CASE STUDIES

TRANSITION TO REGEN CROPPING UNLOCKS NEW YIELD FRONTIERS IN THE DARLING DOWNS

LAND TRANSITION | NATURAL CAPITAL | CLIMATE RESILIENCE

THE CLIENT

Through a UK-based referral in 2017, a global family office contacted Impact Ag Partners with a clear mandate: to acquire a diversified portfolio of land assets.

THE BRIEF

The family office had an allocation of USD $75 million and aimed to invest in Australian agriculture. Their brief to us was to acquire low-risk high-value farming enterprises, with a strategic focus on leasing these to professional tenants with a proven track record and management capacity. Our due diligence identified a suitable list of properties, with one standout example also featuring the strong natural capital assets the client desired. That 10,000-acre property on the Darling Downs of Queensland, Australia, was acquired on behalf of the client in 2018.

THE PROJECT

The client elected to operate the farm for the first 12 months to complete a capital works program aimed at enhancing its value and attracting top-tier tenants. Despite the challenging climatic conditions (at the time, the country’s 4th driest year on record), the client realised cash returns of 6% post-harvest – an outcome which reflects the effectiveness of our due diligence process in identifying robust investment opportunities.

With the capital works program completed, Impact Ag Partners originated and acquired additional cropping enterprises in 2018 and 2019, to create a cluster of farms that leverage operational efficiencies and synergies.

As strategic advisor, Impact Ag Partners developed a five-year strategy to:

• Deliver annual cash yields of 4-5%.

• Increase soil carbon by 1%.

• Monitor and enhance the koala habitat and community.

Central to that strategy was a transition to regenerative cropping practices.

By enhancing ecosystem health and resilience, regenerative practices deliver higher yields, providing a more reliable return for investors. Additionally, healthier soils and ecosystems contribute to long-term capital appreciation, making regenerative agriculture a sound strategy for reducing investment risk.

But while there is now growing interest and uptake of regenerative cropping practices – in 2020 it was a new way of thinking. And that meant Impact Ag Partners needed to demonstrate this as yet untested approach (at least at commercial scale) was the right strategy.

In winter,2022 we conducted a trial comparing regenerative and conventional approaches to growing faba beans.

Trial results were positive:

Higher return: 62% increase in gross profit margin for regenerative crop compared to conventional crops.

Improved yield: 0.44t/acre higher yield in regenerative crop compared to conventional crops.

THE IMPACT

NATURE + PROFIT | CLIMATE POSITIVE LEADERSHIP | ASSET EXPANSION

Across the enterprise’s combined 10,000 acres, Impact Ag Partners is transitioning crop production to proven regenerative practices, which include:

1. Alternative fertilisers: Replacing synthetic fertilisers with organic alternatives.

2. Biological seed dressing: Using biological treatments instead of chemical seed dressings.

3. Legume crop rotation: Introducing legume rotations to address nitrogen deficiencies.

4. Cover cropping: Increasing groundcover and periods of living roots in the soil, reducing the need for follow-up sprays.

5. Chemical reduction: Decreasing overall chemical applications and eliminating synthetic inputs below the soil.

6. Foliar sprays: Implementing foliar applications to improve plant health.

7. Research and innovation: Exploring alternative protein crops and markets for these naturally nitrogen-fixing plants.

Like much of Australia’s prime agricultural land, a historical reliance on industrial agriculture characterised by high synthetic input use had depleted soil composition and biology across the Darling Downs. But soil health results from the first two years of regenerative cropping show that, while still in its early days, our practice change is actively restoring health.

FUTURE THINKING