A conversation with Paul McMahon, co-founder of SLM, about why it makes so much sense to put money to work in real regenerative agriculture, yields, and more importantly, profits and the regenerative edge, and more.
Few papers in regenerative agriculture have been shared more than the Investment Case for Ecological Agriculture written by Paul McMahon. We have shared it countless times, learned a whole lot from the simple investment terms describing why it makes so much sense to put money to work in real regeneration. Now it has been updated, even better, it has been completely rewritten and with a lot more science and a lot more experience from the field.
In the conversation with one of the most experienced regenerative farmland investors, we explore the modules of our recent video course on why we need to change agriculture and food systems urgently, and why now is the time to do it.
LISTEN TO THE CONVERSATION ON:
HOW MUCH HAS CHANGED SINCE 2016, WHEN THE FIRST WHITE PAPER CAME OUT, AND HOW HAVE THE KEY POINTS ON WHY REGENERATIVE AGRICULTURE MAKES SENSE STAYED THE SAME
The fundamental points that have changed in Paul’s view compared to the first white paper are in the amount of research available toward soil health, in the attention toward climate change, in the explosion of interest in biodiversity and water and the recognition of the poor quality of a lot of our food today.
”I think there’s yet more research. There’s an awareness of some of the issues around the current food systems, and we break it down to five major themes, and one is around soil health, the gradual degradation of soils around the world.”
Paul McMahon
”The second theme, of course, which probably got even more attention in the last eight years, is climate change and also in the role of agriculture as major source of emissions. So, I think 24% of human greenhouse gas emissions are associated with agriculture, either directly or indirectly. […] There’s, I think, increasing recognition of the role agriculture can play in storing carbon, in soils, in landscapes. I think that has really evolved and developed a lot since 2016.”
Paul McMahon
”I think the third area is biodiversity, that’s come on a lot. It’s been an explosion of interest in biodiversity, recognition of the problem of biodiversity loss, the sixth mass extinction we’re going through, and I think there’s some research showing that agriculture is responsible for probably 85% of the biodiversity loss. But there’s also recognition that regenerative agriculture, where we manage our landscapes, can help restore that biodiversity, conserve habitats, and help turn that around.”
Paul McMahon
”The fourth is around water, I’d say, that’s probably been well known, about the issues with the use of freshwater resources for irrigation, and over extraction in certain water basins…”
Paul McMahon
”The fifth area that has come on quite a bit is the recognition of the poor quality of a lot of our food today, the new nutritional dumbing down of our foods over the past 50 to 80 years.”
Paul McMahon
MORE AND MORE INVESTORS ARE PUTTING MONEY TO WORK
Investors are more likely to invest after visiting the farm and seeing the scale of commercial operations.
”If you get investors out on farm, they see that these are scaled up, commercial operations, farmers with healthy balance sheets, with millions of dollars in assets, or euros in assets, employing people, and in business and growing. I think they see that these are real, proper businesses. So, I do think the evidence is there, that this isn’t just sort of one hectare hobby plots in someone’s backyard. These are proper commercial farms applying these ideas on a big scale.”
Paul McMahon
THE ROLE OF LIVESTOCK IN REGENERATION
Paul argues that well-managed livestock on pasture can have positive environmental impacts, including soil carbon sequestration and reducing the need for nitrogen fertilizers. Integrating livestock into regenerative agriculture systems can lead to a more sustainable food system with a lot less pigs and chickens, so monogastric animals, and more natural grasslands.
”It’s a question we get all the time, from investors and others. And so, we wanted to step back a bit and almost explain what’s the case for well-managed pasture-raised livestock and how they can have very positive impacts.”
Paul McMahon
”There has been a bit of a swinging back at the pendulum, as other reports, now recently come out, trying to understand the impacts of livestock within a system, looking at the ability to store carbon in soils as to offset some of those emissions, but also the ability of livestock to use areas of land we can’t use for anything else; they can consume grasses, which humans cannot, and turn into a very healthy, nutritious product. And so, they allow us to make use of areas of land, which can actually help conserve, you could say, other natural areas, so there’s a food security angle; there’s a human culture angle there as well.”
– Paul McMahon
THERE IS A LOT MORE SCIENCE NOW TO BACK THINGS UP, AROUND CARBON, NUTRIENT DENSITY, ETC.
According to Paul, regenerative agriculture is based on the most advanced science, including biologically active soils and understanding how they support productive farming systems.
”All the pioneering discoveries in agriculture science over the last few years have all been around biology, the role of healthy soils, and biologically active soils and how they can support productive farming systems. That’s where all the advances have been taking place. How do we wean ourselves off the chemicals and use biology instead.”
Paul McMahon
”I think the third revolution, which is starting to happen now, is a shift towards biology, understanding how these biological systems work and how soils function, and then harnessing the biological ecology process to build good farming systems.”
Paul McMahon
OTHER POINTS DISCUSSED
Koen and Paul also talked about:
- A change in the biodiversity narrative
- Investors confused by the lack of definition and greenwashing in regenerative agriculture
- The importance of partnering with local farmers
LINKS:
- SLM Partners
- The investment case for Ecological Farming
- Video course Your Path Forward in Regenerative Food and Agriculture course or ask your employer to cover the cost of the training course
LINKED INTERVIEWS:
- Paul McMahon on building a 250M climate positive portfolio of tree crops in Europe
- Paul McMahon on why ecological agriculture makes more business sense than chemical agriculture
- Anne Biklé and David R Montgomery – After studying more than 1000 papers the definitive answer, we are what our food ate
- Nutrient Density in Food series
- Ivo Degn and Philippe Birker – Does a low interest, 3,5% on $2,5 million loan, really qualify as a regenerative investment?
- Mariko Thorbecke – Let’s focus on making agriculture fossil fuel free
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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.