Hal Hamilton and Elizabeth Reaves
In late 2020, one of our colleagues, who is responsible for the greenhouse gas commitments of a large food company, asked us to help quantify costs and GHG impacts of work with farmers in their supply chain. The company was having some difficulty justifying projects in crop agriculture because of the long-term nature of carbon accrual.
The Food Lab team began with that cost/benefit question and invited six leading companies to compare their data in a confidential learning group. Our questions were:
- What are the most cost-effective strategies for achieving impact against goals for net-carbon and regenerative agriculture?
- What elements of successful programs are replicable or worth building on?
- What limits our ability to scale and what will we do about it?
We discovered that comparisons among different approaches cannot be definitive because the programs are at different stages of maturity, rely upon implementing partners with varying capabilities in different agronomic contexts. Droughts and other volatile conditions can affect results in any one season. Some programs require start-up support for operating partners. Furthermore, the programs of the six companies are constructed from somewhat different theories of change (sets of assumptions) about what is required to deliver impact.
The programs are generally a mix-and-match of the following key elements:
- Technical assistance, mentoring, training, and demonstration farms or sites;
- Quantification of GHG/ecosystem benefits (scope 3);
- Incentives to farmers for program participation; and
- Support to share farmers’ upfront costs and risks, before improvements take effect.
Program costs vary considerably, depending upon goals, incentives, the unique characteristics of each farming system, and the maturity of existing infrastructure such as farmer learning groups and agronomic assistance. For those programs with enough preliminary data to share, costs ranged from $15-$50 per MT of CO2e reduced. The two programs with the lowest cost per ton were also the largest programs, indicating a potential economy of scale. These programs spent a significant portion of their budgets to provide cost share incentives for practice change, and these practice change incentives seem to correlate to the quantity of CO2e reduced.
One of the programs is a collaborative venture by two companies, with farmers receiving cost-share payments as incentives for planting cover crops, and those farmers planted almost as many acres of cover crops with no cost-share incentive. This model is an example of how multiple companies can invest together for greater impact at lower cost. Our initial hypothesis is that at a certain scale there is a tipping point in which company investment, along with outreach from a strong implementing partner, can achieve a multiplier effect.
Despite some early successes, however, nobody is satisfied with the current rate of progress. Supply chain pilots tend to reach the early adopters and not the broad middle of farmers, and neither companies nor environmental organizations will reach their goals one pilot at a time.
The following barriers to scale consistently arose in these cases:
- High relative costs of measurement and the difficulty of covering these costs within limited sustainability budgets;
- Finding mature and capable implementation partners;
- Limited positive public policy incentives combined with frequently perverse incentives;
- A need for risk share incentives outside of existing market relationships; and
- Farmer habits that can limit participation to early adopters. [For the past several decades, conservation became an add-on to labor-saving productivity on most farms. As one sustainability officer put it, “Farmers’ perception of themselves as stewards of an agriculture legacy is strong, but not necessarily in alignment with the change that is needed to steward a long-term future. Farmers see themselves hitting huge production numbers and think they’re doing great, but the reality is they are mining soil, even though in their hearts the intent is to set the farm up for the future.”]
Examples of the experiences of these six leading companies gave some hints that impact at scale may increase, and program cost per unit may decrease, when:
- Buyers of different crops in farm rotations invest together;
- Organizations on-the-ground that provide agronomic support and facilitated peer learning among farmers are significantly strengthened; and
- Strategies emerge to support change across whole regions (for example, with realignment of crop insurance or new markets for rotation crops).
Program designs are based on assumptions about what farmers need in order to implement and sustain regenerative practices. These assumptions drive program costs for technical assistance, measurement, motivation from engaging with buyers, and financial incentives:
Quick-Win Assumptions: For farmers, practices have immediate return (productivity or efficiency gains) in the first few years of implementation. It thereby makes economic sense for farmers to adopt these practices if provided with training, technical assistance, and demonstration trials (i.e. looking over the fence row at what one’s neighbor is doing). In essence: farmers will adopt better practices because of perceived self-interest.
Worse-Before-Better Assumptions: Adoption of new practices comes with costs and risks that create barriers to entry for farmers, but after a few years of transition, the practices will provide returns such that farmers will continue to use these practices without additional incentives. Therefore, farmers need a support structure that includes training and/or technical assistance and also incentive payments to cover upfront costs before p
ractices become at least cost-neutral.
Long-Game Assumptions: A large-scale shift to regenerative agriculture may require incentives, technical support, and peer-to-peer learning programs for longer than the first few years. Furthermore, change across large farming regions requires not only training and technical assistance but also shifts in farmer culture (perceptions of “success”), market relationships (de-commodification), and public policy (incentives for environmental services to replace incentives for single crop productivity).
These assumptions and strategic approaches can run simultaneously. For example, we can engage early adopters while also working to shift enabling conditions for the large middle.
The above observations and questions shape a 2021 system mapping and strategy development process, called a Scale Lab, facilitated by the Sustainable Food Lab, led by key companies and their partners, with the convening support of the Midwest Row Crop Collaborative, Field to Market Alliance, SAI Platform, Cool Farm Alliance, US Farmers and Ranchers in Action, and Climate Collaborative.
For more information, contact Elizabeth Reaves: [email protected].
