Navigating a delicate balance: The challenge of implementing, monitoring, and rewarding regenerative agriculture

Introduction – Is regenerative agriculture a magic bullet?

The advent of agriculture allowed humans to create settlements and evolve into societies we live in today. Today, the agricultural systems which supply the industrialized world are also undermining it. Years of disregard for soil health has led to soil degradation which threatens agricultural productivity, smallholder incomes, and global food security. Approximately 20-40% of Earth's land is degrading, with about 70% altered to some extent^[1]. This degradation worsens climate change by releasing greenhouse gases. Paradoxically, food systems, mainly conventional agriculture, both suffer from and contribute to soil degradation. They are also responsible for 80% of deforestation, 70% of freshwater use, and most of the biodiversity loss.

Regenerative agriculture has emerged as a beacon of hope for the sustainable future of our planet. A recent report by International Union for Conservation of Nature and Natural Resources (IUCN)^[2], revealed strong evidence that regenerative agriculture works. Regenerative agriculture promises moisture enhancement, soil restoration, carbon sequestration and biodiversity protection, leading to secured food supply and strengthened livelihoods. However, when it comes to implementing, monitoring, and rewarding regenerative agriculture, the path is riddled with complexities. The topic is nuanced and cannot be condensed into a single statement or set of practices making it difficult for investors and startups alike to create a universal framework to understand, contextualize and measure work in this field. That raises a myriad of important questions on how to reap or scale-up the benefits of regenerative agriculture.

The challenge of being "just right"

One of the first challenges with regenerative agriculture is finding the perfect balance. What exactly does regenerative agriculture mean? Well, it's not always clear-cut and can mean different things in different contexts. It includes a variety of practices like water management on farms, managing pests naturally, enhancing soil health, and protecting the biodiversity of organisms present in the soil. These can be achieved through methods like reducing monocropping, interweaving grazing animals in a way that benefits the land and crop, or farming with trees (agroforestry or cover cropping). However, it's not always easy to get farmers to try these new methods; many are used to farming in traditional ways handed down through generations for decades. And if we make these practices too simple to encourage more farmers to adopt them, we risk unintended consequences. For example, if a rice farmer is adopting composting but doesn’t allow enough time between adding the compost and his next season of flooding That can result in an increase in the methane production from the rice fields! So, the challenge is to make regenerative agriculture detailed enough to be effective, but also easy enough for more farmers to adopt and benefit from it.

Context-specific parameters - The four pillars: Water, soil, carbon and now biodiversity

Regenerative agriculture's effectiveness largely depends on specific local factors, including water, soil, carbon, and biodiversity. These key elements of sustainability play varying roles depending on each unique farming situation. For example, while crop diversification techniques like agroforestry and crop rotations generally boost biodiversity, the impact on crop yields can differ. In some cases, such as with organic agriculture, there might even be a reduction in yield. Factors like climate, landscape, and soil type significantly influence the outcomes of these practices. This underscores the need for tailored approaches in regenerative farming, where flexibility and adaptability are crucial. Just like personal health goals can vary from general wellness to specific training objectives, farming practices must be adapted to meet diverse and context-specific goals.

Outcome indicators and thresholds

Unlike carbon, there is no single metric that can be used to measure the success of a regenerative agriculture program. Do you focus on soil quality as a metric or carbon sequestered or biodiversity in the soil? With no clear and unanimous definition in place, regenerative agriculture’s success relies on defining outcome indicators and thresholds. However, measuring these aspects is far from straightforward. How should soil quality be measured – by tracking pH level, moisture content, organic matter content or something else? To add to the complexity, regenerative practices often require several years or even decades to show their full impact. All this put together makes it challenging to convince stakeholders and secure consistent support and investment.

Principles, practices and outcomes

Once an outcome is identified, then a regen ag protocol can be designed across principle and practices. But how do we measure impact? Imagine a farmer adopting regenerative practices like no-till farming and cover cropping. It might take a few years before the soil moisture content can improve and decades before carbon sequestration shows noticeable improvement. In addition, the results can vary widely even within the same field, with variations as high as 20-30%. This means that small adjustments in farming practices can lead to significant differences in outcomes. Hence, we need to move away from rigid notions of measurement of impact and look for innovative solutions to deploy on the ground for monitoring these outcomes.

Business model evolution

Existing supply chains are highly commoditized, and price based; it also falls short in delivering the environmental and livelihood outcomes needed. Traditional supply chain models are unable to recognize the tangible and intangible benefits provided to society through regenerative agriculture as they are built for conventional food systems. Regenerative agriculture commitments will fail if the marketplace model is not redefined. We must reimagine and redesign what it means to get regenerative products from producers to consumers. The model should:

• Acknowledges the importance and the role of all actors in the food system and the relationship within the network - from food and farming businesses, intermediaries, distributors, processors, to end consumers. It should foster collaboration and equitable partnerships to build resilient networks through learning and engagement across different entities.
• Emphasize shared value creation and the holistic well-being of all participants / stakeholders.
• Be decentralized and contextual - as each crop and location may require a unique approach to sustainability, demanding adaptability, and intricacy to the process.

Digital innovation can bridge the gap in regenerative agriculture

We believe that digital solutions can significantly enhance accessibility to regenerative agriculture for farmers and streamline the dissemination of best practices for food companies

• Enhancing communication through digital tools: Transitioning from conventional to regenerative agriculture involves two crucial steps: increasing supply chain awareness and adopting new production techniques like no-till farming and composting. Digital tools, including SMS, USSD, Interactive Voice Response, and WhatsApp, can play a pivotal role in this transition. These tools offer a cost-effective way to reach a broad audience, ensuring consistent and widespread adoption of these practices.
• Data-driven advisory for localized solutions: Advanced technologies like remote sensing and IoT are revolutionizing how we gather information on critical factors like soil condition and weather patterns. This data, coupled with machine learning, allows for personalized advice to farmers, optimizing resources and minimizing risks. Such technologies not only save costs but also enable precision in farming techniques, tailoring solutions to specific local conditions.
• Traceability and global market access: Digital platforms are essential in linking regenerative agriculture initiatives with global markets. These platforms offer traceability from farm to consumer, a crucial factor for buyers willing to pay premium prices for sustainably sourced products. This traceability not only assures the product's origin and quality but also enhances its value, providing farmers with higher income. By doing so, digital solutions help mitigate the financial challenges associated with shifting to regenerative practices.

Financial solutions can help shift from farming to tending the earth

The current financial system focusses on growing cheap food, but this intensified the degradation of farmland. It is important to re-orient capital and the institutions and people that move capital, to reverse farmland degradation and build regenerative food systems that undo the damage done.

Farmers often face shrinking margins and high debt burden resulting in inability to find the capital to restructure their farm. To top it off, moving to regenerative agriculture practices often comes with a temporary dip in yield for the first couple of years of practice change. Hence farmers need support to go on this journey, especially the smallholder farmers who produce 29% of the world’s crops using a quarter of the world’s agricultural land.

New and alternative financing mechanisms are important to provide farmers with the capital to transition towards regenerative practices. Large corporations can help in mobilizing capital by providing credit guarantees through long-term purchasing contracts. Continuous technical assistance would also de-risk farmers’ investments, helping them apply proceeds cost-effectively. Private investors should rethink their investments and consider supporting long term bets to help regenerative agriculture scale up into an attractive investment option. 

FinTech solutions can help farmers crossover into a new paradigm

Digital tools, such as farm data analysis and remote monitoring, bring transparency to a farmer's business model and risk profile, making them more attractive to lenders. This data can be used to secure loans and connect farmers with financial institutions. Establishing market connections beforehand can help mitigate risks and make credit more affordable by leveraging buyer commitments.

Furthermore, IoT sensors unlock innovative financing possibilities. For instance, sensors in irrigation systems can reward farmers for efficient water usage. Smart contracts based on IoT can automatically trigger payments when specific outcomes, like improved soil health, are achieved. However, most equipment and sensors on the field need to be backed by appropriate maintenance support to be effective in the long term.

Another emerging use of digital tools is in carbon markets. They reduce the costs associated with monitoring carbon sequestration, certifying carbon credits, and facilitating transactions between buyers and sellers.

Conclusion

Regenerative agriculture is undoubtedly a path for a sustainable future. However, the path to implementing, monitoring, and rewarding it is fraught with complexities. Although large businesses like the French clothing company Kering founded a Regenerative Fund for Nature (an investment fund that “will provide grants to farming groups, project leaders, NGOs and other stakeholders who are ready to test, prove and scale regenerative practices”), it is just a drop in the ocean. In a study of 79 publicly-listed agri-food firms by FAIRR^[3], 50 have talked publicly about the benefits of regenerative agriculture. However, 32 of these 50 have not set formal targets. Even fewer (4/50) have committed funds to incentivize farmers to take up regenerative practices.

There is an evident misalignment in marketing regenerative agriculture as a scalable climate solution and quantifying emissions. This is also one of the reasons for inability to scale-up regenerative agriculture despite the hype around it. Only 12 out of the 50 companies discussing regenerative agriculture in their public reporting had any alignment between regenerative agriculture and Scope 3 targets. And only 4 are looking to quantify the contribution of regenerative agriculture initiatives to their Scope 3 targets. The FAIRR report adds: “Only a few companies are beginning to make the connection between regenerative agriculture with climate targets.”

Although, ‘regenerative’ is now the buzzword of choice in food marketing, more data is needed to define what it means for individual farmers present in different locations and harvesting different crops before growers can see a clear business case for adopting new practices.

[1] United Nations Convention to Combat Desertification’s (UNCCD) evidence-based flagship Global Land Outlook 2 (GLO2) report.

[2] Regenerative Agriculture in Africa - 2021 report

[3] The Four Labours of Regenerative Agriculture, FAIRR, Sept 2023