S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
Solutions
Capabilities
Delivery Platforms
News & Research
Our Methodology
Methodology & Participation
Reference Tools
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Featured Events
S&P Global
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
S&P Global Offerings
S&P Global
Research & Insights
S&P Global
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
About Commodity Insights
Solutions
Capabilities
Delivery Platforms
News & Research
Our Methodology
Methodology & Participation
Reference Tools
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Featured Events
S&P Global
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
S&P Global Offerings
S&P Global
Research & Insights
S&P Global
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
About Commodity Insights
15 Apr 2024 | 14:18 UTC — Insight Blog
Featuring Jonathan Shoham
Agriculture has a greater impact on the environment than any other human activity. It uses more land than any other human activity, resulting in deforestation and the loss of biodiversity, it uses more water -- around 70% of freshwater is used globally -- and it is responsible for around 24% of greenhouse gas emissions.
Concerns about the environmental impact of agriculture have grown in recent years, and this has resulted in the rise of, among other adaptations, "regenerative agriculture". The term "natural capital" is bandied around frequently and featured prominently in the Food and Agriculture Organization's State of Food and Agriculture 2023 publication.
Governments are increasingly linking agricultural support -- the global value of which exceeds $350 billion, according to the Organization for Economic Cooperation and Development -- to environmental performance. In the UK, £2.4 billion has been earmarked as payment for the delivery of environmental public goods. In the US, the Conservation Reserve Program has operated since 1985 and can pay farmers collectively up to $1 billion or more, depending on the year. A database assembled by authors of a recent paper in Nature Food lists over 6,000 agri-environmental measures across the world.
Farmers benefit from environmentally-linked support, and can also earn income from so-called carbon farming by generating carbon credits and plugging into carbon markets. This is country- or region-specific, with the US having the most developed scheme. Many organizations are trying to help farmers in this area, but one challenge is that the prices of carbon can be very volatile and influenced by political decisions. Prices have also fallen over the last year, according to data from S&P Global Commodity Insights.
At the organizational level, many companies have made carbon commitments, with some having specific targets and initiatives. Assuming these companies are representative of companies across the agri-food chain, the following conclusions can be drawn:
While some crop inputs, such as fertilizers and crop protection products, are seen as deleterious to sustainability, they also have a major role to play: first, in helping to mitigate the negative impact on the environment of agriculture overall, and second, in adapting to a changing climate. Conspicuously, seeds do not have any associated negative environmental impact and have enormous potential to contribute to both mitigation and adaptation -- they are a universally good thing.
The single most important contribution crop inputs have to make to the mitigation of environmental impact is through increased crop yields. The higher the yields, the less the impact per unit of output on the environment -- whether it be water (crop per drop), land (sparing vs sharing) or the atmosphere. This is in line with the concept of "sustainable intensification" promoted by the FAO.
When discussing yield, it is important to distinguish between improvements that can be obtained by applying current best practice and those that relate to innovation.
When it comes to best practices, there are contributions to be made to improving yields from seeds, fertilizers and crop protection.
Where they are not already used, modern seed varieties and hybrids can substantially increase yields. In some parts of the world, notably in Africa, fertilizer use is sub-optimal and there is significant scope for increasing their use and crop yields, although there are significant infrastructural constraints to increasing fertilizer use, such as long transport distances resulting in expensive product.
Digital farming -- a suite of hardware and software technologies applied to agriculture including drones, robotics, sensors, satellite imagery and farm management software -- has a role to play in facilitating best practice by allowing better use of existing inputs and leading to marginal yield improvements.
When it comes to improvements in crop yields through new technology or innovation, seeds have most to offer. It has been estimated that around three-quarters of the improvement in crop yields achieved through the application of new technology can be attributed to seeds. This is reflected in the fact that research and development investment in the seed sector as a percentage of sales far outstrips that in both crop protection, where it is still relatively high compared to other industries, and fertilizers, where it is very low. R&D investments in seeds have resulted in many new technology becoming available, including new genomic technologies such as CRISPR Cas9.
With crop protection, there is scope to improve yields through innovation. There are 40-50 new active ingredients in the industry pipeline, and a major focus on finding new modes of action. However, the yield improvement obtained tends to be incremental at single-digit percentage points.
Moving away from the harnessing of yield gains to improve environmental performance, the correct use and production of fertilizers and crop protection products can make an important contribution to a net reduction in environmental impact.
There are specific measures in each area:
While mitigation limits the increase in global warming, a certain amount seems inevitable. The consequences of climate change -- more extreme weather with higher temperatures, droughts and floods -- will require farmers to adapt their practices and need industry support to do so.
There are many other specific interventions that can be made in the agriculture sector, both in mitigation and adaptation, to address environmental changes.
If the environmental impact of crop inputs is to be limited, or even reversed, the policy dimension will be very important. At the societal level governments are increasingly linking agricultural subsidies to agri-environmental measures, as well as establishing carbon trading schemes. At the organizational level, companies are setting targets and making commitments to reduce their impact on climate, biodiversity and water. At the level of the individual, farmers can adopt regenerative agricultural practices and generate carbon credits.