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GROWTH INDUSTRY

Regenerative farming reduces emissions and is more profitable

A farm is pictured by the sea in Nova Scotia, Canada
REUTERS/Carlo Allegri
A farm in Nova Scotia, Canada
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In recent years, big food companies from Nestle to Danone have pledged to reduce carbon emissions. But how exactly are they going to reach those goals?

Supporting the farmers who supply the commodities for these large companies, as they become more sustainable, is one way to make progress. Nestle, which works with 500,000 farmers and 50,000 suppliers, for instance, recently said it will invest $1.3 billion over the next five years to help farmers and suppliers transition to regenerative agriculture. Four years ago, Danone said it has provided financial and technical support to over 100,000 farmers globally.

Regenerative agriculture is a method of farming that allows food to naturally regrow on its own. As businesses seek to meet emissions targets, regenerative agriculture is seen as a way to farm in harmony with nature and reduce carbon footprints.

A recent study by Bain & Company and Nature United, the Canadian affiliate organization of the Nature Conservancy, shows that transitioning to regenerative farming techniques can help farmers reduce their emissions and increase profits. It says emissions could be cut in half per hectare farmed (one hectare is equivalent to 2.47 acres).

Bain provides consulting to companies that supply farmers or buy from farmers and process their commodities. “We want to add to the list of the tools that we suggest and recommend to our clients when we are discussing climate change strategies,” said Fernando Martins, a partner at Bain. He added that the number of Bain consultants who advise on regenerative agriculture grew from about a few people in early 2020 to dozens this year. The study comes out of a larger, higher-level study by Nature United that outlines natural climate solutions for Canada including regenerative farming, agroforestry, and grassland protection.

The study with Bain looked more specifically at four techniques that would be the most affordable with more immediate results for farmers:

  • Crop rotation, which means changing out which crops are grown according to weather patterns and seasons.
  • Cover crops, which are crops that are planted to enrich the soil and protect cash crops.
  • Reduced tillage, or decreasing the amount soil is moved or disturbed in order to let it settle and harbor microorganisms that provide nutrients.
  • Nutrient management is the balancing of the soil condition, water, and weather conditions in order to achieve the optimal amount of nutrients necessary for crops.

The idea is that all of these techniques are part of a farming system that can produce nutrient-rich soil to grow food year after year with minimal intervention.

Initial losses lead to higher gains

Transitioning a farm that doesn’t use regenerative techniques to one that does will take time. The farm’s soil needs to build up enough nutrients to support crops, which is done by increasing organic matter in the soil to create healthy and consistent topsoil. Most food is grown in the uppermost layer of soil, which is why having good topsoil is important.

Farmers need assistance to get through the initial financial losses of setting up a regenerative farm. While beginning the process of changing farming techniques, initial yields will be lower, leading to less marketable produce and less profit. The study suggests that it would take about four years until a farmer would break even and make the same amount they would have before transitioning.  However, the rewards are greater after the fourth year, with higher profits than if the farm had not made the transition.

Regenerative farming does not exclusively mean organic farming. Depending on the limitations and circumstances of the farmer, fertilizers and other chemicals may still be used. But regenerative farming can also serve as a path to becoming 100% organic since it is difficult to immediately switch from non-organic to organic.

There’s also investment pressure where food companies’ marketing and research and development departments, for instance, would need to allocate more money towards these initial big changes.

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“Balancing sustainability targets and the investments required against just the competitive pressures is going to be hard,” Martins said.

The biggest challenge right now for companies in the food industry is not so much how to reduce emissions but more so how to mobilize the entire hyper-competitive industry, which is being eaten away by private labels, he said. “Many companies in the food value chain have not yet grasped what regenerative agriculture means and what’s the potential.”

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