Sowing the seeds for regenerative agriculture

Within 50 years there may not be enough soil left to grow enough food to feed the world.1 More than half of the world’s agricultural land has already degraded2 and we are rapidly losing capacity to farm.

How can companies and individuals address these shocking statistics? In collaboration with Gail Gallie, Rothschild & Co was proud to host a Sustainability Sphere with landowners, investors, farmers, tech entrepreneurs and industry experts to focus on how regenerative agriculture can both enhance long-term resilience within our food supply chain and mitigate the carbon emissions released by the industry.

Gail co-founded Project Everyone in 2014, acting as a key architect in developing the UN Sustainable Goals campaign and working with businesses to orient their purpose around the goals. Gail also co-founded NATURE2, a movement working to build and scale systems that urgently drive investment into preserving and regenerating nature.

The key takeaways from our discussions are presented below. But first, can you identify which of these phrases below relating to regenerative agriculture are real?

  • Intercropping
  • Mob grazing
  • Vertical farming

Read on to find out.

A starting point for nature-based solutions


There are more soil microorganisms living in a teaspoon of healthy soil than there are people on earth,3 yet conventional agriculture places little value on its importance. In the pursuit of maximising yields, harmful practices such as monocropping weaken the soil, leaving it unable to support healthy plant growth. Farmers turn to chemical fertilisers to encourage growth in weak soil, which in turn further destroys the quality.

Being aware of the power of the soil, how can we work with nature rather than against it? In optimal conditions, it can take up to 400 years to form 1cm4 of new soil so to protect our natural capital, we must focus on nurturing and restoring our soil health now. There are a broad range of updated farming techniques available such as ‘no till’ farming, which focuses on eliminating disturbance from ploughing (which releases carbon) and ‘intercropping’, the practice of growing two or more plant species simultaneously in the same field.

In some cases, the environment itself is encouraging us to improve our soil health. Black-grass – the costliest weed for UK arable farmers – reached epidemic levels in 2014.5 The weed, which can deplete yields by up to 70%, is herbicide resistant, so farmers are increasingly turning to alternative solutions such as crop rotation. This is both an important method to interrupt life cycles of black-grass and can also help maintain a balanced soil profile as different crops have varying nutrient requirements.

Another solution which highlights how improving soil health has wide ranging benefits, not just for the farm, is the use of biochar. This is a carbon-rich soil nutrient, enhancing the quality and structure of the soil, which transforms carbon from certain biomasses into stable carbon sequestration thereby removing carbon dioxide from the atmosphere both immediately and over the long term.

From the field to the balance sheet

 

Farmers cannot prioritise sustainable practices, such as improving soil health, if the economics are imbalanced. Solutions need to be both profitable and sustainable.

Agriculture is a localised industry where different practices suit different regions depending on conditions, so often farmers will bear the upfront cost of introducing a regenerative practice, which might not be effective on their land. Moreover, whilst the cost will be felt immediately by the farm, the benefit can take much longer. For this reason, sustainable practices can be even harder to adapt in farms with short-term land tenure. Consultancy BCG found regenerative practices can be more profitable than traditional farming methods by up to 60%,6 but after a six-year period or longer.

How can we balance the cost of moving to sustainable practices for farmers? The use of data to enhance the precision application of inputs can help farmers minimise waste. Soil scanning sensors can create detailed field maps to ensure the optimal amount of product is used. One technique known as ‘mob grazing’ involves short duration, high density grazing allowing a longer recovery period than usual. Not only does this enhance the soil but has also been found to result in healthier animals and reduces the cost of housing animals inside for longer over winter.

Ultimately, collaboration across landowners can help to share best practices to identify scalable solutions. One example of this is carbon trading, and whilst nascent, may provide farmers with a differentiated income stream.

Being aware of the power of the soil, how can we work with nature rather than against it?"

A key discussion raised at the event was the importance of measuring soil health to set a baseline, track performance and set objectives to improve. The ability to gather data with integrity, for example through a formal accreditation process, would help create a valuation mechanism with which we could price the concept of healthy natural capital.

Alongside soil tests and observations, biological assessments are another example which can help farmers track improvements. Earthworms are the engineers of soil, acting as a biological indicator of its health. Regular worm counts can help monitor soil health with the UK’s Agriculture and Horticulture Development Board producing a soil health scorecard.


Cultivating awareness


One of the most significant barriers to the success of regenerative agriculture is knowledge. Farmers might not be aware of various practices available, whilst consumers may feel they don’t have sufficient information to make better decisions in store. To bridge this gap, we should encourage a positive narrative focused on highlighting the fact the problem is fixable – but requires action now.

Positive case studies can help us all understand the value of resilient nature. One attendee mentioned an innovative process from CCm Technologies which converts either waste or a flow of CO2 from a cement or electricity plant into tailor-made fertiliser – making the process carbon negative.

These fertilisers can be fine-tuned for a particular farm’s requirements, enhancing the benefits for the farm as well as the natural environment.

‘Vertical farming’ offers a solution to optimise farm space whilst leaving as much land as possible for the environment, complementing traditional methods. High-value crops (e.g. fruits and vegetables) are grown under optimal conditions, removing the risk of uncertainty from the weather, and reducing the use of water in the production process. Technical expertise to implement such strategies will also reduce the barrier to engagement.

As we mapped out both problems and solutions within regenerative agriculture, we identified a number of common catalysts which would support growth alongside, rather than against, nature.

As we mapped out both problems and solutions within regenerative agriculture, we identified a number of common catalysts which would support growth alongside, rather than against, nature."

Corporate ambition


Pledges from large multinational companies committing to purchasing regenerative products helps spread consumer awareness. Nestlé, for example, is aiming for 50% of its key ingredients to be sourced from farmers adopting regenerative agricultural practices by the same deadline.7 Commitments such as these demonstrate how the private sector can help shift the mindsets of the industry and accelerate adoption. This is embodied by groups such as the Sustainable Markets Initiative’s Agribusiness Task Force.

Corporates can also lead the way in direct investment to help accelerate the transition.

In 2020 Unilever launched a Climate & Nature Fund, committed to investing €1 billion8 into climate, nature and resource efficiency projects with €300 million spent and committed to the end of 2023. Earlier this year it launched the first project in the UK, working with farms which grow mustard seeds and mint leaves used in Colman’s products.

Education

 

A more engaged consumer will encourage farmers to prioritise the shift to regenerative practices. Industry groups such as the Agriculture and Horticulture Development Board are aiming to focus on engagement through demonstrations and educational campaigns. The LEAF (Linking Environment And Farming) charity has a similar successful campaign known as Open Farm Sunday which helps raise awareness through first-hand experiences.

Our team recently attended the Farm Progress Show in Illinois, where attendees mentioned Clarkson’s Farm. The reach of the show to the US highlights the power television and social media can have in capturing people’s imagination and bringing consumers along the regenerative journey too.

Whilst organic food cannot match the low cost of ultra-processed alternatives, its health benefits are priceless. The UK consumes more ultra-processed foods than anywhere else in Europe.9 If instead we consumed food of higher nutritional quality, this could help alleviate chronic conditions ultimately reducing pressure on our health services. Initiatives such as NATURE2 are imperative in these efforts. If consumers not only associate regenerative agriculture with fresher and higher-quality produce, but also broader environmental benefits, this could accelerate wider adoption.

Whilst organic food cannot match the low cost of ultra-processed alternatives, its health benefits are priceless."

Financial incentives


To bridge the short-term risk of adopting regenerative agricultural practices, the right financial incentives can help accelerate this transition. If food prices reflected the full environmental impact, regenerative practices would attract higher demand, providing farmers with a level of assurance to compensate for upfront costs.

Financial institutions can also support through loans specifically targeted for the transition such as HSBC’s Sustainability Linked Loans. Crop insurance can also serve as a safety net for farmers in the transition. Farmers operating in markets with low price transparency might be unaware of the premiums they could access for growing sustainable crops. Platforms which share this market data more easily may help educate growers.

Indirect incentives can also help. Earlier this year, the new ‘biodiversity net gain’ (BNG) approach to development came into force in the UK. Future developments can only proceed if they deliver a BNG of 10%, ensuring a development results in a better quality habitat.

Rooted in sustainability, growing for tomorrow: A vision for the future

Agriculture has a critical role in helping us mitigate and adapt to climate change. You will have already spotted the answer to the question we posed earlier – intercropping, mob grazing and vertical farming are all techniques we can use to farm more efficiently.

The benefits of regenerative practices are seen much more broadly than just the farm and we should recognise the intersection between food, climate and health. Broadening awareness through education and corporate pledges will help accelerate consumer demand, whilst financial incentives can help ensure the solution is profitable for farmers.

Starting from a healthy soil foundation, regenerative practices are the key to building a climate resilient economy for food as nature thrives.

 

Thank you

Rothschild & Co would like to thank the following people for attending the event and contributing to the report: Addy Windsor-Clive of Regenerate, Andrew Wilkinson of Gilchester Organics, Bill Rossiter of Belmont Estate, Tamsin Rossiter of Belmont Estate, Dave Gasca of Blenheim Palace, Dominique Kun, Erik Bruun Bindslev of Merika, Gil Martin of Belmont Estate, Helen Crowley of Pollination, Henry Rossiter of Belmont Estate, Ingrid Kukuljan of Federated Hermes, James Knight of Climate VC, James Lloyd Jones of Jones Food Company, John Shropshire of G’s Fresh, Julian Marks of Barfoots, Karen Day of Gentian, Max Gottschalk of Vedra Partners, Mike Dickson of Our Generous Gene, Pawel Kisielewski of CCm Technologies, Rhod Needham of Halo Impact, Samuel Gill of Sylvera Carbon and Sarah Megahed of Nuveen.

Ready to begin your journey with us?

Please get in touch

Citations

[1] Why Regenerative Agriculture?, Regeneration International
[2] Why empowering 100 million farmers to transform food systems matters, World Economic Forum, 23 September 2021
[3] Regenerative Agriculture, High Weald National Landscape
[4] Soil: the foundation of life on Earth, John Innes Centre
[5] Breaking the bane of black-grass, Rothamsted Research
[6] The Case for Regenerative Agriculture in Germany – and Beyond, BCG, 23 January 2023
[7] Regenerative agriculture, Nestlé
[8] Unilever Climate & Nature Fund, Unilever
[9] Ultra-processed foods, Soil Association

Past performance is not a guide to future performance and nothing in this article constitutes advice. Although the information and data herein are obtained from sources believed to be reliable, no representation or warranty, expressed or implied, is or will be made and, save in the case of fraud, no responsibility or liability is or will be accepted by Rothschild & Co Wealth Management UK Limited as to or in relation to the fairness, accuracy or completeness of this document or the information forming the basis of this document or for any reliance placed on this document by any person whatsoever. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, targets, estimates or forecasts contained in this document. Furthermore, all opinions and data used in this document are subject to change without prior notice.

Read more articles

  • Growth Equity Update

    Insights

    In October’s edition, we look at the details of OpenAI’s recent $6.6bn raise, who invested and who didn’t, at the financials and at the state of OpenAI as its mission shifts awy from capped profit status. Meanwhile global VC fundraising in Q3 was twice the level of Q1 and September was a robust month for VC backed company raises on both sides of the Atlantic.

  • Corporate earnings growth broadening?

    Strategy Blog

    Earnings season is upon us, beginning with the US major banks. While analysts are expecting a fifth consecutive quarter of growth, will this spread to other sectors and regions? This strategy blog considers the outlook for the US, plus UK, Europe and Japan.

  • Asset Management: Monthly Macro Insights - October 2024

    Market Commentary

    The global economy grapples with a faltering goods sector and higher geopolitical risks. Nonetheless, investors remain confident that an accelerated policy easing would interact with supportive financial conditions to safeguard the resilience of the global economy, especially since China recently announced a coordinated set of monetary and fiscal measures.

  • Female founders share the secrets to their success

    Entrepreneurs

    We know that every entrepreneurial journey is different, but there are lessons that all founders can learn from each other. In this series of video interviews, we asked the founders of three successful companies to share their experiences and offer practical advice.

  • Stimulus revives risk appetite

    Monthly Market Summary

    Global equities moved higher by 2.3% in September (USD terms), while global government bonds returned 1.1% (USD, hedged terms).

  • Politics and portfolios

    Strategy Blog

    Spreading conflict in the Middle East is alarming, particularly when viewed alongside other ongoing geopolitical challenges. While there are no infallible guides to how global markets will respond, in this blog we discuss some of the potential economic consequences.

Back to top