Our current agricultural supply chains are at risk with climate change and intensive agricultural practices leading to more volatile and decreasing agricultural yields globally. This will not only affect the agricultural sector but will also impact economic systems and governments. Implementing regenerative agriculture practices is part of the solution as it contributes to more resource efficient agricultural production that can protect and restore soil, biodiversity, water and reduce carbon.
Members of One Planet Business for Biodiversity (OP2B), including Unilever and PepsiCo, have put forward ambitious targets to implement regenerative agriculture principles and practices across Europe and beyond. Deloitte has supported various agricultural players in implementing regenerative agriculture strategies. They have identified the lack of a viable economic model for the adoption of regenerative agriculture practices, and more specifically the gap in incentives available, as a major bottleneck to scaling the implementation of regenerative agriculture practices in Europe.
This report investigates the economic impact of implementing regenerative agriculture practices at farm level, catalogues available incentives, and articulates the financing gap which farmers face when transitioning. Scope wise, six regenerative agriculture practices and 34 crop-country combinations, based on 10 different countries and 12 different crops are considered. The report also provides guidance and concrete recommendations for all actors, including value chain players, farmer associations, regenerative agriculture implementors, input and equipment providers, financial institutions and government institutions, to collaborate and help farmers improve the business case by supplying additional as well as fit-for-purpose funding. The incentives represented in this study are by no means exhaustive, as there were issues related to transparency and competitiveness when collecting data on private incentives, and many public schemes are yet to be defined. This challenge of limited data availability and transparency of incentives has also been noticed by the farmers and other value chain experts, and is one of the takeaways of this investigation as well.
Our findings on the farmer business case are based on a quantitative model for costs, yield impact and investments associated with implementing regenerative agriculture practices for 34 unique country-crop combinations versus conventional practices, based on expert interviews with farmers, regenerative agriculture implementers and advisors. The findings on incentives are based on collecting available public and private incentives, based on direct approach to incentives providers and supplemented with desk research. Our main findings include:
Farmer business case and funding needs
Incentives