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What do Regenerative Farmers need exactly?

At reNature, we constantly work to help farmers transition to regenerative agriculture. When pitching regen ag to corporates, a few standard questions reoccur when we talk about the transition:

  • Is there a standard for regen ag?
  • How much does it cost per hectare?
  • Will it pay back the investment?
  • Who pays the bill for the transition?
  • How much does it reduce carbon emissions at farm level?
  • What are the costs for monitoring?

If you have a question to be added to the list, please share it with us.

But what exactly does the farmer need? This is a much broader question that taps into the larger landscape of stakeholders in the global supply chain. The problem is not the farmer; it is the system that massively blocks any initiative to scale up regenerative agriculture. 

Although there are national, regional, and local differences, a few simple solutions can increase the success of the much-needed transition to nature-based agriculture.

Recognition for doing good

Farmers who want to transition or are practicing other forms of farming are often perceived as alternative, unconventional, or even difficult. We must learn to appreciate these farmers’ efforts to do good. They need recognition and support throughout the supply chain. How to put this appreciation into practice follows below. You can start by sharing this article on your social media.

Fewer regulations on land use

Depending on national, regional, and local regulations, farmers are bound to work their land within a certain scope. In some EU regions, for instance, farmland can not be kept fallow or unproductive to ‘recover’; instead, it must produce something yearly. 

In some countries, like the Netherlands, farmers are prohibited from planting a large number of trees on their land as it might ‘downgrade’ the agricultural land to forest, which lowers the value of the land and, in theory, decreases regional food production. 

Of course, some regulations are good for the environment. For example, Brazil has the most stringent rules on private land regarding riparian buffer zones and other ecological buffers (PDF). Riparian buffers are the natural vegetation from the edge of the stream bank out through the riparian zone. The vegetative zone is a buffer to pollutants entering a stream from runoff, controls erosion, and provides habitat and nutrient input.

The problem with laws and regulations is that they can eliminate farmers’ will to experiment.

Valuing soil improvement

Regenerative agriculture is about retrieving healthy soils with increased organic matter and biodiversity. Research has shown that healthy soils produce higher yields and better products. We must find a way to reward farmers for their soil improvements. Valuing soil quality makes investing time and money attractive for farmers and landowners. 

Landowners from their side can stimulate their farmers to improve the soil quality by promoting regenerative practices on their land. 

Soft conditions for loans

Access to finance is a challenge in every industry. But in agriculture, it is even harder for starters. The EU reports that farmers’ unmet demand for bank financing reached €62 billion, based on two surveys. Smallholders and young farmers are most affected by this lack of loans and financial investments. 

Providing loans to farmers typically involves serious requirements, like collateral, to secure the loan. This could include land, equipment, livestock, or crops. 

Plus, farmers typically need to specify the purpose of the loan, whether it’s to purchase equipment, land, livestock, or cover operating expenses. Lenders may tailor loan terms based on the intended use of funds. Sometimes, lenders also require farmers to have adequate insurance coverage to protect against risks such as crop failure, natural disasters, or equipment damage. As there are no hard track records, financial institutes, and insurance companies usually see Regenerative Agriculture as a liability. 

Longer lease contracts

The majority of farmers rent their land. For example, about 60% of agricultural land in France belongs to non-farmers. The annual rental prices of one hectare of agricultural land vary between countries and regions within countries. In 2022, renting arable land or permanent grassland was the most expensive in the Netherlands, with an average of €843 per ha. The level of land prices depends on several factors like national laws, proximity to networks, and land-specific factors such as soil quality, slope, or drainage. 

Usually, the farmer needs to renegotiate their lease contract after a few years. Any change in the value of their land, such as improved soil health, will be the subject of that negotiation. 

Short lease contracts under five years demotivate farmers to improve the quality of their land. Logically, longer contracts in which the renting farmer can benefit from their regenerative practices encourage the farmer to transition.

By the way, this is a typical EU and USA issue. In Brazil, for instance, less than four percent of the farmland is rented under lease compared to 33 percent in Europe or 38 percent in the United States, according to the World Census of Agriculture.

Fair price

It makes sense to expect a better price for better products. Every consumer is willing to pay for better quality. However, companies like food processors see premium prices threatening their profit and, as a result, upsetting shareholders. They would rather avoid paying an extra. Premium prices also bring risks to the farmer. Usually, the premium deal ends before the farmer has earned his investment back. 

It would make more sense to work with a fair price and longer off-take agreement to secure the reward for the farmer’s effort to improve his farming system.

Transparent mass balancing

The yields of regeneratively produced products must be higher to reach the consumer on a large scale. The products are sold in small quantities either to specialty brands or on local markets. Large companies should find a way to separate the regenerative commodities upstream, to claim a percentage of the product to be regenerative. Only by showing a part of their product does good to nature,  they win the consumer’s choice and contribute to the scaling up of regenerative practices. Mass balancing is common in renewable energy; why not in food production?

The wild harvest of Brazil Nuts in the Amazon

Smaller margins on goods and services

Last but not least, the economics behind the supply chain. In the current system, raw materials must be cheap and every step in the process adds value. If companies offer premiums to farmers the costs at the start increase and makes the end product more expensive. By decreasing the margins on products that actually do good to the environment (and the brand image), regenerative products will not become a specialty, a niche, or an exclusive product for a happy few but available for the masses. The economics behind mass production can still add up to a serious profit. Opening regenerative produce to the market will increase demand and ignite the transition.

For example, in the simplified supply chain graph below, a harvester of Brazil Nuts (producer) receives 1 euro per kilo of raw material. At the end of the chain, the Dutch consumer pays 22 euros per kilo at the supermarket.

Another solution is to tax products that harm nature. “Dear Ursula, think about the billions EU can receive if you use the European Ecodesign for Sustainable Products Regulation (ESPR) to tax ‘bad’ products. For the consumer, ‘bad’ food will turn into a luxury. A snack that you know is harming nature. Awareness is the start of transition.


Conclusion

Regenerative farmers require several key elements to facilitate their transition to sustainable agriculture. Firstly, they seek recognition and support within the supply chain for their efforts. This includes appreciating their commitment to regenerative practices and assisting throughout the transition process. Moreover, farmers need fewer regulatory constraints on land use to enable experimentation and innovation in farming techniques. While some regulations are beneficial for the environment, excessive restrictions hinder progress.

Additionally, valuing soil improvement is crucial. Farmers should be rewarded for enhancing soil quality incentivizing investments in regenerative practices. Access to finance is another challenge, particularly for smallholders and young farmers. Soft loan conditions and longer lease contracts can alleviate financial burdens and provide stability for farmers.

Fair pricing structures and transparent mass balancing are necessary to ensure that regenerative products are economically viable and accessible to consumers. Adjusting margins and increasing demand for sustainable products can accelerate the transition to regenerative agriculture. Or governments could simply tax ‘bad’ products.

Addressing these needs can facilitate the widespread adoption of regenerative practices and promote a more sustainable food system.