Farming's Triple-Bottom Line
People, planet & profit - unless each one is in a good state, farms are not successful.
The definition of success can be totally different from one farm to the next. The simpler the goal, the more vulnerable the business is to shocks like extreme weather and policy changes.
Focusing on achieving the biggest crop yield is the simplest and most dangerous goal for farmers to chase. It’s expensive, unpopular with the public, and ignores the most important nuances in food and agriculture: mental wellness, nutrition, toxicity, and natural capital reserves.
Compliance with the regulations is an important goal in commercial meat packing and supply managed sectors, which are also vulnerable to political uncertainty and consumer backlash.
Holistic management holds equal space for farmers to build profits, strong teams, and environmental stewardship, creating long-term resiliency.
This spectrum of complexity in farming goals should lead agriculture’s institutional stakeholders towards holistically-managed farms and away from high-emitting, large-scale grain farms, but they’re dealing with conflicting incentives. Interest rates, for example, collect the biggest returns from the biggest loans, and bankers typically assess farm risks based on the past.
In many cases, the quota for a supply-managed farm exceeds the value of all other assets combined: land, buildings, livestock, equipment, etc. Contemplating future markets for dairy and feathers in Canada is too complicated to bother trying right now, but it is safe to assert that quota asset values are under threat right now.
Drastic and sudden changes are now underway in North American trade corridors, with ever more uncertainty facing agricultural markets. Buy-Canadian sentiment has significantly improved business prospects for small, regional, new farm-branded foods.
Prairie Routes exists to help organizations understand and plan for the opportunities at hand. Please email hello@prairieroutes.ca to schedule a free 30-minute consult to find out how we can help your business move forward with success.
Social License
In this podcast, John Kempf points to data from a consumer trust survey that ranked farmers near the top, and agribusiness near the bottom. In other words, farmers (who are trusted) need to find ways to decouple their brands from the captains of industry (who are not), in order to maintain market access.
Unfortunately, in some circles there’s a culture of reverence around the size and power of commodity food agriculture’s giant corporations. Despite their heavy, irreversible investment in the status quo, there’s also a misplaced expectation that the biggest players in agriculture are the ones who will drive change.
Social license refers to the public’s approval level for the business practices of companies in different sectors of the economy. Without it, entire industries become vulnerable to losing large swaths of market access.
Fortunately, there is a trail of breadcrumbs leading out of the corner that commodity farms have been painted into, but it must start with a fulsome definition of success. Then it takes time for businesses in agriculture to arrive at a place of self-determination and well-being.
The Path Forward for Agriculture
A common starting point for commodity farms transitioning into regenerative agriculture is an a-ha moment that inspires a small change. When the small change is successful, the farmer’s confidence builds, enabling better practices to expand.
There are some limiting beliefs in agribusiness that must be overcome by everyone in order for the industry to recover public trust, and the ability to be profitable in the future. Staring truth in the face can be difficult, and also fast and effective in building business strategies for future success, under changing market conditions.
Farms finding ways to reduce expenses are better, more credit-worthy businesses than the ones spending more and more money on equipment and crop inputs every year.
Medium-sized grain farms are the best for alignment to regenerative agriculture business opportunities.
Starting a new farm business is totally viable, and can be easier than changing an existing farm.
Summary
Operating on a smaller land base enables farm operators to watch what’s happening to the soil, plants, livestock, their workers and family members, the community and surrounding wildlife, in response to their management decisions. They have the knowledge, time and capacity to penetrate niche markets, earn higher prices, and generate revenue from new sources.
All of this stability becomes possible when owners/operators stand on the three-legged stool of success for modern agribusiness, based on people, planet and profit. This is the foundation on which regenerative agriculture is scaling up across North America, despite a near-total lack of commodity market segmentation, and in spite of limiting beliefs, and expensive regulatory over-reach.