Tom Cackett, director, Savills Food and Farming, Oxford, explains a system that could make farmland both more profitable and more sustainable.
The term ‘regenerative agriculture’ refers to a farming system that seeks to build on the ‘do no harm’ principles of sustainable farming.
At the core of regenerative farming lies a collection of five practices that will improve soil health, sequester carbon and have a positive impact on water and biodiversity in the local environment, while still producing food. Those five principles are:
- To minimise soil disturbance
- To keep the soil covered all year round
- To keep living roots in the soil all year round
- To integrate livestock within the rotation
- To grow a diverse range of species and crops
But is it a realistic and practical alternative?
Savills latest Spotlight on Soil research examined the financial performance of the Savills Virtual Farm, transitioning from a conventional farming system to a regenerative farming system.
The Spotlight found that, by the sixth year post transition from conventional farming, profitability had increased by 18 per cent – with carbon and additional sustainable farming incentive payments contributing significantly to making up the shortfall in income from crop yield. The Savills Virtual Farm is a top 25 per cent arable producer with over 810 hectares in production.
Income for the regenerative system consists of Sustainable Farming Incentive (SFI) payments, carbon certificates, the sale of crops and grazier’s payments. A grazier was utilised to incorporate livestock into the regenerative system, on a winter grazing agreement for sheep over a 12-week period.
In line with published research a yield reduction of 30 per cent was assumed for the initial transition years. Also, in line with peer reviewed studies, industry benchmarking and experience within the Savills food and farming team, variable costs were reduced by 16 per cent in year one and up to 26 per cent in year six – primarily due to reduced fertiliser, herbicide and fungicide use. Fixed costs were reduced by an average of 17 per cent with the largest reductions applied to machinery costs, fuel and labour.
For the first year of transition from conventional to regenerative farming, net margins were 41 per cent lower than the conventional system, despite the additional carbon and SFI income. Although input costs were reduced, the lack of fertiliser affected crop yields at a time when soil health was judged to be weakest.
By year six however our research showed profitability had increased by 18 per cent above that forecast for conventional farming as improved soil health increased average yields by, and further reduced the input cost burden by, 10 per cent.
Of course, every farm scenario is unique and numerous external factors need to be taken into account, but using the virtual farm to model regenerative and conventional farming outcomes provides some helpful benchmarks.
Although it should not be entered into lightly and is not necessarily right for all, for farmers and landowners who are looking for long-term sustainable solutions to make their business model more resilient, switching to regenerative practices could well be worth consideration.
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