Droughts, floods, forest fires, heatwaves. Once rare occurrences are now intensifying global matters. As environmental concerns grow, governments and policymakers are pressed to consider innovative tactics to combat climate issues and work toward a more sustainable Canada.  

Enter: The Canadian farmer.

Contributing more than $143.8 billion annually to the country’s GDP, spanning roughly 200,000 farms, and creating almost 2.1 million jobs, there is no denying agriculture and farmers play a vital role in the Canadian economic makeup. But it comes at a price.

Canada's agriculture sector currently contributes approximately 10 per cent of the nation's greenhouse gas emissions, with an even larger footprint if fertilizer production is considered. Faced with this statistic, governments are turning to farmers for solutions, and the path forward may find inspiration from the past.

The future is in our roots

Regenerative agriculture, a way of farming that prioritizes enhancing ecosystems through natural agricultural principles, was once a longstanding, sustainable practice in Canada. However, industrial innovations and a growing population have led to the dominance of large-scale mechanical practices in the industry. Despite boosting yields and productivity, this shift comes at the cost of environmental health and future yields.

Diane-Laure Arjaliès, Associate Professor, Founder and lead of the Sustainable Finance Lab at Ivey, has observed an abundance of scientific research – both Western and Indigenous – pointing to the economic and ecological merits of regenerative agriculture. Despite this widespread knowledge, and farmer consensus, the practice has yet to find its ground.

“Farmers want to have healthy land, see their yields increase over time, and do better for our resilience to climate change. But, when we look at the numbers, we don’t see a huge adoption of regenerative practices,” she said.

Why is regenerative agriculture struggling to take root?

Ignited by this question, researchers at the Ivey Sustainable Finance Lab, funded by the Canadian Sustainable Finance Network (CSFN) at Queen’s University, have produced a comprehensive new report entitled Advancing Regenerative Agriculture in Canada: Barriers, Enablers, and Recommendations. More than data, the '101' guide is a call to action, offering evidence-based research, best practices, and five critical recommendations for encouraging the widespread adoption of regenerative agriculture.

Does money grow on trees or within the crops?

While Canadian farmers may recognize regenerative agriculture's vast environmental and financial benefits, research shows many hesitate to adopt due to perceived risks. The financial reality of relying solely on land yields, coupled with concerns like inflation, climate threats, and labour shortages, makes it challenging to shift away from industrial technologies, which are seen as essential for meeting current demands.

Implementing regenerative practices is also not a quick fix with clear timelines, a particular challenge in a profession reliant on timing. The transition from implementation to consistent yield may span multiple years, which is costly for farmers without substantial investments. Additionally, for the nearly half of Canadian farmers who rent their land, making multi-year investments in soil health and ecosystems poses a significant financial risk.

At the core of agricultural sustainability lies a critical question: Can farmers, whose economic and mental well-being hinges on the land's productivity, afford to prioritize short-term profits over the long-term health of their fields? This dilemma underscores the imperative for investment in regenerative practices.

Public funds sow seeds; private sector urged to grow

Although the federal government has supported regenerative agriculture through financial tools like crop insurance and green bonds, and even allocated more than $270 million in its 2021 budget to support agriculture and climate-smart solutions, including regenerative farming, further action is needed. The researchers particularly stressed the need for increased private capital investment. Innovations to improve the financial infrastructure for regenerative agriculture can incent further investment.

Five ways to make regenerative agriculture a reality

To boost the widespread adoption of regenerative agriculture, the researchers share five key recommendations for stakeholders and rightsholders throughout the food value chain:

  1. Clarify ‘regenerative agriculture’ and its role in supporting current farming practices: Greater education and clarity around the term will aid in increased adoption;
  2. Account for the value of nature in agricultural production to create markets and translate ecosystem services into financial models: Developing innovative instruments that value biodiversity may attract sustainability-minded investors;
  3. Develop an inclusive financial infrastructure in cooperation with the various actors along the value food chain: Transitioning to regenerative agriculture involves shared financial responsibility across the entire food value chain, not just the farmers.
  4. The need for a just transition. Empowering other ways of knowing and doing: Allyship is essential for an empowering agricultural system. It’s important to seek perspectives often marginalized in agriculture, such as Indigenous and BIPOC communities, migrant workers, and the land itself.
  5. The need for systems-level solutions to create a system shift: The report highlights the transformative power of small changes from various system actors. Policy-makers, planners, financial services, and the agricultural industry all play a pivotal role in driving change.

Perspectives on finance and regenerative agriculture

In response to the report, The Ivey Academy and the Ivey Centre for Building Sustainable Value – where the Sustainable Finance Lab is hosted – convened a livestream panel event, Regenerative Agriculture: The Role of Finance & the Value Chain, as the second part of their Future of Agri-food Series. The discussion, moderated by The Ivey Academy’s Bryan Benjamin, addressed how regenerative agriculture can transform Canada's food system, aligning finance with sustainability and the role of partnerships in driving this transition. Panelists included John Uhren, Managing Director of Sustainable Finance at BMO Capital Markets; Charlie Angelakos, Vice President of Global External Affairs & Sustainability at McCain Foods Ltd.; and Diane-Laure Arjaliès, lead researcher for the study.

We can’t afford to wait

The journey to regenerative farming is not instant; it demands time, investment, and education. With a timing misalignment between implementing practices and financial returns, farmers are hesitant, particularly amid current challenges like high inflation and rapid population growth.

Observing this trend, BMO’s Uhren emphasized the need to bridge the timing gap in financing and bring new, tailored financial solutions to empower farmers and mitigate risks. While acknowledging the public sector's current focus on environmental initiatives, like the Canadian government's Sustainable Agriculture Strategy, Uhren agreed greater private sector support is imperative.

Why the hesitancy from private investors? Uhren points to a negative stigma tied to the perceived risks and complexities of the sector. Additionally, a lack of clear definition is causing investors to get lost in inertia and delay commitments.

But Uhren stands firm: investors shouldn't wait for a precise definition. “Even if their definition of what constitutes as regenerative agriculture may be a little different, we still see the need to purchase these bonds and invest in these companies that are doing the right thing,” he said.

Arjaliès added, “In 2019, 11,7 per cent of Canadian land was said to be degraded, an increase from 9.7 per cent in 2015. Land degradation is the reduction or loss of biological or economic productivity. It directly impacts our ability to produce enough food for the population, but also our ability to be climate resilient. The more we wait, the more difficult it will be to reverse the trend. We need to act now.”

Farming for the future

While the occasional bad crop yield is not unusual, McCain Foods observed consistently poor yields in its partner farms, likely due to climate change. A climate study confirmed suspicions.

“We knew we had to act with great urgency and immediacy,” said Angelakos.

This led McCain to an ambitious yet promising goal: achieve 100 per cent regenerative farming across all its farms by 2030. Angelakos emphasized a collaborative approach with farmers and the need for incentives. Recognizing the time and investment it requires for farmers to see full benefits from regenerative practices, McCain strategically sought to incentivize its partners through tailored financial arrangements globally. These arrangements included negotiating preferential loan rates and back-stopped loans through financial institutions and providing long-term contracts to partners committed to regenerative practices. However, the company’s core belief was that education is the most effective path forward.

With education in mind, McCain has spearheaded the transformative “Farm of the Future” initiative, strategically selecting global, commercial-grade farms for independent regenerative trials. Their commitment to testing cutting-edge techniques ensures progress without jeopardizing farmers' yields and profitability. Already launched in New Brunswick and South Africa, the program delivers strong results while bearing the financial responsibility and risks.

“At the end of the day, we are bearing the responsibility so that our growers can get the benefits. But at the same time, if we fail, the grower does not have to fail,” said Angelakos.

The way forward is together

With research focused on pushing the boundaries of knowledge and practice, Ivey's Arjaliès says regenerative farming is a key component in challenging climate change. She is dedicated to its widespread implementation – even among its trials.

“Everyone benefits, everyone is committed to it, but no one is ready to change the business model, the value chain, and the valuation model to really prioritize this,” she said.

No stranger to advocating for change, Arjaliès is “taking things into Ivey’s hands” to drive meaningful environmental impact. She announced that in September 2024, Ivey’s Centre for Building Sustainable Value will engage in an extensive new study with collaborators across the country to measure the impact of innovation on regenerative agriculture practices. The study will be conducted as a large, randomized control trial, with a goal to foster a community of practices, encourage collaborations, and test for increased adoption. Arjaliès extended a wide invitation for new partners to join the study and be at the forefront of meaningful change in Canada and beyond.

“We are doing our part for collaboration at Ivey; now all we need is you,” she said.

If you want to learn more, please contact sustainability@ivey.ca.

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