As investors, we must stay up to date not only with regard to real estate market but also the major trends across the country. These trends are directly related to both individual markets like real estate and the overall functioning of our nation, including the economy. The Biden administration made important policy changes, including putting climate change in the foreground policy issues.
One of the topical tools to achieve carbon sequestration is to scale up agriculture industrial agriculture approach of a regenerative agriculture approach. Read on to find out what regenerative farming is, what a switch to regenerative farming might entail, and how an investor can use this information to make sound investment decisions.
What is regenerative agriculture?
Regenerative agriculture, sometimes referred to as carbon agriculture, is a technique of repairing and improving the soil on a farm so that it is better able to support the plants and animals that are raised on the land. It is done inside the existing agricultural system rather than primarily using outsourced resources like synthetic fertilizers. Ultimately, regenerative organic farming aims to create a more sustainable farming system while producing nutrient-rich foods in a more environmentally friendly way.
The main goal of regenerative farmers is to improve soil health. Healthy soil will in turn enable more profitable and efficient food production in the long run, creating resilient and productive farmland. Regeneration practices take a multi-pronged approach, which includes increasing biodiversity, using a cover crop, rotating crops, and implementing rotational grazing to improve organic matter. of the ground. By using the natural resources available locally, farmers are able to encourage a closed-loop farming system that improves overall soil health.
Why should farmers make the switch?
This is a solution to climate change much touted by many environmental groups, which may lead one to believe that it is more of a marginal grassroots movement. But a growing body of scientific research, as well as proven examples of financially successful regenerative agricultural farmers, is starting to shed light on this as a real solution for carbon sequestration. From a climatic perspective, it can reverse soil degradation, which creates greenhouse gas emissions, soil erosion and toxic contamination of waterways with chemical inputs.
While it is obviously ideal for healing the planet and securing a viable food system for future generations, it still has to make sense in dollar terms, otherwise it simply won’t create a sustainable farming system in the long run. From a business perspective, this can help reduce reliance on government funding, commercial loans, crop insurance, and a host of other high-cost expenses while increasing the crop yield. Reducing inputs and increasing outputs over time makes sense, as do many other business and investment models.
Rules for regenerative agriculture
At present, there is no official certification program for regenerative agriculture like there is for organic agriculture. Rather, it is a compilation of practices that have the same comprehensive approach while adapting to local conditions and needs. As such, consumers should be wary of any sort of unregulated labels, preferring instead to research the specific farming approaches used by that farmer. The main components of a regenerative agriculture practice include the following principles:
- Regenerative agricultural practices include as little disturbance as possible to soil and soil microbes so that the soil structure remains intact. This helps improve water retention, nutrient retention, and carbon sequestration.
- Another key element is the enhancement of soil fertility by using biological inputs rather than chemical or mechanical inputs. This eliminates the effects of synthetic fertilizers, which cause the release of carbon from the soil into the atmosphere as well as significant health problems for farmers and consumers.
- Biodiversity on the farm is also an essential part. This comes in the form of interplanting multiple crops on an ongoing basis and using cover crops when the original crop is not actively cultivated to further improve soil health or support pollinators and beneficial insects. .
- The latest integral regenerative agricultural practice is to use grazers in a well-managed farming system to increase organic matter and carbon sequestration in the soil, as well as to provide healthier living conditions for animals, resulting in a product richer in nutrients for the human consumer. .
How to invest in regenerative agriculture
Investing in regenerative agriculture can be suitable for any investor’s budget and time allocation. Obviously, most investors do not have the desire or the knowledge to become regenerative agricultural farmers. But some may be ready to buy or already own land, which may be rented exclusively to farmers that follow regenerative agriculture practices. You could also potentially fund a start-up operation as an accredited investor through private platforms like Farmland LP, which support farmers who can sometimes have difficulty securing funding from traditional funding sources, even when the plan business is solid. If you are a small investor, you can finance microloans to a farmer using regenerative practices using platforms like Steward, which is a B-certified company that connects private finance directly to the farmer seeking help. through short-term interest-bearing loans. You can also invest in private real estate investment trusts (REITs) that support regenerative agriculture, such as Iroquois Valley Farmland REIT. These are not investment recommendations, but simply examples of various investment avenues. You need to do your own due diligence to make sure the investment is right for you and your portfolio.