Agricultural Innovation For A Warming World

Public investment in food production would accelerate technologies and techniques that can reduce the agriculture system’s huge carbon footprint.

Roman Bratschi
Credits

Alex Smith is a food and agriculture analyst at the Breakthrough Institute. He has written for MIT Technology Review, Jacobin Magazine, the Breakthrough Journal, and Foreign Policy.

Agriculture — the world’s largest user of land and the greatest driver of deforestation and biodiversity loss — is responsible for at least a quarter of global emissions each year. But compared to electricity generation, transportation and other carbon-intensive industries, relatively little public spending goes to finding technological pathways to decarbonizing how we grow the food we eat. 

Instead, many climate advocates, agroecologists and governments have pushed for small-scale, labor-intensive agricultural production. This appeals to a kind of retro, “nature-based” sensibility — turn back the clock on technological change, grow organic beets and tomatoes, make your own granola. But replacing high-productivity agriculture with lower-yielding systems may exacerbate the environmental harms of global food production, since “solutions” like regenerative agriculture or organic production require more land to produce less food.

To meaningfully fight climate change, governments must shoulder the responsibility of investing in technologies to decarbonize large agricultural systems. What we need is an industrial policy and funding for agriculture that encourages climate innovation. 

In the United States, that would start with the U.S. Department of Agriculture. Building out the USDA’s capacity to drive innovation through R&D, public financing and other industrial policies could be pivotal for the development of alternative proteins, technologies aimed at improving the efficiency of fertilizers, or more efficient, data-inflected agricultural machinery, to name a few examples. Investment in agricultural innovation would ensure that U.S. agriculture remains efficient, reduces its climate and land-use footprints and, ideally, improves the ecological condition of rural America. 

Moving Beyond Productivity Gains To Decarbonization

U.S. agriculture has seen massive productivity growth over the past century, making the U.S. one of the most efficient — and, surprisingly, climate-friendly — food producers globally. The government pours money into the agricultural sector, but often in the form of subsidies rather than through a cohesive food and farming strategy. 

While total emissions from U.S. agriculture have increased over time, efficiency gains have meant reduced emissions per unit of food. In 2021, agriculture was responsible for almost 11% of total U.S. greenhouse gas emissions, but per unit emissions from most agricultural products have declined. For example, from 1990 to 2018, the greenhouse gases emitted by American farmers to produce 2000 calories of food — roughly an adult’s daily nutrition requirement — declined by just over a fifth. That means that for each metric ton of emissions stemming from the American farm system in 2018, a quarter more calories were made available to consumers compared to 1990.

“Replacing high-productivity agriculture with lower-yielding systems may exacerbate the environmental harms of global food production.”

Increased productivity also makes less farmland necessary. Between 1949 and 2012, the total acreage of U.S. agricultural land declined by about a fifth, despite output more than doubling. Based on data from the UN Food and Agriculture Organization, if U.S. yields had remained stagnant over that amount of time, an additional 416,000 square miles of land — an area roughly the size of Texas and California combined — would have been required to produce the same amount of corn, soy and wheat. 

This is not to say that modern agriculture is without sin. This ultra-efficient system also resulted in ecological harms like nutrient and manure runoff, questionable animal welfare in the meat and dairy industries, and social disintegration resulting from a steep drop in the number of farms, the emptying of rural America as agriculture employment plummeted, and the concentration of agricultural lands under larger producers and corporations. 

Nevertheless, the solution to the problems of modern agriculture is not to rewind history. To retain the many benefits of industrial agriculture — greenhouse gas and land-use efficiency, affordable food — while decarbonizing the food system and reducing pressure on wild landscapes elsewhere, the U.S. needs a food policy that embraces the innovative capacity of the state.

Learning From The Energy And Transportation Sectors

In the U.S., public and private entities spend billions of dollars each year on agriculture and food research and development, much of which is focused on things like food product manufacturing, crop protection and food safety. These are valuable areas of focus, but relatively little is spent on climate mitigation and breakthrough technologies that can radically change the impact of our food systems.

Catching U.S. agriculture up to where the clean energy and transportation sectors are today will mean utilizing mission-oriented R&D, tax incentives for clean production and consumption, and public financing and loan guarantees for promising technologies. The Department of Energy, for example, funds both basic R&D and more applied programs through their Advanced Research Projects Agency-Energy (ARPA-E). The DOE also provides support for next-generation technologies to come to market, both through ARPA-E’s Tech-to-Market program and through their Loan Programs Office, which provides startups and incumbent firms with public investment, loan guarantees and debt commitments when more risky ventures mean private lenders are less likely to make loans. 

“What we need is an industrial policy and funding for agriculture that encourages climate innovation.”

The Loan Programs Office was created by the Energy Policy Act of 2005 and has provided around $30 billion in financing and loan guarantees since its creation. Famously, it gave $465 million in financing to Tesla in 2010, which the company used to purchase and make significant upgrades to a vehicle manufacturing facility in the Bay Area. Today, the plant employs around 22,000 people and Tesla is the highest-valued automaker in the world. 

That kind of public financing fills in gaps in private investment, especially where high-risk ventures with potentially large public benefits are deemed too risky, and can subsequently guide market forces toward industries and firms with the highest public value.

Of course, there have been failed investments. But the point of public financing is to help develop high-risk industries that can have distinct public benefits, reassuring private investors of a firm or technology’s potential, and significantly improving the chances of a firm receiving the necessary finances for growth and success. As of 2021, out of some $30 billion worth of loans and guarantees disbursed by the LPO, only about $1 billion has been written off as a financial loss — about the same loss rate as an average secured, private financial investment.

A Missed Opportunity For Agriculture

The Inflation Reduction Act (IRA), signed into law by President Biden this past August, takes seriously the promises of industrial policy for clean energy deployment, but failed to engage with agriculture’s long-term problems. 

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The IRA included an extra $100 billion in loan authority for the LPO — part of the $369 billion in IRA targeting clean energy — signaling a renewed commitment to utilizing the program to guide decarbonization. Almost immediately, the LPO began funneling that money to electric vehicle and clean energy projects.

Agriculture, meanwhile, received less attention in the IRA. The bill included nearly $20 billion in funding for the adoption of “climate-smart agriculture” but little to nothing in terms of innovation policy for future agricultural technologies. Funding adoption of current technologies is an important policy approach, but the lack of any significant outlays for the development of new ones to further decarbonization underlines the lack of seriousness about agriculture’s greenhouse gas and land-use footprint. 

The USDA already offers billions of dollars in loans and loan guarantees each year for agricultural producers, small businesses and rural industries, but these are mainly geared toward subsidizing continued production. The Farm Service Agency (FSA) and Rural Development agency (RD), for example, provide financing to ensure production and economic growth in rural communities. These are important programs for agricultural producers to fund their operations, and they can encourage better water and soil conservation and other climate-friendly farming practices. And while USDA programs like the Business and Industry Loan Guaranteed Program do provide some funding for food and agriculture manufacturing (roughly $250 million for food manufacturing over the past decade), funding is limited to projects that benefit rural economic growth. 

What the USDA needs is its own Loan Programs Office to coordinate funding to develop breakthrough technologies and innovations normally avoided by risk-averse investors and corporations. Alternative proteins, for example, would greatly benefit from public funding. The industry has grown immensely in the past few years, but the most exciting technologies — like real meat grown from animal cells in factories, often referred to as cell-cultured or cultivated meat — remain difficult to commercialize at scale. 

“The solution to the problems of modern agriculture is not to rewind history.”

Like electric vehicles in the late 2000s, alternative proteins remain more expensive than ordinary pork or chicken. The industry is restricted by a lack of manufacturing capacity, the difficulty of commercializing novel products and cultural attitudes that favor slaughter-based meats over alternatives. While companies like Impossible Foods, Beyond Meat and others have found mixed success in the production and sale of plant-based meats, producing them is more similar to veggie burgers than to game-changing meat imitations capable of shifting demand for conventional meat. To approach the sophisticated supply chains and manufacturing facilities needed to remake meat in a way that can attract consumers in the U.S. and around the world, the industry will need public investment in the form of loans, infrastructure development and broader network support. 

Alternative meats emit far fewer emissions than conventional livestock products, need far less land and don’t require the slaughter of sentient beings, to name a few benefits. When accounting for emissions associated with land use, cultivated meat is 95% less emissions-intensive than beef and around 60% less than pork and chicken. Plant-based meats emit even less. 

Of course, simply providing loans may not be enough to ensure Beyond Meat — or related companies working on everything from cell-cultured salmon or hybrid sausages with plant-based protein and cell-cultured pork fat — grows like Tesla. But, just as the Department of Energy has focused on supporting sub-industries like battery technologies for electric vehicles, so too can the USDA fund and support the development of an alternative protein ecosystem with necessary research investment, scale-up funding for ingredient producers and workforce development. 

A USDA loan office could fund much more than alternative meat. According to the Environmental Protection Agency, nitrous oxide emissions from the application of both synthetic and organic fertilizers on cropland make up about 15% of U.S. agricultural emissions. There are numerous technological solutions to the problem — like Pivot Bio’s microbial fertilizer, which uses biotechnology to add plant-accessible nitrogen to soil — but none are cheap enough for farmers to shift from preexisting synthetic or organic fertilizer uses. 

The Department of Energy has already funded projects related to clean ammonia production — a key component of synthetic nitrogen fertilizer — but with a focus on electricity generation. The USDA could join this effort and fund technologies or companies that seek to produce green ammonia to be used in agricultural production. For example, modular electrochemical ammonia production powered by wind turbines — a technology pioneered by companies like Jupiter Ionics — could allow regional production of synthetic fertilizer, potentially reducing input prices for farmers and lowering fossil fuel emissions from fertilizer production. 

And then there’s precision agricultural machinery, which can reduce emissions and local pollution related to the application of fertilizers and manure. Large companies and small startups alike are working on electric tractors guided by GPS and local data to apply fertilizer more efficiently. The DOE funding of electric vehicle sub-industries is a good blueprint for federal investment in electrified tractors and precision agriculture equipment. The technological advances fostered by DOE funding for EV technologies could even be cross utilized in agricultural machinery, which requires similar battery advances. 

“Given the close-to-universal appeal of industrial policy today, there is likely to be no better time to turn the entrepreneurial spirit of the state onto the challenge of agricultural decarbonization.”

While emissions savings from tractor electrification is relatively minor, improving the fertilizer application practices through data-powered precision equipment could have significant nitrous oxide emissions reductions in the long term. At the same time, precise application of fertilizer and organic amendments would reduce the run-off of agricultural nutrients, limiting pollution of waterways and protecting fisheries, drinking water and recreational areas. But precision agricultural equipment is expensive and in some cases not yet available. Public investment to guide precision equipment to market combined with existing USDA purchasing support for new technologies through programs like the USDA’s Environmental Quality Incentive Program can lower the costs of production and help make these technologies available to as many farmers as possible. 

These technologies are just the tip of the iceberg. Public investment in agricultural decarbonization could also mean an increased role for the state in the development of genetically engineered seeds — like the novel HB4 wheat that is drought-tolerant — or in the logistics and infrastructure necessary to limit the pollution and emissions from livestock manure. Deciding which technologies to invest in will require diligent assessment of the tradeoffs associated with each technology and practice, but investing in and bringing any of these technologies to market would propel the USDA into the 21st century when it comes to decarbonization.

Public financing for innovation in any sector only works so long as it has political support and its goals are clear. Political backlash from Republicans effectively shut down the DOE’s LPO for close to a decade. Luckily, industrial policy has more robust bipartisan support these days, with politicians on both the left and right championing state intervention in markets, albeit for different reasons: The Biden administration has embraced industrial policy as a means of decarbonizing and growing the U.S. economy, while some on the right aim to combat the rise of China with support for domestic economic production. 

But the challenge of having consistent and clear goals for a USDA loan office could be harder to solve. The USDA is closely aligned with existing industry groups, limiting support for more radical technologies and innovations like alternative proteins. Up to now, USDA support for climate policies has generally followed the lead of private interests. To be successful, a loan office must be given clear guidelines about the kinds of technologies and industries it ought to fund. This would mean both funding improvements to existing practices in livestock and crop agriculture and supporting the development of technological alternatives. 

But the peril of shortsighted agricultural policy, and the potential benefits of innovation in agricultural practices and technologies, cannot be overstated. Given the close-to-universal appeal of industrial policy today, there is likely to be no better time to turn the entrepreneurial spirit of the state onto the challenge of agricultural decarbonization.