Investors Are Missing Out on Sustainable Investment Opportunities in Agriculture

Last weekend, I had the distinct honor to be on Ambassador Kip Tom’s farm in Indiana for a visit with the Director-General of the UN’s Food and Agriculture Organization, Qu Dongyu. During our time on the farm, we heard from other leaders in the food and agriculture community speak about this year’s harvest and how it matters more than others. We heard about real, on the ground solutions to the problems posed by climate change and how our farmers and ranchers are a key part of the solution. This was a wonderful continuation of the conversations being held the days before at Climate Week in New York City, a global gathering of leaders from NGOs, governments, and private investors, among others, who are focused on tackling climate change.?

Climate Week was being held in conjunction with the UN General Assembly, a time when world leaders also gather to tackle issues including climate change, global security, and progress on the sustainable development goals. This year’s theme was “A watershed moment: transformative solutions to interlocking challenges.” I couldn’t have said it better myself. If not now, when???

It was exciting to be a part of those dialogues and learn about the progress being made. Global leaders learned about the solutions that live under our feet and the potential of our farmers to be the eco workforce of the future. Investors asked the important questions about climate and the environment. They engaged with corporate leaders on sustainability, filing shareholder resolutions and pushing company managements to prioritize climate change.?

But few, if any, are investing in or thinking about agriculture as a critical piece of their sustainable investment portfolio. Today there are emerging technologies to make agriculture more climate smart, and rural communities could play a pivotal role in reaching a net zero economy. Why wait for Elon Musk’s latest venture when institutional investors can invest now in transformative technologies in the agriculture sector that can help solve the climate crisis??

Recently, the Biden administration announced initial commitments to pilot new revenue streams for climate-smart farmers, ranchers, and forest landowners. All in, the USDA anticipates investing more than $3 billion in pilots that will create market opportunities for American farmers using climate-smart production practices. According to a news release announcing the program, “These initial projects will expand markets for climate-smart commodities, leverage the greenhouse gas benefits of climate-smart commodity production and provide direct, meaningful benefits to production agriculture, including for small and underserved producers.”??

U.S. Farmers & Ranchers in Action, farmer and rancher-led organizations and food and agriculture partners with a common vision to further sustainable food systems, published an important report on transformative investment in agriculture outlining both the need and the opportunity for investing. Climate-smart agriculture practices include rotating crops, planting cover crops, reducing tillage, and integrating crop and livestock systems in order to improve soil health, sequester carbon, and produce co-benefits such as reduced erosion, increased water infiltration, and economic and environmental resiliency. ?

We’ve known for some time that there is a strong investment case for including climate-smart agriculture among a broader portfolio of carbon/net zero investments. Investments in climate-smart agriculture can reduce greenhouse gases and enhance the resiliency and adaptive capacity of food production. As more farmers transition to climate-smart practices and the US recognizes the critical role agriculture plays in driving climate solutions and strengthening US and global food systems, there will be significant opportunities to invest and help drive a climate-smart transition. In fact, we believe climate-smart agriculture merits consideration as part of climate portfolios on par with renewable energy and sustainable forestry. ?

Long term investors need to figure this sector out, especially sustainable investors who are seeking to align their portfolio with the UN sustainable development goals. Number two on the list, and the order matters, is ending hunger. Feeding the population is a first order of business that creates economic development and other co-benefits. Sustainable agriculture cuts across the other SDGs related to climate action, sustainable communities, responsible consumption and production, and life on land. It is also about the protection of green spaces and the revitalization of rural communities.???

Sustainable investors are over indexed to alternative energy, but rarely consider agriculture as another source of energy from technologies produced in the bio economy. An emerging bioeconomy can be a new Silicon Valley with ag innovation driving important sustainable outcomes. These technologies seek to replace black carbon with other forms of green and brown energy such as biodigesters that turn methane into energy. And while reducing methane from cattle is important, it is also important to keep cattle grazing grasslands to ensure this biological system remains viable and active, sequestering enormous amounts of carbon.?

But this is about more than missed opportunities. Overlooking agriculture could add risk to portfolios. Agricultural technologies that address climate change can catalyze the transformation of an industry that is perhaps most at risk due to climate change. Recent fires, heat waves and droughts had a devastating impact on farmers. A productive and sustainable agriculture sector is at the heart of our economy, not to mention national and global security. Covid taught us that we can do without a lot, but not food.??

The farmers who produce our food care about sustainability; it is their livelihood. In fact, farmers are the eco workforce who every day can have an impact on getting us closer to net zero. They just need greater investment to employ the technologies that can catapult the transition. The USDA, USFRA and others have prioritized this transformative investment. Institutional investors should pay attention to both the opportunity and the potential alignment with their long-term sustainable investment goals.?

Seeing the role that the US can play not only in our local communities but also in the global food security when we got on the farm last weekend, I was reminded that global solutions start with local actions. I am grateful that our farmers are entering harvest 22 with a sincere commitment to food security, zero hunger, and solutions for the climate.?

For those who really care about investing sustainably, no other sector can do as much to advance people and planet. The technology is here, and those seeking to save the planet can find opportunities now by partnering with farmers and ranchers.??#harvest22

Erin Fitzgerald is CEO of USFRA??

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ABOUT USFRA ?

U.S. Farmers & Ranchers in Action (USFRA) is a 501(c)(3) that is comprised of 44 organizations representing more than 1.6 million farmers and ranchers across the country. USFRA cultivates a shared vision of co-creating sustainable food systems and a belief that bold action is needed. USFRA drives a broad range of projects that advance meaningful action and results in the co-creation of solutions for sustainable food production, climate change, and economic sustainability. USFRA is serving as the secretariat for a Decade of Ag, a shared vision for the food and agriculture sector, now endorsed by 160 leaders. Fitzgerald is also recognized as a White House Champion of Change for Sustainable and Climate-Smart Agriculture and an Aspen Institute First Movers Fellow. ?

Learn more at www.usfarmersandranchers.org. ?

UN Food and Agriculture Organization Director-General Qu Dongyu at Ambassador Kip Tom’s farm in Leesburg, Indiana, September 24, 2022.? Photo credit: Erin Fitzgerald?