By James Davey, Simon Jessop and Alexander Marrow
GREAT WALTHAM, England, Aug 19 (Reuters) – With Britain about to record its hottest summer yet, Sam Squier’s nearly 200-acre beef farm in south east England stands out as a lush, green oasis surrounded by scorched brown fields.
As neighbouring farmers have resorted to using winter feed, Squier’s herd of Aberdeen Angus feeds on dense pasture maintained by planting that has retained water and improved soil quality.
“This year is a testament to what you can do in a dry year,” Squier told Reuters.
“Our vision was to improve the soil structure and build resilience within our business, mitigating against both prolonged periods of dry hot weather and prolonged periods of wet weather,” he said.
His cattle, which carry genetic traits from Japanese Wagyu that are renowned for producing tender beef, graze on a mix of grasses, deep-rooting herbs and legumes, known as herbal leys.
The method is inspired by ancient practices and reflects decades-long efforts to introduce climate-resilient farming as governments and regulators across the world have sought to make supply chains less vulnerable.
After years of intensive agriculture that was designed to feed the maximum number of people most cost-effectively, this year’s extreme weather has added urgency to the debate over whether climate change has transformed the economics.
According to Reuters’ interviews for this story with more than 25 people engaged on the issue, banks, insurance groups, water companies, governments and major food groups such as McDonald’s are funding a shift in farming practices.
FINANCIAL LOSSES FROM EXTREME WEATHER
Meteorologists have said they expect to declare Britain’s summer, which officially ends on August 31, the hottest yet and Europe as a whole has this year experienced more extreme warming than any other continent with five heatwaves and far below average rainfall.
After its hottest June and driest July on record, almost three-quarters of England is officially in drought.
Livestock and dairy farmers have reported poor grass growth, the UK’s cereal harvest is set to be the worst since comparable records began in 1984, and fruit and vegetable growers have said production will be reduced, echoing warnings from across Europe.
The losses for farmers in the European Union and Britain from failed crops in the June heatwave could be up to €2.3 billion ($2.7 billion), according to the Energy and Climate Intelligence Unit. There are knock-on effects for inflation, which has already been driven higher by the increased energy and fertiliser costs linked to war in the Middle East.
NUTRIENT-ENHANCING AND ENERGY-RICH
By contrast with the arid land all around, the herbal leys in some of Squier’s fields, near Chelmsford, stand over knee height even after two months without rain, and without the use of irrigation.
The grasses provide energy-rich feed, the nutrient-enhancing herbs help to control parasites and reduce the need for medication, while the legumes fix nitrogen in the soil, removing the need for artificial fertilisers.
The cows are concentrated in a small area where they graze and trample the vegetation and are moved twice a day. They create a protective layer over the soil and their manure helps return seed to the ground, boosting soil health and water retention. Squier has not needed to buy winter feed for eight years.
He estimates the soil holds around 400,000 litres (105,700 U.S. gallons) more water per acre than before he adopted regenerative farming. In the first six years after the switch, estimated earthworm numbers rose from 80 million to 680 million.
BIG COMPANIES HELP FARMS TO SWITCH TECHNIQUES
Government environmental grants helped Squier make the transition. Without giving precise detail, he said his farm would struggle to remain viable without that support.
He also said ownership and tenancy arrangements, financial constraints and resistance to change were a problem for others.
An increasingly popular solution is to work with companies from across a range of sectors including insurers and banks, which have an interest in protecting themselves from the consequences of extreme weather, and as evidence mounts that it is worth investing in different farming methods.
“Farms adopting … regenerative practices are consistently outperforming more conventional holdings during drought stress in terms of both yield and profitability,” Andrew Voysey, Chief Impact Officer at agriculture consultancy Soil Capital, said.
He cited a study for the organisation that found farms that adopted regenerative practices reduced drought-related yield losses by at least 10% in around 85% of cases.
In Britain, Lloyds Bank has joined forces with regenerative food business Wildfarmed to create the Food & Nature Resilience Fund, alongside water companies Severn Trent and Affinity Water and insurance group AXA XL. Pooled funds go to farmers to improve soil health.
Ben Makowiecki, Lloyds’ Agriculture Sustainability Director, said water companies could reduce the amount of money spent on removing farm chemicals from river systems, saving £4 ($5) to £6 of upstream costs for every pound they invest in farms, while insurers can access data to better understand how regenerative agriculture can mitigate flood risk.
“We can’t do this on an individual farm-by-farm basis,” he said, adding collaboration was needed to get “systemic industry change”.
Another scheme is the Routes to Regen initiative, involving companies including McCain and McDonald’s, UK supermarket Waitrose, banks such as Lloyds, Barclays and NatWest and insurers including Aon and Tokio Marine Kiln.
Rather than creating a pooled fund, it aims to give farmers a choice of support. The options include preferential lending terms, technical advice, food-company incentives, peer learning and insurance products.
After launching last year with 100 farmers the initiative aims to grow to at least 200 farmers this year, and expand from the original six counties to six more, a spokesperson said.
MAJOR FOOD GROUPS ARE INCREASINGLY INVOLVED
“Building a more resilient food system is bigger than any one company,” said Jon Banner, global chief impact officer at McDonald’s, which aims to spend at least $1 billion over the next decade in supply-chain resilience.
For McCain Foods, the Canadian frozen potato company, more than 50% of its farmer base is eligible for some form of transition-support programme, including financing, guarantees, incentives and longer-term contracts.
Vice President Global External Affairs and Sustainability Charlie Angelakos said supply concerns drove its decision to target regenerative farming, adding: “This isn’t just a climate change play for us. We really look at this as an assured supply initiative.”
For some, the support of the insurance industry has been the catalyst for change.
At Nestle, the world’s largest food and beverages company by market capitalisation, the work to bolster supply chains has been aided by insurers offering lower fees for insurance against yield decline or natural disasters when applied to regenerative agriculture practices.
“That’s quite a tool, that’s new,” Antonia Wanner, Nestle’s chief sustainability officer, told Reuters.
Insurer Generali Italia also this year launched a pilot involving 500 farms that links sustainable farming practices to higher indemnity limits for climate-related events, with future phases potentially including lower premiums.
In Britain farming officials said they could not specify how many farms use regenerative techniques as it can mean different things to different people.
Andy Gray, however, is another English farmer who has made the switch.
On one of the hottest days of the year he pointed a temperature gun at two patches of ground on his farm.
Beneath a cover crop of clover, the soil registered 32 degrees Celsius (89.6 degrees Fahrenheit). On a nearby bare patch, it reached 51 C (123.8 F), a temperature that kills much of the soil biology crops need, he said.
“If I can maintain soil moisture for a fortnight going into the drought, then that gives me an extra fortnight’s growing compared to everybody else,” said Gray, who farms 150 acres of maize in the southwestern county of Devon.
“If it’s green for longer, it’s producing for longer.”
($1 = 0.8644 euros)
(Editing by Kate Holton and Barbara Lewis)
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