**2. Literature review**

Conventional agricultural systems, particularly practiced in the developed world, produce vast amounts of food, yet they come at a significant cost to the environment. While the situation is complex, the details are often not acknowledged; in the following we outline high level important aspects that challenge the long term economic, social, and ecological sustainability of CvF and then show what alternatives exist that could replace CvF practices.

### **2.1 Problems of conventional agricultural systems**

Covering 1/3rd of the planet's surface [24] agriculture has resulted in disturbed ecosystems [25–27], land degradation [28], loss of biodiversity [29–31], leaching fertiliser, nitrification of groundwater, eutrophication of above groundwater ecosystems, coastal dead zones [26, 32], small organism mortality [33, 34], and biological resistance build-up against agrochemicals [35–37]. Modern industrialised agriculture and overgrazing are blamed for destroying a third of the planet's topsoil within 40 years, adding 10 million hectares every year to the toll of soil erosion [38] which is 100 times faster than naturally occurs [39].

We deploy 2½ million tons of pesticides and fungicides annually and nevertheless lose 40% of crops globally to pests, diseases and weeds [40], while its use is also responsible for over 40,000 human deaths and 3–5 million cases of pesticide poisoning every year [41]. At no time in history has agriculture had such a high impact on the environment than in the last 100 years [25, 42–44].

### **2.2 Resource hungry agriculture's impact on planetary boundaries**

Agriculture globally occupies 13 times more land than any other Anthropocene land use [24] and is arguably the biggest contributor to biodiversity loss and

altogether the greatest human impact on our "planetary boundaries" [2]. Seventy percent of all freshwater globally is used for agriculture [41], while in SA it is estimated to be 63% [45] with no surplus for future development [46]. Agriculture is energyhungry, emitting up to 25% of global CO2 [5, 47–49], while the USA uses 17% of all its energy to get food through the value chains onto its tables [50]: that is 1000–1500% more energy than what the food itself contains in the form of energy [48, 49].

Food-related health issues, like diabetes in industrialised countries [25], keep growing, as the nutritional value of fruits and vegetables dwindle [51–53] and are less present in conventional farmed produce than in organic produce [54]. Nutritional losses continue to occur during processing and storage, typical for industrialised food systems [55–57].

"The roots of this crisis lie in the preceding decades of excess…" says the global financier George Soros and "…for 25 years the West has been consuming more than we have been producing…living beyond our means" Australian Prime Minister in the Sydney Morning Herald July 25th 2009 [58]. Consumption and growth cannot continue ad infinitum on a finite planet [59]. However, our entire economic model is based on growth funded by debt [60, 61], and as unlikely as economic growth can continue indefinitely, growing debt by civil society, businesses, and government, will also find its limits. A bubble is likely to burst once planetary boundaries and ecosystem services [62, 63], needed to fuel the growth, reach their limits.

#### **2.3 Benefits of agroecology, organic farming and conservation agriculture**

CA practiced with LEI, in combination with cover crops, has the ability to harvest atmospheric nutrients, build soil organic matter, increase soil life, loosen soil, increase water holding capacity and aggregate stability, reduce soil compaction, reduce erosion, recharge the water reservoir, improve water quality, reduce nutrient leaching, and increase pest, disease, drought resilience, and CO2 sequestration [64–71]. A favourable argument in using cover crops as part of CA is the financial viability with increased crop yields and decrease input costs [65, 72, 73].

The yield gap between CvF and organic farming (as another sustainable production system with many parallels to CA), especially with proper diversification practices, is 8–9% smaller than originally estimated [74]. Using 1 ton less synthetic nitrogen fertiliser in organic farming saves the equivalent of 5.2–7.6 tons of carbon emissions [75]. Organic fertiliser in Ethiopia have increased yield by 2–3 times, outperforming inorganic fertilisers [76]. In the US, organic farming achieves comparable yields, but are 28–34% better during droughts [7–9].

Conventional tillage increases soil-based CO2 respiration and has almost 14 times the carbon emission than no-till [77]; additionally exacerbated by warming global temperatures [78, 79], adding up to 50Pg of soil carbon emissions for the Anthropocene, due to tillage [80]. Organic agriculture uses 2–7 times less energy than conventional agriculture [81, 82] and sequesters 5–15% of greenhouse gas emissions [83, 84]. Tropical agro-forestry systems can sequester between 4 and 6 ton/ha of carbon annually [85–87]. Coghlan [88] even argues that trees planted by local farmers in the Sahel can push back the desert.

A study in Europe has shown that organic farms support more birds, butterflies, beetles, bats and wild flowers than conventional farms, while biodynamic farms have higher levels of soil fertility than organic farms and considerably higher than conventional farms [89, 90].

While we see clear benefits to more sustainable farming practices, such as CA, penetration in South Africa remains low and highly variable between provinces [11], the question remains, why are we not seeing CA products in retail shelves more regularly, or why, when CA poses less risk, do financial institutions not promote CA?

**73**

**3.2 Insurers**

*Value Chain-Induced Constraints Limiting Scale of Conservation Agriculture in South Africa*

The findings of this research are concluded from data collected through interviews with some of the largest agricultural VCPs in South Africa, trying to assess if there are blockages inhibiting CA produce from penetrating the market on a broader scale, and if there is potential scalability of CA produce through these value

The benefits for banks to promote CA to farmers is to end up being less exposed to risk themselves; a capital exposure risk due to drought, potentially exacerbated by climate change. We interviewed four of the largest banks in South Africa, all of whom have been supplying credit to commercial farmers for decades. We asked them whether they had CA tailored products with reduced premiums for farmers because of less perceived risk. Almost all interviewed banks responded in one way or another, saying that they fundamentally did not get involved with productionbased decisions around farm practices, such as CA. Three banks argued that these were decisions farmers needed to make for themselves, and as one bank put it,

All of the four banks argued that good production practices for a farmer automatically showed up in production output benefits and a better balance sheet, which in turn would result in a lower risk profile for a farm and in turn, result in a cheaper credit with better premiums. The argument that this might take years for farmers to achieve was generally responded to that that was the nature of farming. One bank confirmed their view that a production method changeover, specifically to CA, would more likely result in an initial increase in cost and reduction in yield, before any yield increases could be observed and benefits would reflect on the bal-

Subsequently none of the banks supplied a product that would give farmer credits with reduced premiums should a farmer convert to CA. Only one of the interviewed banks was aware of research that evidenced that CA was a less risky production method, especially in times of drought. Two of the banks stated they would not plan for a specific product for farmers that would entice them to do CA if research were to evidence CA was actually a less risky production method. In contrast the other two banks indicated that they would think about making CA part of the funding application decision or create a product that would have less 'hurdles'

All four banks, however, agreed that if CA mitigated risk, it would in any event ultimately reflect on the financial track record and performance over time and subsequently reduce their risk profile, in turn again reducing the premiums these farmers would have to pay. However, a credit offer always remains a decision based

Insurers are first and foremost exposed to hail and then to drought. Insurers' willingness to take on climate risk on behalf of the farmers makes them also susceptible to the farming practices of the farmer, particularly where new machinery and farming principles such as CA have the ability to reduce drought risk and risk of exposure for insurances. The benefits for insurers to promote CA to farmers is not only about reducing risk of capital exposure to drought, but also other climate change risks and the impact of pests and diseases. With a lower risk premiums

during credit approval process, if research showed CA did reduce risk.

chains. The following narrative details the results of our interviews.

banks would otherwise be in conflict with lender's liability principles.

ance sheet for farmers to attain better premiums.

on analysing every farm's risk profile, individually.

*DOI: http://dx.doi.org/10.5772/intechopen.84499*

**3. Value chain research findings**

**3.1 Banks**

*Value Chain-Induced Constraints Limiting Scale of Conservation Agriculture in South Africa DOI: http://dx.doi.org/10.5772/intechopen.84499*
