2022 Sustainable Agriculture Trends for Ag Finance to Be Aware of

With real-world impacts like rising global temperatures, climate change is one of the biggest risk factors agriculture faces today. NOAA reported that 2020 was the second warmest year and the EPA explains a consistent increase of 0.16°F in average surface temperature per decade since 1901. Rising temperatures contribute to extreme weather events like heatwaves, droughts, and degrading soil.

Greenhouse gas emissions are one of the biggest contributors to rising temperatures, with agriculture amounting to 10.5% of emissions in 2018, as estimated by the USDA. The ag industry alone produces 9% of methane emissions, 75% of nitrous oxide, and approximately 698 million metric tons of carbon dioxide in 2018.

Amid all the macro-scaled threats, farmers are taking action to establish resilience measures and follow sustainable agriculture trends in the face of unprecedented challenges.

Ag lenders can engage with their borrowers and create situations wherein farmers can obtain the capital needed to transition their parcels to a more resilient state. By understanding the impact of climate change on agriculture, the goal of creating a more sustainable and resilient agricultural industry that benefits both lenders and farmers is made all the more attainable.

Sustainable Agriculture Trends in 2022

Given the expansive nature of the industry, measures must be taken to apply sustainable agriculture trends on a wide geographical scale.

1. Regenerative Agriculture

Regenerative agriculture is a sustainable agriculture trend with a philosophy that aims to go beyond just maintaining procedures that don’t directly result in creating additional harm to the environment. Through the use of holistic farming practices, regenerative agriculture takes carbon found in our atmosphere and transfers it into the soil. When these nutrients are reintroduced into the ground it has the potential to result in better crop production, stronger soil structure, and a healthier diet for the animals that live off the farmland. It “leverages the power of photosynthesis in plants to…build soil health, primarily through the practices that increase soil organic matter.”

Over the recent years, sustainable agriculture trends have been garnering the attention of agencies across the food industry.

The food conglomerate, General Mills has made a pledge to adopt regenerative farming methods by the year 2030 on 1 million acres of its farmland. Specifically calling out, “threats to agriculture, like extreme droughts and floods,” as key factors that drove the decision-making process as they continue to “drive growth and increase resilience.”

In adhering to the overarching regenerative strategy, the company has kicked off a three-year project working alongside 24 wheat growers and the Kansas Department of Health and Environment.

To measure their effectiveness, the five key metrics chosen were in respect to water, soil health, cow and herd well-being on dairy operations, economic resiliency in farming communities, and biodiversity.

Deputy Secretary of the Division of Environment at the Kansas Department of Health and Environment, Leo Henning shares,

“The goal of the pilot program is to encourage farming practices that improve both soil health and water quality…such that agriculture is the solution to a more resilient and clean water supply for Wichita residents…We believe regenerative agriculture can improve the quality of this vital water source and if we are successful, it’s win-win-win, for farmers, communities, and the environment.”

And because regenerative agriculture can look different depending on what the land is being used for, General Mills established “6 Core Principles of Regenerative Agriculture” within their operations— minimizing levels of soil disruption, keeping roots intact throughout the year, utilizing livestock to maintain soil health and biodiversity, covering the soil, and making sure the farm operation is understood on a case by case basis.

PepsiCo carried the same sentiment in April of 2021, with the hope of adopting regenerative ag across 7 million acres of farmland by 2030 and reducing its GHG emissions by 3 million tons. For the U.S. alone this plan will extend to 500,000 acres by the end of this year.

2. No-till farming

Tilling is a conventional farming practice used by farmers to loosen the soil and remove weeds but it also disrupts existing soil structure, negatively impacting the soil’s ability to retain existing nutrients.

There are five main types of tilling: conservation, primary, secondary, zone, and intensive. Typically the process disrupts anywhere between 4 to 10 inches of soil and can result in water erosion. Tilling also releases carbon dioxide into the atmosphere— directly contributing to a warmer climate.

Plants and soil already have their own sequestration abilities, so when no-tilling practices are used and the soil is left undisturbed it can take water in easier, reduce the possibility of erosion, and keep carbon dioxide in the ground instead of releasing it into the atmosphere. thus creating an incentive for farmers to restore carbon-depleted soils.

When it comes to no-till farming, farmers who adopt this method are looking to maintain the topsoil. The preservation of topsoil is becoming an increasingly well-recognized necessity as The Washington Post shared that no-till farming has been on the rise since the 1980s, growing at a rate of 1.5%.

Amongst the other sustainable agriculture trends, no-till farming can help farmers save time and money, and turn back the clock against accelerating soil degradation.

3. Cover cropping

Traditionally, farms practice the act of monocropping which is a form of agriculture wherein the same crop is grown again and again over various seasons. While this approach offers simplicity through uniformity, cultivating a single species at a time increases its vulnerability to pests thereby driving up the need for pesticides and decreasing soil’s biodiversity. Other ailments of monoculture farming take form in the pollution of groundwater, lower yields, and excessive fuel usage.

Much like the other sustainable agriculture trends, the goal of cover cropping centers around improving soil health.

Cover cropping keeps soil healthy during the off-season of an operation’s cash crop so that when the next season rolls around, the new crops get planted in soil that has had the chance to absorb new nutrients and hasn’t been eroded away by weather events.

Green America describes cover cropping as, “the growing of beneficial plants during these times of rest or in combination with the primary crop…” Sustaining health within the soil can increase yields because it boosts fertility which will be beneficial for the next season’s main crop growth.

2022 Sustainable Agriculture Trends – The Bottom Line

Financial institutions that want to build competitiveness and resilience in their portfolios can recognize the sustainable agriculture trends being adopted across agriculture as well as work with borrowers to provide the funding and financing necessary to do so.

Climate fintech solutions like the GIS Connect data acclimation platform is a solution with the power to acclimate data into an explorable map and analyze water and soil risk across different farming operations.

When Farm Credits and other ag lenders want to make well-informed decisions that impact their portfolios, they need to see exactly how implementing sustainable agriculture trends can transform their ROI.

Contact the team to schedule a free demo, or explore the Resources page to learn more about how fintech can be used to create a stronger borrower-lender relationship.

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