In the words of the great agricultural philosopher Liza Minnelli, “Money makes the world go round.” Most stakeholders RAI interviewed across agricultural supply chains, especially farmers, want to grow crops and raise livestock in a sustainable way. Yet this desire to minimize environmental harm is not feasible if it creates a financially unsustainable operation. Farming profitability is essential for affordable food production, long-term solvency, and accessible financing.
Across the political spectrum, most Americans have favorable opinions of farmers and are happy with the idea that the federal government provides financial assistance to help pay for crop insurance. If they knew crop insurance's full cost, that might change. This system, while well-intentioned, leaves out the majority of farmers and encourages the degradation of precious soil and water reserves by rewarding consolidated monoculture crop production.
This article, by The Regenerative Agriculture Initiative (RAI) team at the Yale Center for Business and the Environment (CBEY), is the first in a series on key opportunities to accelerate regenerative agriculture in the United States. At today’s rate of soil degradation, some scientists predict the world’s topsoil could be destroyed within 60 years. Regenerative agriculture can reverse that.
The traditional water fund model, which has been used around the world, pools philanthropic and donor capital to support upstream restorations. The Revolving Water Fund innovates on this model by also aiming to quantify the pollution reductions from these restoration activities, then packaging and selling the reductions to municipalities in the watershed seeking to cost-effectively comply with water quality standards enforced under the Clean Water Act.
As food companies look to lower supply chain risk and reduce their ecological footprint, new strategies are emerging to increase adoption of sustainability practices among farmers. Several companies have begun using long-term contracts — purchase agreements guaranteeing offtake beyond an annual time horizon — to stabilize costs and allow both grower and buyer to plan further into the future.