This site has been created for exclusive use by institutional investors only and does not take into account investment objectives, financial situation or specific needs of any individual investor. Information should not be the sole basis for any investment decision.
If you are not an institutional client, consultant or financial professional and are looking for more information about mutual funds and other products at Nuveen, please visit our site at www.nuveen.com.
Past performance is not a guarantee of future performance. All investments involve some degree of risk including loss of principal. Investment objectives may not be met.
By agreeing you are confirming you are being truthful, acknowledging you have read the information above and accept the terms and conditions set out with this site and meeting the intended audience requirement for this site. Not all content on this site is appropriate or applicable for the general public and we cannot guarantee consequences with the use of this information by unauthorized or unintended users. Content on this site may not be redistributed and is for informational purposes only and does not constitute investment advice or provide a solicitation of an offer to buy any security.
Regenerative agriculture: principles and practices in action
Regenerative agriculture has recently attracted significant attention for its contribution to mitigate climate change. Although many of the practices are not new, they have not so far been adopted at scale. With the right demand pull-through, market access and incentives, there is significant opportunity for crop production to reduce its own environmental footprint, as well as, in the near-term, help offset that of other industries.
Regenerative agriculture has recently attracted significant attention for its contribution to mitigate climate change. Although many of the practices are not new, they have not so far been adopted at scale.
This paper outlines the four overarching principles that define regenerative agriculture in the context of Westchester’s farmland asset management business. For each principle there are often several practices that can be implemented separately or in concert to achieve a desired outcome. To illustrate how these concepts are carried out at a farm level, practical examples are provided from across Westchester’s farmland portfolio.
1. Protection and enrich soil
Soil may seem static and uniform to those who do not work with it every day. Yet, in nature, soil is dynamic in terms of its structure and biodiversity of organisms and nutrients that support plant life. While not an entirely natural system, the management of agricultural soils should take a holistic approach to preserve and enhance soil quality and structure.
Preserving and improving soil quality requires producers to understand the makeup of the soil(s) they are growing crops on. Mainly, what are the percentages of sand, silt and clay particles comprising the soil, and what is the organic matter content? Soils are a mix of these particles; the coarser (sandier) or finer (clayey) a soil is the more susceptible it is to detrimental effects like erosion from water or compaction from machinery. Knowing a soil’s properties allows producers to make informed decisions such as:
- Controlling machinery traffic to specific pathways to avoid compaction in the root zone. When soil quality and structure is maintained, soil aggregates (clods) are stable units with pores large and small for water infiltration and root growth. When soil is compacted, roots can have trouble growing, unable to reach nutrients and water to support aboveground biomass. Soil structure and quality is often degraded by heavy tillage that breaks apart aggregates and compacts soil, making a zero-tillage system or one that uses tillage sparingly best practice in most instances.
- Choosing the right cover crop(s) for a specific agronomic goal. Maintaining ground cover through cover crops or a previous crop’s residue is critical to protecting soil from erosion as well as providing organic material for microorganisms to decompose and cycle nutrients. When ground cover is maintained, the velocity of rain hitting the soil during precipitation is dramatically decreased, lowering the probability of soil being detached by water. In addition, roots anchor the soil during rain events. Left bare, a field with even the slightest slope can lose multiple metric tons of soil in a single year through erosion, so it is easy to see why the productive capacity of an asset like farmland relies heavily on the stability of its soil.
- Maximizing soil fertility and fertilizer efficiency. This involves applying the right amount of nutrients at the right time and using crop rotations to manage nutrient removal. The key to fertilizer efficiency is knowing the current nutrient levels from soil and plant tissue testing and the amount needed to be applied for a target crop yield. For annual crops, crop rotation is necessary so particular nutrients are not removed in excess year after year, in addition to breaking disease cycles that plague specific crops.
The management of agricultural soils should take a holistic approach to preserve and enhance soil quality and structure.
Practices in action
Soil protection and enrichment in Brazil
In Brazil, the practice of no-till was first adopted in Paraná State in the 1970s and is now widely used throughout the country. It is also the production practice for 100% of Westchester’s portfolio in Brazil. When weather permits following harvest, cover crops are also planted on several farms to build organic matter, improve soil structure and nutrient cycling, and protect against erosion. Cover crops are selected based on the planting window for each region and which crop is planted for the upgrowing season. In the Center-West region, higher temperatures make cover crops like millet, sorghum and brachiaria grass well adapted. In the South, due to lower temperatures, turnips and cool season grasses like wheat, oats and rye are the best options for cover crops following soybean harvest. Some of the system’s benefits include cost savings by using less labor and equipment to till, increased soil moisture, reduced erosion, cooler soil temperatures, and increased nutrient cycling.
To understand the carbon sequestration potential of these soil management practices, Westchester has partnered with International Conservancy and IMAFLORA to quantify the soil carbon stock at a farm located in the State of Bahia in Brazil. The tenant selected for the research manages approximately 11,000 acres of Westchester land and plants soybeans, cotton and corn for cash crops and a variety of cover crops after harvest. The study monitored the soil carbon levels (in metric tons per hectare) on land under native Cerrado vegetation, no-till and cover crops, and conventional tillage. The results demonstrate how regenerative practices can build healthy soils and sequester carbon. Study sites under no-till and cover crops demonstrated 22% more soil carbon than conventional tillage and contained 95% of the soil carbon stock observed under native vegetation.
2. Preserve air and water resources
Just as soil is essential to crop production, air and water play vital roles in producing high yielding and high quality crops. Therefore, the preservation of these resources is critical to maintaining productive farmland and benefitting the broader environment.
Water management techniques include:
- Monitoring water resource use: measuring water application throughout the growing season is the first step towards maximizing water use efficiency when irrigating. A further step is the use of soil moisture sensors to have an estimate of how much water is available to crops and when to irrigate without needlessly applying water. In a number of areas where crops are produced, irrigation is essential to profitability or producing a crop altogether. Many of these regions rely on aquifers or waterways fed from upstream sources, making water scarce relative to rainfed areas. Thus, managing water use to maximize efficiency under these circumstances ensures enough water for agricultural and ecological systems.
- Abating water run-off: nutrients such as nitrogen are not static in soil once applied and often solubilize in water, draining off cropland into waterways via the soil surface during heavy rain, or filtering through the soil into groundwater. Knowing a farm’s topography and buffering drainage areas with vegetation or engineered structures can significantly decrease nutrient and soil runoff into natural waterways.
Air quality management techniques:
- Equipment efficiency: fuel use in agriculture adds to the carbon footprint of crop production. Knowing how much fuel is being used and managing machinery operations to minimize its use lessens the environmental impact of agriculture.
- Nutrient management plans: synthetic fertilizers can affect air quality. Under certain conditions, nitrogen fertilizers that have been applied to cropland can volatilize into nitrous oxide, a greenhouse gas. Nutrient management plans that supplement synthetic chemicals with organic material like manure or apply small amounts of nitrogen as a crop is growing can minimize or alleviate this harmful effect.
- Soil management plans: implementing the soil management practices of no till and cover cropping can both capture additional carbon from the atmosphere and enhance the filtration of water and solubilized nutrients before they reach natural waterways. In addition, they can reduce dust that is created from conventional tillage operations.
Practices in action
Portfolio-wide water, air and nutrient management
Across Westchester’s global portfolio of permanent and row crop farmland, there are several water use, air quality and nutrient management cases to highlight:
- In Australia where drought risk is elevated and irrigation is a common practice, a long-term tenant in New South Wales has created water savings through an agreement with the local water council to re-use wastewater from a nearby urban area. Following water quality testing, wastewater is piped to the property where it is incorporated with a groundwater allocation for irrigating crops.
- In California, Westchester’s horticulture team has completed two groundwater recharge basins capable of adding a combined 1,000-acre feet of water to the underlying aquifer annually. To reduce electricity demand for pumping water, the horticulture team also has five solar installations under construction with another four projects planned for 2021. In all, the solar arrays will offset electrical demand that would otherwise produce 8,500 tons of carbon dioxide annually across 9,600 planted acres, or 40% of Westchester’s Central Valley acreage.
- In Georgia and Mississippi, five row crop properties have tailwater recovery systems that catch irrigation and rain water runoff and channel it to a reservoir for recycled use. This system not only lessens the demand for groundwater, it helps keep nutrients from running off the farm and into streams and rivers.
- Westchester’s viticulture team worked with the Napa Sanitation District to utilize waste water from the city of Napa and constructed a pipeline and storage pond to hold the water. Having previously purchased potable water for irrigation, the project has multiple positive outcomes: reuse of a valuable resource, long-term water security and reduced water costs. The team also constructed four reservoirs in Monterrey County, adding 150-acre feet of surface water storage, improving water efficiency by 50% and ensuring long-term water availability to the vineyard.
3. Manage pests systematically
Whether it is a plant disease, insect or weed, unwanted organisms often find their way into cropping systems and compete for resources or damage crops. While chemicals like pesticides and herbicides are effective when used properly, they should be one tool in a suite of synthetic and natural options for controlling pests.
Natural options to control pest populations include:
- Resistant plant varieties: the genetics of the plant are a natural defense to diseases that would otherwise be controlled by chemical means. Selecting the right genetics based upon disease pressure in the field, if any, is crucial to reducing input use and lowering impact on the environment.
- Trap crops: are planted areas that contain plant species that attract insects away from cash crops. Usually dividing fields or adjacent to them, trap crops also minimize the need for chemical interventions and help preserve beneficial organisms that may otherwise be killed off by a non-selective pesticide.
- Beneficial insects: are natural or introduced insect species that help control unwanted pests by virtue of the food web. Lady bugs are the most well known beneficial insect as both larvae and adults feed on pests like aphids that damage a number of crops. Understanding the natural ecosystems that interface with crop production is the first step to reducing chemical use and maintaining a balance of organisms that work in a crop’s favor.
When chemicals are needed to control pests, it is similar to the use of fertilizer in that the right product should be applied in the right place and at the right time. Crop stress from weeds and insects can be monitored remotely through satellite imagery and physically on the ground throughout the growing season to establish crop loss (economic) thresholds that inform producers to spray only when needed. Additionally, sensors can be installed on sprayers that apply herbicide where weeds are detected instead of indiscriminately across the field. To increase the efficacy of chemicals, susceptible life stages of pests should be targeted and the manufacturer’s recommended rate applied. When weeds are sprayed early, they are less likely to survive the herbicide and produce seeds that can increase populations and possibly breed resistance to the chemical. The same is true for insects as certain life stages can decrease efficacy and increase chances of survival and proliferation.
Knowing what pest pressure(s) is taking place in a crop and addressing it with an integrated plan of natural and chemical controls ensures biodiversity is maintained, chemical use is reduced and that it remains effective over time.
While chemicals like pesticides and herbicides are effective when used properly, they should be one tool in a suite of synthetic and natural options for controlling pests.
Practices in action
Inventing a better way to fight a harmful grapevine virus
Grapevine leafroll-associated viruses are responsible for yield loss and quality reductions in wine grape vineyards throughout the world. One way to combat leafroll virus is through aggressive removal of symptomatic plants. This process is highly effective when symptoms are visible, as they are in red grape varietals. Unfortunately, these symptoms are not visible in white varietals, allowing infections to persist and perpetuating virus transmission.
Westchester’s viticulture team has developed an innovative solution to eliminate this transmission cycle and may ultimately serve as the basis for managing the spread of leafroll viruses industry-wide. A process known as grafting may hold the key to detecting the presence of leafroll virus in white wine grape varietals. Grafting will be used to design “signal vines”. A chardonnay scion will be grafted onto a small section of pinot noir, which will be grafted onto rootstock. Shoots and leaves growing from the small section of the red pinot noir “inter-stock” will exhibit visible symptoms if the vine becomes infected with leafroll virus. Several experiments with this technique are planned for vineyards in Monterey and Santa Barbara County in 2021. The viticulture team anticipates that this experiment will deliver higher yields, grape quality improvements, pesticide reductions and improved farming efficiency.
4. Enhance biodiversity
Modern agriculture is often negatively characterized as a ‘monoculture’, meaning a single crop with uniform genetics covering a large swath of land. When regenerative practices are employed, this portrayal is significantly overturned.
Much of the work to enhance biodiversity was covered in the previous section on pest management because off-target or over-application of chemicals is an important factor determining a farm or region’s level of biodiversity. Yet, there is still more that can be done to preserve biodiversity within and adjacent to cropland.
- Identifying and understanding the ecology of crops and native landscape that surrounds them allows for the establishment of mitigation plantings to preserve indigenous plant species and avoid pesticides detrimental to native flora and fauna. Habitat protection and restoration can promote beneficial organisms that fight unwanted pests as discussed before, but also provide critical ecosystem services like pollination.
- Expanding the genetic diversity among species by alternating crop types, varieties, clones or rootstock creates a more resilient agroecosystem wherein disease cycles are quickly broken and beneficial organism populations are not diminished by repeated use of crop-specific chemicals. Further, soil microorganism populations that perform numerous services for crops such as nitrogen fixation or the decomposition of organic material fluctuate depending on the crop being grown. Just like larger beneficial organisms seen by the naked eye, rotating crops season-to-season can maintain populations of beneficial microorganisms.
Practices in action
Flower stripes for pollinator habitat in Poland
Insects in general and bees in particular are essential to the pollination and production of a large number of crops. Habitat loss has led to a loss of wild bee species and an increase in diseases, leading to a decreasing bee population overall. In landscapes dominated by cropland, insects often lack adequate habitat for food and nesting. Flower stripes sown adjacent to crops helps increase the availability of food for pollinating insects, and in turn increases pollination. Since modern row crop farming is considered partly liable for a decreasing bee population, flower stripes demonstrate that modern farming and pollinators can coexist and support each other.
In an effort to enhance crop pollination and preserve bee populations, Westchester and farm tenants arranged to plant flower stripes at a variety of locations on farms in Poland. Westchester provided tenants with appropriate wildflower seed mixes and reimbursed them for the seeding work. The flowers are planted on areas of the farms that would otherwise not be cultivated due to lower quality soil or an awkward field shape. The stripes provide local beekeepers with attractive locations for their hives and serve as habitat for wild bees and other insects, as well as shelter for larger wildlife between large open fields.
As agriculture strives to further minimize its environmental impact, proven best practices guided by regenerative agriculture principles will undoubtedly be implemented across more and more acres.
Westchester will continue to evaluative where regenerative practices can be implemented, and to use data and benchmarking to understand where practices can be enhanced at an asset, regional and portfolio level. Westchester will work with the operators/tenants and the broader market to ensure that the right measures and incentives further promote these practices on the ground.
This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her advisors. The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on factors such as market conditions or legal and regulatory developments. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions made in preparing this material could have a material impact on the information presented herein. Past performance is no guarantee of future results. Investing involves risk; principal loss is possible. This information does not constitute investment research as defined under MiFID. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
A word on risk As an asset class, agricultural investments are less developed, more illiquid, and less transparent compared to traditional asset classes. Agricultural investments will be subject to risks generally associated with the ownership of real estate-related assets, including changes in economic conditions, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties. Nuveen provides investment advisory solutions through its investment specialists.