An unexpected benefit that happened in Australia during the drought of a few years ago, was water condensing on the solar panels overnight and early morning, trickled down to the grass below, leaving green pasture strips.


So…all this seems really good…and it should be full ahead with this modern and new mixture of farming… except…not so fast! Some voices of dissent and accusations of exploitation have been raised6


.


Some have highlighted how small the overall US lamb industry is and how it has in the past been focused in the past on Western producers who utilised free public land for grazing. There have been accusations of big companies, such as private equity firms, coming into this and using it as just another exercise of ‘greenwashing’. Talk of new, additional supplies of US lamb have raised questions on where the US market for such animal protein would be and where are their USDA plants to process such increased numbers. Where is the appetite for lamb? Finally, this has already attracted new participants to this combined farming industry…so…who are they? Are they interested in the long-term welfare of agriculture and of the land…or just in it to make a quick opportunity? All these are legitimate questions that should be asked…but which I do not have the time or the space in this article, to explore…though I do urge you to consider these points, if you have managed to get this far in my article.


I would also like to add my own points, to this conversation, points I have been considering and which I do not know of an answer to, not yet anyway! My thoughts come from the following. There is no open derivatives market in sheep or lambs, not even in one of the bastions of sheep farming – Australia, though there have been recent calls to try an establish such a market there7


. There are futures


market for cattle and pigs in the USA and for pigs in 6.


Lancaster Farming News, 24 October 2023 7. Sheep Central, 8 September 2023


China…but no direct futures price discovery in sheep or lambs. In part, this has been because…and please pardon the pun…there has been no appetite from some of the futures markets to develop contracts in this area. Why go to all the effort here, when new energy contracts are easier and more profitable for globally orientated exchanges? I would like to put forward the following situation or situations!. They are not complete…but could be some ideas of what may in part or whole, be the future.


Let’s assume the following. The Western world is gradually moving away from animal protein to plant- based protein to feed itself. The demand for beef, poultry and lamb is under pressure. Enter this new scenario where solar farms and Agrivoltaics can see the growth, potentially large growth, for supplying lamb…at the expense of beef farms and maybe other animal protein farms. Could this be enough to dictate a change in the dietary habits of…for example, the USA? Could the more abundant supply see an accelerated move away from beef…and towards lamb? If so, how can a lamb producing solar farmer properly hedge their exposure to market fluctuations in the price of their product? You can hedge the cost of electricity in exchanged traded markets…but what about the other product…the price of lamb? Now, for some larger and more sophisticated players in this new combined industry, there would likely be financial services firms who could offer an OTC derivatives hedge…but for many smaller operations, which seems to be the current majority of solar farms, there would be no new way to protect themselves from price risks. Is this a situation that we, as potential dependent future consumers of both electricity and animal protein from such suppliers, is this exposure something we should maybe start thinking about? As I wrote at the start, this particular rabbit hole, has led me to a whole warren of routes and ideas. I hope perhaps, that you might be minded to think about some of these ideas…and pursue them down your own rabbit hole.


Eddie Tofpik E: eddie.tofpik@admisi.com T: +44(0) 20 7716 8201


13 | ADMISI - The Ghost In The Machine | Q4 Edition 2023


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