The food and agriculture sector is facing a unique moment in time as an increasing number of companies across the value chain are setting ambitious climate and sustainability targets. Emerging leadership from the private sector has the potential to reshape our industry’s approach to conservation, spurring additional investment and accelerating environmental improvements at the farm and landscape levels.
Unprecedented growth in voluntary ecosystem service markets is the clearest sign of this rapidly evolving landscape. In the early days of supply chain sustainability efforts, growers often expressed frustration with a perceived lack of shared value or tangible incentives, which often limited the scale of these programs. Now, there are new ag carbon programs announced nearly every week, heightening expectations around revenue opportunities for farmers along with the potential for major climate benefits.
If we are to realize the full potential of this moment, the entire value chain, from farmers to consumer-facing brands and retailers, must work together to test assumptions and address unresolved questions. Whether utilizing traditional sustainability programs or emerging ecosystem service markets, the following six principles will be key to translating the private sectors ambitions into meaningful impact:
- While expectations continue to grow around the potential for robust ecosystem service markets and outcomes-based payment programs, there is no silver bullet approach to incentivizing and scaling sustainable, regenerative or climate-smart agriculture. Voluntary ecosystem service markets are an increasingly important tool to support and reward farmers in delivering improved environmental outcomes. Likewise, the supply chain continues to implement strategies to support farmers in managing the agronomic and financial risk of transitioning to new practices, exploring mechanisms such as cost-share arrangements, lending and insurance products, technical assistance, market access and price premiums. In addition, federal and state governments will also continue to provide significant public support through traditional conservation programs. Within the next Farm Bill, policymakers will need to explore how public and private sector efforts can align to deliver maximum impact. Initiatives under the Regional Conservation Partnership Program offer many successful examples.
- Pre-competitive metrics are now more important than ever. The proliferation of carbon programs can be a real benefit to the industry as market providers compete on value and service to growers while accelerating innovation. However, if we hope to build confidence in the environmental outcomes, we ultimately need convergence around a finite set of industry-accepted approaches to measurement. If each company measures greenhouse gas emissions, carbon sequestration, and water quality impacts differently, this will unnecessarily obscure an already complex space while risking our industry’s credibility with key stakeholders and the broader public.
- With the proliferation of voluntary ecosystem service markets across U.S. agriculture, there is an urgent need to develop pre-competitive protocols or guidance to avoid double counting or claiming. There are already examples of farmers being approached by multiple carbon programs or supply chain sustainability initiatives without clear guidance on where participation is mutually exclusive. In some instances, stacking benefits will be encouraged, while other programs will apply strict financial additionality tests to determine payment eligibility and carbon asset allocation. The intersection of Scope 1 and Scope 3 programs also remains somewhat murky, with some companies hoping to sell fungible carbon credits while others needing to count reductions toward corporate greenhouse gas goals within their own supply chains. The integrity of the entire system depends upon an assurance that outcomes are real and permanent and that the same reductions or improvements from any farm are not inappropriately counted by more than one company. It is unfair to leave this responsibility and liability entirely on the shoulders of farmers through the fine print of carbon contracts. Pre-competitive agreements across ecosystem service markets and supply chain sustainability programs are critically important to ensure the credibility of these efforts.
- The appeal of market-based programs for farmers and supply chain companies alike will ultimately be determined by their ability to efficiently deliver environmental outcomes at a price point that offers the greatest return on investment for farmers. Ecosystem service markets are working to rapidly reduce the cost of measurement, reporting and verification while ensuring the results are credible. Meanwhile, some producers may gravitate to cost-share arrangements or other kinds of upfront assistance from supply chain partners rather than entering into multi-year carbon contracts. Fundamentally, supply chain companies will need to determine which mix of incentive mechanisms and at what cost will help to achieve their environmental goals at scale.
- Carbon is not a proxy for all environmental indicators. While many of the agronomic practices that increase carbon sequestration also deliver significant environmental co-benefits, the industry must guard against urging farmers to manage for one single outcome. This singular focus also misses an opportunity to reward producers for multiple ecosystem services. Most sustainability initiatives encourage a systems approach, evaluating tradeoffs and considering locally relevant natural resource concerns such as water quality and biodiversity. Companies across the food and agriculture value chain will face public scrutiny and backlash if soil carbon sequestration is valued while other key environmental outcomes decline.
- Last but certainly not least, ecosystem service markets and supply chain sustainability programs must be farmer friendly. There is already significant confusion in the countryside around eligibility requirements, payment and contract terms, and data ownership and privacy considerations. Agriculture organizations and especially commodity groups are in an important position to help demystify this space for farmers once the terms of engagement are clear. Significant outreach and education will be needed across the industry in the coming months and years to ensure farmers understand both the benefits and requirements of participation.
Of course, the stakes could not be higher. Climate impacts are already threatening to reverse long-term productivity gains across the agricultural sector at a time when farmers are being asked to feed a growing global population while delivering natural climate solutions and other ecosystem benefits.
Last year, USDA launched its Agriculture Innovation Agenda, which aims to increase agricultural production by 40 percent while cutting the environmental footprint of U.S. agriculture in half by 2050. Other agricultural organizations have signaled the potential for net negative emissions from U.S. farms. Meeting these goals will require an unprecedented level of collaboration across the value chain, and the increased leadership and investment from the private sector gives me hope that our industry is up to the task.
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Rod Snyder is president of Field to Market: The Alliance for Sustainable Agriculture, the largest multi-stakeholder initiative working to define, measure and advance the sustainability of commodity crop production in the United States. He resides on his family’s farm in Shenandoah Junction, West Virginia.