Regen ag investment pioneer SLM posts 40% AUM growth driven by US institutional interest, reveals first carbon assessment

• More merchants are backing regenerative agriculture in line with natural asset supervisor Sustainable Land Administration (SLM), which appropriate released its fourth-annual influence file and first-ever portfolio-huge carbon accounting file.
• SLM says its property below management (AUM) has grown 40% year on year across its heaps of funds apart from separately managed accounts.
• Carbon accounting unearths an estimated 100,000 a total lot CO2e [carbon dioxide equivalent] sequestered in soil and vegetation in 2023.
• Carbon sequestration estimates outweigh carbon emissions in SLM’s real asset portfolio due to regenerative management practices.

Mapping investor hobby in regenerative ag

“There are great more merchants who desire to make investments in regenerative agriculture and forestry, and we search that with AUM rising by 40% year on year,” SLM managing accomplice Paul McMahon tells AgFunderNews. “It’s undoubtedly a feeling of accomplishment on our aspect that we’re getting backing for something we’ve been talking about for rather a whereas.” SLM used to be founded in 2009.

That AUM growth, says McMahon, has took place across a few funds and systems in the US, Europe and Australia.

“Perchance the largest growth is in working with successfully-organized institutional merchants at successfully-organized pension funds and insurance coverage firms, and moreover some rather successfully-organized family workplaces,” he adds.

SLM for the time being has $610 million AUM and 306,066 hectares of land below management. Whisper has took place across a unfold of regenerative farming strategies that fall into four predominant areas:

• Growing natural annual vegetation to prick reliance on pesticides, GMOs, growth hormones and heaps of extinct practices
• Growing regenerative practices for permanent vegetation equivalent to tree nuts to lengthen biodiversity and reliance on external inputs
• Steady duvet forestry, which depends on natural regeneration and fluctuate versus monocultures of inviting and planted bushes
• Holistic deliberate grazing of farm animals.

As an illustration, in the US Midwest, SLM partners with native natural farmers on long-term leases and helps them convert the land to natural.

“We instruct up one successfully-organized program in the US Midwest, and then we were in a position to lengthen that to the West Cruise of the US closing year with one other institutional investor,” says McMahon. “We moreover did a new investment in the Excessive Plains space, again with natural grains, backed by a family workplace.”

He notes that total AUM in the US is around $400 million, or roughly two thirds of SLM’s total AUM.

One other huge home for growth is SLM’s blended-farming challenge in Australia, an initiative McMahon says involves using regenerative farming to both give a boost to productiveness and generate carbon credit to sell in the native Australian market.

For this challenge, SLM created a joint challenge with Affect Ag Companions, an established farm operator and natural capital firm.

“Thru that we were in a position to entice a successfully-organized separate chronicle backed by a family workplace, and make two rather successfully-organized acquisitions in Novel South Wales,” says McMahon.

Carbon: ‘An extra profitable upside’ to regen ag

One of SLM’s targets as outlined in the file is to flip land into carbon sinks apart from lengthen regenerative practices via carbon markets that might maybe “present an extra profitable upside” for land management.

SLM’s portfolio-huge carbon accounting for 2023 unearths an estimated 100,000 a total lot CO2e sequestered in soil and vegetation, which is identical to the emissions from 23,000 barrels of oil. Carbon sequestration is outweighing its emissions in the cases concerned, the firm says.

Australia, which has aggressive targets to lower its carbon emissions by 40% by 2050, is a considerable market for SLM on this home. The firm reports having sold 1.8 million carbon credit in Australia between 2016 and 2023.

“Australia has a completely-developed, regulated carbon market, which is making an try to encourage landowners and farmers to participate,” says McMahon, adding that credit are sold as offsets into native regulated markets.

Final year moreover seen a shift in Australian carbon markets.

“Within the beginning, the Australian government used to be the purchaser of these credit via long-term off-takes,” explains McMahon.

Now, there’s a new expect “where corporates in Australia have a ambitious expect for credit. Reasonably a few the massive emitters now have obvious caps and so they must meet obvious targets. So we’ve considered a shift some distance off from the federal government as purchaser to corporates, and we’ve considered a ambitious lengthen in prices as a outcome.”

Australia is “great more developed” in relation to carbon markets when when compared with heaps of aspects of the world, he says. Then again, SLM has initiatives in heaps of regions, including a pilot challenge in the US and one in Spain and Portugal where the firm is working with Local climate Farmers to measure carbon on orchards. (Outcomes of the pilots are drawing near near.)

Worth mute a basic verbalize for carbon

Measuring, reporting and verification, no longer to order the price of such tasks, is an ongoing verbalize for carbon farming anywhere on the planet.

Technically talking, measuring soil carbon is no longer tough, says McMahon. Financially talking, on the different hand, soil sampling is difficult to give an explanation for in some cases due to the upfront label of doing it.

“Within the US Midwest, the price of sampling per acre is no longer prohibitive and we hope we can obtain that payback for having the skill to generate and sell credit over a five-to 10-year length,” he says. In incompatibility, in Australia, “whereas you’re going to design corpulent, appropriate soil carbon size across 300,000 hectares of land with rather a few variability of land forms and your soil and terrain, it turns into very costly, and it’s more challenging to obtain that payback.”

“The ask is, ‘How design you obtain the price down?’” he says. “How design you marry soil carbon sampling inner modeling approaches and some distance off sensing to take a leer at and obtain that label down? The place does the payback attain from? What number of credit are you able to generate per hectare? And what label are you able to expect to obtain and therefore what’s the breakeven?”

McMahon says these are mute questions the synthetic is making an try to work out, and that solutions will differ from one geography and land form to the next.

There might maybe be doubtless to design carbon-fair pork

One shock used to be the skill to sequester rather a few carbon from farm animals production appropriate by adopting regenerative grazing systems, says McMahon.

In Australia, SLM has invested in a arrangement called “holistic deliberate grazing” that involves dividing land up into smaller fields, investing in fencing and water and transferring animals round.

“Other folks deem pork cattle emissions are a huge verbalize, and sure there are undoubtedly emissions connected to that category,” he says. “Nevertheless what we stumbled on is that it doesn’t take rather a few carbon sequestration in soils and vegetation to offset these emissions.

“We now have a carbon challenge which handiest extends to a few quarter of our Australian land portfolio, but they are intensively monitored and measured and producing verified credit. And even appropriate a quarter of these verified credit were bigger than ample to outweigh the emissions of the corpulent herd across your total portfolio.”

“That provides us more confidence on these extensive landscapes,” he adds. “Whenever you happen to obtain your management appropriate, there is the ability to design carbon fair pork, which is somewhat thrilling.”

Farming mute ‘a tough substitute’

Any challenge fervent about regenerative ag this contemporary day has to attain with a minute of a disclaimer, suggests McMahon.

“We consistently have a minute contemporary of warning after we talk over with merchants coming to the home for the first time, in accordance with our experiences. We design search a obvious amount of greenwashing — all people’s rushing to say that what they are doing is ‘regenerative.’

“You might maybe actually inquire of what is occurring on the bottom. Is it substitute as standard or is it actually changing? In our file, we tried to instruct out very clearly what we’re doing, which is heaps of from extinct agriculture [and we have] very definite theories of commerce and note commerce.”

He moreover cautions in opposition to among the present hype around regenerative agriculture, “where you obtain new entrants coming in who nearly obtain seduced by the ability.”

“Farming is mute a tough substitute, and rather a few things deserve to be appropriate to make real investment returns, regardless of how regenerative you are,” he adds. “We’re making an try to be practical in the file about what works and what doesn’t work.”