There are all sorts of incentives for best practices in many areas. If you don’t smoke, you pay less in life insurance. If you haven’t had any traffic tickets, you pay less in car insurance.
Now there is a movement to do something similar in agriculture: give better lending terms to farmers who are using “good soil practices.”
Good soil practices go far beyond the usual NPK (nitrogen-phosphorus-potassium) fertilizer treatments. They involve such measures as cover crops, no-till or conservation tillage, and crop rotations.
Everyone may agree that good soil practice is beneficial to all, but it can be difficult to quantify these benefits to growers who have to microscopically scrutinize all of their costs, especially since the benefits may take years to materialize.
“Although there is a general understanding that healthy soils can mitigate risk in agriculture (by increasing resilience to flooding and drought, etc.), institutions that price risk, such as banks and insurers, do not yet have a clear and effective way to incorporate these benefits into their risk pricing today,” according to Land Core, a nonprofit organization dedicated to promoting soil health. Programs — Land Core
Land Core is developing a risk model that will provide just such information. It is intended to be “a pragmatic decision-making tool to inform agricultural finance and insurance” that is “actuarially sound.” It will be “able to assign a risk score based on an individual producer’s soil health management plan.” Land Core Risk Model Overview.pdf – Google Drive
“Lenders and insurers have a lot on the line,” says the company’s website, pointing out that $467 billion was extended in agricultural loans in 2022 and that federal crop insurance costs $9 billion annually.
The model uses “remote sensing and biophysical data on cover cropping, tillage, rotational diversity and other practices, paired with climate, soil and yield.”
As so often happens in American agriculture, the large commodity crops dominant in the Midwest, such as corn and soybeans, are the principal focus, with a pilot program and rollout beginning in that region.
It may be a while before Land Core gets around to specialty crops. Even so, it is one of many agents that is trying to ensure that “good soil health” is no longer to be spelled “NPK.”
