It should come as no surprise that our existing way of producing food is neither sustainable nor healthy. We need to move away from our conventional farming system – a system that is traditional, linear, degenerating, and has a negative impact on the environment. Instead we need to move towards a regenerative farming system. A system that will have a net-positive impact on the ecosystem.

Deloitte recently set-up a program, together with one of our agri clients, that helps farmers transition to such a regenerative system. A sustainable system, focused on increasing and restoring soil health, soil resilience and biodiversity by applying various regenerative practices, such as diversifying crop rotations, applying permanent groundcover, minimizing tillage, reducing artificial fertilizers, improving water and irrigation management and using integrated livestock and grazing systems. One of the great benefits of this effort is that with healthy soil we can sequester more carbon from the air, which in return has an impact on climate change by lowering the emissions from agricultural land. Our program entails several products and solutions to help farmers with the transition towards improved sustainability by providing them with solutions that will restore soil health and biodiversity, maintain crop productivity, reduce costs and enhance profits. It also leads to many opportunities for developing new revenue models for all players within the food value chain; from farmers to retailers.

Carbon build-up in the atmosphere is the net result of carbon emissions and carbon capture. This process is exacerbated through continued global deforestation to expand agricultural land because forests are important carbon sinks. Clearing them to convert into agricultural land has a triple effect, as the forest no longer sequesters carbon, carbon is often released through burning to clear forests and the subsequent farming practices add further GHG emissions. We need to feed a growing population but we can’t afford to do so by expanding agricultural land through deforestation. It is crucial that we efficiently make use of our land today, so we can supply future food demands on the same – or less – land in the future. That’s why, together with WWF, we developed an AI-based early warning system to predict future deforestation risk using a vast range of geospatial data and satellite imagery. It enables timely action being taken to stop the clearing of forests at the expense of biodiversity losses in habitats.

We all need to start living within the boundaries of our carbon budget for food. But this carbon transition needs to be attractive and affordable for the average consumer, rather than cater to high-end consumer segments as is often the case. Together with our client, we developed a portfolio of food products that have a 25% lower footprint compared to the benchmark in the market. By bringing these products to market, the company is moving several steps up the value chain, compared to its traditional position and orchestrating all the partners along the chain to make changes. Initially, we thought these products might increase costs for farmers and consumers significantly but we found that this did not have to be the case. Consumer prices for these products would have to increase by less than 5% to compensate farmers for adopting more sustainable practices. And all this without harming the margins of any of the other value chain players.

The key takeaway here is that there are many decarbonization opportunities for food producers, processors and consumers that can be considered as fairly ‘low hanging fruit’ which do not have to drive costs for consumers up, or drastically reduce margins for companies. But it does require intense collaboration in the supply chain and a fair distribution of benefits and burdens among value chain players. In the next couple of years, we expect to see rapidly increasing levels of vertical integration in the food value chain, specifically driven by sustainability. Vertical integration could take many different forms and does not only have to be about retailers and food brands taking more control of the upstream value chain. It could also be about farmers organizing to move further down the supply chain by bringing their own brands and sustainable food concepts to market while ensuring appropriate compensation.

Deloitte has a Future of Food platform with over 1500 participants motivated to contribute and support the transition to a more sustainable food system for the future. This transition includes decarbonization, and to that end we are committed to realize the journey to a net positive food system. For this we are establishing an ecosystem with leading food companies and our global alliance partners and identify opportunities to innovate, accelerate and scale solutions to a net positive food system.