Be part of the Solution
There are some investors who tell us they don’t like dairy. We believe this is connected to the ‘livestock are bad’ narrative. Whilst this is currently a popular theme, it is much like the food miles concept, i.e. lacking in scientific rigour and fundamentally flawed. Livestock are part of the solution. At least they are when you are investing in ecological, regenerative pastoral livestock systems.
If investors don’t like dairy then what they actually need to do is invest in dairy. It may seem on first glance a silly statement and somewhat counterintuitive, but dairy requires investment support to transform the existing orthodox model to a regenerative approach that delivers improved environmental outcomes as well as attractive financial returns. We are not talking about changing excessively resource hungry intensive indoor systems (CAFO’s), which should be eliminated entirely and don’t exist in New Zealand (NZ) anyway. This is about a change to the existing intensive conventional pasture based model in NZ, that may seem to be ‘warm and fuzzy’ with cows grazing outside year round (particularly to European and North American eyes) but is in fact environmentally damaging, most conspicuously to water quality (sediment, nitrogen leaching, phosphorous etc.) as a result of its intensive nature (feed, fertiliser and stock numbers).
The theme of water quality and the impact of dairy intensification in NZ on water quality, is of such significance that it is considered to have been a material factor in the change of government in 2017.
Not All Dairy Systems Are Created Equal
The point of responsible, informed and socially/culturally engaged investment is to drive and support systems that deliver better outcomes for all stakeholders. Particularly in this age of environmental degradation and the startlingly bleak analysis of recent IPCC climate change reports. Isn’t this part of an investment organisation’s earning its social licence?
There is always going to be dairy in spite of all the VC inspired postings to the contrary on LinkedIn.
If you are investing in agri and you are not investing in dairy because you see dairy as a negative sector then are you actually part of the problem rather than part of the solution?
There are dairy systems that are not only less impactful in terms of their environmental footprint but will measurably improve carbon sequestration, water quality, biodiversity and eliminate the need for the greenhouse gas disaster that is synthetic nitrogen. Interestingly, synthetic nitrogen (and its intensive application) is also a fundamental component of annual crops such as those used to create plant based ‘meat’ or ‘Claytons meat’, which is often trumpeted as an environmental saviour. The belief that a product derived from conventional arable cropping is somehow environmentally superior to regenerative livestock systems is deeply misguided and so flawed as to be environmentally dangerous if acted upon. Ignorance in this situation is definitely not bliss.
Invest in regenerative, ecologically sophisticated agriculture – support the solution.
This is not experimental or speculative, this is founded on practical, proven ecological science based management systems that make a positive environmental difference and deliver sound financial returns.
Being part of the solution isn’t about charity or being purely altruistic, it is about an investment organisation earning its social licence, being a good corporate/investment citizen and earning attractive financial returns. Consumers pay more for food with a strong environmental backstory. People favour companies/businesses that are environmental solution focused. Transforming dairy farming is genuine impact investment and is fundamentally about opportunity. What would your investors/pension-holders/owners want you to do? What would your children (and grandchildren) want you to do?
Investors have called for companies to contribute to society or risk losing their licence to operate. In our view this very clearly extends to investors whose social licence to operate will be increasingly based upon what they invest in and not just what they divest from or avoid.
It is time to invest in the solution.