Since the late 1700s, Australia has experienced massive land degradation, soil erosion and habitat loss. This environmental decline is placing increasing pressure on the ecosystems that support agriculture, highlighting the urgent need for sustainable land management.
However, while the concept of ‘natural capital’ is only beginning to gain traction, Australia has established several policies to encourage investment in natural capital, including through mandatory and voluntary environmental markets.
To find out more about the opportunities this creates for agri managers, we spoke with Brad Mytton, managing partner for food and agriculture at Roc Partners, along with Max Butler, vice-president in the same team, and Samantha Bayes, vice-president for responsible investing.
What are the global megatrends driving the focus on natural capital?
Max Butler: The concept of natural capital for food and agri managers has always existed from our perspective. This is not something new for us. The way that we have thought about natural capital over the past 10 years is that it’s a key risk and opportunity within our natural assets. As a food and agri manager, we invest into our assets to ensure they can produce food and fibre into perpetuity. That then drives returns for our investors.
There’s been a greater focus globally on the term ‘natural capital’, given the links between natural capital and climate policy and then environmental service markets. Agriculture, through nature-based solutions, is one of the ways that the world can decarbonize, and those projects or initiatives are linked to the underlying natural capital base of agricultural assets. Similarly, there are now more and more markets that are setup to tokenize natural capital qualities like carbon sequestration or biodiversity improvement, and that is driving a greater focus on natural capital.
What are some of the key ways that investors can invest in natural capital solutions?
Brad Mytton: Maintaining a consistent and clean supply of water is a key focus in livestock farming. In our Wagyu beef business, we have focused on protecting water sources, so cattle have access to the quantity and quality of water they need. And we do shelterbelt planting – the trees that we plant to generate carbon credits also provide shelter for livestock in periods of extreme heat.
Methane emissions from cattle is another big issue. There are numerous different additives that are available in the market that aim to reduce the methane released by cattle. We’ve run trials with some products in a feedlot setting, we’ve done lab-based testing and we stay abreast with what others are doing in the industry.
The way we like to approach new or novel technologies is to be a fast follower, rather than a pioneer – and we are doing that with our methane strategy with our Wagyu beef business.
Samantha Bayes: Another trend is the growing use of technology to optimise natural resource inputs and minimise environmental impacts. In our glasshouse business, for example, we can achieve significantly higher production efficiency. Glasshouse-grown tomatoes may yield 80 kilograms per square meter of land, whereas field-grown tomatoes may only yield around 7 kilograms per square meter.
That business has also had a significant focus on water. It employs state of the art individual dripper systems that deliver directly to each plant, enabling precise, controllable water and nutrient distribution. So excess water, which is approximately 30 percent, is captured by gutters installed throughout the glasshouses, and then treated using ultraviolet sterilization.
