Soil Organic Matter: A Diversified Investment Portfolio Analogy

Our recent blog post titled “Soil Organic Matter” has brought up many questions. The number one question being: Why does continuous corn, that puts a lot of residue back into the soil each season, not build soil organic matter? The simple answer is that residue is not soil organic matter. It takes time, diversity, and an undisturbed environment to build soil organic matter.

Let’s think about a money analogy to hopefully make things clearer:

In this analogy a continuous corn system is like having $1000 in a chequing account at the bank. That $1000 will earn interest (corn residue) that you can use in the future (as the corn residue breaks down it releases nutrients to the corn crop in future years). However, the rate of interest is low and your $1000 does not grow very much if at all because the rate of interest barely keeps up to the cost of inflation (the nutrient draw by future corn crops as average yield gets higher).

A diversified rotation or multiple years of alfalfa with no soil disturbance is like having $1000 in a diversified investment portfolio. In this scenario you have your money in multiple places: chequing account + stocks + bonds + mutual funds + tax free savings, which give you multiple ways of building your money. This diversified investment portfolio involves several people working to make your money grow at greater returns than just a chequing account. In the soil, a diversified or undisturbed crop rotation builds microbial activity, so you have more good microbes (financial investors) working to build soil organic matter for you. Over time in the diversified investment portfolio you begin to realize the time value of money, compounding interest, and your investment of $1000 grows significantly. The same happens with a diversified crop rotation or multiple years of alfalfa with no soil disturbance, your soil investment results in higher soil organic matter.

We have not yet addressed a very important part of this analogy, a recession or downturn in the money market. Tillage is the soil equivalent of a recession or downturn in the market. When a recession happens, you can lose what you gained in the money market. If your investment portfolio is diversified, you will lose less than if you have all your money in one place. How much tillage you use in any rotation scenario will determine how much you lose or how deep your recession goes. Typically, continuous corn involves intensive tillage each season which disrupts two of the key processes needed to build soil organic matter, time and an undisturbed environment. As a result, tillage in any rotation scenario slows or eliminates the process of building soil organic matter.