A €320-BILLION CIRCULAR ACHIEVING ECONOMY INVESTMENT OPPORTUNITY AVAILABLE ‘GROWTH TO EUROPE UP TO 2025 WITHIN’ 82 | ACHIEVING ‘GROWTH WITHIN’ 10 INVESTMENT THEMES DEPLOYING REGENERATIVE AGRICULTURAL 4 PRACTICES Regenerative agriculture could be for major crops starting to decline broadly defined as the synergistic around the world. 150 The annual cost of combination of as many practices soil degradation in Europe amounts to as possible, including permaculture, €38 billion. 151 Indeed, gains in European organic, no till, 147 holistic grazing, and agricultural productivity have fallen keyline land preparation. steadily from 2.5% per annum in the 1970s to 1.3% per annum in the Shifting towards an agricultural 2000s and 0.9% in 2010. This slowing model that regenerates the soil and of productivity gains has continued revitalises ecosystems through farming despite significant increases in the management practices and technologies use of fertilisers, chemicals (such as could bring Europe onto a pathway to pesticides, herbicides, fungicides, and achieve overall economic benefits of insecticides), fuels, and other inputs up to €35 billion per annum by 2030, designed to increase yields. 152 Currently, against an estimated investment of 73km 3 of water is poured into the €15 billion between now and 2025. The European agricultural system each year primary areas of potential investment are (of which only 40% actually reaches the in providing funding to farmers to bridge plants), 153 alongside 16 million tonnes the transition towards regenerative of synthetic fertiliser (of which only 5% practices, as well as investments in actually goes into nutrients absorbed specific technologies and machinery by humans). Excessive application of enabling these practices. This transition chemical fertilisers creates dependency would see economic rewards based on imports 154 and heightens risk within largely on a reduced dependency on the system. For example, nitrogen fertiliser and pesticides throughout fixation and phosphorus have already the agricultural industry, alongside an exceeded the safe operating limits of overall reduction in agriculture-related the planet by a factor of two. 155 At the greenhouse gas emissions. same time, conventional agriculture does not always produce healthy Relevance of outcomes. In a recent report, the investment theme nutritional content of several types of fruits and vegetables, including cucumbers and tomatoes, was shown It is becoming increasingly evident how to have fallen significantly during the deeply harmful conventional agricultural second half of the twentieth century. 156 practices can be. 148 Our current farming Some foods also often contains traces model has resulted in 30%–85% of EU of toxic chemicals and plastics. 157 agricultural land being affected by soil degradation 149 and productivity gains ACHIEVING ‘GROWTH WITHIN’ | 83 However, emerging practices and that produced with the help of synthetic technologies are providing increasing fertilisers and other chemicals; evidence that one does not have to • Giving farmers greater control over their choose between preserving the soil and cost base, as inputs such as fertiliser are using it for agriculture. In fact, profitable generated by the farm itself. agricultural practices exist that not only preserve the soil, but regenerate The idea at the core of these ‘regenerative it. These practices revitalise the farm’s agricultural’ practices and technologies entire ecosystem, resulting in many is that everything in the farm should be benefits, including: reinvented to mimic nature: in the words of agri-pioneer, Leontino Balbo: ‘If we • The removal of greenhouse gas can restore soil to natural ecosystems emissions from the atmosphere to be conditions, nature will do the rest’. 159 stored in the ground in the form of This shift goes far beyond resource carbon; efficiency, which focuses on using water • Greater yield stability due to a and other inputs more economically. reduced reliance on fertilisers (crops will Pioneer farmers, landowners, and eventually become more resistant to scientists are starting to think outside viruses and weather changes because the box on many levels, such as in the healthy soils cope better with droughts choice of crops and livestock on farms, and floods); 158 the harvesting methods and equipment, • Decreased water usage; and the management techniques for • Production of healthier food with water, waste, energy, and above all, land. a higher-quality nutrient profile than A shift in all these factors could mean FIGURE 22 OVERVIEW OF AGRICULTURAL PRACTICES REGENERATIVE AGRICULTURE The combination of as many practices as possible Permaculture CONSERVATION AGRICULTURE • Introduction of trees and bushes • Swales for water retention • Crop rotation Organic agriculture • No till • Crop rotation • Heavy use of herbicides • • Use of chemical fertilisers No use of chemicals and genetically modified organism INDUSTRIAL AGRICULTURE • Mechanical weed control No till polyculture • Monoculture • Mix of different crops (only for grazing) • Use of turning plough • No use of chemicals • Use of chemical fertilisers Holistic grazing • Short time and limited space grazing plans • Soil regeneration thanks to manure Key line land preparation • Cultivation along contour lines • Optimised water retention Sources: Volterra Ecosystems; Rodale Inst., Gabe Brown (No till polyculture); Allan Savory (Holistic grazing); P.A. Yeomans (Key line land preparation); 160 http://ec.europa.eu/eurostat/statistics-explained/index.php/Organic_farming_statistics; http://www.sciencedirect.com/science/article/pii/S209563391530016 84 | ACHIEVING ‘GROWTH WITHIN’ 10 INVESTMENT THEMES that nature is able to revive the entire • Regenerative fruit/vegetable/cash ecosystem, generating strong levels of crops multi-culture; natural capital on which to build highly • Holistic-planned grazing for bovine, productive agricultural businesses. ovine, porcine, and poultry farming; • Agroforestry systems with alley Current organic agricultural practices cropping; 163 can be considered as regenerative to • Low-input pasture-based dairy some extent, as it implies stopping systems. 164 the use of pesticides and conventional fertilisers, and allowing the soil to start regenerating once these inputs Figure 23 gives an overview of the have been removed. However, organic business case for three examples of agriculture is just one step towards regenerative practices 165 implemented the soil regeneration and ecosystem by Volterra Ecosystems. This Spanish revitalisation that are essential to company focuses on integrating various regenerative agriculture. Also, existing practices into coherent management organic agricultural practices fail to systems aimed at regenerating farmland capture most of the potential economic within profitable enterprises. The and environmental benefits if they are profitability results assessed in Figure not combined with other regenerative 23 are based on initiatives that have practices. As shown in Figure 22, already achieved such profitability levels combining several regenerative in Europe. 166 practices (rather than implementing one) unlocks tremendous economic Another player in this space, SLM value for farmers. For example, a 50% Partners, scales up profitable higher profitability could be achieved regenerative practices by acquiring and by shifting to organic vegetable managing land on behalf of institutional monoculture (i.e. by stopping using investors. Direct investment in corporate conventional inputs). 161 But a 200% vehicles gives investors the security higher profitability could be achieved of land ownership, but also maximum by shifting to regenerative vegetable control over how the land is managed, multi-culture (i.e. by introducing and full equity exposure to the returns a mix of annual and perennial from regenerative farming. SLM Partners plants, and implementing holistic has identified a number of proven ecosystem management in a way regenerative agricultural systems that that mimics nature). 162 are applicable at commercial scale and provide economic returns that Recent developments are as good, or better than, industrial production models. 167 They are currently Multiple transitions to regenerative investing in one of these systems agricultural practices have started in (holistic-planned grazing for beef cattle Europe, specifically over the last years. and sheep) and are exploring others for Advanced regenerative agricultural further investment opportunities. practices with a positive business case These examples demonstrate not only and successful proof-of-concept are: viability, but also a willingness to start embracing these methods in key parts ACHIEVING ‘GROWTH WITHIN’ | 85 of the industry, making now a Current barriers conducive time for investment. to investment Investment opportunities The present-day barriers that prevent identified farmers from shifting towards regenerative practices at scale can be Although a set of regenerative broken down as follows: agricultural practices are profitable, leveraging innovative technologies • Most farmers are not familiar with designed to mimic nature – such as regenerative practices and may be Big Data and robotics – has good risk-averse or resistant towards them, potential to further enhance profitability as the shift to organic farming has and substantially reduce the payback been challenging on some farms. In time as shown by the Balbo Group’s addition, incumbent suppliers, such as innovations, detailed in the case agrichemical