Talking up Regenerative Agriculture

By: "Farm Tender" News
Cattle News
Dec 16, 2018
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By Chuck de Liedekerke - Regenerative Agriculture!

Since Soil Capital’s inception in 2013, we have held management responsibilities on over thirty large scale farms. We have learned, sometimes the hard way, what creates value and what does not. Our goal here is to share a few reasons why we are now convinced regenerative farming is the right choice if a farmer wants to be successful. We even believe this is the best solution for the future of farming.

Many farmland operations struggle to perform financially, to inspire the next generation and to keep up with the burden of tougher consumer demands and regulation. On the other hand, a growing number of farmers have adopted a new farming paradigm, turning previous roadblocks into concrete opportunities:

* Cutting input costs from the first year onwards,

* Maintaining (or improving) yields,

* Receiving a better price for products

The key driver to this shift in mindset is soil health and ecosystem fertility. Regenerative farmers protect and nurture their soils, increase biodiversity, adapt to their landscape and climate, and minimize external inputs as much as possible. The more farmers focus on developing the soil’s ability to better feed the plants, the more profitable, and valuable, their farms become. Incidentally, their crops also become healthier and their impact on the environment becomes positive.

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This said, examples of failed regenerative operations still exist, and we need to learn a few simple lessons if we want to realise regenerative agriculture’s true value. Farming is a business going far beyond the soil.

Lesson #1: Strategy, risk and cash management matter: regenerative farming is a rapidly developing field. The science of chemical fertility that underpins conventional farming is mature, tried and tested. The formal science behind biological fertility is still in its early stages. Even if regenerative ag already delivers meaningful gains, rolling out new practices too fast can hurt a farm more than not changing at all.

This is why trials, adapted technology and frequent discussions with regenerative practitioners are crucial. Through gradual steps, where a portion of incremental profits is reinvested into manageable changes, trials and investments, a farm can transition to a regenerative organic system over five to ten years, while beating its historical performance.

Lesson #2. The hardest resource to find is a great farm manager. Ideal profiles must offer an almost opposing set of skills. Consider the following job description:

- Are you an experienced, seasoned farm manager, yet willing to constantly innovate and learn from people who have never set foot on your farm before?

- Financially-minded, with an ability to own a long-term plan that delivers on investors’ expectations, yet deeply operational, ready to make many crucial decisions every day?

- Willing to live in isolated and often foreign environments for long periods of time, yet reliable and connected enough to frequently involve the London-based owners in key developments and important decisions?

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(If you are this person, we have a job for you!)

We’ve learned from our own experience this is easier found in a team. This is what Soil Capital’s Farm Management Services delivers. As farm managers, we spend considerable time on location to create the right dynamics between us and the local teams. Our objectives are to assess the regenerative potential of operations, design a realistic long-range plan, develop local execution capabilities and leave with the legitimacy and knowledge to engage frequently with the team going forward. The frameworks, tools and experience that we share as a team support this process.

Lesson #3. A portfolio of farms is more complicated to manage than a single farm. Regulations, reporting and governance are often burdens that add little value for the farms and frustrate the farm manager. Therefore, a group makes more sense when there is a clear value creation strategy, such as a dedicated focus on specific complementary products, markets, or geographies. This allows the emergence of a brand, a specific know-how and synergies which are expensive to achieve otherwise. This also ensures regenerative farming becomes a core part of a group strategy rather than a requirement that needs to co-exist alongside target returns. Finally, and most importantly, it creates a more inspiring and engaging context for local teams.

Our Business and Government Solutions activities seek to elicit the right group-level opportunities for regenerative farmers: how to achieve a premium for regenerative crops or share in the cost savings; what opportunities exist to finance de-risked regenerative farms; and what are benefits for which governments are prepared to reward farmers. Many solutions exist for farmers to share improved margins with their consumers and the value chain. We find these are best co-created with the businesses, financial institutions and governments we work with.

In the words of Nassim Nicholas Taleb, “the solutions need to be simpler than the problems”. Lack of farm profitability, unhealthy food and environmental degradation are complicated and serious problems. Done correctly, regenerative farming is the simple solution we need. Let’s work together to deliver this, the sooner the better.