From the vast cropland of Kansas to the bright green fields of eastern China, farmers are being guided in adopting more sustainable farming practices that improve the carbon retention of soil and ultimately support their bottom line. Technology platforms from the likes of Cargill and Tate & Lyle help growers to capture data about the soil quality of fields and the impact of switching to less-invasive farming methods. In so doing, large corporations reduce the environmental impact of their supply chains and help their customers achieve their carbon reduction goals too.
Cargill aims to see 10 million acres of US farmland adopt so-called ‘regenerative agriculture’ practices by 2030, through the implementation of its RegenConnect program, launched last year across six states in the US Midwest. Demand for the carbon storage units generated by farmers has been so strong that the company is expanding the program to 15 states this year. The program rewards farmers for implementing regenerative farming practices such as reduced or no tillage (ploughing the soil less) and for planting cover crops over the winter with a payment of $25 per metric ton of carbon offset, said Cargill’s Sustainability Lead Nathan Fries. That price will be reviewed and adjusted every year, depending on how Cargill views it as commensurate with the voluntary carbon market, Fries said.
As corporations boost their sustainability commitments amid mounting investor pressure, the price of offsets could rise significantly, creating a $190 billion market as early as 2030, according to BloombergNEF.
Soil’s secret
“Sustainable agriculture is an incredible resource to reduce the footprint of food and beverage companies,” Anna Pierce, director of sustainability at Tate & Lyle, told BloombergNEF. The company works with Truterra, the sustainability division of farmer cooperative Land O’Lakes, to “enable growers to make more informed decisions about changes in agricultural practices and connect that back to their return-on-investment,” she said.
The Truterra platform allows Tate & Lyle to establish a greenhouse gas emissions baseline for the more than 1.5 million acres of corn that it procures annually — and to track improvements to those emissions, in addition to other factors like soil health, erosion and water quality over time. Up to 26 conservation practices are promoted under the program, from rotating crop type on the same field to doing less tillage, which means disturbing the soil less and so emiting less CO2. The program works hand-in -hand with landowners to ensure that “environmental change is financially sustainable”, because otherwise it won’t produce the la sting change that is required, Pierce said.
Tate & Lyle is also training farmers in China in how to modernize the farming of stevia, a low-calorie sweetener found in cakes and soda. The program is switching out synthetic fertilizer and pesticides to more sustainable alternatives, and introducing methods to improve soil carbon.
“Our first priority is to reduce emissions in our supply chain” rather than to pay for carbon offsets that are external to that in order to reach Tate & Lyle’s emissions reduction goals, Pierce said. These carbon storage efforts within a company’s supply chain are known as ‘carbon insets’ and are becoming more popular in the food and beverage industry.
Carbon insets
The carbon insets generated through Cargill’s Regen Connect program count toward its own Scope 3 emission reduction goals, in addition to offsetting the emissions of its downstream customers, Fries said. Scope 3 emissions are those that occur within a company’s supply chain.
The Regen Connect program for 2022 will use a model from Regrow Ag to measure historical crop type, tillage use, weather and soil type on a field-by-field basis across the acreage enrolled. From this, the model uses algorithms to predict the amount of CO2 that could be sequestered by adopting regenerative farming practices over the contract term. For those signing up this summer, that term will run until December 2023, with carbon inset payments issued a few months in as well as at the end of the contract. Cargill aims to see farmers adopt these practices for the long term, but offers one-year contracts for flexibility on pricing. “As biomass increases in the soil, typically the CO2 sequestration rate will increase for the first 8-10 years of adopting the practices (soil and weather dependent),” Fries said.
One area of contention in the industry, however, is that Cargill’s program only recognizes new practices adopted, and thereby excludes farmland that has been sustainably farmed for decades. “We hear from a lot of farmers that have adopted sustainable practices 10-40 years ago, but unfortunately, demand from buyers today is mostly looking to incentivize new practices that count toward their own targets,” Fries said.
Setting a baseline
Nestle is another proponent of working directly with farmers to improve their yield and the surrounding environment. It uses the ‘Cool Farm’ tool to model the carbon footprint of a farm and to set a baseline upon which it can build. Healthy soil is an “important nexus in agriculture,” said Pascal Chapot, head of agriculture at the Vevey, Switzerland-based company. “If you have a rich, healthy soil, with a good structure, it is the start of a virtuous cycle – you have better fertility, productivity and higher water retention capacity. It also helps to trap carbon,” he told BNEF.
Nestle works directly with 600,000 farmers globally, while also buying via intermediaries like traders and suppliers. Its Farmer Connect initiative sees agronomists work directly with growers to improve soil health, reduce the use of chemical fertilizer and improve yields. In Vietnam, the Cool Farm tool has identified opportunities to improve the application of fertilizer on coffee plantations, while dairy farmers in Brazil are paid more per liter depending on how they score in Nestle’s sustainability assessment. In the U.K. too, dairy farmers with better grazing practices, wider hedgerows and healthier soils, also receive a bonus, Chapot said.
“Any change in farming comes with a risk… Our pricing scheme helps to de-risk that transition, and we also have subsidies for upfront investment,” Chapot said.
PepsiCo Playbook
PepsiCo aims to guide its huge network of farmers and suppliers toward a more sustainable future through the practices set out in its Positive Agriculture Playbook. This defines regenerative agriculture and helps farmers set goals around improving soil health, water quality, biodiversity and reducing carbon emissions. By 2030, the maker of Walkers crisps and Quaker oats aims to sustainably source 100% of its key ingredients and spread the adoption of regenerative agriculture across 7 million acres.
“Farmers have often been following the same practices for generations. So financial incentives from the government would help the [regenerative agriculture] transition”, as well as support from corporations such as PepsiCo, said Natasha Schwarzbach, director for global procurement sustainability at the US-based company.
PepsiCo sources over 25 crops across 60 countries and in Europe, works directly with 2,300 farmers via a team of 50 agronomists. It gathers data on soil quality, water levels and weather via direct input from each farmer, in addition to soil penetrometers, field sampling and has recently been piloting probes to measure carbon levels in soil. It also uses precision agriculture technology, called iCrop, across all of its European potato farming that “allows growers to unearth how their crops are performing and why”, it told BNEF. Through the iCrop tool “farmers can track the correlation between crop performance and soil type, fertilizers, irrigation and water usage”, a spokesperson said.
PepsiCo is also working with farmers to introduce drip irrigation technology to reduce water consumption and has a partnership to make organic fertilizer from potato peelings, which could reduce the carbon emissions of Walker’s crisps by as much as 70%, Schwarzbach said.
Both PepsiCo and Tate & Lyle are in the process of developing incentives to encourage regenerative agriculture practices, but declined to provide further detail.
Incentives
Carbon removal platform Nori uses a cryptocurrency-based model to reward farmers for adopting sustainable practices and storing more carbon in their soil. The US-based company partners with Soil Metrics, whose software uses third-party data from a network of 1,200 sites across the US where soil sample testing is conducted regularly, which is then fed back into the platform to assess the amount of carbon stored relative to a baseline year.
Farmers wishing to join Nori’s program enter data about the fields they wish to enroll and sign a 10-year contract to continue with sustainable practices such as reduced till, cover crops and crop rotation. External verifiers check that the project is genuine and once verification is complete, farmers (or carbon credit suppliers) are issued with Nori Removal Tonnes (or NRTs) to be sold in the Nori marketplace for NORI tokens where one NRT always costs one NORI. The NORI can either be sold for cash or kept for future use.
“We typically sell credits to small and medium-sized companies that have never bought carbon offsets before, as well as other blockchain platforms who want to make their platform carbon neutral, plus celebrities who want to offset their footprint. We are sold out and have had to turn to pre-selling credits,” Paul Gambill, founder of Nori, told BNEF.
NRTs currently cost $20 per ton of carbon offset, plus a 15% transaction fee, but Gambill recognizes that the market would perform better were a true “reference price for carbon” established. “A higher carbon price would encourage more farmers to participate in soil carbon and sell through Nori,” he said.
Less cultivation
A carbon credit program is also being launched in the UK and Ireland by Future Food Solutions, a Yorkshire-based company that for years has worked with corporates including Diageo, Heineken, Coca Cola and Intersnack to facilitate change in their supply chains. Applications are now open for farmers to apply to its Sustainable Futures Carbon Bank to enroll their fields in sequestering more carbon.
An announcement will soon be made for 500 tons of carbon credits from a Yorkshire farm purchased by a “global organization”, Steve Cann, director at Future Food Solutions, said. The carbon certification will be done by BCarbon Inc. Future Food Solutions has an exclusive agreement to work with the Texas-based startup in the UK and Ireland on a pilot for 10,000 tons of carbon credits.
Farmers sign a 10-year contract with Carbon Bank to apply a list of protocols to their land such as crop rotation, no till and cover crops in order to improve soil organic matter. “We estimate that every time a hectare is ploughed, between 2.5 and 3 tons of carbon is returned to the atmosphere,” Cann said. To protect soil organic matter, the soil should be disturbed as little as possible, using “direct drill” machinery to insert seeds directly into the soil without turning it over, Cann said.
“The last few years have seen more innovation around less cultivation,” to save money and reduce carbon emissions.
Under Carbon Bank, farmers will be paid annually and potentially a bonus if more carbon is stored than estimated, once verification is complete. As much as 80% of the value of the carbon credits sold will be returned to the farmer, Cann said.
Future Food Solutions has done carbon testing across agricultural land over the last eight years, by calculating how much carbon is stored by a cover crop (grown in-between cash crop cycles like wheat or barley to regenerate the soil) over a particular time period. “We take tissue samples of a square meter of cover crop, send it to a lab and receive analysis of the nitrogen, potassium and potash, together with a dry matter number from which we can deduce the level of carbon”, Cann said. From that, the amount of carbon sequestration across an entire field can be calculated.
Improved soil health also helps to prevent flooding — particularly important in flood-prone regions like Northeast England. “Every 1% increase in soil organic matter over one hectare of land will allow that land to absorb an additional 240 tons of water,” Cann said.
Natural capital
The financial world is yet to become familiar with making profit from planting trees to generate and sell carbon offsets, but this could soon change, with the launch of the first natural capital investment trust on the London Stock Exchange in November 2021.
The Foresight Sustainable Forestry Co. invests in mature forestry for timber production in the UK, which generates steady returns, as well as planting new trees on previously un-forested land. Once those trees have grown and are accredited, the plan would be to sell the forests and associated carbon properties within eight to 10 years, by which time the carbon market will be more established and carbon should reach its maximum value, Robert Guest, director in infrastructure and real estate at Foresight Forestry, said.
“The theme of sustainable timber and UK freeholds perform well against inflation”, so we see UK forestry as the “perfect entry point into the natural capital market” for investors, Guest said. The “structural imbalance between the supply and demand of timber globally” due to population growth, urbanization and low-carbon construction is likely to drive strong returns, he told BNEF.
Foresight Sustainable Forestry currently has 29 properties across the UK, two-thirds of which is mature forestry and the remainder of which is afforestation. The aim is to bring the balance to more of a 50/50 balance between the two, which is expected to offer the best risk-adjusted return for investors, Guest said.
The carbon credits generated by these forests will be verified by auditors on a regular basis, using drones and radar to ensure there is sufficient biomass. “Any buyer of a carbon credit will want to know those forests are still growing and being cared for”, so data collection will be key to Foresight’s management strategy, Guest said.