From competition to collaboration: Why regenerative agriculture is ‘a team sport’ for major food firms

Image: Lou Boop, PepsiCo

Today (12 November) has an agriculture theme in the COP27 presidency’s agenda. Despite food systems causing around one-third of global emissions and being acutely vulnerable to climate-related risks, the topic has never had a dedicated space in the agenda at previous UN climate conferences.

The inclusion of this dedicated theme is welcome news for the SMI’s Agribusiness Task Force. Formed earlier this year, the initiative includes 12 large businesses across the food and drink value chain – many of which are direct competitors. Its aim is to accelerate the adoption of agricultural practices that restore nature to the extent that they become “predominant”.

As part of its preparations for COP27, the SMI’s Agribusiness Task Force recently published an ‘action plan’ to scale regenerative agriculture. It reveals that just 15% of the world’s cropland is currently managed in a way that uses regenerative practices, and states that the proportion will need to grow to at least 40% by 2030 if the UN’s top-level international climate and nature commitments are to be delivered. With the year-on-year growth of this proportion now stagnating around 0.6%, the document emphasises that it really is now or never to accelerate implementation.

Mars is one of the Task Force members, and its outgoing chief executive Grant Reid is its chair. Mars’ chief procurement and sustainability officer Barry Parkin tells edie: “The way I think about it is that the early adopters have already adopted, and then it stalled. The vast majority of farmers are not adopting.”

In Parkin’s opinion, the main barrier to adoption is, “fundamentally”,  to do with the profitability of reg-ag. While he recognises that regenerative farms typically have similar or better yields, farmers face a transition period of a few years in which this will not be the case. And, in many regions, governments simply will not support farmers through this period, nor will they guarantee improved payments thereafter.

Parkin tells edie that improving the economics of reg-ag “has to be a combination effort” between policymakers and the private sector. “In some cases”, he argues, nations actively disincentivise a regenerative approach, and this is not something that businesses can overcome alone by paying a premium for regenerative.

He adds: “I think the next steps will involve really evaluating how well – or how poorly – individual country incentives work for regenerative farming… We need to get a spotlight on that.”

Here in the UK, where edie is based, there was anger and confusion in late September, as reports emerged that policymakers were angling to scrap plans for new farming subsidy schemes that would see farmers rewarded for improving nature. The reports came under Liz Truss and, with Rishi Sunak now at the helm and Therese Coffey in the top job on farming, there has been neither confirmation nor denial that this would go ahead – the Government simply missed its original deadline for publishing proposals.

Critics of the proposals include environmental groups, arguing that subsidy schemes which do not encourage nature improvements will leave the UK off-track to delivering its pledge to leave the environment in a better state for the next generation, and farmers, who say they have spent months preparing to change practices in line with the new schemes. The whole point of redesigning post-Brexit subsidy schemes, both of these factions have noted, was to realise the opportunity to increase benefits for nature, farmer livelihoods and the economy compared with the EU’s much-criticised Common Agricultural Policy (CAP).

Farmer-centric approach

Also speaking exclusively with edie about the Task Force’s report is PepsiCo’s executive vice president and chief sustainability Jim Andrew, who notes that the “combination effort” is as much between businesses and suppliers as it is between businesses and policymakers.

He explains: “Reg-ag is a team sport. It has to be, because farmers don’t grow just one thing and they grow crops in rotation.

“We think of this as a landscape approach – how do we work with all of the other organisations that our farmers care about and interface with, so that we can be in a position to address the whole set of needs?

“It’s really a farmer-centric approach as opposed to the company-centric approach. That’s how we will drive change and, make no mistake, what we are talking about is systemic change.”

Mars’ Parkin similarly notes that, as supplier farms adopt cover cropping, they will likely need to work with additional buyers if they wish to monetise their additional outputs. Cover cropping entails planting one or more different crops alongside your main crop for purposes such as improving soil health, smothering weeds, controlling pests or offering shade. In the past, these crops have been grown ‘for soil, not for plates’ – but as time goes on, farms may well look to sell them.

For Parkin and for PepsiCo’s Andrew, a ‘farmer-centric’ approach goes beyond big food companies collaborating with each other, and the other organisations which farmers speak with. It also involves providing farmers with the long-term certainty to make it through the transition period and beyond.

Parkin does not mince his words: “The reality is that most agriculture materials are being purchased as commodities. The whole industry is based on price and short-term contracts. I’ve continually said we need to end the commodity era; we now need to have relationships – directly or indirectly – with farmers. They need to have certainty to invest over a few years knowing that we will be there with them. Supply chain practices have got to change.”

“These are not transactional relationships,” Andrew agrees.

Going beyond a commodity approach enables greater transparency in the supply chain, to name one benefit. This will be crucial if big businesses are to collect the improved data they need to reach top-line sustainability goals and prove the benefits of the reg-ag approach.

But Andrew notes that farmers – more often than not – will not be pushed into action by data. In his opinion, while finances are the main barrier to reg-ag adoption, “there’s also a social and cultural piece”. He tells of how he heard from one UK-based potato farmer that a neighbouring business called his field ‘dirty’, not understanding that practices such as low-till and cover cropping were being implemented.

To that end, PepsiCo has more than 350 demonstration farms worldwide – locations that other people in the profession are invited to attend and see first-hand how innovative technologies or uncommon practices work. Andrew calls the owners and operators of these locations as “influencer farmers” and “positive role models”.

Carbon benefits

It is perhaps no coincidence that, as Mars and PepsiCo participate in a Task Force aiming to transform food systems, they are both undergoing companywide transformation plans of their own in the name of sustainability.

Mars launched its flagship ‘Sustainable in a Generation’ strategy back in 2017 and initially pledged at least $1bn for efforts to set and deliver targets aligned with the latest science on climate, nature and nutrition. It has subsequently decoupled growth from emissions, with emissions peaking in 2018, and set out plans last year to achieve a net-zero carbon value chain by 2050.

PepsiCo was a little later to move. It appointed its first chief sustainability officer, Andrew’s predecessor Simon Lowden, in 2019. This prioritisation of sustainability at board level paved the way for the launch of PepsiCo Positive in September 2021 – a so-called ‘strategic, end-to-end transformation plan’ with headline ambitions around net-positive impacts on nature and people.

Key environmental targets under PepsiCo Positive include adopting regenerative practices across the firm’s entire agricultural footprint and reaching net-zero carbon emissions by 2040 without the use of offsets. Instead, ‘insetting’ within the supply chain will be prioritised.

With this in mind, we ask Parkin and Andrew whether the carbon sequestration benefits generated by scaling reg-ag will be used in corporate emissions accounting towards long-term goals. Neither are able to give a definite answer at this stage.

Both speak of “ongoing” discussions and “evolving” science and standards, through frameworks including the Greenhouse Gas Protocol and Science-Based Targets initiative (SBTi). “We’re hoping that there’s not a competing multitude of standards and different ways of accounting between different geographies, under different NGOs,” Andrew adds.

The SBTi launched its first guidance for companies looking to set emissions targets that account for land-based emissions reductions and removals less than six weeks ago, in the form of its Forest, Land and Agriculture (FLAG) Guidance. This Guidance will need to be used by all companies in the food and drink value chain, as well as those producing tobacco or forest and paper products.

The SBTi is also working to finalise science-based targets for nature. Interim guidance was issued in 2020 and we have been told to await an update in 2023.