In a Letter to the Editor in DTN Progressive Farmer, Amy Senter, Director, Food & Finance at WBCSD, writes about how finance can drive broad adoption of contemporary farming practices and help the agriculture sector reduce its carbon footprint. A key actor in the field is Banking for Impact on Climate in Agriculture, bringing together banks that have large agriculture business
Mike Shuter, a third-generation family farmer in Frankton, Indiana, has been practicing “no-till” farming for 38 years and planting cover crops for a dozen years with the goal of enhancing the health of his farm’s soil to reduce the amount of fertilizer he’d need to apply and optimize yields.
But he soon learned the practice also helped with water filtration in the fields after heavy spring rains, slashed the amount of fertilizer and pesticides needed to optimize yields, reduced soil erosion, and it better protects the area’s water resources.
Shuter Sunset Farms, located about 50 miles northeast of Indianapolis, covers 3,000 acres, and specializes in corn, soybeans, winter wheat, cattle, and pork production.
Shuter, and his partners, sons Brian and Patrick, have long been independent advocates of no-till and cover crops. Sustainable practices like these can improve farm resilience, enhance biodiversity, and reduce farming’s environmental impact on climate change. And the practice is starting to spread.
According to the Indiana State Department of Agriculture, farmers across the state set a record this year by planting an estimated 1.5 million acres of cover crops, such as buckwheat, or cereal and annual rye, and other grasses.
As impressive as that is, it’s still just 10% of the state’s total farm acreage. The low adoption rate, however, is probably higher than it is in many of the nation’s largest agricultural states, including Minnesota, Missouri, Iowa, Oklahoma, Nebraska, Texas, California, Montana, and South Dakota.
That’s one of the reasons why environmentally conscious banks and financial institutions are working with farmer groups, non-profits, and non-governmental organizations to help influence and motivate farmers and large farming corporations to adapt to no-till, cover crops, and other contemporary, technology-based farming practices.
Aside from the agricultural and environmental benefits, adapting to these practices also could present farmers with an opportunity for a new revenue stream by sequestering carbon in the soil, which reduces greenhouse gas emissions that contribute to climate crisis.
Financial institutions also are looking for ways to reduce risk from climate-related disasters and regulation, and protect their reputation as they seek to meet their net zero carbon targets.
This “food-finance nexus” is urgently needed to help drive broad adoption of contemporary farming practices among the country’s 3 million farms, two-thirds of which are family-owned and average just 280 acres in size. (See www.census.gov)
Every one of those American farms — large and small — will be needed to help feed the country’s growing population, which is projected to increase by 55 million to nearly 390 million people by 2050, according to the U.S. Census Bureau. (See www.census.gov)
But such a transformation takes money … and influence.
While energy and transportation companies are among the first industries usually targeted to reduce their carbon footprint, accelerated investments in American agriculture are needed to help farms reach a net-zero — possibly a net carbon positive — profile.
Ironically, the land-use sector contributes 24% of all carbon emissions into the atmosphere, but it receives less than 10% of global climate finance.
It doesn’t make sense. But that could soon change.
The U.S. Department of Agriculture recently announced a new $38 million pilot program — Farmers For Soil Health — with the United Soybean Board, the National Corn Growers Association, and the National Pork Board.
Its goal is to double the use of soil-health practices, especially cover crops on corn and soybean fields, to 30 million acres by 2030 to help farmers mitigate climate change. The program will be used in just 11 states initially, including Arkansas, California, Colorado, Georgia, Iowa, Michigan, Mississippi, Ohio, Pennsylvania, South Carolina, and South Dakota.
Aside from this new federal program, public and private financial institutions are starting to create new coalitions to develop investment strategies and financial mechanisms to encourage and enable a transition to sustainable farming practices across the country’s 900 million acres of farmland. That’s nearly 40% of the country’s land mass.
That’s the impetus behind another new, global initiative called Banking for Impact. It brings together leading banks with total assets of $10 trillion that have large agriculture business portfolios to develop technical resources to reduce their agriculture- and land use-related emissions and nature impacts.
The new initiative was formed by the World Business Council for Sustainable Development (WBCSD) in partnership with the United Nations Environment Programme Finance Initiative, the Partnership for Carbon Accounting Financials, and the Environmental Defense Fund. Their goal is to work with banks and investment houses that provide financing to farm and ranch operations to encourage their customers to transition to a net zero ag environment.
So far, the group has signed up leading banks, including Rabobank, Santander, and Barclays, along with support from the Wells Fargo Foundation. Others — such as the big farm credit organizations that provide wholesale loan funding to about 50 agricultural credit associations in the U.S. — hopefully will join this effort. They lend money to co-ops that make loans to farmers for purchases of land, equipment, and other needs.
These powerhouse organizations have the money and the influence to fuel a faster transition for American agribusiness to encourage or incent farmers to adopt sustainable farming practices that offer a multitude of benefits, including sequestering carbon in the ground.
This financing work needs to happen in tandem with the cultural transformation that is slowly underway within the nation’s farming community, especially among the younger generation of farmers, who are generally more flexible and open to new farming practices.
In 2014, Mike Shuter had quadruple bypass heart surgery, and recently said he thought God “left me here on Earth” to continue working his farm and to promote sustainable farming practices among other farmers and ag-business groups.
Big financial institutions and farmers across the nation could learn a lesson from Mr. Shuter and his sons, who have cultivated sustainable farming practices for nearly four decades, and today, are reaping the benefits.
Higher yields. Less fertilizer. Better water filtration in the fields. Less erosion. No seepage into creeks, streams, rivers, lakes, and other water sources.
And, thanks to cover crops and no-till practices, the Shuters also are sequestering carbon in the ground, preventing it from emitting into the atmosphere, where it contributes to global warming and climate change.
All of this, thanks to Mike Shuter’s desire decades ago to create healthier soil on his farm.
Director of the World Business Council for Sustainable Development in North America and previously served as Chief Sustainability Officer for Kellogg Company in Battle Creek, Michigan.