Farmhand Community News #2
What I'm reading about in ag and why it matters
Howdy!
I hope that everyone had a refreshing 4th of July holiday, for those who celebrate (or at least tolerable, for those with anxious animals and neighbors with half as many fireworks as mine had🎆….Thundershirts for the win over here. Read through to the bottom to see anxious-but-still-cute Echo putting my foot to sleep.)
Denmark sets first carbon tax on agriculture (here from OEM, and here’s the actual Agreement in Green Denmark, both in Danish…Claude and I are working through reading and understanding it)
TL;DR: Denmark is trying to be the first country in the world (recall that New Zealand tried to pass a version of this in 2022) to actually set an emissions tax on agriculture. Denmark is a huge pork and dairy producer with EUR2.9M in pork exports (9th largest global pork exporter) and EUR1.8M in dairy exports. This tax will (based on my research, which is involving a dangerous amount of Google translate, so, take with a grain of salt and send me anything substantial that you read on this topic) be based upon livestock headcount, which Denmark already mandates as part of its livestock census. It will be reinvested into climate smart farming. It won’t actually go into effect until 2030, and then the tax will increase over the subsequent 5 years.
My takeaway: This is super interesting to watch, as I don’t think we will be able to decarbonize agriculture without tax based incentives. It’s also interesting because there is no broadly acceptable and scalable mechanism to actually measure vs model….and that’s a major problem if we want taxes to incentivize more efficient agricultural production. Nevertheless, it will be interesting and informative to understand the Danish industry/public response and global response to this first-of-its-kind-tax, assuming it continues to move forward. Eventually, some country (probably the EU, maybe as block) is going to implement something like this, and sooner tends to be better in the fight against climate change.
TL;DR: The USDA issued an RFP back in Sep 2023 to distribute up to $65M to “provide support for agricultural employers in implementing robust labor standards to promote a safe, healthy work environment for both U.S. workers and workers hired from Northern Central American countries under the seasonal H-2A visa program.” It allocated $50M to 101 farms across 41 states + Puerto Rico.
My takeaway: Evidence that the US government will not let labor costs/lack of availability drive “too many”
farmers out of business.
Predicting how the government defines “too many”, and how exactly it intervenes is a complicated question, but I suspect that we will see more dollars allocated to subsidizing ag labor (and associated compliance) costs in coming years. I will be doing my best to stay looped in on US policy in order to ensure that my portfolio companies are able to take advantage of cash inflows where they occur.
TL;DR: “We gotta do something about labor cause it’s making our farmers and ranchers less sustainable and it really really is a huge burden on our small and medium sized farms.” - Zippy Duvall, AFBF President
My takeaway: Preach, Zippy! There are a LOT of things that Zippy and I disagree on, but here, we find common ground. I also want a bill that’s “really fair to the employee and treats them right” and that “helps the farmer to be sustainable.”
That said, the notion that we can somehow separate immigration reform and farmworker reform feels impossible to me. I do not believe that it will be possible to solve the ag labor crisis in the US without some form of immigration reform, coupled with a next generation of agricultural equipment and technology designed to make work suck less for the people who do it.
What is Regenerative Agriculture? (Nobody knows/agrees)
TL;DR: Nobody knows or agrees on a set definition for regenerative agriculture
My takeaway: Duh. Regen is the new sustainable and it means so many things that it means nothing. I share this more to flag that, in 17.4% of journal articles and 40.9% of practitioner websites included outcomes related to "improving the social and/or economic wellbeing of communities.” The word labor is mentioned a singular time in this entire paper.
There are a lot of things about regenerative agriculture (be it defined by practices or outcomes or some hybrid) that are absolutely necessary reframings of how we approach agriculture. If the regen movement doesn’t get serious about addressing the realities of the ag labor crisis and how that relates to transitioning to regenerative systems, there will be no transition.
*New Agtech Toolkit Page* - Farm Labor in the US
About Agtech Toolkit: Farmhand Ventures and Western Growers Association have been collaborating on an open-access guide to innovation in agriculture. The Toolkit is designed for agtech entrepreneurs to ground-truth their knowledge of their market(s), and we provide up-to-date deep-dives on specific crops. It’s been really useful for VCs and for startup-onboarding, too. This newest page breaks down farm labor costs in the top specialty crop production states in the US and provides a basic breakdown of the H-2A program and AEWR.
Good job reading! Here’s Echo, stressing out under my desk during a thunderstorm (didn’t take pics of her on July 4, but very similar situation.)
Have a great week,
Connie