Case Study

SLM Partners: Using regenerative land management to deliver value

SLM Partners is an asset manager that acquires and manages rural land on behalf of institutional investors. Based in the US, SLM aims to invest in the scaling-up of regenerative, ecological farming and forestry systems such as soil regeneration and carbon sequestration, that deliver both financial returns and environmental benefits. SLM has invested in nearly half a million hectares of land in Australia through the SLM Australia Livestock Fund and is developing new strategies in Ireland, the US and Chile.

Grounding returns in responsible land management

SLM aims to deliver sustainable long-term returns for investors by capitalising on land management and agriculture practices that produce food and other commodities at a competitive cost but in a sustainable and regenerative manner. For example, these sustainable practices tend to deliver:
• Improvements in soil fertility, especiallylevels of soil organic matter;
• Reductions in greenhouse gas emissions, through soil carbon sequestration and efficient use of fossil fuel-based inputs;
• Improved water quality and water cycles;
• Enhanced biodiversity.

SLM’s investment philosophy is underpinned by a belief that increasing global population and rising middle incomes, particularly in fast growing Asian economies – will continue to drive demand for food and fibre from sustainably managed land around the globe. Paul McMahon, CEO of SLM explains; “Over the past decade agricultural commodity costs have been rising  including fertiliser and feed for animals, increasingly volatile weather and environmental degradation such as soil erosion, water and air pollution. However, there are alternative farming systems such as regenerative rotational grazing that minimise the use of expensive inputs, enhance resilience to volatile weather and create positive environmental impacts. Research shows these systems can be just as productive and, in many cases, more profitable than conventional operations. Our aim is to scale up these practices to deliver environmental benefits and financial returns.”

Moving away from intensive operations

SLM’s backs up its approach through significant research into pasture management and consumption trends. In April 2017 SLM released ‘Back to grass – the market potential for US
Grass-fed beef’ a report that examines the opportunities arising from grass-fed beef. It also estimates the US grass-fed beef market to be worth $4 billion in retail and food services sales,
representing 4% of the total US beef market.

The report shows that grass-fed beef, when produced using regenerative grazing practices, can have many benefits for human health, animal welfare and the environment. For example,
it finds the nutrient and fatty acid profiles are healthier in grass-fed meat.

“There is significant evidence to show that grasslands managed with regenerative grazing techniques can sequester carbon in soils.” – Paul McMahon, CEO of SLM

In particular, the report address the role of agriculture on climate change, and shows that while on the surface grass-fed beef may release more GHGs than intensively-raised beef, a deeper analysis reveals that the contributions to soil health from grassfed methods help to sequester carbon in soils. McMahon explains, “Most cattle life cycle analysisdoes not take into account the positive or negative externalities that grazing and cropping systems have on soil carbon. When a broader life cycle analysis is applied, a different picture emerges. There is significant evidence to show that grasslands managed with regenerative grazing techniques can sequester carbon in soils.”

An Australian livestock fund to cash in on carbon

SLM’s first project – the SLM Australia Livestock Fund – has invested in more than 480,000 hectares of grazing land in rural Australia for grass-fed beef cattle production. The
fund acquires properties and implements a management process known as ‘holistic planned grazing’. This involves dividing land into smaller paddocks, putting cattle in large herds, and
moving them frequently across the property. It provides a decision-making framework that allows managers to vary the size of herds and the frequency of herd movements according
to seasonal conditions. The land benefits from concentrated animal impact, and then long periods of rest, which mimics the behaviour of grazing animals in natural grassland eco-systems.

SLM research shows that regenerative grazing can increase grass productivity, soil organic matter and soil fertility. Such increases lead to improved profitability for farmers as increased
grass quality and quantity allows more animals to be raised on a farm.

McMahon reflects, “Regenerative, ecological systems have particular advantages for long-term financial investors. They take degraded land, of which there are millions of hectares around the world, and restore it. This transforms an underperforming asset into a productive one that has obvious benefits for investors. Increasing production on degraded land also takes the pressure off the rest of the planet.”

“Regenerative, ecological systems have particular advantages for longterm financial investors. They take degraded land, of which there are millions of hectares around the world, and restore it.”– Paul McMahon, CEO of SLM

The fund also benefits from carbon credits available through the Australian government’s Emissions Reduction Fund. The Emissions Reduction Fund is a AUD $2.5 billion tool to purchase Australian Carbon Credits from eligible activities. A recent report from the Australian Farm Institute indicates that carbon is now worth more than  AUD$190 million annually for farmers, with vegetation projects accounting for most emission reduction.

More information:
slmpartners.com