Regenerative Ag: changing the food you eat
Anthony Howcroft
CEO, founder at SWARM Engineering
Last week I attended the Regenerative Food Systems Investment Forum in Denver, which was fascinating and enlightening; it's clear that regenerative agriculture (RA) is not just a fad; it's the future of sustainable farming – which means it will affect the food we all eat, very soon. The evidence presented was pretty compelling. Being somewhat new to RA, I thought I’d highlight a few points for others who might still be learning about this topic. Here are my key takeaways:
What is Regenerative Ag?
RA is a farming approach that seeks to restore soil health, enhance biodiversity, and counteract climate change by capturing carbon in the soil. It involves practices like cover cropping, no-till farming, and rotational grazing with animals, to produce high nutrition density food, while improving the land, rather than depleting it. The RA approach also helps with water management and increases resilience to climatic shifts, especially droughts and/or heavy rainfalls.
Key takeaways
“Water follows carbon”: soils with higher organic carbon content tend to have improved structure and greater porosity. This not only allows the soil to absorb water more efficiently but also helps it hold onto water for longer periods.
Yield is sexy, profitability is not (but should be!): something we whole-heartedly agree with at SWARM. Producers love to talk about yield, but the conversation should really be focused on profit.
RA products currently command a market premium: certain products are getting a significant uplift in price when grown with RA. Forward thinking companies like Cargill have launched programs offering higher prices to their suppliers that implement RA policies. The expectation is that fruit may soon begin to also command a premium, as RA expands in this market.
The well-being of producers is key: nobody is going to roll-out RA across their fourth-generation farm if it will kill their short-term income and bankrupt them. We need to find ways to fund transitions, and support producers.
Standard Venture Capital is not always the best fit for producers: as one eloquent speaker put it, “when the VCs ask me what my exit strategy is, I tell them death. I’m not selling the farm.” The good news is there were plenty of creative investors at the event looking at ways to fund producers, without requiring an IPO or trade sale as an exit.
Fund raising for growers is tough: some of the funding journeys for growers make a software startup funding cycle look simple in comparison. They have to wrestle with multiple forms of capital and debt systems, from regional and national groups, private and state. The Bi-partisan Government Farm Bill is critical to support AgriFood in the USA, and the next iteration of it is currently delayed.
The carbon credits market is complex: it seems like the Australians are ahead of the world on this because the government started the process in 2011 by regulating carbon credits (and because they have no subsidies!). The Australians have some great data and experience. RA is a small piece of the carbon market today, with less than 1% of carbon credits presently coming from soil. Which is odd, because soil is the third largest carbon pool in the world. Despite all of the attention on carbon markets, whether consumers are willing to pay more for carbon neutral products is still unproven.
Difference between carbon insets/offsets: basically, a carbon inset is an investment to reduce or sequester carbon that occurs inside your supply chain, e.g. paying your growers to plant trees as part of a carbon sequestration program. An offset is where you invest in the same approaches outside of your supply chain – which sometimes gets companies into hot water as these efforts can be perceived as ‘buying’ a carbon position.
Paid carbon insets may be temporary: ultimately, many companies will require their Supply Chain partners to be responsible on carbon insets by default, and it most likely will become a standard cost of doing business.
RA increases nutrient density: and there is significant scientific evidence for this, which is being gathered together by organizations like Edacious. At the same time, organizations like Brightseed and Rockefeller Foundation are working to document the hidden health benefits of plants & food.
Clearly, some of these subjects are highly emotive, so it’s not my intention to kick-off a big debate here, just share some of the points that I came away with from the event. So, what does this all mean for the future of agriculture?
The conference underscored a critical message: RA is not just about changing farming practices but altering the ethos surrounding agriculture. It's philosophy is that our well-being is intrinsically linked to the health of the land.
However, as with any transformative approach, there are challenges. Adoption at scale requires education, policy support, and financial outlays. It is great to see our investors in SWARM at the forefront of this revolution: Builders Vision (S2G) and Trailhead were both prominent at the event. RA offers a path forward, marrying tradition with innovation to pave the way for a sustainable, prosperous, and resilient agricultural future.
With my SWARM hat on, I would also note that the use of RA opens up many opportunities for making better, informed decisions that have a positive impact; for example, ensuring that supplier purchases favor RA growers, and that produce and products are allocated to customers and consumers willing to pay a premium, ensuring maximum profitability. This is something we know how to do well :)