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1、The Case for Regenerative Agriculture in Germany and Beyond January 2023 By Torsten Kurth,Benjamin Subei,Paul Pltner,and Simon KrmerBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pio
2、neer in business strategy when it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global teams bri
3、ng deep industry and functional expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm and
4、 throughout all levels of the client organization,fueled by the goal of helping our clients thrive and enabling them to make the world a better place.Founded in 1899,NABU(Nature And Biodiversity Conservation Union),is one of the oldest and largest environmental associations in Germany.The associatio
5、n encompasses more than 875.000 members and sponsors.NABUs most important tasks are the preservation of habitat and biodiversity,the sustainability of agriculture,forestry and water management and,last but not least,climate protection.The communication of nature experiences and the promotion of natu
6、ral history knowledge are among NABUs central concerns.About 40,000 volunteers play an active role in practical nature conservation work,with great success:This is something that is unique to NABU.These active NABU members look after more than 110,000 hectares of valuable protected reserves in Germa
7、ny.NABU also has volunteer groups working on an international level to conserve nature and combat poverty in Africa,Eurasia,and the Caucasus.This work is supported by professionals at our regional offices and at our national headquarters in Berlin,who take care of public relations,project developmen
8、t and management,and political lobbying.NABU is part of BirdLife International.www.NABU.dewww.birdlife.orgBOSTON CONSULTING GROUP 3In a world where the effects of global warming are on the rise and where pressure to mitigate them is growing rapidly,the global agri-food system faces a major prob-lem.
9、It is,of course,vital to the survival of the worlds billions of people as a source of both food and livelihoods.But at the same time,its contribution to climate change and biodiversity loss is immense,and it is among the industries most affected by these ecological crises.Regenerative agriculture,we
10、 argue,is the only approach to farming that can overcome the agriculture industrys sta-tus quo by significantly reducing the industrys negative environmental impact on our land and climate,increasing its positive impact,and economically benefiting the entire agri-food value chainfrom farmers to food
11、 manufactur-ers to retailers to consumers.In Germany,the economic,social,and regulatory pressure on the agriculture system is especially intense.Agriculture contributes 12.5%of the countrys total Scope 1 green-house gas(GHG)emissions,a combination of carbon dioxide,methane,and nitrous oxide from cro
12、ps and live-stock,as well as land use changes that lead directly to the release of GHGs from the soil.Farmers must cope with the increasing intensity and frequency of extreme weather eventsboth droughts and torrential rainsthat wreak havoc on crops yields,even as they struggle to meet the increased
13、cost of land and farming inputs.Meanwhile,regulators are imposing limits on GHG emissions and requiring changes in land use,and consumers are de-manding healthier,cheaper food.This article presents the key findings of our detailed analy-sis of the economic,environmental,and social benefits of regene
14、rative agriculture in Germanyand by extension,in every country with a mature agri-food system.What Regenerative Agriculture Is and IsntSome people imagine that regenerative agriculture is an esoteric,dogmatic ideology,just“another trend”after organic farming.Others suppose that it is a kind of carbo
15、n farming,designed solely to manage GHG emissions at the expense of reducing farmers yields.Such perceptions are erroneous,however;in fact,regenerative agriculture is a collection of pragmatic farming practices that can be carried out beneficially on both conventional and organic farms.As we shall s
16、ee,these practices leave farmers and food companies better off economically,and most negative short-term impacts that may occur are typically the result of uninformed trial and error.We define regenerative agriculture as“an adaptive farming approach applying practically proven and science-based prac
17、-tices,focused on soil and crop health aimed at yield resilience and a positive impact on carbon,water,and biodiversity.”Healthy soil is a key enabler for productive agriculture,and most regenerative practices are designed to support the soils functions by protecting and feeding its biodiversity.Thi
18、s is the goal of the three principles at the heart of regenerative agriculture:no-till farming,including direct seeding;permanent coverage of the soil with plants;and promotion of biological diversity,including wider crop rotation.The Case for Regenerative Agriculture in Germanyand Beyond4 THE CASE
19、FOR REGENERATIVE AGRICULTURE IN GERMANYAND BEYONDThe essential practices of regenerative agriculture are meant to be implemented in three stagesbasic,intermediate,and advancedover the course of several years.(See Exhibit 1.)In general,each stage includes three kinds of activities that affect how soi
20、l and crops are cultivated,what inputs are used,and how the land is structured.To establish a foundation for the best results,farmers should carry out all of the basic Stage 1 practices together,but the succeeding stages and their specific practices arent written in stone.Depending on context and pa
21、st practices with regard to such variables as climate and soil type,individual farms may require different regenerative practices.Shifting to regenerative agriculture is a continuous process that requires time to thoroughly understand each farms circumstances.The key is to reflect,adapt,and regenera
22、te.Benefits for FarmersRegenerative agriculture has long been associated with lower yields and shrinking profits for farmers.However,an objective analysis of the economics of German farms conducted on a per-hectare basis shows that regenerative agriculture offers huge benefits in the middle to long
23、term,resulting in higher profits for the countrys farmers.Overall,once a steady state of implementation is in placetypically after 6 to 10 yearsStage 1 and Stage 2 practices should increase farmers profits by an estimated 60%or more.ApplicationtypeRegenerative farming practicesStagesCultivationHow w
24、e cultivatethe landBasic implementation1Intermediate implementation2Advanced implementation3InputsWhat inputs weput on land/cropsApplies to croplandApplies to grasslandStructureWhich structurewe createNo-till practices,includingdirect seedingSoil analysis andbalancingMinimal soil-disturbingsubsoilin
25、gCover croppingInterseedingNo structural practices inbasic implementation stageBiofertilizer/biostimulantsand seed coatingOptional:Bio leachinginhibitors and crop protectionMinimal soil-disturbingmulch systemUndersown croppingAdaptive grazing or mowingLegume crop rotationBiologically activatedbiocha
26、rIntercroppingLivestock integrationOptional:Smaller aerialstructure and krylinesubsoiling AgroforestryOptional:Pasture croppingSource:BCG and NABU analysis.Exhibit 1-Regenerative Agriculture Involves Changes in Cultivation,Inputs,and Farm Structure,to Be Carried Out in Three StagesRegenerative agric
27、ulture offers a triple win:higher farming profits,more resilient food production,and less impact on land and climate.6 THE CASE FOR REGENERATIVE AGRICULTURE IN GERMANYAND BEYONDAn example of this analysis breaks down the specific practices carried out on a typical crop farm that grows cereals and oi
28、lseeds.(See Exhibit 2.)Improvements in soil structure as a result of no-till farming,for instance,would increase the farms profits by 97 per hectare,including a gain of 69 per hectare in net cost savings from avoided tillage operations and 28 per hectare in revenue from increased yields.Aside from t
29、he positive impact on farmers income,long-term improvements in the fertility of the soil increase farmlands productive potential and thus have a positive effect on its value.Undoubtedly some farmers lack the capital needed to cover the cost of adopting certain regenerative practices or may simply be
30、 unwilling to risk abandoning their custom-ary approach to farming.To overcome these fears,Germa-nys government and its food companies must support farmers in their transformation toward regenerative agri-culture and convince them that they can achieve positive economic effects even in the first yea
31、r of the transition.Socio-Ecological Benefits Shifting to regenerative agriculture would also have sub-stantial benefits for German society overall,improving the quality of the countrys environment on several fronts and enhancing the nutritional value of the countrys food.Profits per hectare(average
32、 of winter wheat,barley,and rapeseed,in)Excluding subsidies+Up to+60%69286161443812 1913 15 15 36 23 355581 70 Conven-tionalprofitsStage1 and 2profitsNetoperationscosts andsavingsMachineoperatingcostsAvoidedyieldloss andcarboncredits1Avoided yield loss and yield uplift1Net inputcost reductionAvoided
33、yieldloss1Avoidedyieldloss1Avoidedyieldloss1Testingand cost ofadditionalfertilizerNetinput costreductionAvoidedyieldloss andcarboncredits1Netinput costreductionMachinecosts(including fertilizermachinesavings)Bio-stimulantcostsBetter soilstructureNo-till practicesand minimallydisturbingsubsoiling+97/
34、ha(27%)Implementationof species-richcover cropsCovercropping+52/ha(15%)Based on soilanalysisSoil nutrientbalancing+4/ha(1%)ImprovingmanureBiofertilizer+3/ha(1%)Fertilizerreduction andcarbon creditsUndersowncropping+49/ha(14%)Advanced use ofcover crop scrapsMinimal soil-disturbingmulch system+21/ha(6
35、%)RevenueInput costsOperations costsSources:Bavarian State Institute for Agriculture;FAO;German ministry for agriculture;DLG;BayWa;KTBL;farmer interviews;BCG and NABU analysis.1“Avoided yield loss”due to better soil structure,which increases resilience to droughts.Analysis based on yield in 2018,a d
36、rought year.Exhibit 2-Once Fully Implemented,Regenerative Practices Offer Farmers as Much as 60%Higher Profits on Their Cereal and Oilseed CropsRegenerative agriculture can reduce Germanys annual GHG emissions by 35 million tons,equal to a third of its private cars yearly GHGs.8 THE CASE FOR REGENER
37、ATIVE AGRICULTURE IN GERMANYAND BEYONDOur analysis shows that the socio-ecological benefits of regenerative agriculture in Germany could have a total economic value of approximately 8.5 billion per year.(See Exhibit 3.)Around 8 billion of this amount would come from regenerative agricultures positiv
38、e impact on the countrys carbon footprint.Strengthening the soils capacity to serve as a carbon sink would account for about 6.8 billion of the 8 billion,and reducing GHG emissionsprimarily nitrous oxide and methane,two especially potent greenhouse gaseswould account for another 1.2 billion.In addit
39、ion,an estimated 0.5 billion in annual benefits would result from improved water quality,achieved by reducing the need for irrigation and by avoiding nitrate pollution attributable to excessive use of nitrogen fertilizer.Further benefits would arise from improvements in the countrys water cyclethe p
40、rocess of terrestrial precipita-tion,evaporation,and soil moisture(“green water”)due to the upgraded condition of the soil,but quantifying these gains requires more research.Another key goal of regenerative agriculture is to protect existing biodiversity by reducing the negative impacts of conventio
41、nal agriculture,and to increase the overall biodiversity of cropland and grassland.Although our analysis does not attempt to quantify these benefits,they are driven primarily by improved soil health and reduced use of synthetic crop protection and fertilizer inputs.Benefits for the German Agri-Food
42、Value ChainA primary effect of regenerative agriculture is resiliencethe ability of soil,crops,and the local ecosystem to better handle climate-related shocks to the system.This effect underpins a key benefit for Germanys agri-food system:the safeguarding of future supplies of food and food inputs.L
43、ower crop yields due to extreme weather could reduce companies access to the input crops needed for the food they produce,putting their operations and production vol-umes at risk.And the price they must pay for input crops could increase,especially in years with low yields,putting pressure either on
44、 their profits or on consumer prices.By strengthening farmers resilience in the face of severe weather conditions,regenerative agriculture can help com-panies secure stable sources of input crops.Our analysis shows that regenerative practices can reduce yield losses in years marked by severe weather
45、 conditions by up to 50%.A further benefit involves ensuring food companies repu-tations and social license to operate.Investors,regulators,and consumers are pressuring companies in every industry to lower their GHG emissions and implement greener,more environmentally friendly practices throughout t
46、heir operations.Companies in the downstream food value chain have a particularly onerous obligation to meet their green goalsin particular,those related to Scope 3 emissionsgiven the sheer size of their impact on the 6.8Carbon8.0Water+Unquantified benefitsof green water1.2Unquantified0.10.5+8.5+8.5+
47、0.5+CapturedcarbonPromotedbiodiversityAvoidedemissionsReducedirrigationAvoided nitrogenpollution TotalbenefitEconomic benefits of steady-state regenerative practices(billions)BiodiversityExhibit 3-By 2035,the Socio-Ecological Benefits of Regenerative Agriculture Are Expected to Total at Least 8.5 Bi
48、llion AnnuallySource:BCG and NABU analysis.BOSTON CONSULTING GROUP 9environment and their role in supplying food to Germany.By supporting the goals of regenerative agriculture,they can enhance their reputations as environmentally friendly companies and ensure that they stay in front of current and f
49、uture environmental and climate regulations.Taking all of these benefits into account,regenerative agriculture promises a triple-win for farmers,society,and the food industry.The Way ForwardDespite the many benefits of regenerative agriculture,the transition wont be easy to accomplish.Its difficult
50、to convince farmers to embrace a fundamentally different approach to farming without broad and centrally organized support,and fears of reduced yields and higher costs remain a challenge for them and for the food companies they supply.Promoting regenerative agriculture will therefore require a conce
51、rted effort by all stakeholders in Germanys food supply,including agriculture input companies,academic experts,agronomic advisors,regulators,and downstream food producers,distributors,and retailers.The return on investment of regenerative practices is high,not just for Germanys farmers,but also for
52、the companies that make,distribute,and sell foodand especially for the countrys consumers and society at large,which will bene-fit from a healthier,more sustainable,and more secure food supply.Its a triple-win for all concerned.About the AuthorsTorsten Kurth is a managing director and senior partner
53、 in the Berlin office of Boston Consulting Group and leads the firms work related to agriculture in Europe.You may contact him by email at .Benjamin Subei is a partner and associate director in BCGs Dsseldorf office and an expert in agriculture.You may contact him by email at .Paul Pltner is a proje
54、ct leader in the firms Berlin office and focuses on agribusiness and greentech.You may con-tact him by email at .Simon Krmer is a food system and soil policy advisor at Nature and Biodiversity Conservation Union headquarters in Berlin,with a focus on regenerative agriculture.You may contact him by e
55、mail at simon.kraemernabu.de.AcknowledgmentsThe authors would like to thank the individuals noted in the following organizations for their valuable contributions to this report:NABU Joerg-Andreas Krueger,Konstantin Kreiser,and Maximilian Meister BCG Louise Berrebi,Jack Bugas,Felicitas Bnger,Elena Co
56、rrales,Chris Grantham,Max Havermeier,Jan-Frederik Jerratsch,Georg Kappen,Annastacia Kouvela,Mayra Krten-Bschle,Nikolaus Lorenz,Dean Muruven,Helena Nannes,Adrien Portafaix,Johanna Puetz,Rachel Ross,Jonas Schroeder,and Shalini Unnikrishna Hohenheim University Markus Pflugfelder Biodivers.land Georg Kn
57、ig and the Biodivers.land co-founders They would also like to thank Malte Neuhaus and Dr.Theodor Friedrich.For Further ContactIf you would like to discuss this report,please contact the authors.Boston Consulting Group partners with leaders in business and society to tackle their most important chall
58、enges and capture their greatest opportunities.BCG was the pioneer in business strategy when it was founded in 1963.Today,we help clients with total transformationinspiring complex change,enabling organizations to grow,building competitive advantage,and driving bottom-line impact.To succeed,organiza
59、tions must blend digital and human capabilities.Our diverse,global teams bring deep industry and functional expertise and a range of perspectives to spark change.BCG delivers solutions through leading-edge management consulting along with technology and design,corporate and digital venturesand busin
60、ess purpose.We work in a uniquely collaborative model across the firm and throughout all levels of the client organization,generating results that allow our clients to thrive.Uciam volora ditatur?Axim voloreribus moluptati autet hario qui a nust faciis reperro vitatia dipsandelia sit laborum,quassit
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62、oloratur?Explige ndeliaectur magnam,que expedignist ex et voluptaquam,offici bernam atqui dem vel ius nus.Nem faccaborest hillamendia doluptae conseruptate inim volesequid molum quam,conseque consedipit hillabo.Imaio evelenditium haribus,con reictur autemost,vendam am ellania estrundem corepuda derr
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