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How do we judge farm performance in a net zero world?

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Jon Dearsley at Savills Savils consider metrics to use to judge farm performance in a net zero worldIn this guest piece Jon Dearsley (pictured left), Head of Natural Capital at Savills considers the metrics we could use to judge land use in a net zero context.


The recent Climate Change Committee progress report highlighted how much work there is to do to align agricultural policy with net zero objectives. One of the key recommendations was that alongside land use change for carbon sequestration and biomass, was a need ‘to get more from less’ on the land that we have available for producing food. This rather suggests that tonnes of wheat produced per hectare remains the primary determinant of farm viability in a net zero world.

It is obvious that using a single-metric, such as yield, in decision making around land could produce some very perverse outcomes and is rather the problem that has got us to where we are now. Land ‘spared’ by intensification could be released to alternative uses, of course, but the land retained in intensive usage has no greater guarantee of sustainability than before, and arguably it could be less resilient than before if yield enhancements require more inputs or more interventions to deliver.

So what metrics should we be using to judge land use in a net zero context? If carbon truly is the limiting factor in land use decisions, as suggested by environmental policy and land investors’ net zero ambitions, then measuring the land-based carbon balance (emissions v sequestration) per year will be desirable. However, this will only work to judge farm performance whilst carbon sequestration can be factored in as a revenue stream to counteract the loss of income elsewhere, and only until habitats are at maturity. In terms of assessing production efficiency, tonnes of CO2e per tonne of wheat or litres of milk produced seems more logical.

wheat
Is the level of CO2e per tonne of wheat a logical metric to assess farm production efficiency in a Net Zero world?

Of course, these metrics assume better results lead to better financial outcomes, which in many cases of environmental performance they do not. The pollution pricing mechanisms that would be needed are likely to be hard to create and almost impossible to enforce. Supply chains may be able to start creating incentives from impact metrics where they can also be linked to yield. Milk for example will have a carbon range of 900g to 1200g of CO2e per litre of milk produced. If a carbon ‘tax’ of £50/t were factored into the price paid to the farmer, a litre of milk with a carbon emission of 900g/litre should be worth 1.5p per litre more than milk with a 1200g/litre carbon emission.

The challenge is, of course, that these metrics drive efficiency and intensity of production, when many proponents of regenerative farming would argue that nature can be relied upon to optimise its own systems of production. For those on the first step to more sustainable farming, abandoning yield per acre as the primary motivator will be the first big psychological barrier to cross. For those looking at a completely alternative view of the health of their farms, much more complex KPIs are needed that reflect inputs, diversity and soil health together.

Progressive metrics need to be tailored to each farm and designed to improve overall resilience, whilst helping businesses understand which resources are key to their future success and invest accordingly. Benchmarking performance with other farms would be useful, but the huge variation in size, sector and type of farm means this is difficult to achieve across all land use. Accounting consistency will enable a simple year on year comparison for individual farms, but assessing carbon impact per pound of profit generated could be one metric that would allow all farms to compete on a level playing field.

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