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Regenerative ag’s numerous growing pains are worth the trouble

Toronto’s Area One Farms founder and CEO Joelle Faulkner talks through the fundamentals of regenerative ag and Canada’s transition challenges, such as a lack of suitable crop insurance.

Regenerative agriculture has become a major buzzword in recent years. It’s increase in popularity can be seen outside of normal agriculture circles, with documentaries such as the Woody Harrelson-narrated Kiss the Ground being released on Netflix in 2021.

In agriculture, it is also of keen interest among farmers looking to lower chemical inputs and increase resilience to volatile weather – something that is relevant today, when fertilizer prices are triple what they were last year (if you can get it at all) and most areas in North America remain deficient in moisture as a result of the 2021 drought.

So, what exactly is regenerative agriculture, what does it ultimately achieve, and, given its promise of being more environmentally friendly, less wasteful, more economical and, overall, a better alternative to traditional farming and harvesting, why is it not seeing sky-high adoption rates?

The reason Area One Farms is so interested and involved is because we actually run row-crop producing farms. Our approach is to partner with family farms and help them expand. As such, the practices they use, and their financial performance, is critical to our success. The alignment of interests with our Farm Partners also means we get a very good understanding of the obstacles to adoption.

As with most things in life, while the idea is simple, the adoption is actually quite complex. The labor, machinery and inputs needed to put practices in place that are more ‘regenerative’ are significant, and quite different from more mainstream methods. As a result, the pivot to those is complex and difficult.

The very-hard-to-change systems of crop insurance and production methods are also a challenge to switching to regenerative agriculture methods. As advocates who strongly feel this change is both inevitable and productive, we are actively looking at regenerative agriculture as a path that all of our farm partners will eventually take, which is why we are proactively working to make the practices truly ‘commercial.’

Regenerative ag in a nutshell

There is no single agreed definition for regenerative agriculture, but almost all include common principles from which farmers can design agricultural practices and achieve outcomes.

The specific principles, here as outlined by US multinational General Mills, include:

  1. Understanding the context of the farm operation.
  2. Minimizing soil disturbance.
  3. Maximizing crop diversity.
  4. Keeping the soil covered with crops.
  5. Maintaining living roots year-round.
  6. Integration of livestock.

The practices include cover cropping, intercropping, livestock integration, enhanced nutrient management and conservation tillage (low-till or no-till). The outcomes include higher carbon sequestration, increased soil water retention and storage capacity, soil enrichment (both quality and nutrient availability), increased biodiversity, emissions reduction, enhanced ecosystem services and a reduction in freshwater impact.

These principles and practices seek to regenerate a farm’s natural resources for the purpose of enhancing the farm’s total function as an ecosystem. Simply put, regenerative agriculture is the practice of food production that supports soil biology. The promise is simple: soil biology helps produce a crop with lower synthetic inputs, and increases the soil’s moisture-holding capacity by increasing its carbon content. If it achieves that promise, soil biology will increase profitability.

That is an attractive proposition to any farmer. So what are the obstacles that make it difficult for farmers to deliver on this very attractive promise?

Barriers to the transition

For a start, it is not clear exactly what regenerative agriculture looks like, and it is hard to practice things that you cannot see. We need to, over time, develop clear practices of both what to do and how to do it, which will require significant experimentation and sharing of those practices.

Another issue is that practices currently being used are not necessarily designed and tested for every climate. For example, it is hard to find cover crops that can be planted in late October in Canada. Each region will need to develop its own options for how to integrate the practices.

Stakeholders must also consider that farm assets, such as machinery and staff, are not yet designed or trained in the new practices. For example, harvesting peas and canola means separation of each crop at harvest, which requires new machinery and potentially additional labor. To seed a cover crop after harvest requires additional staff to get the job done. It is not simply about economic barriers – which carbon credits can potentially help alleviate – it is also about the practical barriers of getting the right machinery and people in place to meet the needs of these new practices.

Crop insurance must adapt

Finally, there are systems that farmers rely on, which also need to adapt. Crop insurance is one of the most significant. Farming is essentially running a manufacturing process where many of the variables are outside of the operator’s control. Weather is the most critical of those. Governments have helped farmers stabilize their income by subsidizing insurance that provides downside protection against weather risks.

In Canada, for example, the farmer can insure between 50 percent and 90 percent of their historic physical yield (bushels per acre), depending on the province. If the farmer grows less than the insured yield, the insurance program pays out. This system is critical to helping farmers survive years like 2021, where drought caused some farmers to grow under 25 percent of what they would normally have grown.

The farmer’s historic yield is based on the amount of yield produced historically per crop, on a per acre basis. Crop insurance does not recognize practices like intercropping (growing two or more crops in the same field). This means if the farmer grows 25 bushels of canola and 25 bushels of peas per acre while intercropping, from a crop insurance perspective, the farmer will have to add either the canola yield or the pea yield to their history, rather than being recognized for growing a 50 bushels crop.

For regenerative practices to scale, the downside protection provided by crop insurance needs to find a way to adapt to recognize the total yield.

A worthwhile endeavor

To be sure, these are all typical practice change issues that can be expected in the execution of any business strategy. Even so, the business of farming has its own unique challenges to overcome. As farmers increasingly face the need for weather resilience, as commodity prices continue to rise and demand for carbon credits surges, there are many reasons for persevering and overcoming these obstacles.

This is another way the farming industry can and should be taking its cues from the software and technology sectors, fintech and other modern approaches to business and integrating an open-source approach that benefits all.

Area One farms has spoken to roughly 20 farm stakeholders and we have collated all of our studies alongside market advice and analyzed the costs and benefits of each potential practice change. We are eager to share our findings with anyone who wants to review them as we want to make it readily available so anyone can also add to it.

Indeed, the primary objective for all farmers is to feed an ever-growing world. No business or industry can operate at a loss indefinitely and agriculture is no exception. Farmers are in a unique position to do good and do well through regenerative practices that are better for the long-term health of the land, the environment and their livelihoods.

Area One Farms is a Toronto-based fund manager that specializes in equity partnerships with Canadian farmers.