agribusiness

Carbon Farming to Reverse Climate Change

This paper outlines the global threat from Climate Change and proposes a simple economic model as a practical solution through which land use innovation can drive behaviour change and reverse global warming. The planet is warming, we are losing the race to save all the inestimable physical wealth and cultural value that humankind created over the centuries and yet we have singularly failed to use the most efficient tool for reducing carbon dioxide levels: photosynthesis. Nothing else comes close to sucking carbon out of the atmosphere, yet we neglect it.Two decades of policies to address the rising threat of catastrophic climate change have focused on reducing emissions. They failed, however, to slow the increase in greenhouse gas levels. Instead, directly and by default, government policies have brought about continuing increases instead.

Forestry and farming are the cheapest and most effective ways to take carbon out of the atmosphere, sequestering it in the vast unexploited reservoir of the soil and trees. Yet instead of actively pursuing these low-cost options we have deforested and degraded forest carbon and soil sinks.  How can we fix this?

The “4 per 1000” (‘Quatre pour Mille’) initiative launched at the Paris COP21 aims to do just that, by rewarding carbon farming.vBritain is a signatory and a Forum and Consortium member.  “4 per 1000” states that, if farming and forestry increased soil organic carbon annually by four parts per thousand per year, that would be enough to totally offset the annual 16 billion tonnes increase in greenhouse gas levels.  With carbon a marketable crop, we could stop worrying about global warming.

In 2015, the French National Assembly responded to ‘4 per 1000’ by setting a €56 (£50) a tonne carbon tax to comes into effect in 2020.

Carbon emissions reduction policies have failed so far:  

  • HM Govt has spent over £1.5 billion supporting Carbon Capture and Storage (CCS), the idea that you can capture CO2 emissions and bury them securely in the ground. For CCS to work and be effective it would cost at least €70 per tonne CO2 stored and require an increase in fossil fuel use of 35%.

  • The voluntary market has created credits for 1 billion tonnes of CO2 in the past 10 years. That’s a mere 1/500 of emissions. Cap and trade is subject to political vagaries. The European Climate Exchange and the Chicago Climate Exchange went bust in 2010 when EU political decisions led to a gross oversupply of carbon allowances.

  • The EU Renewable Transport Fuel Obligation requires mixing sugar beet ethanol, rapeseed oil or palm oil with petrol or diesel. 7 million tonnes of the world’s annual palm oil production of 66 million tonnes is burned as biodiesel, much more than is consumed as food in the EU. Land across the EU is degraded by intensive production of sugar beet and rapeseed for biofuel use, with negligible reductions and, even in some cases, increases in CO2.

The “4 per 1000” initiative is predicated on there being a price on carbon, whether emitted into the atmosphere or removed from the atmosphere. The Government sets a price for carbon and all emissions of CO2 are paid as part of a company’s tax bill, declared as part of its annual returns.  If a company can purchase carbon offsets for less it can deduct these offsets from its tax bill from carbon aware farmers. 

What would happen if there were a £50 per tonne CO2 price?

  • Nitrates, pesticides and herbicides would become uneconomic in many applications and farmers would minimise or abandon these inputs

  • Farmers would increase soil carbon by the use of grass leys and compost. They would minimise tillage and grow green manures to keep ground cover all year round

  • Carbon from straw, sawmill waste and forestry arisings would be converted into biochar (agricultural charcoal) then added to the soil to permanently enhance fertility and increase the carbon in the soil ‘carbon bank.’ Biochar is 80-90% pure carbon and stays in the soil for centuries.

  • Farmers would plant trees and hedgerows instead of growing rapeseed for biodiesel.

  • Wood burning would 10.5 billion be disincentivised. Wood would replace steel and concrete in buildings and homes. Wood is carbon negative. Modern cross lamination technology produces wood that equals or exceeds the strength, durability and load bearing capacity of concrete and steel.

  • The £1.5 billion Government subsidy to date wasted on carbon capture and storage research would be saved.

  • Peat use would end overnight - peat bogs capture more carbon than any land use other than salt marshes.

  • The sea would be more productive. Reduced fertiliser use and reversal of soil erosion would herald the end of harmful algal blooms that damage coastal ecosystems and fish stock populations.

Soil is the world’s most important and valuable commodity.  With a realistic carbon price, we would not suffer the resource misallocation of agricultural subsidies such as in the Common Agricultural Policy. 

Wind and solar are getting cheaper, but are nowhere near as competitive as 4/1000.  Money has been poured into supporting wind energy.  Every tonne of CO2 saved by onshore wind costs €162, from offshore wind £267.

A regenerating degraded forest can profitably generate CO2 savings for a cost of less than £5 tonne CO2.  Forestry management costs of planting, then thinning are minimal. Forests, pasture and arable farmland can easily sequester “4 per 1000 per annum.”  Yet we still lose 31 football fields per minute globally of productive agricultural land because industrial farming methods need take no account of carbon emissions.

How does a Carbon Price affect Fossil Fuel Prices?

A carbon tax would add $10 to a barrel of oil.  That is well within the range of fluctuations in the oil price (e.g. recent OPEC decisions).    

There is a financial opportunity. The Government simply establishes a tax that can be offset by carbon credits.  This then puts carbon dioxide, like any other valuable commodity, in the hands of markets.   

Fossil fuel emissions are 33 billion tonnes CO2 a year globally. At £50/tonne the market for carbon credits would be more than £1.5 trillion. If Britain leads on this by example then London would be the financial hub for carbon trading . The City of London has the depth of liquidity and the reputation for integrity that a global carbon market will need to succeed. 

The flow of cash into sequestration will be transformative.  Agricultural subsidies can fall away without impacting on land values.  Rural economies will be invigorated and farming can begin to remediate the misallocation of resources that current CAP policy encourages.

Auditing, validation and certification of carbon sequestration represents an opportunity for the certification industry, much of which operates out of the UK.

What is the scale of the opportunity?  Carbon sinks are primarily forests, fields and meadows.

The world has 1.5 billion hectares of arable land, 4 billion hectares of forest and woodland and 5 billion hectares of grassland, a total of 10.5 billion hectares that can be put to work removing CO2 from the atmosphere.  The annual net increase in CO2 levels is 16 billion tonnes.  If every hectare of our available land annually removed 4 tonnes CO2 then we would remove 41 tonnes of CO2 from the atmosphere every year, which would get us back to pre-industrial levels in just 35 years.

Is 4 tonnes CO2 per hectare realistic?

La Vialla, a biodynamic family farm in Tuscany, comprises 1440 hectares including arable, pasture, woodland, vines and olives. Taking this as an example and microcosm of the global distribution of land use types, the University of Sienna, using IPCC methodology has evaluated La Vialla’s annual carbon cycle for the past eight years. Calculations show that 4.24 tonnes of CO2e per hectare have been captured every year for the past eight years. 

 An obvious criticism of soil and forest sequestration is that it can be reversed through human and natural impacts.  A farmer can plough up the soil, a forester can chop down the trees and then much of the carbon captured is released back into the atmosphere.  An additional risk is that fire, war, flood or hurricane can reduce the carbon store.

A two-part payment can address this by providing:

  • a payment for the annual increment of CO2;

  • an additional ‘interest’ payment on the carbon that is stored in the carbon ‘bank.’

Soil is the foundation of our natural capital.  In a capitalist system it should be valued.

Farmers can insure against loss of carbon. Banks will advance loans against land to farmers who operate best practice carbon farming in the knowledge that the asset that is loaned against is increasing in value as its carbon content increases.

The cost of low carbon food would come down and the cost of high carbon food would go up. No longer would price be a barrier to eating food that is rich in nutrients, low in pesticide residues and which delivers tangential social and environmental benefits.

Carbon sequestration in farmland, pasture and forests is a cheap and effective way of reducing greenhouse gas levels.  Compliance with agreed Paris COP 21 targets will be unlikely if we continue to depend on technological solutions and biofuels to reduce emissions.  Using up precious soil and forests for the production of biofuels is wasteful, uneconomic and does nothing to help mitigate climate change. An economic incentive to maximise soil and forest sequestration of carbon dioxide is the most effective, practical and low- cost solution to achieving greenhouse gas reduction.

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Agribusiness

xorganic-farming-640x426-jpg-pagespeed-ic-thzrqz2irqWhen a business sector sees a rash of mergers and acquisitions, it's for one of two reasons, growth or decay. The organic food industry has seen a lot of acquisitions by companies anxious to get in on the ground floor of the 5% annual growth rate in organic food and regenerative farming. Meanwhile, on the dark side, Monsanto is facing takeover by Bayer, not for any positive reasons, but because they are both looking into the abyss. Merger is one way to survive when the farmers they are competing for are spending less. Farmers aren't stupid - they can do the maths. When they see diminishing returns on their investment in seeds and agrichemicals, they reduce their spending. Normally in a situation like this the agribusiness operators would go to the EU or Washington and just wheedle more subsidies out of the national purse, bleating about food security while encouraging biofuels to prop up soy, rapeseed and corn prices. Who cares if you're destroying the earth's precious farmland at 30 football fields a minute? If you were a big landowner, you'd feel entitled to being paid to do this. That's what us mugs are here for. Now that the EU even subsidises grouse moors you'd think the gates were wide open. But the money is running out. Half the EU budget goes to farmers, much of it British money going via Brussels to France. The US spends $350 billion a year propping up agriculture in the US, channeling money through farmers to agribiz.

Let's take a look at who's eating whom. The potash fertiliser price has halved in the past 3 years, from $450 a tonne to $219. So in Canada, Agrium and Potash, two of the world's biggest potash producers, are merging in a desperate attempt to keep afloat while they wait for a bounce in price that may never happen. Bayer and Monsanto are both facing plunging sales and profits. Monsanto have the seed and Bayer have the pesticides to go with them. But again it's desperation. They hope that innovation will save them, but innovation is not something you find in mega corporations.   GMOs are losing support - US farmers never wanted them but were denied choice after Monsanto bought up all the seed companies and forced GMOs down their throats.

The whole ethanol biofuels scam is blowing up, too. It was never even vaguely 'carbon neutral' - it takes more energy to produce a litre of ethanol than the energy you get by burning it. It's more energy efficient to just mix corn with coal and shovel it into a power station, but that would be too obvious and repulsive.

Chem China has taken over Syngenta. They make the herbicides that Syngenta's GM seed can resist. Nobody in China will eat GMO rice but they'll tolerate pork or chicken fed on GM maize. But the real prize for Chem China is Syngenta's strong presence in US market: they're after Bayer/Monsanto's piece of the diminishing pie. Their US competitors are suddenly bleating about food security.   Two other agrichemical giants, Dow and DuPont, also merged recently. They're all like a bunch of drunks spilling out of the pub after a good night out, trying to keep each other from falling down.

If you're a farmer, what do you do? You used to be able to play off one agrichemical giant against the other, but soon you'll just take what you're given. Or look for an alternative and boy, what an alternative is on the horizon!

When the French '4 per 1000 initiative' succeeds at the Marrakech COP22 climate conference in November every hectare of organic farmland will be set to get over €150 a year in carbon credits. A hectare of chemical-dependent farmland will have to pay for its carbon footprint and that could cost close to €100 per hectare.   It won't happen overnight but the French have fixed a price of €56 per tonne for carbon, to take effect by 2020. The world will probably follow, even the US.   If you were a government that was facing huge annual costs to subsidise farmers with money that flows through their bank accounts to Dow/DuPont, Bayer/Monsanto and Chem China/Syngenta and you could instead just let the carbon markets transfer the money from fossil fuel power stations direct to organic farmers, what would you do? Keep on propping up a dying industry or finally recognise that organic food, when the carbon is priced in, is actually cheaper than the degenerative kind that is destroying our available soil at the rate of 30 football fields per minute? (I can't repeat this often enough)

Governments have been holding back for quite a long time because of the immense political power of the agrichemicals industry and of the landowning fraternity. They passionately hate socialism in all its forms, until it comes to their welfare payments.

It's time for a change. We need to bring freedom to farming. Carbon pricing that encourages regenerative farming instead of degenerative farming is the way forward. Organic is good for you and the climate, too.

Is Agribusiness a 'stranded asset' class?

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Is it time for investors to dump Monsanto, Syngenta and Bayer?

The UNFCC has launched its '4 per 1000' initiative based on data from the French National Institute for Agronomic Research that shows that just by increasing overall the carbon-rich organic matter of soil by 0.4% per annum we could completely and totally offset all our annual GHG greenhouse gas emissions.  The farming methods that can take carbon out of the atmosphere and lock it in the soil include big reductions of nitrate fertilisers and fungicides.  Just doing that will make a difference as they represent a 15% contribution to annual GHG emissions.  The rest comes from 'agroecological' practices, mostly pioneered by organic and biodynamic farmers, that are now tested, refined and proven to be competitive in yield with industrial methods of farming.  They do not deliver high revenue streams to agribusiness companies and they also do not externalise all sorts of other costs onto society.  These biggest cost is greenhouse gas emissions as that's the planetary existential threat.  But the personal and social costs are pretty costly, too: pesticide residues in food, soil erosion, dust storms, water pollution, flooding, biodiversity loss, toxic algal blooms and an archaic subsidy system that has the hard-working poor subsidising rich landowners in the name of 'cheap food.'.  But forget about that, just concentrating on the carbon dioxide equivalent emissions from farming is enough.  There are plenty of untested technological solutions like mirrors in space or the delusion of Carbon Capture and Storage (CCS) that you can pump carbon dioxide into old oil wells and somehow convince yourself and everyone else that it will stay there.   The beauty of what I should like to call Soil Carbon Capture and Storage (SCCS) is that with soil carbon, what goes in the ground stays in the ground.   All it needs is the right price signals.  If carbon has a value then the farmer who reduces emissions and increases sequestration will be rewarded. When carbon has a value it will be traded and there is no need for complicated and inequitable government farm subsidy policies that punish environmentally responsible behaviour.  SCCS farmers will sell their carbon right alongside their corn and beans.

Ideally a SCCS farmer would receive three carbon-related payments per annum,  as well, of course as their normal income and profit from growing wheat or carrots or alfalfa or eggs or whatever .  There would be a capital payment and an interest payment and an avoided emissions payment.  Here's how it could work:

  1. Capital Payment:  This is a payment to a farmer for the net annual increase of carbon in the soil.   Rodale's research has shown that an organic farm can sequester 2.5 tonnes CO2 per hectare per year.  There are 1.5 billion hectares of farmland and 3.5 billion hectares of pasture.  For farmland alone, 1.5 billion ha. times 2.5 tonnes is 3.75 billion tonnes of CO2 per annum.  Conversely, a farm that continues to reduce its soil carbon annually would have to pay for that reduction.
  2. Soil Interest Payment - This would be an 'interest'  payment of the market price of carbon based on the amount of carbon that is already in the soil, the 'deposit' so to speak.
  3. Avoided emissions payment - emissions include fossil fuels and the emissions involved in the manufacture and application of fertilisers, pesticides and agricultural equipment.

How does it work in practice?   Let's say a farmer has 100 hectares of land.   The carbon price is $50 per tonne CO2.  There are already 60 tonnes of CO2 as soil organic matter per hectare.  The farmer adds 2.5 tonnes in one year.  What is the annual carbon payout?

Capital Payment: 100 hectares x 2.5 tonnes x $50 =   $ 12,500

Interest Payment: 100 hectares x 60 x 0.5%            =   $    3,000

Avoided emissions payment:  1 tonne $50  x 100     = $    5,000

So the farmer can sell carbon credits to gain an additional $20,500 of revenue on 100 hectares

What about the  industrial farmer?

Capital Payment: 1 tonne p.a. soil CO2 decrease, $50 x 100   =   - $5,000

Interest Payment: 100 hectares x 60 x 0.5%            =                        $ 3,000

Emissions Payment:   .5 tonne CO2/ha =                                         -$ 2,500

(a fee for nitrous oxide, methane and carbon dioxide emissions from the soil due to the use of nitrate fertiliser and pesticides and fungicides)

Total carbon cost of farming as usual:                                          $4,500

Total 'spread' between SCCS farmer and industrial farmer 100 hectares:

$20,500 + $ 4,500  =  $25,000

If yields are equal and input costs are comparable then this is a significant edge in competitiveness in favour of the agroecological or organic farmer.

That's $250 per hectare.  About what a farmer gets nowadays by way of government subsidy but, instead of it coming from the taxpayer and the farmer acting as a conduit that channels it to agribusiness the payment is funded by the carbon markets and most of the money stays in the farmer's pocket.

Michael Pollan's made a lovely video that tells the story of soil carbon.  And Deborah Garcia's film 'Symphony of the Soil' is certainly worth watching to get a full understanding of the real underfoot magic of our existence.

And the Financial Times published my letter on December 18th 2015 that was a warning to investors not to get caught in a meltdown of agribusiness shares similar to what's been happening with fossil fuel company shares - the writing is on the wall for businesses that generate high greenhouse gas emissions - there's no hiding place any more.  The Paris talks have tipped the balance.

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War of the world

After a century of destructive conflict a new battle is about the begin – the one to save Planet Earth. It’s the war we really can’t afford to lose, writes Craig Sams.

“I’m the King of the castle – and you’re a dirty rascal”

Every since my playground days I’ve been aware of who holds the high ground and who is a serf. In the olden days it was the legacy of your birth that determined your future chances. In our corporate world ‘legacy industries’ cling to their power in the face of change.

Economists bat on about ‘creative destruction’ in capitalism, but there are still way too many gigantic corporations that are dinosaurs; fat and obsolete but refusing to just lie down and be creatively destroyed. They’re the ‘kings of the castle’ and they’re not about to let any perceived ‘dirty rascals’ impinge on their power.  Sometimes creative destruction does work. A disruptive technology like a smartphone can instantly make obsolete regular cell phones, PDAs, MP3 players, cameras, wrist watches, calculators, voice recorders and game boxes. Apple nearly destroyed IBM.

In Victorian times Britain and France went on a colony-building binge, demolishing the Ottoman Empire and the Austro Hungarian Empire in order to take over their territory.  This led in 1914 to the ‘War to end all Wars’ that we commemorate.  Hindsight shows it was the start of a 100 Years War…WWI was followed by a lot of mini wars, then WWII, then the Korean War, the Vietnam War, the Lebanon invasion, the Iraq war, Afghanistan, to name a few.  NATO is at the heart of most of these wars

The NATO conference agenda recently called for increased military expenditure now that the EU economy seems to be finally.  Where would the money go?  To arms manufacturers in the US and Britain and to terrorists who we train and arm before they go over to the other side, creating new conflicts.

War of course isn’t the only legacy industry that made all its money out of a situation and can’t move on. .

Adam Smith nailed it in The Wealth of Nations when he wrote:  “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Who are the other dinosaurs that have sunk their fangs into the taxpayer’s neck and are sucking out our hard earned money to pay their salaries and remunerate their shareholders?

The pharmaceutical industry depends on widespread disease.  Many diseases arise from environmental reasons: lead in petrol, hormones in meat, pesticide residues in food and water, side effects of drugs, additives in food and toiletries and poor quality food grown in depleted soils. Prevention is the best cure, but where’s the profit in that?  If everyone was healthy Pharma would be in a very bad place.

Agribusiness depends on depleted soils.  Once you’ve knocked the life out of soil with nitrates, fungicides, insecticides, nematicides and other toxic material the only way a farmer can get a crop is by buying in ever more chemicals.  Farmers have to do what the government pays them to do, so Big Ag leans on government to make sure that the subsidy system encourages farmers to grow biofuels instead of food and to farm for production rather than sustainable productivity. They spend a lot of money fighting off real progress.

The ‘disruptive technology’ in agriculture is organic farming – like the smartphone it delivers a number of products in one package: sustainable yields, healthier soils, lower pollution, healthier people, reduced global warming, more biodiversity and far less expenditure on subsidies for expensive poisons and chemical fertilisers.

The oil industry get massive subsidies masked as exploration grants to make them seem more competitive than they really are. Private energy generation is discouraged, but it’s more resilient and cheaper.

But the biggest legacy industry of all is government – not only does it collaborate with the other legacy industries to protect their obsolete positions, the legacy industries collaborate with government to keep them dishing out the dosh and keeping their upstart competitors at bay.

Silicon Valley blew a hole in a number of legacy industries: big computers, expensive telephony, monopolised media and communications, to name a few. Now the Silicon Valley investors are investing big time in what they call ‘AgriTech.’ These investors don’t care for heavy-handed government regulation and can see an opportunity to cash in on food production in a world where daft ideas like biofuels, GMOs, subsidies and chemicals are making less and less sense. Organic farming and agroecological systems are where the smart investment money is heading. Backed by technology, organic farming can wipe the floor with the dinosaurs like Monsanto – they’ll fight back but there is a tidal wave of smart money that is betting against them

World War Three will be the war to save planet Earth. This is one we can’t afford to lose.

By Craig Sams

Organic food pioneer and polemicist Craig Sams is Britain’s best known natural food pioneer. He is the founder of Green & Blacks, a former Soil Association chairman and the author of The Little Food Book.