Payments for Regenerative Practices

 

Due to government subsidies, a number of companies are now paying farmers for regenerative farming practices and conservation practices that reduce greenhouse gases. Agriculture, it is estimated, may be responsible for about 10% of greenhouse gas emissions to the atmosphere. However, agriculture can be a huge sink or storage vessel for stored carbon. Currently only about 15% of farmland is considered regenerative with the goal of reaching 40% by 2030! Reaching that goal will require higher payments to farmers to make that change.

Most of the money comes from the Inflation Reduction Act passed last year, around 40 billion dollars. Companies get paid for buying farm commodities that reduce our “Carbon footprint” which can amount to multi-millions of tons of carbon. Several practices are being promoted from cover crops, reduced tillage, nutrient optimization, agro-forestry practices, and grazing. Farmers will have many opportunities to participate in these government/company sponsored programs and expect many companies to start pushing regenerative practices because the payouts are substantial.

Companies like Cargill/John Deere want to have 10 million acres enrolled by 2030. ADM and Pepsico are partnering to pay farmers $3 an acre on up to 7 million acres by 2030 if they use regenerative practices. Compared to the H20 Ohio government program, the payments are not large. In some cases though the requirements may be easier to fulfill. Unfortunately, farmers can not double dip. You can only be in one program and can not get paid twice.

Other companies include Pioneer/Corteva Agriscience a major chemical and seed company that is an agricultural unit of DowDupont. Companies include Walmart (cotton), Microsoft (Land O Lakes), VF corp (clothing), Nestle (cocoa), McDonald’s (fast food), General Mills (cereal), Mars (candy), and several Unilever companies like Lays (potato chips), Gatorade (sports drink), Hellman’s Mayonnaise (soybeans). Other companies and entities include Indigo Agriculture, Rodale institute and numerous non-profit organizations.

Most companies have started making direct payments to farmers for carbon credits. In the past companies have paid for farm commodities based on price and quality. Now they may start paying based on environmental factors. In some cases, they may pay a premium, in other cases, if they contract for specific commodities, they may simply specify how the crop is grown. The biggest problem currently is simply defining what practices are regenerative. To get government subsidies, the practice has to be verified and permanent. That’s difficult because most soil carbon is recycled and varies by farm and climate. The payments are high enough, companies are finding ways to comply with the government rules. ADM/Pepsico plans to randomly check their farms, paying farmers $1000 if they just allow ADM to test and check on their practices and how much carbon they are storing.

The regenerative movement is also active in foreign countries. The European Union has passed legislation and is paying premiums for crops grown on non-deforested (since 2010) cropland. Since the United States was deforested primarily before 2010, all USA farmland is considered acceptable for grain export. The European goal is to reduce deforestation in the Amazon. ADM at Toledo is considering being a major hub for soybeans produced in the USA for transport to the European Union. This may include some grain price premiums.

The Natural Resource Defense Council (NRDC) outlines several initiatives that they are promoting in the upcoming USA FARM Bill. They have four main objectives. First, they want to level federal investment in regenerative stewardship. The government pays farmers billions of dollars in government payments and they want more to go toward regenerative practices. Second, they want to increase more diversity of crops on farms and decentralize food systems. Third, they promote supporting regenerative farms and ranchers, and fourth, they want more money to fund regenerative agricultural research. There are at least 17 non-profit organizations that have similar goals.

So, what is regenerative farming really? The ultimate goal is to increase healthy soil. Most of our topsoil has become degraded over time due to soil erosion. The goal is to produce food we eat at a lower cost with less pesticides. Healthy food should lead to healthier livestock and people if you are what you eat. Regenerative agriculture includes a system of practices that reduce tillage, uses good crop rotations, cover crops, and reduced chemical inputs. It includes some common farming practices (crop rotation) already being used but adds some others that are more difficult to do (no-till, cover crops, reduced chemical inputs. With new programs there are a lot of rules to be worked out, so be patient. ). There are a lot variations, so most farmers should be able to find something they hang their hat on to participate.