I was talking to a farmer a few weeks ago who had opened a farm shop to sell direct to her local community. The results have been fantastic. The shop has taken the business through the Covid lockdowns, getting healthy food to people living nearby. The farm has moved from arable and indoor pigs to farming regeneratively with a diverse mix of livestock and crops in rotations. Hosting a farm shop alongside a dairy and a butchery, the farm is now a local food hub, regenerating the landscape and supporting the local community.

What if this farmer had been able to show clearly the value her diversified business is adding?

But opening the shop has come with an unexpected catch. When the time came recently to renew the mortgage on the business, it turned out that this farm was no longer a farm. The bank had reclassified it as a retail business, because that’s where the highest proportion of their income was coming from. Banks see retail as a riskier industry to lend to than farming. Which meant this farmer would now have to pay a premium to borrow against a risky retail business, rather than the comparative security of a farm.

What if this farmer had been able to show clearly the value her diversified business is adding to nature and the community? What if the bank were able to assess the loan on a more well-rounded set of criteria than purely financial return?

The vital role of reliable data for the farming transition is becoming ever more apparent.

Last month, FFCC hosted leaders and experts from the worlds of farming and finance for a symposium on the finance required for the farming transition. As this story from the day shows, the conversations kept returning to one topic – the overwhelming importance of good data.

The vital role of reliable data for the farming transition is becoming ever more apparent. There are three big and interlocking reasons for this, the first two of which come back to money. The third gets to the core of why so many are supporting a transition to agroecology:

• Verified data is needed to measure the success of the government’s new farm support, the environmental land management (ELM) scheme.
• Certified data will provide confidence to banks and investors to invest in regenerative farming businesses.
• Trusted data is essential to track progress towards addressing climate breakdown, halting and reversing the destruction of nature, and holding businesses to account for doing so.

The key questions here are: who needs to pay for data collection and how much is it worth?

Let’s take these one by one, starting with measuring the success of ELMs. With the new schemes, which pay farmers for farming in ways that benefit the environment, all the talk is of ‘public goods’. These are positive changes like clean rivers, reduced air pollution, a greater abundance of wildlife – changes which all of us can benefit from and which public money should support.

The key questions here are: who needs to pay for data collection and how much is it worth? Clearly, to measure that ELMs delivers the improvements it is designed to, government should pick up data collection and monitoring as a cornerstone of the schemes. This is already being done in part, for example through the moorland standard (though nothing much is being done with the data – more on which in a moment). As a core principle of ELMs, paying all farmers a fair rate to collect baseline data would help to get people signed up. It would also gather a wealth of information on the success of regenerative practices.

This will have a range of positive knock-on effects, starting with helping banks to assess risk more accurately. When deciding whether to loan to a business, banks are now tasked with taking their own performance against Environmental, Social and Governance (ESG) requirements into account. In the case of a farming business, this would cover how the bank’s loan supports the farm’s impacts on the environment and the communities they work with, for which the bank bears some of the responsibility.

With accurate farm data to support the bank’s assessment of the loan’s impact, the financial risk of the shop can be set against the positive impacts the farm is having on nature.

Think back to the farm that, in the eyes of the bank, is now a retail business. This farm, if paid at a fair rate to collect data through ELMs, could use that data on their mortgage application to show the benefits of their regenerative rotations for the environment. With accurate farm data to support the bank’s assessment of the loan’s impact, the financial risk of the shop can be set against the positive impacts the farm is having on nature through the more rounded lens of an ESG assessment.

This would also help the bank assess their own performance against ESG criteria, which brings us to the most important part in all this. Banks have so far been largely accountable to themselves when measuring their environmental impacts – assessing their own targets against their own yard sticks. But this is starting to change. Bodies such as the Task-Force on Climate-related Financial Disclosures (TCFD) are being set up to hold corporates to account for their emissions and verify their reductions.

For this to work, we need both data and standards for its collection.

To do so (you guessed it!) they need data. The data collected through ELMs, paid for with public money, is a ‘public good’. It should be held by government in a publicly accessible central hub, with all data anonymised. Unlike with the data being collected for the moorland standard, this would mean the data could be used to drive meaningful change: bodies such as the TCFD could refer to it to hold banks and corporates to account for reducing their impacts and becoming net zero and nature positive.

But for the TCFD to do their work, they need both data and standards for its collection – a harmonisation of metrics that allow one bank’s ESG assessment to be compared to another. With so many tools on the market, consistent frameworks and methodologies for collection are needed to ensure that data is comparable. This is a huge opportunity for government. By setting methodologies and signposting the tools for best practice, they can create the conditions for bodies such as the TCFD to do their job.

So, where there are three reasons for the overwhelming importance of data for the farming transition, there are also three clear actions for government to harness data to drive real change towards climate and nature commitments:

• Pay farmers a fair price to collect data as a cornerstone of ELMs.
• Establish a centralised and anonymised hub where this data is held and open to access.
• Set the overarching methodologies and frameworks for data collection.

Others are circling to collect this data for themselves.

With these three straightforward policies, government can help farmers who are working to mitigate climate breakdown and restore nature, provide confidence to banks and investors to invest in those regenerative businesses, and support those tasked with the oversight of our climate and biodiversity commitments to do their vital work.

And let’s not forget, others are circling to collect this data for themselves. Crucially, by holding this data in an open-source and anonymised hub, government can help to ensure it delivers what all of us need it to deliver – public goods rather than commercial gain.

Dr Jim Scown is Farming Transition Co-Lead for the Food, Farming and Countryside Commission