WASHINGTON — While it is understood good soil health practices like cover cropping, reduced tillage and crop rotations are generally beneficial to on-farm resilience, the empirical correlation between these practices and their specific impacts at the field level, especially on crop yields, has not been quantified. As a result, agricultural lenders and insurers who price risk do not currently factor in incentives for the risk reduction generated by improved soil health management practices.
To create the economic rationale for these stakeholders to offer financial incentives, such as better terms or lower loan rates and insurance prices to producers adopting good soil health practices, the Foundation for Food & Agriculture Research (FFAR) is awarding a $715,611 Seeding Solutions grant to Land Core to create an unprecedented market-based, actuarially-sound model that can determine the risk-mitigation benefits and related cost savings associated with specific soil health practices. Family foundations including the Paul and June Rossetti Foundation, Mighty Arrow Family Foundation, J.M. Kaplan Fund, Great Island Foundation and Records-Johnston Family Foundation are providing matching funds for a total $1,449,611 investment.
“We have discounts for being a good driver and a non-smoker because those behaviors are scientifically proven to mitigate health risks and save insurers money,” said Land Core Co-founder and Executive Director, Aria McLauchlan. “It’s commonplace across industries to incentivize the adoption of low-risk practices. Healthy soil should be no different.”
McLauchlan, along with a cross-disciplinary research team including agroecologist Dr. Tim Bowles from U.C. Berkeley, statistician Dr. Frederi Viens from Rice University and agricultural economist Dr. Lawson Connor from the University of Arkansas, is examining and correlating over 17 years of data on corn and soybean fields in the U.S. Midwest, including: 1) the adoption of important soil health-building practices, specifically cover cropping, no till/conservation tillage and crop rotations, via remote sensing; 2) estimated corn and soybean yields, via remote sensing and modeling; 3) key environmental variables using publicly-available climate, weather, soil and geological data, and 4) county-level economic data such as input use and crop insurance indemnities.
Utilizing causal inference methods and Bayesian statistics, the researchers are translating this data into a model capable of predicting the likelihood of reduced financial risk at field, farm, county and state levels for corn and soybeans, the dominant crops in the U.S.
“We have discounts for being a good driver and a non-smoker because those behaviors are scientifically proven to mitigate health risks and save insurers money,” said McLauchlan. “It’s commonplace across insurance industries to incentivize the adoption of low-risk practices. Healthy soil should be no different.”
Connor said, “We need to quantify the resilience and economic benefits of applying soil health practices, to determine the unaccounted value they provide to financial systems and reward the farmers implementing them appropriately.”
“Risk is a major factor in preventing farmers from adopting soil health management practices,” said Dr. LaKisha Odom, FFAR’s Soil Health scientific program director. “Crop insurance is a major opportunity for change, but insurers can’t provide an incentive or discount without reliable, research-based information. The data this project is generating has the potential to influence insurers to provide incentives to encourage practice adoption.” Odom also noted that since U.S. tax dollars currently subsidize billions of dollars in crop insurance payouts, largely due to flood and drought, this research could give the U.S. Department of Agriculture’s Risk Management Agency a tool to reliably quantify field-level risk reduction, potentially saving significant taxpayer money.
Land Core is partnering with Compeer Financial, an agricultural lender and insurer, and the third-largest farm credit system cooperative with $30 billion in assets, to support the development of the model including providing appropriate parameters for analysis and ensuring its usability within the industry. Through this partnership, Compeer Financial has become the first major agricultural financial services provider to approach risk assessment through the lens of soil-health.
Land Core is also co-developing and piloting with Compeer Financial and its Midwest farmer clients an array of soil health-adoption incentives based on this research. Additionally, Land Core is working with a growing network of regional farming partners to seek feedback on these piloted incentives and assess the impact of these new program and product offerings in influencing adoption.
FFAR’s Seeding Solutions Grant Program is an open call for bold ideas that address pressing food and agriculture issues in one of the Foundation’s Challenge Areas. Land Core’s research furthers FFAR’s Soil Health Challenge Area by creating innovative solutions to improve soil health from measurement to adoption.
Foundation for Food & Agriculture Research
The Foundation for Food & Agriculture Research (FFAR) builds public-private partnerships to fund bold research addressing big food and agriculture challenges. FFAR was established in the 2014 Farm Bill to increase public agriculture research investments, fill knowledge gaps and complement the U.S. Department of Agriculture’s research agenda. FFAR’s model matches federal funding from Congress with private funding, delivering a powerful return on taxpayer investment. Through collaboration and partnerships, FFAR advances actionable science benefiting farmers, consumers and the environment.
— Foundation for Food & Agriculture Research