According to EIT Food, a European Knowledge and Innovation Community, farming is responsible for approximately one-quarter of all greenhouse gas emissions and leads to the erosion of 24 billion tonnes of topsoil annually. To put this into perspective, that amount of topsoil erosion is equivalent to an area the size of Greece. (1)
However, in recent years, farming practices are being reshaped in essential ways. Organic and regenerative farming are two trends at the top of the list. Why should you as an F&B business make sure your suppliers are engaging in these two agricultural practices? Read on to find out.
What exactly are organic and regenerative farming?
Before we start, let’s make sure we are all on the same page in terms of what it is we are talking about.
Organic farming is an agricultural approach that emphasizes the use of natural inputs and methods to cultivate crops and raise livestock. It avoids the use of synthetic chemicals, such as pesticides and fertilizers, and promotes practices that enhance soil health, biodiversity, and ecological balance. (2)
Regenerative farming is an agricultural approach that goes beyond organic practices, focusing on the restoration and improvement of ecosystems and soil health. It aims to enhance biodiversity, promote carbon sequestration, and create resilient agricultural systems that mitigate climate change and restore the natural balance of ecosystems. (3)
Growing Consumer Demand for Organic and Regenerative Farming
The F&B industry and grocery retail sector are experiencing a remarkable surge in consumer demand for organic products. Today's consumers are more conscious than ever about the impact of their food choices on personal health and the environment.
In 2021, the EU market for organic food products increased by 12 percent reaching $58.6 billion, making it the world’s second largest organic market behind the US. While the pandemic and the war in Ukraine have affected sales, in the long term this area is expected to grow as European regulators push for organic farming practices. (4)
One regulation that will have a major impact is Europe’s Farm to Fork strategy from 2019, which strongly promotes organic foods. The policy aims to increase the percentage of EU farmland under organic management from 8 percent to 25 percent by 2030. (7)
In terms of regenerative farming, in 2021, Forbes already announced that regenerative agriculture was going to be “the next big thing”. (5) The Global Regenerative Agriculture Market size is expected to reach $5 billion by 2029. This represents a growth of 14.4%. (6)
Let us now take a closer look at organic farming and the benefits it offers.
Organic is better for the environment
This should come as no surprise. Organic farming contributes to mitigating climate change by reducing non-renewable energy use. Organic farmers use natural fertilizers such as compost, manure, and cover crops instead of synthetic fertilizers derived from fossil fuels. They also use natural pest control methods, while conventional farming often depends on synthetic pesticides, which are petroleum-based products. Organic farming also supports biodiversity at different levels, using traditional seeds and diverse plant and animal combinations to optimize nutrient cycling, creating habitats for wildlife, and attracting beneficial organisms. It has been shown to promote higher biodiversity compared to other farming systems. (9)
Organic is more profitable
But why should you care? Well, aside from the obvious fact that the climate crisis will end up destroying the crops you need for your food product, which will cause financial damage and increased prices for sourcing ingredients, organic farming practices save money in other ways. Organic agriculture was found to be more financially profitable than conventional agriculture, despite lower yields. (8)
Organic agriculture focuses on sustainability over the long term, by taking a proactive approach to prevent soil infertility and pest issues. Organic farmers focus on practices like crop rotations, inter-cropping, and organic fertilizers to improve soil formation, structure, and stability. These practices in turn control soil erosion, increase soil biodiversity, and reduce nutrient losses, maintaining and enhancing soil productivity. (9)
The conventional food system has caused issues across a range of different areas, including social, health, and environmental aspects. As a result, consumers are increasingly focusing on the origin of the products they buy. Certified organic products have a clear advantage in the market. Their appeal stems from the fact that organically grown foods minimize the use of harmful substances, leading consumers to conclude that they are more nutritious. (8)
Organic farming reduces exposure to harmful synthetic pesticides, compared to conventional farming, which typically uses multiple pesticides on crops. Some widely-used pesticides have been associated with health issues such as ADHD, autism, obesity, and certain cancers. Opting for organic farming creates healthier and safer work environments, benefiting farmworkers, neighbors, and the community. By avoiding high-risk chemical materials, organic farmers mitigate health risks for workers and those living near farms, leading to greater employee retention and overall well-being. (8)
But how does this relate to the F&B businesses further down the value chain? Well, a healthy and contented workforce contributes to the production of high-quality and safe ingredients. When farmworkers are protected from harmful pesticides and work in healthier environments, they are more likely to be productive, motivated, and invested in producing top-notch produce, ensuring the overall integrity of the F&B business's products and reputation in the market.
Contrary to the misconception that regenerative agriculture leads to lower yields and reduced profits, a comprehensive analysis of the economic impact on German farms discovered significant long-term advantages. Regenerative agriculture was shown to have substantial benefits, including higher profitability for farmers. Upon reaching a stable stage of implementation, typically after 6 to 10 years, farmers' profits are expected to grow by an estimated 60% or more. (11)
This of course translates into a positive effect on the bottom line of F&B businesses as well, translating to cost savings and more stable pricing.
Regenerative agriculture carries significant socio-ecological benefits, with an estimated annual economic value of approximately €8.5 billion in Germany alone. The largest portion of this value, around €8 billion, stems from regenerative agriculture's positive influence on the country's carbon footprint. Enhancing the soil's ability to act as a carbon sink contributes approximately €6.8 billion to this total, while the reduction of greenhouse gas emissions, particularly nitrous oxide and methane, accounts for an additional €1.2 billion. (11)
Even though fighting the climate crisis should be our entire economy’s overarching goal, the above figures should provide further incentive for F&B businesses to support regenerative farming.
Regenerative agriculture has multiple benefits for the agri-food system. One key advantage is the enhanced resilience of soil, crops, and the local ecosystem, enabling them to better withstand climate-related shocks. (11)
This resilience safeguards future food supplies, preventing potential disruptions caused by extreme weather and ensuring stability for food production. Furthermore, regenerative practices can reduce yield losses by up to 50% in years with severe weather conditions, mitigating potential financial risks for companies and maintaining stable consumer prices. (11)
In conclusion, it is very clear that adopting regenerative agriculture is a smart move for companies facing growing pressure to lower their emissions and become more sustainable. Supporting these practices enhances their reputations, ensures compliance with environmental regulations, and secures their social license to operate. (11)
Farmers face specific challenges particularly when transitioning regenerative agriculture, with three main barriers being social acceptance, financing and expert knowledge.
Some farmers who embrace regenerative practices face social and economic challenges. Their community may view them as unconventional and supermarkets and consultants may discourage their transition since they may worry about the impact on the reputation of other products on their shelves or they have close connections to pesticide producing companies. (12)
The financial burden is also a major hurdle. European farmers face challenges due to subsidies and financial dependencies. Transitioning to sustainable practices requires a substantial initial investment, as farmers experiment with unfamiliar methods and may experience short-term crop yield decreases. Some methodologies, like agroforestry, take 10-20 years to show benefits, requiring long-term planning, new machinery, and equipment to implement necessary changes.(12)
Understanding the practices that fall under the regenerative umbrella and their application is another considerable hurdle. Regenerative farming is a highly intricate and holistic approach, involving increased crop diversity, agroforestry, biodiversity barriers, and soil maintenance. (12)
It requires farmers to be skilled in managing their entire ecosystem, not just their produce. It further demands a deeper understanding of soil and a wider range of crops, which challenges traditional farming practices that often focus on only a few crops. (12)
What is more, regenerative farmers must be willing to adopt experimental practices and stay updated with the latest knowledge, which involves higher risks compared to relying on well-established methods. (12)
If the above mentioned benefits have not convinced you yet, increased consumer loyalty as well as future regulations should. Considering the veritable slew of regulation being passed in the EU at the moment relating to anything from stamping out greenwashing to banning products that cause any deforestation across the entire world, it will not come as a big surprise if regulators shift towards heavily supporting organic and regenerative farming practices in the near future.
Do you even know about the exact farming techniques employed along your supply chain?
In complex supply chains, knowing exactly where ingredients come from and how they are grown can seem like an overwhelming task. It does not have to be. inoqo assesses the impact of your products along the entire value chain, taking into account the types of farming practices employed, so you can take steps towards becoming more sustainable. You want to know, how exactly we do this? Then get in touch at email@example.com.
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