Food security and the disruptive power of regenerative agriculture

The traditional approach to increasing yields in agriculture relies on seeking incremental gains via refining existing processes and making more efficient use of capital; for instance, by way of improving fertilizers and pest control, or using bigger and better machinery.

Key takeaways
  • Regenerative agriculture offers the potential to radically disrupt existing farming practices
  • The approach includes a range of techniques, many of which leverage emerging technologies, to improve soil and livestock health
  • Agriculture provides an archetypal example of how disruption is moving beyond the tech sector

Yet such approaches are not only limited – in terms of delivering ever smaller marginal gains – but may also be having medium- to long-term deleterious effects on the soil quality, biodiversity, the water cycle, animal health, and, eventually, on yields themselves. Indeed, ensuring future food security requires looking towards different techniques as, on the one hand, booming demand for meat from growing middle classes in emerging markets is likely set to continue unabated; and, on the supply side, capacity issues and the implications of existing practices for biodiversity mean that a change of approach is sorely needed.

An alternative approach that is gaining an increasing amount of attention for its potential to radically disrupt agriculture and food production – and ensure the sustainability and security of food supplies – is the range of techniques that fall under the umbrella of “regenerative agriculture”. If sustainability is about avoiding deterioration, regenerative practices go one step further; they improve the inheritance of future generations. For farmers, that inheritance is the productive capacity of the land or, more specifically, the health of the soil. Regenerative agriculture is primarily concerned with improving soil health by weaning the farm off the use of chemicals and tillage because these cause collateral damage to the soil’s microorganisms that are allied in supporting healthy plant growth. After around seven years of regenerative practices, soil health is so improved that yields can match those of traditional farms, but the farm’s profits are higher as input costs are lower.

“The potential of regenerative agriculture… to change the shape of farming and food production provides an archetypal example of how disruption is now changing industries beyond what is traditionally considered “tech”.

To de-risk the transition to regenerative farming, solutions like precision & digital agriculture, biologicals and voluntary carbon markets can play a helpful role.

Technology changing the landscape

The regenerative approach encompasses a variety of techniques to improve soil health, including the use of antibiotic-free livestock that cycle nutrients back into the soil without relying on chemical fertilizers. Healthier soil produces more nutrient-rich food, retains more water, and protects against the extreme weather that is becoming more common the climate changes. And, as well as disrupting the nature of large-scale agriculture itself, the regenerative approach also has the potential to reduce a range of negative externalities caused by existing farming practices – such as, for example, the emission of greenhouse gases and the runoff of harmful chemicals into rivers, lakes, and seas. Indeed, in this respect the “sustainable” label is accurate, and the growth of regenerative agriculture fits well with the trend towards improving the resilience, environmental impact, and sustainability of economic processes across the board.

hands full of corn

Looking specifically at the tech-driven aspects of the regenerative approach, there are several areas that offer the greatest promise for disrupting existing methods of agriculture. For instance, pioneering work in the biotech sector is facilitating nitrogen fixation for a range of different crops, greatly reducing the volume of added fertilizer needed to maintain and grow current yields. Alongside simplifying existing processes and potentially reducing costs, lowering the volume of chemical fertilizers used in agriculture will reduce runoff pollution and the associated algae blooms that often threaten marine life.

Other seed solutions coming from the biotech sector offer the prospect of genetically modified crops, such as wheat and soybeans, with greatly improved drought resistance. Not only does such technology offer greater yields in water-limited conditions, but also the potential for improved water management in agriculture more broadly. Likewise, engendering disease and pest resistance through genetic engineering could greatly reduce the use of chemicals throughout a crop’s lifecycle, while the development of these chemicals themselves is becoming more sophisticated to avoid the use of “collateral damage” type products that can inflict harm beyond their intended targets. Of course, such approaches are not without controversy and, while there is now an imperative to act and these new technologies are certainly here to stay, constructive debates around the most appropriate use of such technologies will continue and should be welcomed.

the inspector inspects the salad

With respect to livestock, the philosophy is similar: to seek solutions that reduce the need for later interventions that may come with potentially harmful side effects. One example of this is the development of breeds – perhaps through leveraging natural selection – that are resistant to certain diseases, thus greatly reducing the costs and externalities involved in treating these diseases during the animal’s life.

Disruptive potential

The potential of regenerative agriculture, and related developments in the sector, to change the shape of farming and food production provides an archetypal example of how disruption is now changing industries beyond what is traditionally considered “tech”. Indeed, it is clear that this disruption not only presents risks for existing, established players, but also opportunities for both up-and-coming corporates and forward-thinking investors. While the science and technology behind many of the techniques discussed is now coming of age, economic imperatives are also driving fundamental change in the agricultural sector. Indeed, it seems the time is certainly ripe for a radical disruption of existing agricultural practices.

  • Disclaimer
    Investing involves risk The value of an investment and the income from it will fluctuate and investors may not get back the principal invested.[*] Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

    The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities. In mainland China, it is for Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations and is for information purpose only. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication’s sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional /professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.

    This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors U.S. LLC, an investment adviser registered with the U.S. Securities and Exchange Commission; Allianz Global Investors Distributors LLC, distributor registered with FINRA, is affiliated with Allianz Global Investors U.S. LLC; Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; in HK, by Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; in Singapore, by Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; in Japan, by Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424], Member of Japan Investment Advisers Association, the Investment Trust Association, Japan and Type II Financial Instruments Firms Association; in Taiwan, by Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan; and in Indonesia, by PT. Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK).

    2580755

Recent insights

Embracing Disruption

According to the USDA, total U.S. farm output tripled from 1984 to 2021, largely driven by advancements in technology such as precision agriculture, automation, and improved crop genetics.

Discover more

Navigating Rates

France is in the grip of political upheaval. But what is the impact on markets?

Discover more

Achieving Sustainability

After a year dominated by elections, 2025 will be framed by the aftershocks. We explore five topics that will influence sustainable investing in 2025.

Discover more

Allianz Global Investors

You are leaving this website and being re-directed to the below website. This does not imply any approval or endorsement of the information by Allianz Global Investors Asia Pacific Limited contained in the redirected website nor does Allianz Global Investors Asia Pacific Limited accept any responsibility or liability in connection with this hyperlink and the information contained herein. Please keep in mind that the redirected website may contain funds and strategies not authorized for offering to the public in your jurisdiction. Besides, please also take note on the redirected website’s terms and conditions, privacy and security policies, or other legal information. By clicking “Continue”, you confirm you acknowledge the details mentioned above and would like to continue accessing the redirected website. Please click “Stay here” if you have any concerns.