Land Core Contributes to Berkeley Food Institute “Redefining Value and Risk in Agriculture” Report

Land Core was pleased to contribute to the Berkeley Food Institute’s report: “Redefining Value and Risk in Agriculture: Policy and Investment Solutions to Scale the Transition to Regenerative Agriculture”.

The report highlights the growing interest and opportunities for public and private sector investment to support the transition to regenerative agriculture. It also emphasizes the need for support to address the unique barriers facing producers - whether technical, social, ecological or economic. In particular, producers looking to implement regenerative practices face high up-front costs and often shoulder the full risk of this transition. 

Among the range of public and private sector incentives being developed to reduce these risks, Land Core highlighted the potential for both the private and public sector to provide up-front financing. As one of the report's six key recommendations, we explained how this can be achieved through redefining risk to account for the risk-reducing impacts of regenerative agriculture practices, which are generally understood to mitigate the impacts of flood and drought on agricultural lands.

“If the RMA and finance sector could quantify that difference [in risk],” explained Harley Cross, Land Core’s Director of Strategy, “they’d have to admit they're throwing money away at the cost of taxpayers and investors."

Land Core is solving this problem by building an actuarially-sound, predictive model of the risk-mitigating benefits of soil health practices.

The Land Core Risk Model is being designed by a cross-sector working group of experts, as a tool for lenders and insurers to account for regenerative agriculture’s lower risk as a potential source of long-term revenue in their financing and payment structures, while offering upfront economic incentives - such as discounted insurance premiums or lower rate loans and credit enhancements - to producers adopting these practices.

Just as lenders and insurers should modify actuarial models to recognize the lower risk associated with regenerative practices, federal and state governments should also account for these risk reduction benefits and reflect those benefits in financing and direct payments.

The Land Core Risk Model could also boost the actuarial case for federal crop insurance reform, contributing to efforts by colleagues including the AGree Economic and Environmental Risk Coalition, the National Resources Defense Council (NRDC), and the National Sustainable Agriculture Coalition (NSAC) to reform the crop insurance program to drive broader adoption of regenerative agriculture. 

With over $400 billion in loans extended, and $10 billion/year in crop insurance payments made, saving even a fraction of those amounts can fund the transformation of agriculture from degenerative to regenerative.

In light of the surge in environmental, social and corporate governance (ESG) investing, more mainstream investors may also find this sector attractive, and may determine, Cross stated, that investments in conventional “industrial cropping systems are not as safe for their own returns.”

We are grateful to the Berkeley Food Institute and UC Berkeley School of Law’s Center for Law, Energy & the Environment for convening farmers, policy experts, advocates, investors and other stakeholders to publish this timely report to support farmers in their transition to regenerative agriculture.