Regenerative can safely be called a small hype. Recent American research shows that consumers there appreciate a more environmentally friendly cultivation method, but they are not prepared to pay the extra costs involved.
In addition to regeneratively grown agricultural products, you now have regenerative education, water management, clothing and even houses. While the term sustainable was the buzzword ten years ago, regenerative is now on the rise. It is also attractive to companies in the food industry. There are no legal requirements attached to the umbrella term, such as organic. What is regenerative? Each company gives its own interpretation to that.
Main points
Roughly speaking, agriculture usually involves a few main points: Reducing CO2 (by means of less or no tillage), keeping the soil covered with the help of green manures, using less synthetic crop protection products and artificial fertilizers, and working on biodiversity with, for example, flower strips and field margins.
The leading American agricultural university Purdue conducts monthly research into food consumption and the choices that consumers in the US make in this regard. Their most recent research focuses on regenerative. Almost three quarters of the 1.200 respondents indicate that they are not or hardly familiar with the term. Those who are familiar with it, mainly mention soil, health, land and agriculture as words that they associate with the term.
No surcharge
Researchers divided respondents into four groups that were asked to give their opinions on three hypothetical scenarios. Farmers voluntarily choosing to grow regeneratively, buyers forcing growers to do so and paying them a fee (which is included in the product price), and finally government policy forcing the sector to grow in this way and freeing up the money by levying higher taxes.
The fourth (control) group is a big supporter of the step towards regenerative. 43% answer positively to that. Especially when farmers choose that themselves. If it costs the consumer money, then that is suddenly very different. That is also the case when (again fictitious) two snack products are offered. A standard and a regenerative variant, which costs fifty dollar cents more ($5 versus $5,50). Just over half (56%) say they are willing to pay for a regenerative variant, but when push comes to shove, only 47% pay the fifty cents extra.
Biodiversity little supported
This behavior is reflected when the university asks about important topics. The vast majority of people find the affordability of food to be in first place. In second place comes improving soil fertility and in third place reducing water use. Remarkably enough, the preservation of biodiversity is at the bottom of the ranking. Who should pay for these additional requirements? The government treasury is quickly pointed at, as long as that does not mean higher taxes. Only 6% say that the consumer should pay for this. A not very surprising result.
Whether a European or Dutch study will come up with the same results is difficult to say. What is clear is that the word regenerative is also used more and more here. In the Netherlands, potato processor McCain since last year, the farmer with a regenerative potato contract, which it has invested heavily in this year. By joining forces with Rabobank, an interest discount of 3% is offered for related investments. In addition, the factory pays €5 per ton on top of the standard contract price.
Financial advantage
The Canadian company has been pioneering so-called 'regen fries' (which sounds clearer in English than it does here) since 2021 and has now rolled out programs in several European countries. It has the ambitious strategy that all potatoes grown for McCain must be 'regen' by 2030. The strategy in other countries is roughly the same. There are different levels of complexity and it works with lenders. BNP Paribas in Poland and NatWest in the United Kingdom, for example. In this way, regenerative becomes a revenue model at the same time.
In Poland, Farm Frites collaborates with McDonald's, to which it also supplies products in the Netherlands, and regenerative potatoes are also grown. However, it is not so obvious here and Farm Frites itself speaks of the 'Future Farming Program'. In this program, the Biodiversity Monitor Arable Farming (BMA) and the KPI system are used to calculate the impact of an arable farmer. This takes a broader view than just potato cultivation, but measures the entire construction plan of an arable farmer. The WUR and the Louis Bolk Institute developed the system for this.
In addition to fries grown with respect for nature, the world's largest fast food chain is also focusing on its burgers. In the United Kingdom, it is working on other methods of raising beef cattle and achieving zero emissions by 2030. In the meantime, the company has been working with FrieslandCampina since last year to be able to offer dairy (milk and cheese) with a lower environmental impact. The goal is to have reduced greenhouse gas emissions by 14% by 2025 (compared to the starting point in 2019).
Marketing
The company does not explain how a regenerative portion of fries, milkshake or hamburger at McDonald's is financially justified. It is likely that this is (partly) paid for by the consumer. Food companies and the processing industry see it partly as a marketing tool to offer something different than the competition. In doing so, they are ahead of the game, given the American figures that regenerative means little to a consumer. On the other hand, it also helps to satisfy the supporters. Certainly for a listed company. In the potato sector, and perhaps other sectors as well, competing companies are watching this development with suspicion. Not every factory is involved in regenerative cultivation. What if all these extra measures soon become the new standard? In addition to a cautious consumer, not everyone in the chain is jumping for joy either.