Sustainable farming revolution
Feeding growing human populations has always been a challenge. Higher agricultural productivity is not the sole target anymore. The motivation behind “climate smart” and “regenerative” farming practices is to feed more people, sustainably, while avoiding resource depletion, environmental pollution, and additional greenhouse gas emissions. How can insurance contribute?
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Emissions from world food systems (16.5 billion metric tons of GHG in 2019) account for around 31% of total humaninduced emissions.1 We have seen consumer groups shifting to more sustainable foods, such as plant-based or locally-sourced produce. However, global consumption of meat and protein-rich foods is expected to rise in the coming years.2 The challenge for agriculture is to improve productivity to feed more people, while at the same time reduce emissions.
Beyond monoculture
Unrestrained use of monoculture and industrial chemicals is being challenged, as a shift towards sustainable practices in large commercial and small-scale farming gains pace. Transition to climate-smart and regenerative agriculture can yield multiple benefits such as improved soil health and ecosystem biodiversity, climate-resistant crops and, at later stages, increased profit margins.3
Climate-smart agriculture fosters biodiversity and reduces dependence on fossil-fuel reliant production of fertilisers, the production and use of which currently account for 2.4% of global emissions. Active farmland management such as intercropping with nitrogencapturing plants or use of biological fertilizers (eg, enlisting the help of bacteria) maximizes the ability of soils to absorb and hold more nitrogen, reducing the need for chemical fertilizers. At the same time, slower production cycles and ensuring appropriate mix of crops come with challenges that need to be managed. Solutions based on technological advancements and data such as precision farming, the deployment of robots, and the use of drones allow for more efficiency and refined farm management decisions.4
Climate smart farming and insurance
Insurers can play a vital role in faster adoption and scaling of sustainable farming practices by offering better-suited coverage solutions. They can offer affordable cover in the case of crop failure, and also risk-prevention support. This will help climate smart and regenerative agriculture gain traction, including by de-risking the upfront investment that is often required and mitigating the potential dip in performance while soils adjust and practices stabilise.
Not all farmers have sufficient financial or human capital – or even have access to internet – necessary to deploy new technologies for improved outcomes. To this end, small-scale farming can be served by microinsurance schemes offering parametric covers that mitigate operational overhead.
More broadly, financial risk transfer in the form of insurance can enable long-term investments, helping fuel the transformation of practices. Insurance innovation lies in helping the agriculture sector optimise yields – highest possible yield with the minimum inputs. The insurance industry should support farmers in adhering to measurement, reporting & verification (MRV) procedures aligned with the UN Sustainable Development Goals, and also with carbon farming certification and food labelling requirements. These measures can support long-term transition to sustainable and resilient farming communities.
Video: Interview with a sustainable farming expert
Further Information
References
1 Tubiello, F.N., et al,. “Pre- and post-production processes along supply chains increasinglydominate GHG emissions from agri-food systems globally and in most countries,” Earth Syst.Sci. Data Discuss. [preprint], 2021.
2 “OECD-FAO Agricultural Outlook 2021-2030: 6. Meat,” OECD iLibrary.
3 “Helping Farmers Shift to Regenerative Agriculture,” Bain & Company, 2 December 2021; and “Regenerative agriculture works: New research and African businesses show how,” IUCN, 25 October 2021.
4 For digitally enhanced crop insurance see Swiss Re‘s analytics platform.
