Is The Market Leading A Shift to Regenerative Agriculture?

Whole Foods, the US organic supermarket giant, named regenerative farming as the number one food trend of 2020.

Meanwhile, brands like Patagonia and Dr Bronner are backing the new Regenerative Organic Certification. Certified producers will need to practice crop and grazing rotation and planting of cover crops.

Whole Foods, the US organic supermarket giant, named regenerative farming as the number one food trend of 2020.

Meanwhile, brands like Patagonia and Dr Bronner are backing the new Regenerative Organic Certification. Certified producers will need to practice crop and grazing rotation and planting of cover crops.

The Croatan Institute found $320 billion in investment opportunities for sustainable agriculture. Regenerative farming takes 14% of that share.

Is this a trend? Or is it a market-led shift to more sustainable agriculture?

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The principles of regenerative agriculture

Conventional farming treats the land like a machine. Regenerative farming treats it as a living thing. It uses techniques like: 

  •       Crop rotation
  •       Crop diversification
  •       Growth of cover crops
  •       Avoidance of soil tilling
  •       Enrichment of soil with organic matter
  •       Rotational grazing

These reduce the impact that agriculture has on the environment and soil quality.

The problem with conventional agriculture

Intensive farming practices cause soils to erode and dry out.  About 30% of the world’s topsoil is already degraded. Every year, another 12 million hectares are destroyed. The UN said total degradation is likely within 60 years if we’re not careful.  Soil degradation is very difficult (and expensive) to repair.

The value of healthy soil

By 2050, the global population will reach 9.8 billion. The demand for food will be 60% higher than now. But if soil degradation continues, we’ll experience global food shortages.

But with healthy soil and regenerative agriculture, we could produce more food of better quality. Diverse soil microbiomes on regenerative farms may improve the nutrition of food.

The value of healthy soil doesn’t stop there. Agriculture is responsible for around 25% of global greenhouse emissions.  But regenerative farming creates soil that actually absorbs carbon. The UN found that regenerated soil alone could offset total global emissions by 10%. Regeneration International says if 10-20% of agriculture became regenerative, global soil could absorb enough CO2 to reverse climate change. 

Healthy soil is one of the most valuable assets we have. It’s got the potential to counter two dilemmas: Climate change and food shortages.

The case for regenerative agriculture in the Australian lamb industry

It’s been accepted for a long time that intensive agriculture isn’t good for Australia. We already have significant topsoil erosion and compaction. As the climate gets harsher, we should look at ways to improve our land management.

A study from Agricultural Systems suggests regenerative agriculture could ease the pressure of climate change on farms. Compared to conventional farms, regenerative farms:

  •       Support more livestock per acre
  •       Buy less feed
  •       Have better topsoil quality with dense plant cover that prevents erosion
  •       Are more drought-resistant thanks to the soil quality.
  •       Hold 20 000 extra gallons of water per acre with each 1% increase in manure and other organic matter in the soil

While we don’t know the full impact and cause of the current bushfires, 12% of all Australian sheep have been affected. As well as the financial burden of the loss of so many animals, farmers will be under more ongoing pressure to buy feed as their paddock fodder recovers.

Charles Massy has successfully run a regenerative sheep farm in NSW since the 1980s. He claims his farm recovers from drought 5-8 times faster than it would through conventional practices.

Could regenerative agriculture reduce the financial devastation for fire and drought-affected farmers in the future? 

According to Keith Wilson, Group General Manager of Australian Food & Farming, the education of farmers plays a big role in the uptake of regenerative farming. 

“Most big farms are not using regenerative farming. In my opinion, that’s because they learn farming by studying data that has been provided by big companies and sponsored by big companies and therefore we need to keep the data in perspective and form our own opinions. Australian Food & Farming produce our own nitrogen naturally, it’s naturally available so we might as well use it,” he says. 

Economic opportunities for the Australian lamb industry

 As the world population grows, so too will the demand for animal protein. The OECD-FAO predicts the demand for ANZ lamb will rise by 26% by 2027. We already produce 90%. It’s a huge economic opportunity but we’ll need healthy soil if we want it to happen.

Making large-scale regenerative farming happen

The short-term cost of implementing regenerative practices is the main obstacle for cash-strapped farmers. While it may change in the future, for now, it’s about 30% more expensive for small farms to go regenerative than it is for the biggest ones.

Australian Food & Farming is one of the largest sheepmeat producers in Australia. By the end of 2020, they will have a breeding flock of 20 000 sheep raised on regenerative farms.  Australian Food & Farming’s scale means they can compete with conventional farms, operate at lower costs and sell at more competitive prices. 

“An important part of regenerative farming is the type of product you grow. Some plants such as serradella and biserrula grow a lot of above-ground and below-ground mass which increases organic matter naturally. They are very nitrogenous-rich and so help increase the nitrogen in the soil and it also breaks down dry matter,” Keith Wilson says.  

The shift to regenerative farming is being led by the consumer market. As people become educated about the benefits of regenerative farming, it will become more mainstream. For the foreseeable future, large regenerative operations like Australian Food & Farming are the ones with the best chance of meeting the growing demand at scale.

To learn more about the investment opportunities with Australian Food & Farming, please click here to request the IM.

Reach Markets are the advisors assisting with the management of this offer and may receive fees depending on whether an offer is taken up by investors. Reach Markets have also been engaged by Australian Food & Farming to assist with private investor management.

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