Growing Returns

Selected tag(s): food companies

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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From Southwestern India to Iowa: Why farming is at the heart of sustainability

Hiking in India

Studying in the Western Ghats region of India.

When I was younger, I fantasized about becoming a Jane Goodall for the millennial generation. I imagined living in the wilderness to study animals’ behavior and help conserve land. During college, I briefly lived out my dream when I spent a summer in the biodiversity-rich Western Ghats region of India, living and working on a private wildlife sanctuary where I studied the local flora.

The sanctuary was an island of preserved land, surrounded by vast farms that dominated the region’s landscape. While there, I had an epiphany – one that brought me back to my own family’s agricultural history on a farm in Iowa.

I realized that if we don’t work with farmers to conserve wild places, we will never be able to create truly sustainable environments for animals and humans. If I really wanted to make an impact on the Ghats region and its biodiversity, I’d need to move beyond a private sanctuary and back toward my family’s farming roots.

India showed me first-hand the need to partner with farmers. Spending summers on my family’s farm in Iowa and steering the tractor with my grandfather taught me to appreciate the integral role farmers play in maintaining balance in the ecosystem – and that farming is incredibly hard work. Both of these experiences still influence my agricultural career, which is focused on deploying the SUSTAIN™ platform, developed by United Suppliers, Inc. in coordination with EDF, to assist growers in improving fertilizer efficiency and soil health. Read More »

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A newly re-energized sustainable ag movement

Walmart storefront Last month I spent some time in Bentonville, Arkansas, at Walmart’s semi-annual “Sustainability Showcase,” a celebration of the company’s progress in implementing environmental initiatives.

During the showcase, Walmart CEO Doug McMillon invited the executives of major Fortune 500 companies in attendance to share their insights on sustainability – and I was inspired. On stage were the CEOs of Cargill, Kellogg, as well as Dr. Mehmood Khan, Vice Chairman and Chief Scientific Officer, Global Research and Development for PepsiCo.

I was struck by how open and bold these CEOs were in recognizing the need and their responsibility to help solve major environmental challenges such as climate change and water pollution. McMillon, for example, started the discussion by explaining that 20 percent of lakes in Minnesota are not drinkable, a situation that “touches people personally every day.”

Here’s my take on the top two agricultural highlights – and why I’m more confident than ever that sustainable farming initiatives will improve water and air quality across the U.S. Read More »

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How a 10-year old Walmart speech fostered sustainable food production

_Y1C0167Ten years ago the former CEO of Walmart, Lee Scott, made a speech that included three aspirational environmental goals. One of these goals was “to sell products that sustain our resources and environment.”

Yesterday Walmart announced that it will surpass its aggressive goal of reducing 20 million metric tons (MMT) of greenhouse gas (GHG) emissions from its supply chain. In total, Walmart will reduce 28 MMT of GHG from its supply chain by the end of 2015. That’s the equivalent of getting almost six million cars off the road.

To achieve this goal, Walmart tackled a diverse range of projects, including changing food date labeling to reduce waste and working with food companies and EDF to optimize fertilizer use on over 20 million acres of U.S. farmland.

As EDF president Fred Krupp said, “When you can get big companies to do important things, you can change the world.”

That’s why Walmart’s commitments have had a ripple effect with food companies across the country – 15 companies representing 30 percent of the U.S. food and beverage market created fertilizer efficiency plans – and why the retailer is helping make sustainable food production the norm. Walmart and the food companies supplying products to the retailer’s shelves understand that we’re facing environmental challenges that demand market based solutions. Read More »

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Cutting food waste to support farmers and the famished

Surplus food at the Food Donation Connection. Photo Credit: USDA.

Surplus food at the Food Donation Connection. Photo Credit: USDA.

Food waste affects more than just our wallets. Approximately one-third of all food produced in the world gets thrown away every year, leading to 3.3 billion tons of greenhouse gas emissions. At 2.6 trillion pounds, that’s enough sustenance to feed three billion people, or almost all people living in poverty worldwide today.

That’s why, last week, when I attended a Q&A session for ag interns at the U.S. Department of Agriculture with Secretary Tom Vilsack, I was intrigued when a fellow intern asked a question regarding food sustainability and what the U.S. can do to ensure that there will be enough food to feed the 9 billion people expected to populate the world by 2050.

The Secretary’s answer? Reduce food waste.

Read More »

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Why you won’t see an eco-label on your corn flakes anytime soon

Corn cereal

Credit: Flickr user Mike Mozart

Corn affects every person in the United States.

It is grown on about 90 million acres, an area roughly the size of Montana. Corn is ubiquitous in the products we buy, from shampoo and sodas to ethanol and animal feed.

The crop also uses the majority of nitrogen fertilizer in agriculture, requiring more nitrogen than soybeans, cotton and wheat combined. Nitrogen is necessary to produce corn. But when nitrogen is over-applied, crops cannot absorb it all – and this can lead to air and water pollution.

Fortunately, figuring out ways to use nutrients more efficiently to reduce loss improves a farmer’s bottom line. It also gives them a competitive advantage, as more and more food companies are embracing sustainability and fertilizer efficiency as a way to reduce risk in their supply chains. Read More »

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