Originally published March 2021.

This newly trendy approach is not just environmentally and consumer friendly, it’s practical too – and at root it’s as old as the hills.

Regenerative agriculture is the groundswell movement shaking up land investment at the moment. The approach is gaining popularity not only with farmers and land managers but also with scientists, policy-makers and the public. Over the last two years, my conversations on the topic have evolved from farmers looking to add brand value through adopting practices allied with regenerative agriculture, to most recently a rather urgent interest from investors looking for a new source of nature-based climate-saving solutions.

Many property investors are only now waking up to the climate crisis and the need to take responsibility for sustainability impact, so for them thinking about regenerative systems might seem a bit ‘out there’. The confusion over the difference between regenerative systems and sustainability does not help. To be clear, all regenerative models are sustainable – however, not all sustainable action is regenerative. A regenerative system fixes the root cause of the problem first, renewing its inherent growth potential, whereas sustainability just tries to stop the initial problem getting worse.

The reason regenerative agriculture is gaining so much interest is that accredited carbon accounting systems require conversion of land from agricultural production to something else. For carbon investors, this is usually planting trees. Scaling up tree planting across the UK is front and centre of government policy, yet the barriers to woodland creation are legion, from planning concerns (in England) to land availability (in Scotland). The impact on land values for the tiny amount of land suitable for tree planting that comes to market each year is evident: in Scotland we tracked a 17.5% increase in the value of ‘poor livestock’ land last year, with its suitability for tree planting and competition between buyers for a scarce resource driving this dramatic capital appreciation.

The advantage with regenerative agriculture is that it exploits the natural potential of soil to store carbon, and in particular to do so while still producing food. There is, at the end of the day, little point in having a landscape covered with trees and no ability to feed ourselves. The co-benefits of the soil carbon approach are in restoring and enhancing biodiversity and soil fertility and the consequential ecosystem service provision (such as pollination and water retention) of farmed land. It’s the opposite of the extractive ‘industrial farming’ systems much bemoaned by environmental NGOs and eco-anxious activists the world over.

Regenerative agriculture is, as a result, being proposed as a key solution for feeding growing populations while also tackling climate change and mitigating the environmental risk facing property assets and supply chains. Philanthropists and investors are piling in as a result, perhaps seeing it as a less controversial outcome than rewilding (while being equally trendy).

On the one hand, the term ‘regenerative agriculture’ has only recently surfaced in the popular lexicon. On the other, enhancing soil’s natural fertility and using livestock and rotations to build resilience and diversity is as old as farming itself. The recent revival is being driven by more than one perspective, though, suggesting that it’s only a matter of time before it crosses into mainstream rural asset management.

The first driving factor is farmers themselves. Looking at the slow wind-down of the Basic Payment Scheme in the UK, and the loss of income support on offer, many farmers are challenging the ‘high input high output’ model that underpins cheap food and supports the agrochemical and petrochemical industries. Regenerative agriculture is the opposite of this ‘efficiency’ driven model, as it seeks to bring more crops back into the rotation, more enterprises to the farm, and more people to the business. A key element is the reintroduction of livestock to arable systems, which has been missing from many cropped farms for a generation. This brings new labour and skills requirements, but on the other hand switched-on, social media savvy farmers are making more money by creating and selling produce direct to consumers who are looking to avoid the ‘guilt factor’ of buying food from intensive and distant farms.

Conscientious carnivores are the second major factor in regenerative agriculture’s revival, and particularly the pressure they are putting on major brands to ‘do the right thing’ for both the climate and animal welfare. For supply chains sourcing commodity protein, regenerative agriculture offers a route to add meaningful metrics to the value proposition for both consumer and farmer supplier. Corporates such as Timberland, Nestlé and General Mills have made public commitments to source materials from regenerative systems, supporting farmers to adopt new systems, upskill and scale up their enterprises. To consumers, regenerative agriculture helps balance livestock production against their environmental concerns. Popular culture countering vegan trends has backed this, and even made the small screen via the celebrated Netflix documentary “Kiss the Ground”.

The third major driver is rural asset-owners, particularly those who own land as part of a property portfolio. For these owners, leveraging the value that land can offer in meeting internal net-zero targets while still delivering meaningful income from agricultural activity is the holy grail. Regenerative practices benefit from a strong farmer-to-farmer learning network, making it easier for owners and investors to tap into existing knowledge resources in incentivising behavioural change. Short tenancy terms are a common complaint of policy-makers, but for investors these short-term agreements now offer a quick means by which a substantial amount of land can be relet to meet new environmental objectives.

There are barriers to achieving this golden panacea of environmentally benign, socially diverse and guilt-free consumer-friendly farming. Not least is the lack of a common definition or metric system for regenerative agriculture – policy and certification could help deliver certainty. Risk-averse investors may prefer buying woodland carbon credits or adopting organic principles instead. Equally, the technological platforms to deliver environmental improvement at scale are in early development, inhibiting the ability to create investment funds in regenerative outcomes. Finally, valuation practice (and market evidence) does not yet effectively price in the ecological condition of land assets, meaning that direct investment models could be based on speculative exit strategies.   

However, land use is responsible for 10% of emissions in the UK, and the property sector another 40%, which means that the rural sector will face pressure both to reduce its own carbon emissions and to start locking up others. In the face of the urgent need for climate change adaptation, there is huge demand for systems resilience from supply chains, government and consumers. With so many people looking to bridge the gaps and implement system-wide change, it is only a matter of time before stakeholders begin to coalesce around a common regenerative outcome. And about time too.