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Perennial Possibilities for Agriculture

Jun 16, 202325 min
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Episode description

Agriculture, forestry and land use are among the most climate-sensitive areas of our economy. They also account for almost a quarter of global greenhouse gas emissions, which begs the question: Can anything be done to reduce farming’s sizable carbon footprint? On today’s show, Dana talks to Caroline Lewis, an analyst from BNEF’s Sustainable Agriculture team, about perennial crops, one possible solution. Together they discuss the benefits of multiyear lifecycles, the evolution from annual to perennial cereals, and how these crops could aid carbon sequestration while also reducing overall emissions in the sector. 

This podcast drew upon themes found in the BNEF research note, Perennial Cereals: The Root of Regenerative Agriculture. Complimentary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal, on bnef.com or on the BNEF mobile app.

See omnystudio.com/listener for privacy information.

Transcript

Speaker 1

This is Dana Perkins and you're listening to Switched on the B and EF podcast. So today let's step outside the office and let's go down to the farm. Agriculture, forestry, and land use account for twenty three percent of global greenhouse gas emissions. And given how essential this sector is, after all, you and I both like food, action is desperately needed in what is one of the most climate

sensitive areas of our economy. In today's episode, we look at one potential solution within the agriculture space perennial crops. While most crops and cereals have an annual life cycle, perennials have a multi year lifespan and with that longer life comes the possibility of a reduced carbon footprint. But can perennials compete with their annual counterparts and just how do they work well. To find out more, I sat down with Caroline Lewis. She's an analyst from bnaf's newest team,

the Sustainable Agriculture Group. Together we discuss a range of topics, including the different varieties of perennials, how they breed and where there be farmed. We also discuss how perennial crops could actually aid, carbon sequestration, the intellectual property ownership of the technology, and the players behind the market. If you like this podcast, make sure to subscribe to receive updates for future episodes, and if you're listening to us on

Apple Podcasts or Spotify, consider giving us a review. Today's episode was based on research that's found in a research note from BNAF titled Perennial serials The Root of Regenerative Agriculture, and this was written by Caroline Lewis. BNF subscribers will be able to access this research note at BNAF, on the Bloomberg terminal at BNF dot com, or on our mobile app. But right now we get to hear my conversation with Caroline about perennials. Thank you for joining today.

Speaker 2

Name problem. I'm glad to be joining you.

Speaker 1

So we're going to talk about agriculture, but specifically crop rotation or maybe lack thereof. So can you help us set the stage a little bit, explain what our options are from a crop rotation at a standpoint.

Speaker 3

In current systems, there are three primary crops which we consume globally, so that is wheat, maize, and rice. Those are three main crops that are grown worldwide and they actually make up about sixty percent of consumed calories globally.

Speaker 1

Wow.

Speaker 3

So those are the three primary crops and some years will have those crops grown in fields year on year, and obviously this creates a huge lack of diversity. So that's why crop rotations are important, is to sort of bring diversity back into the soils and prevent disease build up through to the next crop.

Speaker 1

And also, I would guess pests are an issue.

Speaker 3

Yeah, so pests are an issue, and that's why we've had the development over recent years of many pesticides and herbicides, with ninety eight percent of pesticides not actually reaching their target species and being washed out into the rest of the environment. So they're having a huge impact. So it's really important to bring a diverse mix of crops into the rotation to prevent this.

Speaker 1

So what are perennial crops then, Yeah.

Speaker 3

So perennial crops are you would have come across perennial crops in the form of apple trees or blueberries and raspberries, those are perennial crops. But what we're looking at here are perennial cereals and they're really exciting because they are cereal crops that don't need replanting year on year, so

they survive for anywhere between three and four years. They're still in development, so we need to understand this in a bit more detail, but yeah, they can essentially survive for multiple years without being replanted, which is really exciting.

Speaker 1

You stay, there's still in development. Does that mean that they are genetically modified crops and therefore, sitting here in Europe, would they be something we'd be allowed to actually plant.

Speaker 2

Yeah, that's a really interesting question.

Speaker 3

So perennial crops have actually been developed over the past forty fifty sixty years. They've been in development for a long time, and actually they are developed using selective breeding techniques, so it's not GM And one of the key institutes in the States, called the Land Institute, are developing perennial wheat, and then another institute called Wan University in China is developing perennial rice and that has been one of the most successful thus far.

Speaker 1

So you've explained what perennial crops are, but really, what is the existing problem with the rotation? Why is this such a hot button issue to fix?

Speaker 3

So one of the key issues with annual crops is the fact that they are very intensive, and intensive systems are not going to be able to sustain themselves going forward. So we've got issues around water use, we've got issues around land use change, and we've also got a huge issue with being able to provide enough food with the land that we've got. And one of the things with intensive systems is that we are degrading a huge amount of soils. And one thing that we're hoping perennial crops

could do is solve this issue. And actually, because of their certain traits, so they've got bigger roots and larger shoots. What we're thinking one of the key attributes here is that they can grow in more extreme environments and hopefully rebuild soils so regenerate those areas which have been used intensively.

Speaker 1

So it seems like that those that are developing this space are thinking about it from an economic standpoint as well, because you want to be able to continue to use

the land for a longer period of time. And when you talk about intensive farming and soil degradation and the issues that are facing farmers, are these facing them in the next three to five years, seven to ten years or longer, because I would imagine that if it's in the nearer term as a farmer, you'd be more interested in making changes and experimenting than if it felt like a far out and distant problem that might affect the next farmer.

Speaker 3

So it's actually estimated that the average farmer will have sixty harvests yet left in the way that we're managing soils currently, So that's sixty years of agric culture in the way that we are doing it today. So there is definitely need for change. Sixty years may sound like a long time, but you've got one chance once a year as a farmer to do all of those steps, So from planting to harvest, it's one opportunity. And I think a lot of farmers are seeing that they need

to change and do something different. And you've got a lot of people moving towards these mentail systems and direct drill systems because they're seeing that they're having an effect on their land and on their soil. And this is a change that people are recognizing. And I think the big barrier that we're experiencing with perennials is the fact that their yield is a lot lower than annual crops, and that's why we need investment and development in the

gene editing aspect of it. Essentially, we need that to grow so that yields can catch up with annual crops.

Speaker 1

Earlier in the show, at the beginning, you reference the different types of crops that the majority of the world eats in quite high volume. So rice, wheat, and maize. Let's go into each of those in a bit of detail. So what is the well the problem and more importantly, what is the potential for employing these methods with rice specifically.

Speaker 3

So rice has been the most successful of the perennial crops under development today, and these actually have a higher yield than their annual counterpart, and this is only very slight, but essentially they are just as competitive. And one of the big opportunities with perennial rise is they can reduce methane emissions and also reduce those carbon emissions. It's been estimated that this is about half they half those emissions,

which is huge. They're grown across several areas in Southeast Asia and we're expecting for this to continue in their growth.

Speaker 1

Okay, so then how about wheat. I'm originally from the US and I definitely think of wheat farming is one of those things when I think of large farms and these at scale methods with tilling, that is definitely something I picture in my head. How is the innovation coming in that regard.

Speaker 3

With wheat, it has been a bit more of a struggle. One thing which is worth highlighting with the rice crop is they have a natural ability to regrow and what the selective breeding programs have done is enhance that regrowth gene. However, with wheats, we really don't know what is controlling the regrowth. As I said, there are several genes that are controlling this element of regrowth. So they've actually got a very

low yield right now. I think their yield is around zero point eight of a ton per hector compared to six point four tons per hector of annual wheat. So you can see there's a huge difference there in yield. However, one thing that I'm hopeful for is that this crop will continue to develop and improve over the coming years.

Speaker 1

And then last but not least maze and actually I don't know what MAZE goes into. I'm going to really start at the very top level there. What are we consuming mays for and what does it make?

Speaker 2

Maize? Could make your corn flakes?

Speaker 1

Oh right, well, why I thought that was weak? Yes mazes. Okay, maze is making my morning breakfast today. I ate it and not didn't realize. Okay, so maize. Wow, that's really sad.

Speaker 2

So maize.

Speaker 3

They have developed perennial maize, but they are very uncertain about whether it's safety eat. They haven't yet put it in field trials, so essentially it's in its infancy. It's right at the bottom in terms of development. However, they have seen that it can regrow, and they've also seen huge potential in terms of its resilience. They've seen essentially because they're breeding it with a wild counterpart, that's how

the breeding program works. They've seen that it's actually inherited a load of traits from the wild parent and it's become resilient to about seven major diseases in the crop. And they've estimated that this could be worth around four billion in terms of growth and yield improvements to come in May.

Speaker 2

So it's a super exciting crop. We just need to develop it.

Speaker 1

So you reference that it may not be safe to eat, please expand on that, because I want to know what might be happening to my morning corn flakes, and you know what sort of hoops I guess from a government regulation standpoint, they're going to need to go through in order to prove that it is.

Speaker 3

So it all has to go via the USDA and get approved from them for consumption in the States, and usually once it's gone through the USDA, it's approved. In many other nations, they've sort of got fairly stringent regulations.

Speaker 2

However, the one.

Speaker 3

Thing with perennial maize is that because they're mixing lots of other genes together, they kind of need to profile it and check that it's safe before it's sent to human consumption.

Speaker 2

So what they're waiting for is.

Speaker 3

For firstly for a successful crop to be developed before they take that step, and then once that is achieved, they can go through the approval process.

Speaker 1

I wanted to know where in the world we're seeing uptake because I imagine that barmeerstocks to each other and within certain communities, certain things are getting traction or not getting traction, and that may be hyperregional.

Speaker 3

So definitely with perennial rise, that has gained traction around South Asia, so across China, some parts of India, and actually we are seeing it being grown in Uganda as well, so that's exciting. It could reach parts of Africa over.

Speaker 2

The next few years.

Speaker 3

And with perennial wheat, we're seeing that grown across Kansas, Wisconsin, several parts of the states now with perennial maze that is yet to be developed. They have got a perennial maze variety. However, the yield is extremely low, and to prove that it is perennial, you actually need at least three or four years of it being grown, so it takes quite a long time to determine whether it is

firstly a successful crop, whether it's truly perennial. So I think hopefully you can start to see here how it's actually such a long process. It's not like you can say after six months, oh, we know if it's a success or not, because obviously it takes a long time to get around to harvesting and growing.

Speaker 1

So looking at carbon sequestration and the benefits the perennial crops can really have, can you explain the process and how perennials really do this, What is the science behind it?

Speaker 3

Yeah, and that's what's so exciting about perennials is they do offer a huge opportunity to sequest a carbon. And essentially how carbon sequestration works is it's locking up organic matter and soil. Carbon in the soil, so it's taking atmospheric carbon through a photosynthesizing plant and as it grows actually in its biomass, that is locking up the carbon.

And this is one of the key opportunities that perennials hold because their roots can reach between two and two and a half meters deep in length, so that's a huge amount of mass underground. So that is why perennials offer such a huge opportunity to sequest a carbon.

Speaker 1

So to put it really simply, if the carbon is in all of these plants and they're in the ground longer, it's just it's not in the air. There's less carbon in the air.

Speaker 2

Yeah, precisely.

Speaker 3

And the way in which it transforms into that more stable carbon is through decomposition. So you have all of your microbes working for you breaking down that material. Some of it will be loss of the atmosphere. About two thirds of the carbon which is locked in plants is actually released back into the atmosphere through decomposition, but a third of it is retained in the soils.

Speaker 1

I mean, this is all part of a normal natural cycle. So when you're talking about disturbing the soil, replanting and it releasing back into the air, how do perennials like truly reduce in addition to their roots and how much they can hold over time, how do they really reduce other forms of release?

Speaker 3

Yeah, so due to this no tillage method, obviously, it means that there's lack of disturbance of the soil. And what happens in normal system is they go through and plow up the fields and as they do that locked up carbon in the soil is exposed to the atmosphere and this carbon oxidizes and is released as carbon dioxide. But with a perennial crop, obviously you're not turning the soils, and this means that more carbon is locked up.

Speaker 1

So when I'm thinking about farming methods and I'm actually thinking about my food sources, one of the things that comes up is methane, in particular in regard to livestock. And often we use the term carbon synonymously with one of the lead causes of climate change and therefore, it's all about carbon reduction and decarbonization. Is it really carbon in this space or is it methane and other greenhouse gases that we're actually keeping an eye on When it comes.

Speaker 2

To crops, that's a really interesting question.

Speaker 3

And approximately sixty percent of row crops that we grow across the world go to feed animals, so we can see how that is a huge link between livestock and crops, and the thing that we are talking about here is a mixture of to actually we're reducing emissions that come as a result of annual cropping via this perennial system. So, for example, it's been seen in the perennial rice systems that there's been a sixty percent reduction in inputs and labor.

So obviously, by reducing inputs, you're going to be reducing emissions. You're applying fewer fertilizers, fewer pesticide, and you're also using less fuel when you're growing these crops. But when it comes to the livestock and methane side, we've also seen with perennial wheat that you can graze that as well as harvest it. It has this what they call a dual purpose so it means that you can graze it and it's not having a detrimental effect on the yield.

So there's actually sort of like a two sided impact there, which is exciting.

Speaker 1

That is exciting. We've talked a lot about three specific crops. Are there any other crops that I should be keeping my eye on?

Speaker 2

Yes? I think there are.

Speaker 3

We have seen some exciting movements around Perennial Barley and this is actually being developed across some Nordic countries by Carlsberg, So I think we could see some movement there. And it's not just Bali. The Land Institute are working across many other cereals as well.

Speaker 1

There are government bodies that will ultimately decide whether or not this is something that reaches all of our tables breakfast, lunch, or dinner. And then how about the companies that are actually involved in this. So let's say if the US FDA essentially sets the tone for adoption in many parts of the world, what are the companies that are really bringing this to scale? Actually, if you could walk me through upstream and downstream and who's really got to handle on this.

Speaker 3

So it really varies between the crops. There's different bodies managing each one mostly because they are grown as he said, they're grain regionally. For example, with perennial wheat, this is managed and developed by the Land Institute.

Speaker 2

So they are.

Speaker 3

Developing perennial wheat and they're also developing the perennial maze as well.

Speaker 1

What is the Land Institute.

Speaker 3

It is an non for profit institute which is looking at developing perennial Cropskay truly focuses on perennials and they are the key people behind perennial wheat and maize. However, they are also forming partnerships with both growers and supply chain buyers. So Kanza, which is the variety of perennial wheat which the Lands Institute is growing, they have copyrighted that name and that is grown across one than six hundred hectares in the States currently, so it's.

Speaker 2

Not a huge area.

Speaker 3

It's really in its infancy. But what those growers are looking to do is to target a premium market to sell that crop, and what the Land Institute want to do is they want to help them do that and they have been connecting them with suppliers further down the streams such as General Mills, who a few years ago invested some money to help the kickoff of Kernza across many areas. However, are not so involved anymore because there were unfortunately a few years of poor harvest and poor

crops across the states. So they've had to withdraw their funding, but we never know they might come back.

Speaker 1

So then I'm thinking about the economics, and I'm thinking about one of the topics it's very hotly discussed at the moment, which is voluntary carbon credits. So in the

carbon credit space, there are the questions around additionality. Are there projects that are actually going to take carbon out of the air and put it into the ground, perhaps, just like in this circumstance that companies that are emitting can actually pay for If we're at a place where these farming practices are taking off on their own, I certainly don't see the additionality there in terms of paying

for it. However, in this development phase, is there a place for carbon credit schemes to essentially drive more favorable economics for perennial crops and for them to you know, serve I think everyone's familiar with this idea of tree planting, but how about crop planting as a form of carbon credits.

Speaker 3

Yeah, I think there certainly is the opportunity with perennial crops. We can actually see it happening at the moment with annuals and have this addition of sequestering a lot more

carbon and requiring a lot fewer inputs. So one thing that has developed over the past six months, six twelve months is the Land Institute have been in contact with the USDA and they are actually putting KERNSA into the Comet Farm System, which is the life cycle assessment tool for agriculture in the US so that will enable carbon assessments of KERNSA and going forward, this could mean that it is included in voluntary carbon markets potentially moving forward,

and it could mean that growers can receive a monetary payment for growing their perennial crops.

Speaker 1

Just driving back to the economics, we've referenced the potential for carbon credits. We've referenced some of the companies that are actually looking at this as well as nonprofits. But in the government space, there is government approval, But are there governments that are actively trying to promote this sort of development because they also see the scale of the problem.

Speaker 2

Yeah, I think that's a great question.

Speaker 3

And in the States they are looking at bringing perennial crops into some of their conservation schemes. This is the only example I've seen in the UK. Here we do have schemes where perennial crops would fit in, but they're not explicitly listed. And I also think it's something that growers need to recognize that these could actually have a benefit to their farming systems, you know, build the resilience

in their soils and also sequesta carbon. So I think that's the direction I see it moving in in terms of who has some responsibility there. But also interestingly, there are quite a few barriers in the States with growing these crops, and that's around the insurance of crops there. So essentially, if you grow an annual crop, you can get insurance for that crop, but if it fails or

if the yield is lower significantly lower than other areas. However, perennial crops are not listed for insurance, so that obviously creates a big barrier.

Speaker 1

So farming is a highly fragmented space from the grower's perspective, and what are some of the barriers that would actually or are actually stopping these methods from getting traction at that level.

Speaker 3

Yeah, so I think one of the barriers is definitely investment. There is a lack of investment and interest in these crops.

Speaker 1

So investment in the technology or investment in education and awareness, I.

Speaker 2

Think a mixture.

Speaker 3

I think investment in the technology to make these crops higher yielding is probably the first key action that needs to be taken. But then following that actually getting growers to understand that the tradition of crops being annual isn't necessarily the only way of growing cereals.

Speaker 1

I mean, because ultimately this needs to be good for the planet and good for farmers. And I guess then my question is you seem fairly optimistic about this technology. Do you think that it will be able to, with enough develop and over time, strike that balance where it's the best of all things or will there always be some sort of trade off.

Speaker 3

I think in the future there will be a balance between both annual and perennial crops.

Speaker 2

The key thing with the lights of.

Speaker 3

Wheat and maize is that they do need to have their yields improved before we can see wide adoption. However, I do think even today, in many areas where there's degraded soils, we could have cans are growing because they are more robust and they can be grazed. So actually, in those sort of more marginal areas where soils are less healthy, I think we could have those crops growing and them returning some sort of gross margin back to the farmer.

Speaker 1

It's kindsa the only currently patented one of these at this time.

Speaker 3

Yes, yes, so Kansa is the only patented wheat. However, they are also developing another type of perennial wheat, so I'll briefly explain there's two different ways of breeding canza and perennial wheat. So Kanza has been bred by taking the wild wheat grass and breeding that to give us a higher yield over time, whereas perennial wheat is being developed by crossing the annual counterpart and the wild relative. So that's actually breeding two species together and creating a hybrid.

And I think the hope in the future is that Kansa will remain more of a wheat grass variety, and it may never achieve the full yield potential that annual crops do. However, I think they are hoping that the hybridization will achieve that high yield.

Speaker 1

Well, we've certainly taken a step today in terms of trying to spread the word regarding the potential for perennial crops. Maybe we'll get a farmer too listening to the podcast today. But certainly for those who are listening and for me, hopefully they have learned something that we didn't know when we started the show. Thank you very much for joining today and explaining what perennial crops are and the potential that they hold.

Speaker 2

Thank you very much, Dana.

Speaker 1

Bloomberg n EF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed as investment advice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg an EF should not be considered as information sufficient upon

which to base an investment decision. Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any liability as a result of this recording is expressly disclaimed

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