Growing Returns

Selected tag(s): farm finance

Could catalytic capital help shape the agriculture of tomorrow?

Investing in climate-smart agriculture is a hot topic. Startups in plant-based meats and dairy alternatives are taking the market by storm. Major food companies are setting sustainability targets and investing in soil health practices.

Yet farmers face poor farm economic conditions stemming from trade disputes, COVID-19 supply chain disruptions, and increasingly frequent, extreme and destructive weather events.

Farmers across the U.S. have felt the pain of extreme weather in 2020, from the derecho that wreaked havoc in the Midwest to the destructive wildfires that continue to rage out West. (Photo credit: National Weather Service).

It’s clear that more innovation is needed to make the food system fit to face 21st century challenges, and fast. Catalytic capital can help.

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3 takeaways from my testimony to Congress on climate-related financial risks to U.S. agriculture

Highlight: EDF’s Maggie Monast testified at a hearing of the House Select Committee on the Climate Crisis, “Creating a Climate Resilient America: Strengthening the U.S. Financial System and Expanding Economic Opportunity.” Watch here.

It’s becoming impossible to ignore the risks that climate change poses to financial markets, including those that support U.S. agriculture.

Increased temperatures and more frequent droughts and extreme precipitation events threaten crop productivity across the nation. In 2020 alone, we have seen ample evidence of these impacts, including destructive storms in the Midwest, hurricanes along our coasts, and wildfires and smoke in the West.

These physical risks of climate change create risks to the U.S. financial system, which was the topic of last week’s hearing held by the House Select Committee on the Climate Crisis, entitled “Creating a Climate Resilient America: Strengthening the U.S. Financial System and Expanding Economic Opportunity.”

I testified to the committee on climate risks to the agriculture finance system — and opportunities to build resilience. Read More »

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Financial leaders release climate risk report calling for agricultural resilience

A report released today by a subcommittee of the U.S. Commodity Futures Trading Commission, Managing Climate Risk in the U.S. Financial System, examines the threat that increasingly extreme and volatile weather poses to the stability of financial markets, including U.S. agricultural markets. Representatives from EDF served on the 35-member panel.

The report found climate risks pose a wide range of threats to U.S. agriculture — including heat stress on farmworkers, livestock and crops, soil and water quality degradation, more frequent supply chain disruptions and productivity declines. Read More »

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3 steps for agricultural lenders to mitigate climate risk and finance resilience

Farmers in the U.S. are facing severe challenges including poor economic conditions, extreme weather and disruptions from the COVID-19 pandemic. These risks also impact farmers’ financial partners, including agricultural lenders.

While some of these risks are difficult to anticipate and plan for, there are growing opportunities and resources available for farmers and their lenders to better understand their vulnerabilities related to climate change — and take steps to build resilience.

A new report, Financing Resilient Agriculture: How Agricultural Lenders Can Reduce Climate Risk and Help Farmers Build Resilience, finds that lenders can reduce risk by supporting farmer investments in conservation practices like no-till and cover crops that are known to build climate resilience.

This report provides a path forward for lenders to support a more productive, profitable and resilient agricultural system.

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Anticipating sharp declines in 2021 farm profitability, experts suggest cost savings from fertilizer efficiency

Farmers across the country may not see profitable conditions for some time as the effects of COVID-19 suppress already meager profit margins.

Projections from the University of Illinois and the University of Missouri show that farm profits could fall significantly in 2021, and economists are recommending farmers examine fertilizer application and tillage passes for the potential to provide highly needed cost savings. Read More »

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As if things weren’t already hard enough, farmers must brace for another wet spring

Farmers have already been dealing with tough economic conditions exacerbated by a trade war, extreme weather and now the coronavirus. Unfortunately, the latest 2020 spring flood outlook shows that farmers in the Midwest could be facing yet another wet year.

Although projected to be less severe than 2019, the U.S. Spring Flood and Climate Outlook for 2020 predicts widespread flooding across 23 states with severe flooding in North Dakota, South Dakota and Minnesota. As a result of the 2019 floods, soils across the Midwest are full of moisture this spring, increasing the likelihood of flooding in 2020. Source: NOAA 

Making American farmland resilient to growing weather shocks like flooding requires greater adoption of conservation practices such as no-till and cover cropping practices that improve water infiltration and reduce erosion and field runoff. Despite the financial benefits of these practices, adoption remains low across the country. In 2017, only 3.9% of U.S. farmland adopted cover crops.

How can we scale conservation practice adoption to reduce risk and boost resilience of the agricultural sector? Read More »

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Farmer grit created unexpected bright spots in a difficult year

It is a wild understatement to say it has been a hard year in agriculture. It has been a year of loss, heartbreak and stress. As a frontpage Washington Post article captured, “Farm bankruptcies and loan delinquencies are rising, calamitous weather events are ruining crops and profits are vanishing during Trump’s global trade disputes.”

I had to dig deep, but I was determined to find some silver linings.

As I sat with my pen, paper and thoughts, I found I had more and more to write. I was reminded that farmers have amazing grit and determination, which is why, despite the incredible challenges ahead, I remain firmly optimistic that we will find the ways to feed the world while sustaining the natural resources on which we all depend. Read More »

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3 ways agricultural lenders can help farmers reap millions in savings from conservation

The U.S. farm economy is in its worst condition in decades due to several years of low crop prices, ongoing trade disputes, natural disasters and other variable weather. But many farmers are adapting and innovating – implementing conservation practices that build soil health and resilience, such as nutrient optimization, cover crops and no-till.

Still, there is a growing need for farmers to understand the full financial benefits of these practices and prove their value to ag lenders and other financial partners.

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Four ways conservation pays for dairy farmers, even in a weak agricultural economy

The dairy industry is a critical part of the landscape, economy and social fabric of Pennsylvania and the Chesapeake Bay. But it’s under stress.

Dairy is in the fourth year of an economic downturn in which many farmers have struggled to break even. Dairy farmers in Pennsylvania and across the U.S. are highly motivated to increase their resilience to unfavorable economic and environmental conditions, including highly variable milk and feed prices, unpredictable farm policies and extreme weather – most notably increased heavy rain events and flooding.

While dairy prices have recently trended upward and PennState Extension’s dairy outlook  predicts milk price could approach $20/cwt by the end of 2019, another PennState Extension analysis  found that the gross milk price breakeven point for most farmers in the state is $21.20/cwt.

Most of these factors are out of farmers’ control, but conservation is something farmers can be sure of.

That’s what my colleagues and I concluded after digging into the budgets of four Pennsylvania dairy farmers in our new report: How conservation makes dairy farms more resilient, especially in a lean agricultural economy. The report shows how a variety of conservation practices can deliver multiple returns on investment that simultaneously benefit the farm budget and the local environment.

Here are our four key findings: Read More »

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A new guide for farmers to boost profits through conservation

As the struggling U.S. farm economy continues to make the news, agricultural organizations, government agencies and conservation groups are rightly focusing their attention on the affordability of conservation adoption.

A 2018 report from EDF and agricultural accounting firm K·Coe Isom, Farm Finance and Conservation, found that farmers who adopt conservation practices such as no-till, nutrient optimization, cover crops and diverse rotations improved their profitability and were more resilient.

Despite these benefits, the costs of transitioning to conservation management practices can be a barrier to adoption. In addition, any change carries some risk, and farmers are likely to be reluctant to take on additional risk in the current economic climate.

For these reasons, it is more important than ever to provide farmers with practical guidance on how to minimize the costs and risks of conservation adoption. Fortunately, a new technical bulletin from the Sustainable Agriculture Research and Education (SARE) program at the U.S. Department of Agriculture does just that.

Cover Crop Economics: Opportunities to Improve Your Bottom Line in Row Crops [PDF] describes seven different management scenarios in which farmers can speed their transition to cover crops and achieve profitability more quickly — in some cases within the first year of adoption. Read More »

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