Regenerative agriculture is an approach to land management that restores degraded land to its full fertility and function. This practice nourishes the land, resulting in healthy nutritious food for the end user.
There are no strict rules to follow, but the principals behind the system of regenerative farming are meant to restore soil and ecosystem health, leaving the land and the climate in better condition for future generations. The practice of regenerative agriculture is in direct contrast with the industrial agriculture system that has been practiced for many years. The industrial system has been the major cause of soil erosion, nutrient runoff, air pollution and algae blooms in our freshwater system.
Regenerative farmers make every effort to reduce the use of synthetic inputs such as herbicides, pesticides, and chemical fertilizers. By eliminating the use of these harmful products, the farmers have witnessed the increase of beneficial insects and wildlife, which results in a more resilient ecosystem. As the soil becomes healthier the cost of production becomes less, and there is a great benefit to human health.
Here are the 5 principles of regenerative agriculture:
You can choose the best enterprise mix for your farm or ranch by evaluating the following factors.
GROSS MARGINS: Figure out your gross margin (revenue minus direct costs, excluding overheads) for each class of livestock, each crop and the equipment each one requires. Divide gross margin by the number of acres the enterprise uses to determine gross margin per acre. Taking acreage away from a low gross margin use and allocating it to a competing high gross margin use can turn a struggling farm around.
SPECIALIZATION: Choose complimentary enterprises that share the same expense (barns, equipment, etc.), use one another’s by-products, and have a high ratio of profit to work hours. If you are finishing grass beef, you can reduce cost and increase profit by buying big calves and spend a couple of months finishing them on grass instead of wintering them and incurring winter feed bills.
TURNOVER: Turnover is defined as the number of units produced in each time period. If you have room for 20 cattle on your place and you keep them all year, that’s 20 units. Going with a trading enterprise over a home-raised one can really boost turnover. Say you have grass to support 20 cattle, but you flip 3 groups per year. You just sold 60 units in a year instead of 20! You have tripled the “size” of your operation without having to acquire and maintain triple the land, machinery, and infrastructure.
Whether you’re starting a new operation or transitioning a conventional one, step one must always be to create a viable business plan. Do not assume you’ll just figure it out as you go along. Even more importantly than that, do not proceed if the numbers don’t work. The purpose of planning is to save you money, time, and stress and to ensure that you meet your goals. Your business plan is bound to change as time goes by, and it should. At least once a year, you should adapt it according to what’s going on in the world and what you’ve learned. Regenerative management is all about being adaptive.
The right enterprise mix for your farm can only be determined through economic analysis and planning that is specific to your situation. If you don’t know how to create or interpret a business plan, we at Farmgate Advisors are here to help you plan your capital budget, operating expenses, and if necessary find sources of money when needed.
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