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Regenerative Agriculture Profitability


Farming has become an increasingly risky business as the climate crisis has an increasing effect on weather conditions and competition with foreign supply chains rises. Farmers around the United States and the world are beginning to look toward regenerative agriculture as a way to trace back to the roots of farming, restoring profitability and becoming more self-reliant while contributing to reversing climate change. Implementing principles of regenerative agriculture leads to healthier soils.


Healthier soils lead to healthier plants and healthier profits, while helping to remove carbon from the atmosphere.


Increasing Demand

The U.S. demand for organic food continues to grow. The 2020 Organic Industry Survey by the Organic Trade Association (OTA) found that organic food sales hit $50.1 billion in 2019, up 4.6% from 2018 and outpacing the general market growth rate of around 2% for total food sales during the same period. The OTA suggests that the coronavirus pandemic has further fueled the organic movement. Consumer behavior and awareness of environmental concerns are driving demand for produce created under regenerative conditions. This is especially true for younger adults and teenagers, who are increasingly concerned about climate change.

Certifications for food, textiles, and personal care ingredients produced through regenerative agriculture, such as Regenerative Organic Certified, are becoming more available to help consumers make informed choices about their purchases.

As a result of the growing awareness and demand for safer, healthier foods and the call for action against climate change, incentives have become more available to farmers making the shift to regenerative practices. Funding is available on national, state, and local levels, and private grants are more available as well.

External Inputs

Over time, regenerative agricultural systems require fewer external inputs, mainly in the form of seed and fertilizer. Increasing soil organic matter decreases the need for external fertilizer by keeping more natural nutrients in the soil. Researchers have also found that these practices increase biodiversity, which can decrease the abundance of harmful pests. This leads to stronger, more resilient crops and less investment from

the farmer. In addition, soils that have more organic matter can retain more water, lowering irrigation costs.

Regenerative Agriculture and Profitability – Research Study

Researchers from Ecdysis Foundation investigated how transitioning to regenerative practices might affect profitability. The study looked at 20 farms growing corn that implemented regenerative practices. In particular, the researchers looked at soil organic matter, pest presence, crop yield, and profit.

  • Corn crop yields decreased in the regenerative systems by as much as 29%. However, the study found that the regenerative farms were 78% more profitable than conventional corn farms. The increase in profitability was due to lowered input costs and profitable end markets.

  • Regenerative agricultural systems require far fewer external inputs such as seeds and fertilizer. In fact, conventional farmers spend almost a third of their gross income on external inputs, compared to 12% for regenerative farmers.

  • The regenerative systems also increase soil organic matter leading to increased diversity of insects in the soil, which decreases harmful pests in cornfields. This made for stronger crops and reduced the need for pesticides.

  • The study also found that regenerative farmers received higher premiums for their crops through certifications, by selling their grain as seed or feed directly to consumers, and by planting more than just corn in their fields.

  • The study showed that soil organic matter may be a more important driver of farm profitability than yield.


The Future of Regenerative Agriculture Profitability

A poll conducted by South Dakota State University in partnership with SDSHC and supported by the USDA Natural Resources Conservation Service asked conventional-practice producers and soil health-practice producers about their current stress levels on a range of issues from market price volatility to extreme weather events. They were also asked to assess their operation’s current and future profitability, input cost pressure and natural resource conditions for passing their farm to the next generation.


Soil health producers reported lower costs and a higher level of confidence their operations would be positioned for the future, both in terms of economics and in terms of natural resources.

The poll showed:

  • 31% of soil health farmers and ranchers reported increased profitability in 2019 while only 12% of conventional producers did so.

  • When asked about prospects for the next three to five years, a significantly higher percentage of soil health producers (69% vs. 36%) predicted increases in profits. By a margin of 83% to 60%, soil health producers said their operations would be more resilient to weather extremes.

Conclusion

By adopting principles of regenerative agriculture, farmers can reduce their fertilizer costs, pesticide costs, water costs, and make more profit per acre. In addition, the US government is also getting involved in the regenerative movement. The awareness and demand for safer, healthier foods is increasing, as well as the hope to reverse the effects of climate change. Regenerative agriculture practices are becoming more popular as they are known to be better for the environment, better for biodiversity, better for the farmer, and better for humankind.



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