A USDA study taken every five years showed that in 2017, more than 41% of U.S. farmland was involved in some type of conservation practice. American farmers know improving environmental stewardship is key to an economically sustainable operation that stays in the family for generations.
Conservation practices are voluntary production changes growers implement such as reduced tillage, crop rotation, the implementation of cover crops and water-quality improvements including buffer strips and precision nutrient application.
The team at Conterra Ag Capital feels strongly that ag lenders should not only encourage on-farm conservation adoption but should actively work with producers to promote and adopt practices devoted to the long-term sustainability of the farm.
An ag lender’s role in conservation
Conterra Relationship Manager Jackie Mosier says sustainability efforts are in the best interests of every ag lender, because profitability and conservation often go together.
“At Conterra, our goal is to make sure our borrowers are cost competitive,” says Mosier. “Practices that promote soil health and productivity can maximize profits while conserving natural resources.”
Mosier says for an operation to be truly sustainable, profitability must be kept in mind, otherwise the farm loses its ability to be proactive when it comes to sustainability efforts. Jackie’s role is to help ensure the producer is competitive, because with good business acumen comes the opportunity to employ additional conservation-focused production practices.
“Sustainability efforts usually come with an initial price tag,” says Mosier. “As lenders, we want producers to have the cash flow necessary for the initial upfront costs for these practices like cover crops, alternative tillage practices or even an anaerobic digestor, an energy source to responsibly managing manure.”
The Ohio-based lender says most producers are always trying to be good stewards of the land. She manages producers in Illinois, Wisconsin, Indiana, Ohio, Michigan, and Kentucky and says it’s quite common to see grass strips used as water-quality management, livestock producers implementing rotational grazing to decrease runoff and improve water absorption and cover crops to improve soil health.
Building soil health also promotes the economics of a farm. An Iowa State University study showed that converting just 10% of a crop field to diverse, native vegetation reduces erosion by 95% and nutrient runoff by more than 70%.
“I have customers who use cover-crop management as a sustainability practice, and they’ve lowered their input costs because the soil fertility is better,” says Mosier. “They also develop better weed control and, in some cases, have improved their yields.”
Working together toward sustainability
Interest is growing in maximizing profitability through environmentally smart practices. In April 2021, USDA said a total of more than 20 million acres were enrolled in the agency’s Conservation Reserve Program. And with the agency’s announcement of $1 billion going to climate-smart ag practices, momentum is building for widespread conservation adoption that not only maximizes profit opportunity, but restores soil health, improves water quality and sequesters carbon.
Climate-smart practices will continue to be a part of the discussion in conservation, and government programs like the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP) provide opportunity for real benefits to farmers and the environment.
Ag lenders like Jackie are an interested party in decisions surrounding conservation. When lenders stand behind producers looking to improve sustainability, everyone has the chance to benefit because improved production practices improve collateral for the long-term financing of the operation.
Implementing conservation practices today means a sustainable agriculture future – a goal Conterra feels strongly about as the leading ag lender in the sustainability sector.
“Conterra is here to support producers looking to make sustainability changes,” adds Mosier. “We’re available as a resource, committed to producer success economically and environmentally.”
Disclaimer: Please note that the information provided in this article is for educational and informational purposes only, and should not be construed as financial or investment advice. While we have made every effort to ensure the accuracy and reliability of the information presented, Conterra Ag Capital and its affiliates make no representation or warranty as to the completeness, correctness, timeliness, suitability, or validity of any information contained in this article. You should always consult a qualified financial advisor, tax professional, or other qualified professional for advice on your specific financial situation.
