Why should farmers make the switch?
This is a highly touted solution to climate change from many environmental groups, which may lead one to believe it's more of a fringe grassroots movement. But a growing body of scientific research, as well as proven examples from financially successful regenerative agriculture farmers, is starting to bring this into light as a real solution for carbon sequestration. From a climate perspective, it can reverse soil degradation, which creates greenhouse gas emissions, soil erosion, and toxic contamination of waterways from chemical inputs.
While it is obviously ideal to heal the planet and secure a viable food system for future generations, it still has to make sense dollars wise or it just won't create a sustainable farming system long term. From a business perspective, it can aid in reducing dependence on government funding, commercial loans, crop insurance, and a host of other high-cost expenditures while at the same time increase the crop yield. Reduced inputs and increased outputs over time make sense just as with many other business and investing models.
Rules for regenerative agriculture
As of now, there is no official certification program for regenerative agriculture like there is for organic farming. Rather, it's a compilation of practices that have the same overarching approach while adapting to local conditions and needs. As such, consumers should be wary of any sort of unregulated labels, instead opting to research the specific farming approaches used by that farmer. The main components to a regenerative agriculture practice include the following principles:
- Regenerative farming practices include as little disruption to the soil and soil microbes as possible so the soil structure remains intact. This helps improve water retention, nutrient retention, and carbon sequestration.
- Another key component is building soil fertility using biological inputs rather than chemical or mechanical inputs. This eliminates the effects of synthetic fertilizers, which cause soil carbon to be released into the atmosphere as well as substantial health problems for farmers and consumers.
- Biodiversity on the farm is also an essential piece. This comes in the form of interplanting multiple crops on a continual basis and utilizing cover crops when the original crop isn't actively farmed to further improve soil health or support pollinators and beneficial insects.
- The last integral regenerative farming practice is to utilize grazers in a well-managed farming system to increase organic matter and soil carbon sequestration as well as to provide more healthful living conditions for the animals, which results in more nutrient-dense product for the human consumer.
How to invest in regenerative agriculture
Investing in regenerative agriculture can fit any investor's budget and time allowance. Obviously, most investors don't have the desire or knowledge to become regenerative agriculture farmers. But some may be ready to purchase or already own land, which can be leased exclusively to farmers who follow regenerative agriculture practices. You could also potentially fund a startup operation as an accredited investor through private platforms like Farmland LP, which support farmers who at times can have difficulty securing funding from traditional financing sources even when the business plan is sound. If you're a smaller investor, you could finance microloans to a farmer utilizing regenerative practices using platforms like Steward, which is a certified B corporation that connects private financing directly to the farmer seeking assistance via interest-bearing short-term loans. You could also invest in private real estate investment trusts (REITs) that support regenerative agriculture, like Iroquois Valley Farmland REIT. These are not investment recommendations but simply examples of various investment avenues. You must do your own due diligence to ensure that the investment is a good fit for you and your portfolio.