How investing in regenerative agriculture can help fight climate change
By: Matthew Reynolds
Tags: Climate Change, Sustainable Business, Investing, Regenerative Agriculture, Impact Investing

Land degradation is one of the world’s great problems with about 25% of total land area in a degraded state. When land is degraded, soil carbon and nitrous oxide is released into the atmosphere. This makes land degradation one of the largest contributors to climate change.

Scientists have predicted that up to 24 billion tons of fertile soil are being lost each year due to unsustainable agricultural practices. If this trend continues 95% of the Earths land areas could become degraded by 2050.

A recent United Nations report discussed how agriculture, forestry and other land use contributed around a quarter of net greenhouse emissions from 2007 to 2016.

There is an alternative to industrial type agriculture which strips the soil of nutrients and carbon.

The practice of regenerative agriculture is a holistic approach to farming. It includes practices and principles that increase biodiversity, enriches soil, improves watersheds and generally enhances the overall eco-system. One of the major benefits of regenerative agriculture is carbon sequestration.

Carbon sequestration refers to the process whereby plants absorb carbon dioxide and convert that carbon dioxide into carbon compounds which are integrated into soil matter through microbial and other biological activity. Simply, it is taking carbon from the atmosphere and putting it back into the soil where it belongs.

Industrial style farming practices degrade quality by releasing carbon from the soil and diminishing the soil’s capacity for carbon sequestration.

Regenerative farming processes such as compost application, no tilling, rotational grazing, cover-cropping and permaculture assist carbon sequestration and replenish and nourish the land. This is a proven and scientific method to combat climate change.

According to the European Initiative, if we increase carbon in total farm soil by 0.4% a year, it could offset the annual amount of carbon dioxide humans put into the atmosphere.

How to get involved?

As most of us do not own a farm and cannot engage in regenerative agriculture ourselves, the next best alternative is to invest in companies engaged in the process of regenerative agriculture.

In July 2018, Wide Open Agriculture Limited (ASX: WOA) or (FWB: 2WO) become the first globally listed regenerative agriculture company with over 450 investors and AUD $5 million capital raised from investors. Wide Open Agriculture is transforming degraded land in the Wheatbelt of Western Australia with a ‘4 Returns’ business model. This model is based around the company delivering not just financial returns, but also returns on social capital, natural capital and inspiration returns from communities and stakeholders.

Wide Open Agriculture recently reported strong cash flow for the 3 months to September 2019 with over AUD $200,000 received from sales of regeneratively farmed beef and lamb. This represents a 68% increase from June 2019 sales. The company is vertically integrated with its own food brand ‘dirty clean food’ and has a development pipeline that includes oat milk, meat substitutes and healthy snacks. And an export licence was recently granted which means the company can now commence negotiations with customers in South-East Asian markets.

Disclaimer — The author of this article, Matthew Reynolds, is a consultant to Wide Open Agriculture Limited.