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Exclusive: Farmland LP tallies regenerative impact

The firm used a $250,000 grant from the USDA to produce a report that quantifies the impact of sustainable ag practices within the REIT's portfolio at more than $21m.

Farmland LP’s use of sustainable agricultural practices on a distinct set of its farmland properties has created an additional $21.4 million in ecosystem benefits over the past five years, according to a report set to be released on Wednesday.

The conclusions draw on a field-by-field analysis of Farmland LP’s properties that quantified both the benefits of its regenerative approach and the savings over damage that would have been incurred, had the same properties been managed conventionally.

For the 6,011 farmland acres held within the firm’s debut Vital Farmland fund, the impact report found that Farmland LP’s regenerative practices had created $12.9 million in ecosystem service value, while averting the $8.5 million in ecosystem damage that would have occurred otherwise.

“Regenerative agriculture integrates the principals of organic farming, agroecology and holistic management to counter the decline in biodiversity, rise in atmospheric carbon dioxide, loss of topsoil and water pollution caused by standard farming practices,” the report said.

“In practice, this means growing more perennial crops, reducing external chemical inputs such as synthetic fertilizers, diversifying crop rotations, integrating livestock grazing with cropping systems and improving or establishing functional natural areas.”

San Francisco-based Farmland LP produced the document together with Washington-headquartered non-profit Earth Economics and the Delta Institute after securing a $250,000 Conservation Innovation grant from the USDA’s Natural Resources Conservation Service two-and-a-half years ago.

The report looked at key areas of impact including biodiversity, soils, water, carbon and climate and social value, identifying biophysical metrics by which to measure each.

Craig Wichner, managing partner at Farmland LP, told Agri Investor the USDA sponsored the study as part of an effort to develop a more refined understanding of the differences between sustainable and conventional agriculture.

Wichner said that by calculating the economic value of agricultural processes Farmland LP carries out – down to the individual tillage pass and fertilizer application, in some cases – the USDA hopes to increase the efficiency with which it distributes crop subsidy and conservation payments.

In the impact report, Wichner said, each of those processes has been analyzed in terms of biophysical metrics previously identified as influenced by agricultural practices, ranging from soil nutrients and erosion to damages from flooding and housing prices.

By providing a level of detail possible only though dedicated study and cutting-edge research methods, he explained, Farmland LP hopes to offer a set of metrics to encourage more farmers, and investors, to back regenerative approaches to ag.

“Historically, investors have asked sometimes very specific questions about soil carbon, or water, or pollinator habitat, but they tend to be qualitative questions,” said Wichner. “Now it can be much more quantitative and even, economic.”

He noted that the issues addressed through the impact report are similar to those that have come up from LPs for years and that early reactions to the report, from consultants especially, have been very supportive. While calculating the value of pollinators or cover crops is very challenging and can be somewhat subjective, Wichner said, the Farmland LP’s impact report has provided a baseline for a set of conversations about how important priorities can be balanced.

“At a macro level, we all live downstream from farmland and being able to put a price tag on both the negative and positive environmental impacts of farming practices is absolutely important and essential for society,” Wichner said.