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Sustainable Agriculture

What is Sustainable Agriculture?

Agriculture is by definition a business. Sustainable agriculture is more a business analysis tool, than a set of defining activities.

The results of this analysis should reveal to the business its strengths, and some exposures to risk. The businesses that come out looking good are those that people in the industry might identify. They are in a location which enjoys climatic and soil conditions that give it a long term competitive advantage. On the other hand, an analysis would probably reveal some risk exposures among those businesses.

One well-known description of sustainable agriculture reads
"A Sustainable Agriculture does not deplete soils or people.”

It's an apt summary, but it provides no guidance about what factors lead to depleted soils or people. There is a need for analysis to alert the farm manager to potential, emerging and present risks so that solutions can be found. See the next section, below.

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Structured analysis, using universally applicable principles

The analysis we use looks at four key measures in an agricultural business:

  • Productivity
  • Resilience to a range of challenges including changes in government policy, in climate, in markets and more.
  • Preserves or enhances natural and human-made capital from soil health to farm infrastructure. It does not cause damage to other natural capital such as leaching of fertiliser causes in water courses.
  • Provides an equitable outcome for financial, and human capital deployed

Behind each key measure are a several specific measures. Below are some indicative measures from the suite we have developed:

  • a familar and useful measure of productivity is the output in product per ha. We can also bring in valued product per $10K of capital invested. This levels the assessments between growers growing in the soil vs hydroponic systems in vertical farms.
  • numerous factors indicate high or low resilience: high equity in the property is a component of high resilience; another is having more than one product or one customer.
  • natural capital is measured initially as whether soil organic matter is rising, stable or declining over a five year period. Soil is the engine of productivity; therefore it deserves careful analysis. An additional analysis is how the soil in production areas compares with soil from an unmanaged area, taking into account several attributes not related to soil chemistry. The reference soil values will indicate how previous farming practices have affected the soil in managed areas. It also provides guidance on what is achievable, or what has been achieved for not all soils are ideal for agricultural production in their native condition.
  • equitable outcomes considers the net earnings and how much is delivered to each person in financial equity plus income (eg in family farms) and gross wages compared to median wages in the relevant community.

Each of the measures has more complex analysis behind it when we consult with you. You may want to focus on improving resilience, or understand what credentials you can present to raise the community profile of agriculture, and address misguided or ill-informed criticism.

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Specific guidance on how to implement

Some businesses want our assistance to clarify the factors in the risks and constraints that our report identifies in the business. From that a plan can be developed.

  • Productivity: If productivity per ha is below what the farm prefers, there may be a range of solutions. After checking satellite imagery, we may identify areas on the farm that are currently low yielding. Some farms make money in some blocks, and lose some of that profit in other loss-making blocks. We work with you to clarify the source of the issue. Its not always solved by more fertiliser. In fact, its probably not going to be solved by fertiliser. We need the facts from investigation of that location. If the business suffers from a long-term competitive disadvantage, revising the strategy may be required.
    In every case whowever, we believe that optimising your land use, not maximising it, and adjusting the production system to soil-specific management provides the greatest productivity per unit over the medium term and enhances business resilience.
  • Resilience: If equity is low, it may be a case to consider how long it may take under present trading conditions to regain equity. Financial advisors may be able to guide the farm manager on this journey. If the low resilience is due to marketing, it may be appropriate to consider value-added markets or producing a product from what is currently considered waste. We have guided clients through such a process.
  • Preserving capital: Business analysis taking in all the capitals (natural, social, financial, human etc) involves identifying the dependencies and impacts. Soil is important natural capital; it is also the engine of productivity. If the soil pH or organic matter is declining, or electrical conductivity is rising, it is a serious challenge to the sustainability of the enterprise. Good care for soil capital is not as complex as it might seem from comments like Soil processes are a black box.
    The benefits of good soil health are very widespread across your production system, from reduced cost for irrigation to less loss to soil-borne diseases. You probably consider the performance of staff, and recognise that poor performance of tasks has a range of costs. Do you quantify the losses due to soil ill health?
  • Equity:The financial return to a farming enterprise is the combination of increase in equity plus wages taken or drawings by the owners. If the drawings are less than the median wage in a relevant community, the gap can be described as a price one pays for personal satisfaction. It is a choice which deserves respect. If however wages/drawings are high, and there is only minor maintenance of capital, the business is converting capital to current income. Its an unsustainable practice in the medium term.
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Tools for recording so that benefits are measured

Having a plan to address sustainability risks is essential, but more importantly the farm manager needs to know the factors that cause this risk, and the measures will demonstrate progress and validate the investment in addressing the risk. Not measuring progress of strategic initiatives can lead to being very reactive and responding to the latest problem. Some problems have their source in other risks.

The records one should keep depend on the risk to be addressed. We talk with clients about that during the process, and what can be recorded or tracked to advantage.

Since soil is indeed the engine of production, it is prudent to regularly monitor indicators of its condition. We provide software to store and review the results of soil samples. We encourage the use of on farm sampling as some of the measures that are important can be easily measured by farm staff. The software provides reports that show the trend of soil health parameters.

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