​​​​​​​Regenerative Farming Is About Reducing Risk, Not Maximising Yield

Van Lanschot Kempen's When Summer Becomes the Stress Test argues that climate change is changing how investors should evaluate farmland, shifting the focus from peak yields to resilience during periods of heat and drought.

• The report highlights evidence from 1,262 French farms showing that during the 2023 drought, farms with higher adoption of regenerative practices experienced an average 8% yield decline, compared with 22% for less regenerative farms. Rather than guaranteeing better harvests, regenerative farming appears to reduce downside risk during extreme weather.

• Practices such as cover crops, reduced tillage, longer crop rotations and improved soil management enhance water retention, infiltration and soil health, making farmland more resilient as heatwaves and water stress become more frequent.

• For investors, the report argues that farmland should increasingly be assessed on how it performs during stress events. Indicators such as soil organic matter, water retention, crop diversity and long-term productivity provide a better measure of asset quality than yields in favourable years alone.

Read the full report for a detailed discussion of regenerative agriculture and its implications for long-term farmland investing.