Contributed Content Part VII: Bee Fatalities and The State of Pollination

November 15, 2019

This is the seventh article in an eight-part series published by GAI News that examines eight existing trends set to alter the structure of our global food system. Join us each month for a new installment, and be sure to read the first six articles here: Part I, Part II, Part III, Part IV, Part V and Part VI.

By Jeremy Stroud, Bonnefield Investment Analyst

GAI-News_series-icon_150x150px_tsptInstitutional investors are allocating capital with greater longevity in mind than ever.(1) With US$84 trillion of institutional assets under management in the 34 Organization for Economic Co-operation and Development (OECD) countries and a lengthening timescale of liabilities, investors are increasingly considering factors that were previously overlooked.(2) As the Canada Pension Plan Investment Board (CPPIB) stated in its last annual report, its current strategy involves “investing in quarter centuries, not quarters” by addressing factors that are projected to pose a threat to return generation and capital preservation several decades in the future.(3) While crop pollination and insect extinction may not be issues that rise to the top of an investor’s mind, they are fundamental to many economic activities in the long term.(4) One-third of the world’s food supply is reliant on external pollinators such as ants, honeybees, and bumble bees. The quality and frequency of their activity is intrinsically tied to the success of the agri-food sector and all adjacent industries. The matter is therefore worthy of rigorous consideration when investing in agriculture.  

Commercial fruit and vegetable producers – a group with the most economic dependence on the ecosystem services offered by pollinators – are seeing consistently declining pollinator populations.(5) Ecosystem biodiversity is at a lower level than needed to sustain healthy colony numbers, and investors may have a part to play in solving the issue.(6) Investors with access to local expertise, an understanding of biological sciences, and flexibility in capital deployment may benefit from investing in the preservation of native pollinators as part of their asset management activities. This may also be a key factor in underwriting new investments in fruit and vegetable land, as crop yield and quality fluctuates in proportion to the amount of pollination it receives.(7) Native wild pollinators have been shown to increase the shelf life and commercial value of fruit crops versus their domestically managed counterparts.(8) From the farmer’s standpoint, permanent crops such as orchards, vineyards and bushland as well as row crops like canola, beets, and strawberries are all dependent on external pollination.

Neonicotinoids

There exists a contentious issue in modern agricultural communities where pesticides such as neonicotinoids, which account for about 25 percent of global agro-chemical sales, are perceived to cause destructive effects to bee colonies. As there exists a correlation between higher pesticide use and regional colony collapse disorder frequency, countries who use the most pesticides are projected to have more rapidly declining bee populations. With this being said, a statistically significant study of causation has yet to be found, and the issue continues to be debated in agricultural circles. Exhibit 1 shows the extent of pesticide use by country.

Pecticide use per ha of cropland

Exhibit 1: Pesticide Use per Hectare of Cropland (kg/ha), 2014

Source: United Nations Food and Agriculture Organization, 2014

As seen in the above chart, farmers in countries such as China and the Netherlands use three times more pesticides on their crops than farmers in the U.S., UK and Canada. The latter countries may attribute part of their moderation in chemical use to the cold winters which naturally regulate pest and disease risk. Countries with year-round growing seasons and extended periods of wetness are more susceptible to the growth of undesirable organisms. In contrast, pollinators such as bees are more likely to thrive in Canada due to its lower population density, greater extent of forested regions and reduced use of pesticides compared to other agricultural producers.

Honeybees

A recent comprehensive study indicates that the U.S. agricultural landscape is 48 times more toxic for bees than just 25 years ago.(9) Honeybees, which are used by the US Environmental Protection Agency (EPA) as a proxy for other insect populations, are consistently declining in numbers throughout North America. As insect populations drop, bird populations that rely on insect nutrition also decline.

Despite the abundance of rhetoric surrounding honeybee colonies in the United States, the insect is not native to North America. Their genetic predecessors were first seen in Asia over 300,000 years ago and the species we see today was brought to the Americas by early colonists.(10) Honeybees may be thought of as a domesticated species, similar to livestock, that are bred, managed, and shipped from farm to farm for their pollination capacity of crops such as blueberries. While they do provide additional economic value through their productive capacity for honey, honeybees are generally less efficient than native pollinators and are prone to spreading diseases to other insects.(11)  Global pollinated crops are valued at over US$212 billion per year, a value that is expected to accelerate at a pace faster than typical grain crops due to a growing global appetite for fruits, nuts and vegetables.(12) Exhibit 2 demonstrates where pollinator services provide the greatest benefits on a per hectare basis. 

Pollinator services

Exhibit 2: Pollination service contribution to the crop market output ($USD/ha)

Source: Potts et al., 2016(13)

The map above shows areas such as southern Europe and Asia as key regions where investment in pollination service could make the greatest improvement to crop market outputs. The total value of pollinator services may be attributed to thousands of species; however, and as some academics have stated, honeybees have a tendency to “hog the limelight”(14).

Alternative Pollinators

While honeybees are in vogue as a topic of discussion, non-bee pollinators such as flies, beetles, ants, wasps, butterflies, bats, and birds are all important contributors to global crop production.(15) Some studies estimate that these alternatives offer up to 50 percent of total pollinating services for all fruit, nut and vegetable crops.(16) With this being said, secondary pollinators are less efficient per visit, and cannot be relied upon to replace bee populations for specific crop types and climatic zones.

Considering that ecosystem fragility is a national or even continental issue, opportunities to work with governments in the form of Public-Private Partnerships may offer interregional solutions. Initiatives such as the Integrated Crop Pollination Project may be pointed to as a progressive example of the intersection between profitable farm management and environmental enhancement. An analysis from the Journal of Economic Entomology estimates that profit per acre can increase by over US $2,000 per acre of tree fruit land by incorporating alternative pollinators such as the native blue orchard bee on farms in North America.(17) This requires maintenance, expertise, and the deliberate allocation of patient capital, forgoing short-term profits for long-term gains.

Pesticides are necessary for generating the long-term crop yields that are needed to nourish the growing global appetite, but the management with which they are applied is crucial to preserving a diverse ecosystem – both above and beneath the soil. Strong evidence suggests that large-scale fruit and vegetable farmers could benefit from investing in the establishment and stewardship of wild pollinator colonies. Governments and enterprises are adopting a broader recognition for the roles that biodiversity and ecosystem services play throughout the value chain.(18) This is underpinned by a consumer base with preferences for supporting transparency and sustainability – a trend that is unlikely to disappear. Companies and investors who act early on this issue may benefit from an early mover’s advantage, industry recognition, and the development of proprietary processes. 

 

Continue Reading:
Part VIII – Population and Food Demand: Growing Appetites and Shrinking Fields

 

About the Author

 Jereny head shotJeremy Stroud is an agricultural investment analyst with Bonnefield Financial based in Toronto, Canada. With a background in international food business, he offers insights on global agri-food and water investments, value chain analysis and economic systems. He has volunteered and worked with a spectrum of primary and vertically integrated agricultural groups in North and South America, Europe and Africa.

Sources:

  1. Ameli et al., 2019. Climate finance and disclosure for institutional investors.
  2. Rottgers et al., 2018. Approaches to Mobilising Institutional Investment for Sustainable Infrastructure.
  3. Canada Pension Plan Investment Board, 2019. Annual Report 2019: Investing for Generations.
  4. Schroders, 2014. The bee and the stock market.
  5. Cameron et al., 2011. Patterns of widespread decline in North American bumble bees. Proceedings of the National Academy of Sciences.
  6. Winfree et al., 2011. Valuing Pollination Services to Agriculture.
  7. Rader et al., 2016. Non-bee insects are important contributors to global crop pollination
  8. Winfree et al., 2011. Valuing Pollination Services to Agriculture.
  9. DiBartolomeis et al., 2019. An assessment of acute insecticide toxicity loading (AITL) of chemical pesticides used on agricultural land in the United States
  10. Wallberg et al., 2014. A worldwide survey of genome sequence variation provides insight into the evolutionary history of the honeybee.
  11. Graham, 2018. Beyond honey bees: Wild bees are also key pollinators, and some species are disappearing.
  12. vanEngelsdorp and Meixner. 2010. A historical review of managed honey bee populations in Europe and the United States and the factors that may affect them
  13. Potts et al., 2016. Safeguarding pollinators and their values to human well-being.
  14. Donkersley. 2018. Honeybees hog the limelight, yet wild insects are the most important and vulnerable pollinators
  15. Rader et al., 2016. Non-bee insects are important contributors to global crop pollination. Proceedings of the National Academy of Sciences
  16. Rader et al., 2016. Non-bee insects are important contributors to global crop pollination. Proceedings of the National Academy of Sciences
  17. Koh et al., 2017. Ecology and Economics of Using Native Managed Bees for Almond Pollination
  18. Schroders, 2014. An overview of pollinator decline and its economic and corporate significance.

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