Regenerative agriculture can safely be called a small hype. Especially the agricultural sector is dealing with it, now that buyers increasingly demand that dairy, meat, and potatoes are produced regeneratively. Recent American research shows that consumers do appreciate a more environmentally friendly cultivation method, but they are not willing to pay the extra costs involved.
In addition to regeneratively grown agricultural products, there is now regenerative education, water management, clothing, and even houses. If sustainable was the buzzword ten years ago, regenerative is now on the rise. It is also attractive for companies in the food industry. Unlike organic, there are no legal requirements attached to the umbrella term. What is regenerative? Each company gives its own interpretation.
Main Points
Broadly speaking, in agriculture, it usually involves a few main points: Reducing CO2 (through min-till or no-till), keeping the soil covered with the help of cover crops, using fewer synthetic pesticides and fertilisers, and working on biodiversity with, for example, flower strips and field margins.
The leading American agricultural Purdue University conducts monthly research on food consumption and the choices consumers make in the US. Their most recent research focuses on regenerative. Almost three-quarters of the 1,200 respondents indicate that they are not or hardly familiar with the term. Those who do recognize it mainly mention soil, health, land, and agriculture as words they associate with the term.
No Price Premium
Researchers divided the respondents into four groups who had to give their opinion on three hypothetical scenarios. Farmers who voluntarily choose to start regenerative cultivation, buyers who require growers to do so and pay a fee (which is passed on in the product price), and finally government policies that force the sector to cultivate in this way and allocate the funds by raising taxes.
The fourth (control) group strongly supports the move towards regenerative. 43% respond positively. Especially when farmers choose it themselves. If it will cost the consumer money, the response is quite different. This is also the case when (again fictitious) two snack products are offered. A standard and a regenerative variant, which costs fifty cents more ($5 versus $5.50). Slightly more than half (56%) are willing to pay extra for a regenerative variant, but when it comes down to it, only 47% actually pay the fifty cents extra.
Low Support for Biodiversity
This behavior is reflected when the university asks about important topics. Most people consider the affordability of food to be the top priority. Improving soil fertility comes second, and reducing water usage comes third. Interestingly, biodiversity conservation ranks lowest in the ranking. When it comes to who should pay for these additional requirements, the state's treasury is quickly pointed to, as long as it does not mean higher taxes. Only 6% say that consumers should pay for this. A hardly surprising outcome.
Whether a European or Dutch study would yield the same results is hard to say. What is clear is that the term regenerative is being used more and more here too. In the Netherlands, potato processor McCain has been promoting a regenerative potato contract since last year, which it has heavily invested in this year. By joining forces with Rabobank, a 3% interest discount is offered for related investments. In addition, the factory pays €5 per ton on top of the standard contract price.
Financial Benefit
Since 2021, the Canadian company has been pioneering so-called 'rain fries' (which is clearer in English than in Dutch) and has now rolled out programs in several European countries. It has the ambitious strategy that by 2030, all potatoes grown for McCain must be 'rain.' The strategy in other countries is roughly the same. There are different levels of complexity, and it collaborates with lenders. For example, BNP Paribas in Poland and NatWest in the UK. This way, regenerative becomes a business model at the same time.
In Poland, Farm Frites collaborates with McDonald's, to which it also supplies products in the Netherlands, and regenerative potatoes are also grown. However, it is not as explicitly highlighted here, and Farm Frites refers to it as the 'Future Farming Program.' This program uses the Biodiversity Monitor Arable Farming (BMA) and the KPI systematics to calculate the impact of an arable farmer. It looks beyond just potato cultivation to measure the entire crop plan of an arable farmer. The methodology was developed by WUR and the Louis Bolk Institute.
In addition to fries grown with respect for nature, the world's largest fast-food chain also focuses on burgers. In the UK, they are working on different methods of raising cattle and achieving zero emissions by 2030. Meanwhile, the company has been working with FrieslandCampina since last year to offer dairy products (milk and cheese) with a lower environmental impact. The goal is to have reduced greenhouse gas emissions by 14% by 2025 (compared to the starting point in 2019).
Marketing
McDonald's does not explain how a regenerative portion of fries, milkshake, or hamburger is financially justified. It is likely that the consumer will partly cover this cost. Food companies and the processing industry see it partly as a marketing tool to offer something different from the competition. This way, they are ahead of the curve, considering the American figures showing that regenerative means little to consumers. On the other hand, it also helps satisfy the base. Especially for a publicly traded company. In the potato sector, and perhaps in other sectors, competing companies are closely monitoring this development. Not every factory is engaged in regenerative cultivation. What if all these extra measures become the new standard? Besides a hesitant consumer, not everyone in the chain is enthusiastic.
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