The Financial Case for Regenerative Agriculture

Koen van Seijen

In this video, Koen van Seijen examines the potential of regenerative agriculture to deliver superior returns compared to conventional farming methods. He challenges the traditional mindset that views farming as a linear process and emphasises the benefits of regenerative practices. Koen highlights how this approach can lead to better yields, lower costs, and increased resilience, while also enhancing natural capital and offering opportunities for higher market premiums.

Agriculture

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The Financial Case for Regenerative Agriculture

7 mins 35 secs

Key learning objectives:

Understand the fundamental differences between conventional and regenerative agriculture, especially in terms of financial returns and environmental impact
Learn the seven key reasons why regenerative agriculture can offer superior risk-adjusted returns compared to traditional farming methods
Explore real-world examples that demonstrate the resilience and profitability of regenerative farming practices

Overview:

How can regenerative agriculture outperform conventional farming? Regenerative agriculture is not just an ethical choice but also a financially sound one. There are many compelling reasons why regenerative systems can deliver superior risk-adjusted returns. A few of them include better yields, lower operating costs and enhanced resilience and profitability.

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Summary

How does conventional agriculture approach farming, and why is it problematic?

Conventional agriculture often approaches farming with a factory-like mindset, aiming for efficiency through technological intensification and monoculture. This approach is problematic because it overlooks the biological complexity of farming, leading to fragile systems that are highly dependent on fossil fuels and vulnerable to environmental and market shocks. One example are the olive groves in Andalusia, Spain, where billions of euros were invested in super-intensive, fully-mechanised monoculture olive farming. While this system worked for a few years, extreme weather events in 2022 and 2023 led to failed harvests, causing a spike in olive oil prices and highlighting the fragility of such systems.

What is regenerative agriculture, and how does it differ from conventional farming?

Regenerative agriculture is an approach that focuses on improving the health of the soil and ecosystems, turning sunlight into food, fibres, and oils more sustainably. Unlike conventional farming, which relies on external inputs and monoculture, regenerative agriculture aims to create resilient, biologically diverse systems that enhance natural capital and reduce environmental impact.

What are the seven reasons why regenerative agriculture can deliver superior returns?

According to Koen, the seven reasons are:

Comparable or better yields: Contrary to popular belief, regenerative farming can produce yields that are comparable or even superior to conventional farming, especially during extreme weather events.
Lower operating costs: Regenerative farming reduces reliance on expensive external inputs, leading to lower operating costs.
Enhanced natural capital: Farming in a regenerative way can increase the value of the land over time by improving soil health and water retention.
Climatic resilience: Healthy soils in regenerative systems can better cope with extreme weather, reducing the risk of crop failure.
Positive environmental externalities: Farmers can potentially earn additional income through carbon credits, biodiversity credits, and other environmental services.
Higher value markets: Regenerative products can often be sold at a premium, such as organic or grass-fed labels, increasing profitability.
Higher profitability with less volatility: Regenerative farms tend to be more profitable and less volatile, offering better returns over the long term.

What is the significance of climatic resilience in regenerative farming?

Climatic resilience is crucial because healthy soils can better absorb and retain water, making them more resistant to extreme weather events. For example, Singing Frog Farm in California was able to withstand massive floods in 2023 due to the high organic matter in their soil, which acted like a sponge to absorb excess water.

What are the potential benefits of selling regenerative products to higher value markets?

Regenerative products, such as organic or grass-fed, can command significant price premiums in the market. For instance, organic grain in the US has enjoyed a 100-200% price premium over conventional grain, making it a highly profitable option even if yields are slightly lower.

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Koen van Seijen

Koen van Seijen is a regenerative agriculture and food expert, has been exploring the carbon sequestration potential of regenerative farming since 2011. He is the founder and host of the Investing in Regenerative Agriculture and Food podcast. In the last decade through 300 podcast interviews with investors, fund managers, scientists, entrepreneurs and farmers, Koen explored the role of money and entrepreneurship all over the world in regenerating soils, ecosystems and communities. Koen also works at Toniic, a global community of asset owners seeking deeper positive net impact across the capital spectrum. Toniic members consist of around 500 high net wealth individuals, family offices, and foundations, who are deepening their impact in over 25 countries.

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