Growing Returns

Collaboration between food companies and banks can accelerate regenerative agriculture in Europe and beyond

The widespread adoption of regenerative agriculture practices in Europe could strengthen crop resilience to extreme weather and support the long-term sustainability of farms, communities and ecosystems – an urgent need as the region faces record-breaking heatwaves. Despite the benefits of adopting cover cropping, no-till, nutrient management, alternative manure management and other regenerative practices, many farmers are hindered by financial barriers, including high up-front costs and risks.

These transition costs coincide with a major financing gap. A 2023 analysis from the European Investment Bank estimates that agriculture in the EU has a financing gap of up to €62 billion ($73 billion). Research by the Soil Association Exchange with farmers in the UK found that 66% of farmers agree that financial and business risks are barriers to transitioning to farming systems that prioritize climate and nature, and 60% lack the financial flexibility needed for experimentation and learning during the transition process.

We’ve conducted similar research in the United States, finding that more than half of farmers in Iowa – the highest producing state for many commodity crops – are interested in transition loans paired with other incentives to support them in adopting soil health practices.

Farmers’ financial partners – commercial and agricultural banks, lenders that provide farm loans, and food and agriculture companies that buy farmers’ products – have an important role in supporting the transition to regenerative agriculture.

Recently, EDF, Opterra and EIT Food co-hosted a roundtable bringing several leading agricultural banks together with food and agriculture companies in Europe to explore how they can collaborate to co-finance regenerative agriculture. What we learned can help accelerate regenerative agriculture in Europe and beyond.

Food companies and banks have complementary motivations to finance regenerative agriculture

Food and agriculture companies and agricultural banks have complementary business drivers and strengths that support their collaboration. Many food and agriculture companies have set environmental targets for the agricultural products they source and have already established programs offering incentives and technical support to farmers who improve environmental outcomes. They are also motivated by the opportunity to build resilience in their supply chains as extreme weather increasingly threatens food security.

Agricultural banks offer financing that can support farmers through on-farm investments that occur over time or require substantial capital outlays. They also often have existing, close relationships with their farmer clients and insight into the entirety of farm businesses. They are motivated to support their farmer clients who want to make on-farm investments aligned with market shifts and government targets, including sustainability goals and greenhouse gas emission reductions.

When these business priorities come together, companies and banks have the opportunity to support farmers by offering holistic financial solutions in which market incentives and financing are packaged and tailored to the regenerative transition. In addition to providing better financial solutions for farmers, collaboration between food companies and agricultural banks will also expand the total amount of transition finance available to farmers. This would be a dramatic improvement to the status quo, in which farmers must try to fit together different incentives and financing that often have incompatible or burdensome requirements.

Building from examples of success

Participants in the roundtable shared existing programs and initiatives that could be learned from or expanded with a broader collaborative effort.

Across Europe, offering interest rate incentives within agricultural loans for sustainable projects is increasingly becoming the norm. For example, the Bank of Ireland has expanded its Enviroflex loan program to be available to 95% of Irish dairy farmers, and has received €30 million in loan applications to date. This financing supports the Irish dairy sector – a critical economic driver and major source of the country’s greenhouse gas emissions – to implement climate-friendly practices and technologies.

Earlier this year, the United Kingdom agricultural bank Oxbury also launched a new loan facility to incentivize and reward farmers to make sustainable changes. The Oxbury Transition Facility operates in conjunction with other financing initiatives, such as government grants and supply chain incentives, to create a blended finance model that extends the impact of multiple partners.

Additionally, the Swedish alternative finance provider Gårdskapital was created to help more farmers transition to regenerative practices and offers a variety of tailored financing options.

Value chain collaboration can drive progress

To bring financial solutions such as these and others to scale, participants weighed how they can enable greater collaboration between food and agricultural companies and financial institutions.

One key idea of interest was a blended finance facility at a landscape scale – an entity that could help convene finance providers to offer lower interest rates or take on higher-risk projects, and better align with supply chain programs and incentives in a specific region. Other opportunities that emerged for collaboration on financing or de-risking products included bi-lateral partnerships when companies’ product sourcing regions and financial institutions’ service territories have farmer customers in common.

This kind of collaboration promotes a voluntary, whole-value chain approach to advancing regenerative agriculture – one that enables farmers to make a change by supporting them through the transition.

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Modernizing agricultural insurance to strengthen farmers’ ability to adapt

Last year, the U.S. faced its fourth most costly year of extreme weather, contributing to more than $20 billion in agricultural losses. As this trend of increasingly extreme weather continues, modernizing agricultural insurance in the U.S. is a crucial step toward protecting farmers’ financial stability and reducing the risks they face when transitioning to climate-resilient practices.

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A new normal for Irish dairy: Pioneering sustainable change for Ireland’s climate future

Black and white cows graze along a coastal hillside in Ireland.

Ireland’s lush pastures and deep-rooted agricultural traditions have long made it a global dairy powerhouse. But with agriculture contributing nearly 38% of the country’s greenhouse gas emissions — four times the EU average — there’s no escaping the uncomfortable truth: Ireland’s booming dairy sector must evolve to meet the country’s climate targets.

To respond to this pressing challenge, Environmental Defense Fund Europe (EDF Europe) and EIT Climate-KIC partnered to explore a new vision for sustainable dairy. The goal? To co-create a future-proof model that balances climate action with economic resilience in Ireland’s rural heartlands.

Below, we’ll outline a new roadmap for sustainable dairy. Read More »

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Farmers need technical support to balance crop yields with climate benefits

Cornfields on Ohio farm.

Cropland, which covers roughly 13% of global land surface, is integral to producing food, slowing warming and boosting resilience. Farmers find themselves in a difficult spot: they are compelled to deliver higher yields to feed a growing human population but with a lower carbon footprint.

This complexity is underscored in a recent paper published in Nature Climate Change, which assessed how tillage, cover crops and crop residue affected both crop yields and greenhouse gas mitigation over time. This work is the first to examine the yield and mitigation impacts of common regenerative agriculture practices independently and collectively at a global scale looking out to 2050 and 2100.

Importantly, farmers can use these conservation practices to produce yields and mitigation, but they will need additional technical and financial assistance to do so. This is critical to maintaining livelihoods, food stability and supporting the climate.

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To slow climate change, we must measure livestock methane accurately

Accurate enteric methane measurements from dairy cows are essential

Reducing methane emissions, a climate super-pollutant, can lessen rates of warming within decades. Since livestock farming is one of the biggest emitters of that methane gas, with enteric methane from cow burps alone contributing about a third of all human-caused methane emissions each year, lowering it can have a big impact.

To reduce livestock emissions, we first have to know where we’re starting. That requires accurate and validated measurement, but measuring methane from livestock isn’t simple — how we do it matters. These are the most important considerations.

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Farmers need support to survive this economic squeeze

A farmer in a tractor plants rows of corn in a field.

In conversations with farmers in recent months, one word keeps coming up to describe their economic reality: “squeeze.” High farm input costs and loan interest rates are making it more expensive for farmers to grow crops. At the same time, low commodity prices mean they earn less money for the crops they grow. Farmers are caught in the middle of a bad deal with many asking whether it is even worth it to farm this year.

Farmers are facing this dilemma while also navigating additional disruptions and uncertainty. Federal funds have been frozen or canceled, putting farmers with existing contracts at risk after they’ve already invested their own money with the expectation that government funding would cover the remaining cost of farm improvements. Tariffs create another layer of price uncertainty and open the door for other countries to gain a competitive advantage in global markets. On top of this, farmers in several regions have experienced damage from extreme weather events, making their financial situation even more fraught.

Farmers are getting squeezed, and this makes it harder or even impossible for them to position their businesses for long-term success. But it doesn’t have to be this way.

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Three ways to improve soil carbon measurement

Farmer checking soil health with their hand.

Measuring soil carbon accurately is essential for ensuring confidence in large-scale efforts to improve soil health, reduce greenhouse gas emissions and support initiatives like carbon credit programs.

But determining how much organic carbon is stored in soil from decomposed plants can be a challenge, leading to a well-known problem: different soil testing labs can give different numbers for the same soil.

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Animal health is key to healthy people and planet

Molly Nyambura, member of Lynjack self-help group, working in her farm in Kiambu County. Photo courtesy of USAID Kenya.

Maintaining animal health isn’t only an essential practice for livestock farming, though any farmer or rancher will agree that’s true. It’s also a way to lower the methane intensity of the meat and dairy produced by livestock and improve health and livelihoods for people, which is particularly important for smallholder farmers in low-income countries.

Livestock farming contributes more than one-third of human-caused methane emissions, a powerful super-pollutant responsible for much of the additional warming and extreme weather the world is facing. At the same time, animal agriculture both provides critical nutrition and supports the livelihoods of millions of families, benefits that are now at risk due to heatwaves, droughts and other climate impacts. 

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Without financing solutions, farmers have to leave money — and environmental benefits — on the table

This op-ed was originally published in Hoard’s Dairyman. Since its initial publication, the financial uncertainty for farmers engaging in conservation practices has grown substantially. Ongoing trade negotiations, tariffs and blocked funding for existing U.S. Department of Agriculture contracts for conservation expenses and the uncertainty of future funding for conservation programs intensify the financial challenges faced by dairy farmers.

Dairy farmers are already part of a high-risk industry — the experience shared below shows how difficult it can be to align funding opportunities with farms’ financial needs. Now, farmers are being left to absorb that risk with less support. To continue producing food for their communities and responsibly stewarding natural resources, farmers will need more flexibility from financial institutions and greater investments from stakeholders advancing sustainable agriculture.

By Alice Crothers

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Measuring soil carbon is economically feasible

Doug Peterson, State Soil Health Conservationist with USDA, displays soil sample from a field that uses cover crops.
Credit: Kyle Spradley, MU College of Agriculture, Food & Natural Resources

There’s widespread consensus that climate smart agricultural practices like cover cropping, reduced and no-tillage and crop diversification can help farmers adapt to climate change and help reduce greenhouse gas emissions. Yet confidence in the impacts of these practices as a climate solution has been undermined by reliance on models to determine how much carbon has been accrued or retained in soils.

Soil organic carbon accounting and crediting relies on models because of the belief that direct measurement is too costly and cannot provide a practical solution to any large-scale measurement, monitoring, reporting and verification (MMRV) program for tracking soil carbon outcomes.

But that assumption may be wrong. Working with a team of researchers from the University of Illinois and Yale School of the Environment, Environmental Defense Fund found that a rigorous approach to soil carbon quantification that relies on taking soil samples before and after practice adoption across a large number of farm fields is economically feasible.

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