Building Team Chemistry: The Bigger Picture Behind Cows & Climate
Conor McCabe
Animal Biology Graduate Student, UC Davis
Grant Quantifies Farm Risk Mitigation Through Improved Soil Health
Aria McLauchlan
Land CoreThere is no empirical correlation between good soil health practices like cover cropping, reduced tillage and crop rotations and their impacts on crop yields. 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.
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. It’s commonplace across industries to incentivize the adoption of low-risk practices. Healthy soil should be no different.Aria McLauchlan
Land Core Co-founder & Executive Director
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.Dr. Lawson Connor
University of Arkansas Agricultural Economist
Why this research is important?
There is currently no economic rationale agricultural lenders and insurers to offer farmers financial incentives, such as better terms or lower loan rates and insurance prices to producers adopting good soil health practices. Additionally, U.S. tax dollars currently subsidize billions of dollars in crop insurance payouts, largely due to flood and drought, which good soil health practices help mitigate. The U.S. Department of Agriculture’s Risk Management Agency, which is committed to increasing the availability and effectiveness of Federal crop insurance as a risk management tool, does not have a way to reliably quantify field-level risk reduction from good soil health practices that that could potentially save significant taxpayer money.
To solve for this, Land Core is creating an unprecedented market-based, actuarially-sound model that can determine the risk-mitigation benefits and related cost savings associated with specific soil health practices.
What else could this research impact?
The marketplace for agricultural lending and insurance is enormous. Agriculture debt was valued at $467.4 billion in 2022 according to the U.S. Department of Agriculture Economic Research Service, with around $20 billion in new loans issued annually. Capturing even a fraction of this existing market through de-risking represents a large funding potential to spur the transition to a soil-health centered agricultural system.
Risk is a major factor in preventing farmers from adopting soil health management practices. 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.LaKisha Odom, Ph.D.
Scientific Program Director Soil Health
Compeer Financial is providing critical support
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.
Matching Funders
Paul and June Rossetti Foundation, Mighty Arrow Family Foundation, J.M. Kaplan Fund, Great Island Foundation and Records-Johnston Family Foundation
