-based information dissemination to farmers, creating mechanisms to reward those who take precautions and proactively manage climate risks, and conducting assessments of traditional and informal risk-sharing and risk-pooling systems.
Describing the third priority area, i.e. “multi-actor partnerships”, the report explained: “This key pathway addresses issues around coordination, coherence, exchange, and integration by strengthening the enabling environment and creating forums, platforms, and spaces for different actors to connect and collaborate. This also serves to make it easier for stakeholders to invest and creates more fertile ground for the private sector to engage.” Under this, the report pointed out two key areas, namely, creating partnership frameworks and attracting investments.
Some of the recommended actions are creating a more collaborative regulatory environment that facilitates multi-actor partnerships; developing forums and lines of communications between the public and private sector in order to facilitate regulators to provide compliance support and information on regulatory requirements; mainstreaming climate risk into local planning processes and incorporating risk assessments and CDRFI into training and capacity-building programmes; integrating climate risk assessments, climate finance, and loss and damage finance into local planning processes; mainstreaming climate risk into local planning processes; and establishing rural hubs for skills development and entrepreneurship.
With regard to the fourth area of priority, i.e. “inclusive processes”, the report pointed out the importance of building on existing networks and relationships. It said that this pathway works towards greater trust and confidence in CDRFI solutions and aims to incorporate actors across the supply chain into various processes to give them ownership and a voice. This also includes special provisions for youth and females to address existing inequities and barriers. This paid attention to holistic food system risk management, growing networks of trust, and enhancing inclusive processes.
Recommended actions in this regard include, creating a common framework for the assessment of climate impacts that includes farmers' perspectives and inputs, investing in technology and digitisation, developing a comprehensive national policy for female finance and removing gender-based access barriers for CDRFI solutions, building the capacities of youth and establishing structures for youth participation, strengthening safety nets, and incorporating communities into data collection and risk-assessment processes.
The report added: “These recommendations can provide building blocks for different actors to strengthen Sri Lanka’s ecosystem for climate and disaster risk management and finance. Enhancing and scaling up CDRFI solutions in food systems can support farmers and their communities, safeguard livelihoods and food security, and build long-term resilience by dynamically and proactively responding to current and future needs.”