The business case for a regenerative supply chain

THE BUSINESS CASE FOR A REGENERATIVE SUPPLY CHAIN

- and why agriculture just might be the key component

In recent years, the food industry has faced significant challenges. As global crises threaten the security of supply chains, the EU and UN declare bold climate goals, and more and more companies set ambitious science-based carbon targets, the urgency of finding creative solutions grows. Food companies, investors, and consumers are all looking to ensure a reliable supply of product while simultaneously building a greener future.?

Supply chains in the food industry cannot function without their foundational piece: agriculture. Operations from dairy farms to wheat fields to vegetable farms form the essential first step of the production process, supplying raw materials that travel through the supply chain to become finished products. Moving away from outdated, inefficient, and polluting agricultural practices that degrade soils is key to the resilient and green transformation of the way we produce food.

Among food industry giants, farmers, and consumers, the consensus is growing that regenerative agriculture is the direction of the future. Regenerative agriculture practices hold massive potential for businesses, farmers, and the environment— and the world is taking note. The 4 per 1000 Initiative, launched by the French government during the 2015 Paris Climate Summit, asserts an international vision of healthy soils as key to combating climate change through carbon sequestration (1). The initiative marks a commitment by its members, including 68 countries and many more international companies and NGOs, farmer organisations, research bodies, and private companies, to store carbon in their soils by scaling up regenerative farming, grazing, and land use practices.?

Consumers in the food industry are also looking towards agriculture as a key aspect of global sustainability. A 2022 food trend report analyzing over 1 million restaurants, 22 billion social interactions, and 4 million home recipes found that consumers are increasingly interested in the terms “regenerative farming” and “carbon footprint,” and keenly aware of which brands are implementing sustainable practices and which are simply posing as eco-friendly (2).

A refresher on regenerative agriculture

As a reminder, regenerative agriculture refers to a set of agricultural practices that contribute to humus accumulation (fertile top layer) in the soil; these techniques include crop rotation, use of cover crops, reduction of soil disturbances, integration of livestock, and preservation of living roots, among others. Our previous piece on regenerative agriculture provides further details on each of these methods.

“Reports from leading organisations, such as FAO, IPCC, and EAT Forum, state the fundamental importance of transitioning to more regenerative agriculture methods if Europe is to meet its climate change targets, food security needs, protect our farmland and build a healthier food system.” - European Institute of Innovation &? Technology (3)

Regenerative agriculture practices actively store carbon in the soil, having the potential to make farming climate-positive, meaning achieving negative carbon emissions through carbon sequestration. This is an extremely significant feat given that traditional agriculture currently accounts for about 1/4 of all global emissions .

Extensive literature documents hundreds of long-term field experiments across the globe that prove the efficiency and effectiveness of regenerative agriculture techniques in carbon sequestration (4 - 11). The climate-positive impacts of these agricultural practices are measurable, consistent, reliable, and essential to future yield security.?

A more resilient, cost-effective supply chain

Regenerative agriculture contributes to building climate resilience in value chains, as its practices radically improve soil water storage capabilities (12) and soil fertility (13). This means that farms, and therefore the rest of the key players in the supply chain, are better able to cope with fluctuations in climate. As adverse weather events like floods and droughts become more frequent and threaten crop yields, this benefit of regenerative agriculture is especially important.?

Regenerative agriculture also results in higher-quality products— preliminary research points to crops grown using regenerative practices being more nutritious (14). As nutrient density becomes more important to consumers (15), this is a key added benefit of regenerative agriculture.

A climate & strategic solution

Unilever, PepsiCo, and Walmart are just a few of the many multinational companies who have arrived at the same conclusion: that regenerative agriculture holds huge potential to help them meet their carbon goals, secure future-proof supply chains, and meet consumer demands for high-quality products. Integrating regenerative agriculture into the supply chain also ensures long-term investment viability, as investors continue to prioritize companies with positive environmental impacts.

“?Regenerative agriculture is the key to future-proofing the food sector” - EIT Food (16)

Regenerative agriculture is the future, and the food industry is already taking advantage of the valuable opportunity it poses to build more resilient, greener supply chains. Remaking the agricultural system into one that contributes to supply chain resilience and decarbonization is an urgent task that demands decisive action from the food industry now. Through restoring our soils, we could store up to 11 billion tons of CO2 emissions annually while also boosting crop production and increasing climate resilience (17).

So, what does this look like in practice?

Let’s say you are the largest producer of ice cream in Germany, with many happy consumers. It’s summertime and you know your sales are about to skyrocket. However, the last few years have posed many challenges: you have struggled with supply chain issues and staying on target to meet ambitious carbon goals. You are looking for a creative solution that will solve these problems while continuing to meet your consumers’ needs for a reliable supply of ice cream. You decide incorporating regenerative agriculture practices into your supply chain is the most strategic move, and you partner with Klim to streamline the process. Together with your supplier, you start onboarding your dairy farmers to the Klim app and they start applying regenerative practices within your own value chain. The farmers document their progress and Klim digitally quantifies and verifies their carbon sequestration impact. In addition, your supply chain becomes more resilient and you gain the loyalty of your farmers, thus future-proofing your value chain.

Sources

(1) ?https://www.4p1000.org/

(2) ?https://reports.tastewise.io/hubfs/Tastewise%202022%20Trend%20Prediction%20Report.pdf

(3) ?https://www.eitfood.eu/projects/regenag-revolution

(4) ?https://doi.org/10.1111/gcb.14644

(5) ?https://doi.org/10.1016/j.agee.2014.10.024

(6) ?https://doi.org/10.2136/sssaj2009.0079

(7) ?https://www.thuenen.de/index.php?id=2285&L=1

(8) https://www.researchgate.net/publication/257015734_No-till_management_impacts_on_crop_productivity_carbon_input_and_soil_carbon_sequestration

(9) ?https://acsess.onlinelibrary.wiley.com/doi/full/10.2136/sssaj2010.0076

(10) ?https://pubmed.ncbi.nlm.nih.gov/27875004/

(11) https://www.researchgate.net/publication/8262780_Deriving_Grassland_Management_Factors_for_a_Carbon_Accounting_Method_Developed_by_the_Intergovernmental_Panel_on_Climate_Change

(12) ?https://doi.org/10.1002/saj2.20162

(13) ?https://journals.sagepub.com/doi/abs/10.3184/003685017X14876775256165

(14) ?https://modernfarmer.com/2022/03/regenerative-farming-food-healthier/

(15) ?https://www.foodbusinessnews.net/articles/20040-nutrient-density-moving-up-as-a-marketing-tool

(16) https://www.foodnavigator.com/Article/2021/05/14/Regenerative-agriculture-key-to-future-proofing-food-sector-says-EIT-Food

(17) ?https://www.fao.org/3/i1688e/i1688e06.pdf