Innovation Guide: Building and Scaling Regenerative Agriculture Business Models
What is this guide and why does it matter?
This guide provides actionable steps for businesses to design and apply Regenerative Agriculture practices in their supply chains, offering practical, real-world insights into what it takes to move from pilot to scale.
Built on years of technical assistance, inclusive business analyses, and implementation support across global value chains, this guide serves as a hands-on resource for companies, cooperatives, and development organisations seeking to strengthen or expand their investments in Regenerative Agriculture.
The goal of this guide is to demonstrate that Regenerative Agriculture is not a niche innovation; it is fast becoming the new norm. By integrating regenerative principles into their business models, companies can not only improve farmer livelihoods and environmental outcomes, but also strengthen their supply security, reduce risk, and unlock commercial value. Sending a clear signal to all supply chain partners, this guide supports companies in building a business case for Regenerative Agriculture that is both impactful and scalable.
This guide is primarily for:
- Companies supporting implementation of Regenerative Agriculture practices in their supply chain
- Development and support organisations helping companies invest in and scale Regenerative Agriculture models
What is Regenerative Agriculture?
Definition
Regenerative Agriculture is a holistic farming approach that aims to improve ecological conditions on a farm while maintaining high-yielding crops. Central principles of Regenerative Agriculture include enhancing soil health, promoting diversity, optimizing water management, minimizing external agrochemical inputs, and integrating farm management practices with community empowerment and socio-economic resilience. [Source: SAI Platform Regenerating Together Framework]. Crop health is realised as much as possible by natural processes such as legume nitrogen fixation, improved soil microbial life, plant-fungus symbiotic relationships, and natural pest management rather than relying on the application of external chemical inputs. Frameworks and the precise combination of practices vary widely, dependent on priorities, crops and local circumstances. [Source: O’Donoghue et al., Sustainability 2022]. There can exist basic forms of Regenerative Agriculture that apply fewer practices or to a lesser degree, such as reduced depth of tillage, simple diversification and mulching, while more advanced forms use e.g. no till, continuous cover cropping and highly diversified farms.
An example of a Regenerative Agriculture framework showing key practices and basic to advanced implementation options [Source: IDH Farmfit - Regen Ag Module]
Why implement Regenerative Agriculture?
Regenerative Agriculture promises an alternative direction, benefiting farmers while improving degraded soils and building climate resilience. Where industrial intensification is mostly focused on short-term productivity and profitability, Regenerative Agriculture deviates by aiming for a much broader set of outcomes, including:
- Environmental: improved soil health, increased biodiversity, reduced carbon emissions
- Economic: improved and resilient crop yields over the long-term, reduced input costs, diversified income streams for farmers
- Social: improved farmer welfare, stronger community resilience, better food security and quality
Business case for different actors across the value chain
- Improved long term yields: Regen Ag aims to create healthy soils, resilient crops and more diverse crops, eventually leading to high yields that can be maintained without depleting soils or water resources.
- Enhanced resilience to climatic shocks: Improved soil health and practices such as rotation and agroforestry can ultimately improve farm resilience against climatic shocks such as droughts and heavy rains.
- Reduced production costs and dependency on external inputs: Reduction of external and chemical inputs can lead to reduced production costs and higher self-sufficiency over the long term.
- Income diversification and stability: Regenerative Agriculture can generate additional income streams from trees and crops which reduce reliance on a single commodity and lead to more predictable and resilient farm income, especially during times of market volatility. Additionally, if carbon reductions and removals are measured and monetized they can provide additional revenue streams. For example, Biodiversal and Cirkular give direct cash payments to coffee farmers in Colombia generated from carbon credits from biochar production.
- New market opportunities and incentives: In some markets, particularly those linked to international traders and brands, farmers adopting Regenerative Agriculture may be able to access premium pricing and favourable procurement contracts.For example, Cargill’s RegenConnect program offers farmers offtake agreements and additional payments for adoption of regenerative practices.
- Enhanced food security and quality: Diversified cropping systems can lead to increased and more diverse food production. For example, legumes play a critical role in many regenerative systems due to their nitrogen-fixating abilities, while also yielding protein-rich foods of a food group that is among the most under-consumed in diets around the world [Source: EAT Lancet commission report]
- New service offerings: Service providers can develop and offer specialised services related to Regenerative Agriculture, such as soil testing, organic inputs, and training programs. Financial service providers can offer working capital of longer-term loans suitable to regenerative timelines, as well as insurance products. Carbon service providers can find opportunities for carbon sequestration and accreditation, in particular in agroforestry systems and biochar production.
- Secured and high-quality raw material supply: Sourcing from regenerative farms can improve product quality, due to healthier crops and reduced chemical use, enhancing the aggregator’s ability to meet buyer requirements. At the same time, more resilient farming systems mitigate sourcing risks related to climate change, price volatility, environmental degradation, and overall supply disruptions.
- Access to premium markets: Sourcing regenerative products enables companies to differentiate in the market, appealing to buyers committed to sustainability targets. For example, the spices company Verstegen recently went through a selection process for new cardamom suppliers in Guatemala based on regenerative criteria, ultimately choosing one supplier that had a strong regenerative track record.
- Diversified income streams: If sourcing multiple products from diversified farms (e.g., timber from agroforestry, other produce from fruit trees, livestock), company income can increase and become more stable under climate and market disruptions.
- Reduced regulatory risk and increased traceability: Sourcing regenerative volumes requires traceable supply chains. This and many of the beneficial outcomes from regenerative agriculture supports compliance with (upcoming) regulatory frameworks (e.g., EU regulations on deforestation and due diligence).
- Higher brand value: Marketing regenerative products positions brands and retailers as sustainability leaders, which can resonate with certain consumer segments. Regenerative Agriculture can be used as a marketing narrative to build a sustainable image and increase consumer loyalty. For example, YOGI Tea builds their brand around their various progressive regenerative projects and are regularly approached for additional speaking and branding opportunities because of the inspiring examples.
- Higher product value: Regenerative products may be offered at premium prices. For example, IDH’s Regenerative Production Landscape Collaborative (RPLC) in Madhya Pradesh, India is building such mechanisms with a number of apparel brands that have committed to sourcing cotton from the region.
- Reduced supply chain risks: Products sourced from regenerative supply chains (with healthier soils and more diversified farming systems) tend to be more stable and less vulnerable to disruptions related to climate change, which is already having large effects in many sectors.
- Reduced reputational and regulatory risk: Engaging with regenerative supply chains supports compliance with (upcoming) regulatory frameworks (e.g., EU regulations on deforestation and due diligence).
- Alignment with environmental and social commitments: Regenerative Agriculture can directly contribute to corporate sustainability commitments to be used in sustainability reporting and marketing. For example, carbon reductions and removals as a result of tree planting and chemical fertiliser reduction can contribute to reducing company scope 3 emissions, and reduced farmer costs of production and thriving crops can contribute to Living Income targets.
- Improved climate resilience and food security of communities due to resilient and diversified farming systems.
- Potential for increased job creation, economic growth, export products and foreign investments from a more professionalised, higher quality agricultural sector.
- Opportunity to meet national climate commitments (NDCs) by reducing agricultural emissions
Context matters: What are enabling conditions for Regenerative Agriculture service delivery business models?
Realising a successful transition to Regenerative Agriculture is dependent on many conditions which should be explicitly considered during project design. It’s important to be aware of the extent of supportive ecosystems, aligned value chains, organised farmer groups, policies, and infrastructure. Local context, such as crop type, climate risks, and soil health, also shapes where and how Regenerative Agriculture delivers the biggest benefits.
- Crop type: Regenerative agriculture tends to deliver the strongest benefits for crops that are highly sensitive to soil health and climatic stress (including coffee, cocoa, cotton, fruits and vegetables, oil palm). Leguminous crops, such as soy, are highly suitable for Regenerative Agriculture, as a nitrogen-fixing crop with deep root systems and therefore soil carbon sequestration potential.
- Climatic vulnerability: In regions where climate change has increased the frequency of droughts, unpredictable rainfall, and other extreme weather events, farmer income is more volatile and crop losses more frequent. This increases the relevance of investing in and incentivizing Regenerative Agriculture as a resilience strategy. Regenerative practices can buffer farms against climatic shocks and help stabilise yields. For businesses, it helps to secure long-term supply and reduce climate-related sourcing risks.
- Soil depletion: Soils that are degraded, from e.g. erosion, drought, compaction or chemical overuse,are less able to yield healthy crops and makes plants more vulnerable to pressures from weather, pests and diseases. Where soils are already degraded, adoption of regenerative practices is especially important and can rapidly improve conditions, sometimes delivering notable yield increases within just a year.
- Pressure from pests and diseases: A growing incidence of pests and plant diseases causes major crop losses in crop productivity. As shown in cases like banana disease pandemics or pest outbreaks in cotton, this results in rising input costs (e.g., pesticides, labour), deepening debt cycles and making farmer incomes unstable. Regenerative practices (such as crop diversification, integrated pest management, soil health restoration) can reduce vulnerability to such outbreaks and help stabilise farm productivity and income, leading to more resilient supply chains.
- Geographical dispersion of farmers: Implementing Regenerative Agriculture across dispersed smallholder farmers is difficult due to varying agroecological conditions and logistical challenges, and farmers in remote areas may lack access to the necessary training, resources, and markets required for a well-functioning Regenerative Agriculture value chain. When farms are geographically clustered rather than dispersed, companies and service providers can deliver technical assistance, inputs, financing, and monitoring more efficiently and cost-effectively. Demonstration plots are critical to showcase successful Regenerative Agriculture practices and development of local hubs can support distribution of inputs and aggregation of diverse crops and other produce such as honey and dairy. Use of digital platforms for knowledge sharing and training can help in reaching remote farmers.
- Degree of farmer organization: Well-organised farmer groups or cooperatives can effectively coordinate farmer transitions to Regenerative Agriculture practices, efficiently distribute supporting incentives and technical assistance, and negotiate better terms with buyers for primary and secondary crops. Strong farmer organizations can also facilitate collective investments and improve access to finance, lessening the financial burden of individual farmers making the transition. They are critical for downstream buyers to realise economies of scale at field level.
- Service and knowledge ecosystem: A good ecosystem of service providers with strong outreach and farmer access, such as input companies, financial service providers, offtakers or cooperatives with training programs etc. will help to deliver the broad support to farmers that they need for a successful transition towards Regenerative Agriculture. The services must be tailored to the specific needs of regenerative agriculture; for example, financial loan products that are available over multiple years rather than over a single season. Additionally, areas where good research and data is available on e.g. farmers, agricultural systems and environmental conditions can help in reducing risks or costs for companies and service providers that are interested to invest in a transition to Regenerative Agriculture.
- Value chain organization: Farmers can receive a broader support network, increasing the success of a transition to Regenerative Agriculture, when a value chain is organised and well-aligned, with clear and actionable commitments from downstream actors (aggregators, traders, processors, retailers). An example of this is a commitment to long-term off-take (see also Guaranteed offtake agreements in the Farmfit Innovation Library) or financial incentives such as premiums linked to regenerative outcomes, both of which incentivise farmers to adopt and maintain regenerative practices.
- Digital infrastructure: Digital infrastructure enables remote training, access to affordable inputs, and market access, which are key for scaling Regenerative Agriculture. Furthermore, robust digital infrastructure facilitates better monitoring, traceability and reporting of regenerative outcomes, which are vital to develop a credible incentive mechanism and business model. Digital tools for data collection, remote sensing, satellite imagery, and farm management software enable supply chain actors to efficiently measure the impact of their investments, verify compliance, and streamline incentive distribution.
- Rural infrastructure: Adequate rural infrastructure (roads, irrigation, storage) is beneficial for the successful implementation and scaling of Regenerative Agriculture practices, as service providers can deliver technical assistance, inputs, financing, and monitoring more efficiently and cost-effectively.
- Policy environment: Supportive policies and regulatory frameworks that value and reward regenerative practices and outcomes enhance the economic attractiveness of Regenerative Agriculture. These can include subsidies, tax incentives, carbon credit mechanisms, ecosystem services payment schemes, and other financial regulations that reduce barriers to scaling Regenerative Agriculture. On the other hand, there can exist perverse incentives, such as subsidies for chemical inputs.
Why not? Key limitations, risks, and unintended consequences
Transitioning to Regenerative Agriculture comes with certain limitations, risks and potential unintended consequences. It is important to be aware of these at an early stage, so that smart design choices can be made before implementation to mitigate these risks.
- Long transition periods: Transitioning to Regenerative Agriculture typically involves a multi-year period before tangible yield and profitability benefits materialise. Farmers (and their offtakers) may initially experience reduced yields and / or increased variability in production, which impacts farmer livelihoods and short-term business continuity. The time period varies; in some cases, positive results are seen within a season, while other farming systems require years to adapt. Our case studies on coffee found that it requires around 3 years for farmers to breakeven again while transitioning to diversified and Regenerative Agriculture farming systems. Even after breakeven, the transition may continue. For example, TechnoServe recommend a 7-year transition plan for coffee farmers [Source: https://www.technoserve.org/regenerative-coffee-investment-case/ ].
- High initial costs: A transition to Regenerative Agriculture typically requires labour and/or capital investments from farmers, who therefore need adequate access to finance to bridge this financing gap of 3 years. Companies supporting farmers in their transition to Regenerative Agriculture can provide significant upfront investment in training, equipment, and inputs. A portion of such costs can be shared by companies to support farmers over the course of the first 2-5 years, depending on their individual approach around Regenerative Agriculture.
- Complexity and context-dependence: Regenerative practices are highly context-specific, requiring tailored designs for specific regions, biomes, cropping systems and farmer archetypes. This can make replicating and scaling interventions across supply chains challenging. It also increases the complexity of farming, while good application of practices is vital for healthy crops. For example, over-reliance on organic biopesticides or poorly balanced compost can cause nutrient imbalances, disease, or soil salinity issues.
- Low farmer adoption: Without sufficient financial support and training, farmers may not be sufficiently equipped or incentivised to transition to Regenerative Agriculture, leading to low adoption of practices and a failed transition program. Significant training and capacity building are required to ensure farmers understand and can implement Regenerative Agriculture practices effectively. It is key to tailor the Regenerative Agriculture practices to local conditions and farmer capacities as to reduce risks and enhance positive outcomes as much as possible. A gradual approach can also be considered to ease the initial financial, labour and training burden. Using social influence such as lead farmer or peer training programs can be an important driver of increased adoption.
- Weather and pest events: During the transition phase, unforeseen events (e.g. a drought during the seedling stage) can lead to lower yields or failed harvests during the early phases, temporarily worsening farmer income and stability. Similarly, there may be an increased chance of such pest outbreaks in initial years when chemical application is reduced and not properly offset by other forms of pest management. For example, cotton is notorious for heavy pest loads (bollworm, aphids, whiteflies), and risks of outbreaks must be managed well, especially during the transition phase.
- Market access for diversification crops: Without timely and assured market access for the diverse crops farmers grow on regenerative farms, there is a large risk of post-harvest losses and low prices for such crops. Diversification crops therefore either need an existing market that is sufficiently sophisticated to support in logistics and quality control, or otherwise offtakers of the primary crop need to invest in creating or strengthening market access for diversification crops.
- Niche market insecurity: For farmers and companies that build their regenerative models around premium markets and prices, there can be uncertainty around current and future demand for regenerative products from downstream buyers and consumers.
- Measurement and verification costs. Measuring and verifying regenerative outcomes (e.g., biodiversity improvements, soil health, carbon sequestration) is costly and complex. While outcome-based financing is preferable, limited data availability due to these factors can undermine the ability to demonstrate the impacts necessary to justify investments (and make practice-based financing more suitable).
There can be unintended negative consequences as a result of incentivizing Regenerative Agriculture. These can impact (certain segments of) farmers, the environment, local community, partner organizations and other stakeholders. Key areas to consider are:
- Environmental impacts: Inappropriate implementation of Regenerative Agriculture practices could lead to unintended negative environmental impacts. A key risk is the reduction of yields, which may increase land sprawling and thereby pressure on nearby natural ecosystems such as forests. [Source: CGIAR]
- Farmers trapped in weak farming model: Pilots have occurred where the agronomical benefits of regenerative farming did not fully materialise, and e.g. yields were lower than expected. Sometimes farmers are simultaneously incentivised financially to adopt regenerative practices. This combination of a weak farming model with financial incentives can leave farmers in a conflicting situation where the suboptimal farming model may be applied longer or solved later. Good design of the regenerative agriculture business model and implementation strategy largely mitigates this risk.
- Exclusion of smallholder farmers: Insufficiently tailored transitions to Regenerative Agriculture can be prohibitively costly, complex or labour-intensive for smallholders compared to larger-scale, commercial farmers and for more marginalised groups such as female farmers. This can deepen socio-economies inequalities. Strategies that are tailored to farmer typologies and are gender-sensitive are essential.
How to build a Regenerative Agriculture business model?
Designing, setting up and scaling a Regenerative Agriculture business model requires a structured and adaptive approach that balances the long-term transformation of farming systems with the short-term realities faced by both farmers and companies. The following 3 phases, with key steps, offer a practical roadmap to build Regenerative Agriculture business models that are financially viable, farmer-centric, and scalable.
Phase 1: How to design and get started on a regenerative business model?
Before scaling up Regenerative Agriculture, businesses typically start small to test what works for their needs. Phase 1 outlines the key steps to get things off the ground: assessing how Regenerative Agriculture fits the business model, choosing a suitable pilot supply chain, and developing a plan to engage with farmers and partners.
The first step for a company is to decide whether Regenerative Agriculture is a good strategic choice for their business. Any Regenerative Agriculture business model that is developed needs to be aligned with the company’s strategic business goals from the start, ensuring contribution to profitability, sustainability, and social impact. Especially consider how Regenerative Agriculture can improve your business case, for example, through contributing to Scope 3 emission reductions, enhancing supply security, ESG reporting, strengthening brand positioning, creating differentiation for (impact) investors. This can be based on value chain risks and opportunities assessments, such as climate and soil risks, product quality, buyer requirements, consumer markets, and sustainability objectives. Regenerative Agriculture’s key strength is that it promises to improve multiple of such risks and opportunities at the same time, therefore providing a more holistic and efficient solution than trying to solve them individually.
Once a company decides that Regenerative Agriculture is potentially interesting to their value chain, a pilot can be chosen to be implemented in a location where it fits the company and farmers’ needs. Carefully pre-assessing a location and farmer base for the enabling conditions, limitations and risks mentioned in Section 4 and 5 can prevent major challenges and unintended consequences at a later stage; it is not uncommon for pilots to have been selected under unsuitable conditions, e.g. with insufficient market appetite, farmer knowledge, and adverse weather events leading to failed transitions. Establish clear, measurable, and time-bound targets (i.e., KPIs) on environmental, social and economic themes (e.g., soil health, farmer income stability, climate resilience, etc.) to guide the design of interventions and facilitate monitoring and reporting.
Farmers are undisputably at the centre of successful transitions to Regenerative Agriculture. Therefore, it is key to create a detailed transition plan for farmers that includes their specific needs, context and business model assessment. Elements to consider include:
- Assess context and farmer archetypes: Assess farmer context, including existing farming practices (e.g., the extent to which no till is already utilised), environmental conditions (e.g., current levels of soil health, expected climate change impacts), farmer capacity (e.g. land size, financial capacity, age), and the enabling environment (e.g., market access, policy support) to identify opportunities, constraints, and suitable Regenerative Agriculture practices. Use the information to formulate different farmer archetypes (e.g. typical farmer profiles for very small / small / medium land holding) and design different transition plans that are tailored to each of these group’s needs.
- Assess regenerative farming models: Analyse existing models and available evidence for the specific crops. In some sectors (e.g., coffee, cocoa, grains), well-established practices like cover cropping, agroforestry, and minimal tillage are supported by field data. In others (e.g., potatoes, palm oil), approaches are less tested. Use this to inform your risk assessment and select practices that align with your crop and context, for example diversified systems such as intercropping and agroforestry can help spread income risk or reduce climate risk by lowering dependency on single crops.
- Assess the farmer business case: The success of the transition fully depends on a good farmer business case. Assess all expected costs, including inputs, labour, and loans, and benefits including (decreasing or increasing) yields, prices and income from diversified crops. Assess the costs and benefits on a monthly basis, to ensure farmer cashflow is healthy at every stage. Assess this for different farmer archetypes to ensure that each farmer is supported with a suitable transition plan. Specific recommendations include:
Figure: Example of a phased transition plan for coffee farmers
- Phased adoption: The introduction of Regenerative Agriculture practices can be done step-by-step to reduce risk and make the multi-year transition more manageable for both farmers and companies. It can also help to introduce at least some useful regenerative elements that are suitable to less professionalised farmers that are unable to engage in a full-blown transition. For example, each year new elements can be introduced to ensure labour and capital requirements are never too high or yields too low in any given year. Start with fundamental practices like soil health improvements, and gradually introduce more complex systems such as advanced diversification, spreading costs and risks over time to make the transition more manageable in the short-term.
- Mix of quick wins and long-term benefits: Combine short-term income strategies (e.g., providing bean seeds and fertiliser for immediate income) with long-term activities (e.g., shade trees that yield income in 5 to 7 years) to keep farmers motivated. An example of coffee farmers in Uganda exploring different diversified and Regenerative Agriculture farming systems shows the difference in net income distribution over time between coffee and other crops.
- Revenue diversification: Enhance farm resilience by promoting additional income streams alongside regenerative practices. Encourage intercropping, crop rotation or agroforestry systems to stabilise income and improve soil and farm conditions. In Kenya and Uganda for example, over 90% of coffee farmers intercrop with bananas, beans, or shade trees, improving yields, nutrient retention, and income stability. [source: https://www.idhsustainabletrade.com/uploaded/2022/05/2022111-IDH-Baseline-Report-V2-gecomprimeerd.pdf]. In Southeast Sulawesi, Indonesia, Mondelēz International and PUR Projet transformed approximately 1,900 hectares of cocoa farms into agroforestry systems, distributing nearly 60,000 trees (including fruit and timber species) to diversify farmer income and strengthen environmental resilience. [source: https://www.pur.co/news-stories/cocoa-agroforestry-in-southeast-sulawesi]
- Suitable plan for all farmers: Assess different farmer groups, based on e.g. land size, yield, age, skills, appetite for changing practices, etc., and tailor the transition process to the different groups’ needs. This requires special attention for more marginalised groups such as women, remote farmers and very small farmers who may not adopt well if generic training, inputs and financial services are offered that are not suited to them.
- Farmer engagement: Involve farmers early in the design process (e.g., through methods such as focus group discussions) to ensure regenerative practices match local farming systems and offer clear tangible benefits. Approaches or practices can be tailored to local perceptions and preferences for greater buy-in, for example when farmers face high climate risks or high cost of production from chemical inputs, adoption of Regenerative Agriculture is more likely.
Regenerative Agriculture transitions require many different forms of farmer support that can be difficult to organize by a single company. It can therefore help to work with other actors including farmer organizations, other offtakers and (financial) service providers who already have expertise, capacity and network in such areas. Further benefits of collaboration include the sharing of resources, knowledge, and infrastructure, and expanding of joint reach. Below are options for collaborations on farmer support (while broader Landscape and sectoral collaborations are discussed in Section 3: How to scale):
- Role of farmer organizations: Identify existing farmer organizations that are well-positioned to participate in a pilot or deliver key farmer services. Look for those with sufficient organizational capacity, openness to innovation, access to support services, and other lower-risk contexts.
- Service Coalitions (for more info, see our Service Coalition Guide): Collaborate with service providers and potentially other offtakers to jointly invest in a shared farmer base. By each focusing on the service they deliver best, a comprehensive bundle of high-quality support services for Regenerative Agriculture adoption can be provided at lower cost. Partnerships formalized through contracts or MoUs can help expand training programs or access to regenerative inputs like cover crop seeds, organic fertilizer or beekeeping equipment and training. For example, a Ugandan coffee company worked with a local beekeeping company to support farmers with Regenerative Agriculture: the coffee company subsidized the cost of bee hives for the farmers, the beekeeping company provided training for free, the farmers sold the honey for additional income.
- Blended Service Delivery: Blended service delivery focuses on integrating different types of services (such as inputs, training, financing, or market access) for the different crops that are grown on a single regenerative farm. In this way a farmer receives one aligned bundle of services for all their needs, even if they are provided by separate actors. For example, a coffee company in Kenya realized farmers were diverting organic inputs away from coffee to use on beans and maize. By deciding to provide sufficient inputs for both coffee and beans, the company ensured coffee yields were protected while supporting holistic regenerative practices on the farm. By additionally buying the beans, the company supports farmers by providing a reliable market for their diverse produce and also diversifies their own product offerings.
Key benefits vs. challenges of blended service delivery - Value Chain collaboration: Create stronger support mechanisms between upstream and downstream actors. For example, downstream companies may support suppliers to invest in the transition to regenerative agriculture through higher prices, more favourable contractual terms or co-investment in field-level interventions. Key examples of large companies who are providing such support include Nestle, Danone, Natura&Co, but smaller companies can also lead the way.
Distribution of value, cost, and risk across a value chain
Phase 2: How to implement a Regenerative Agriculture service delivery business model?
Once a pilot is in place, the focus shifts to building a strong support system that helps farmers transition effectively. Phase 2 outlines how to design this ecosystem, covering training, finance inputs, and incentives, while also ensuring the model is efficient, financially viable, and built for continuous monitoring and improvement.
Regenerative Agriculture often involves practices that are new or unfamiliar to farmers (e.g., cover cropping, no-till farming, rotational grazing), therefore it is critical to provide support services to ensure participating farmers are sufficiently able to adopt and sustain regenerative practices. Additionally, capacity building can be offered to Producer Organisations and cooperatives to ensure they are aligned and able to support the transition.
- Customised training: Provide locally adapted support based on specific crops, farming systems, environmental conditions, and existing farmer knowledge through diverse formats (e.g., group training sessions, field demonstrations, farmer exchanges, one-on-one agronomic advice, digital tools). For example, Nespresso in Ethiopia partnered with TechnoServe to establish farmer training centres, where local agronomists deliver hands-on demonstrations in soil health, shade management, and agroforestry tailored to local conditions, significantly improving farmer adoption rates. [source: https://www.technoserve.org/wp-content/uploads/2024/04/TechnoServe-Nespresso-AAA-Impact-Report-Ethiopia-Kenya.pdf. Similarly, RPLC India has developed a contextualised regenerative agriculture training manual for cotton farmers in Madhya Pradesh, with practice adaptations for six different crops typically grown as part of the cropping mix.
- Complementary training and information: Strengthen farmers’ understanding of a broader set of business skills alongside agronomic skills to help them become e.g. more adaptable and bankable. Additional training topics include climate change, soil health, financial literacy and recordkeeping. Better provision of further information can also be useful to improve implementation of Regenerative Agriculture practices, including access to detailed weather information and crop and soil diagnostics.
- Research collaboration: Partner with research institutes and set up demonstration farms to validate and scale proven Regenerative Agriculture practices. For example, PepsiCo, McCain, the International Potato Center and others have teamed up in India to pilot Regenerative Agriculture methods in potato cultivation. They’ve established demonstration farms to test practices like zero-till potato under rice mulch and providing proof-of-concept for broader scaling across smallholder supply chains. [source: https://indianpotato.com/a-collaborative-initiative-by-cip-mccain-and-pepsico-for-regenerative-potato-farming-in-india/ ]
Ensure farmers have reliable, affordable access to the right agricultural inputs to support their transition to Regenerative Agriculture.
- Input provision: Address the key barrier of availability to reliable inputs by linking farmers to trusted suppliers or by directly supplying them with organic or cover crop seeds, compost or biofertilisers, mulch, equipment for reduced tillage, and tree seedlings (for agroforestry systems). Also assess what farmers can create themselves, including different forms of compost, mulch and seeds.
- Labour: Regenerative practices can lead to a (temporary) increase of labour needs, e.g. for planting, mulching, multi-crop harvesting etc. Famers can be supported with accessing hired farm labour, by e.g. coupling them to digital platforms or training farm labourers in regenerative practices.
- Equipment: Assess other equipment that farmers may need in their transition, such as different tilling equipment, composting materials, fencing, etc., and ensure they can access high quality products.
Different forms of additional contractual and financial incentives can be offered to farmers to incentivise them to implement Regenerative Agriculture. Financial incentives can be particularly useful during the initial transition years before farming benefits materialise. However, the central incentive and reward for farmers to adopt Regenerative Agriculture must always remain a strong farming model itself; one that produces high and stable yields with low costs of production. Financial incentives should only complement a business plan on top of a strong farming proposition. The following mechanisms can be good for such additional farmer support:
- Improved offtake agreements: Farmers require some form of contractual security to enable investments into Regenerative Agriculture. Offer guaranteed offtake for volumes of Regenerative Agriculture produce to incentivise the farmers to apply or make short-term investments in new practices (see also Guaranteed offtake agreements in the Farmfit Innovation Library: https://farmfitinsightshub.org/innovation-library/innovation/guaranteed-off-take-agreements). Additionally, companies can provide multi-season market security to farmers through long-term sourcing contracts, enabling them to invest in regenerative transitions with higher upfront costs with reduced market risk. For example, Nestlé and Danone use multi-year contracts as part of their regenerative sourcing approach. Offtake agreements can also embed agronomic training, input support, and access to finance to ensure successful implementation of regenerative practices. For example, Nestlé provides technical support and input financing alongside purchase guarantees across multiple commodity supply chains (coffee, cocoa, dairy).
- Pricing incentives: Offer premium pricing for products grown under regenerative practices to compensate for higher initial production costs or loss of yield and to incentivise adoption. For example, Danone pays price premiums to farmers for adopting Regenerative Agriculture practices. Similar options are offered by many companies, typically those operating in high-end markets. Some of the most common premium-paying value chains today include cocoa, coffee, and cotton, while premiums are least common for bulk commodities like soy, maize, palm. Care must be taken that price premiums do not seek to compensate for relatively low performing farming models; those challenges should be solved within the farming model itself. Price premiums can also be offered temporarily, during the transition period when yields are not yet at their full potential.
- Performance-based and behavioural incentives: Design smart rewards to tackle barriers such as fear of data sharing or uncertain returns:
- Practice-based incentives: Offer simple, activity-linked rewards (e.g., payment per hectare under cover cropping or agroforestry) where outcome verification is difficult or costly. For example, Cargill’s RegenConnect program offers farmers payments based on their adoption of recommended practices, and PepsiCo and Walmart $120M set up a joint fund that provides similar financial incentives to farmers. When paying for adoption of practices, it must be noted that farmers need to invest labour and resources upfront. Payments should be designed accordingly so farmers can cover initial costs.
- Outcome-based payments: Compensate farmers for measurable environmental improvements (e.g., per ton of CO₂sequestered, improved water retention, or verified soil health). An example is the RTRS Regenerative Incentives System, which is an add-on module to the existing Round Table on Responsible Soy (RTRS) certification. The points-based system rewards soy farmers who adopt increasingly advanced regenerative practices. The amount of achieved points generates credits that can be sold on RTRS’s proprietary trading platform.
Outcome-based payments as incentive and reward
- Contractual conditionality and milestones: Integrate regenerative benchmarks (e.g., % of cover cropping, % of deforestation-free land, verified carbon outcomes) into procurement contracts with verification protocols and phased targets.
Financial de-risking by Organic Cotton Accelerator
Farmers often lack access to sufficient financial services for Regenerative Agriculture transitions. For example, terms offered on loans may be unsuitable to the long timeframes required and inadequate data on farmers leads to low coverage or high interest rates. It is key to facilitate or develop suitable finance models to reduce the burden on farmers during the initial transition stages to regenerative practices. Some financial products can be offered by value chain companies, while many others require collaboration with a financial service provider. Such partnerships can provide a strong ecosystem of services for farmers. Collaboration is key, as e.g. project MRV data as well as company procurement can act as de-risking mechanisms for banks to offer loans. However, all financial products must be understood to be only complementary to direct financial support and incentives; there must be low pressure on farmers to take out loans to invest. In all cases, it is important to ensure financial products offered to farmers adhere to the Client Protection Principles which aim to reduce risks of farmers taking up financial burdens.
Key financing needs for farmers include:
- Working capital: This covers the day-to-day expenses farmers incur throughout the production cycle, including the purchase of inputs, hiring of seasonal labor, and payment for services such as technical assistance or machinery rental. These costs are recurring, time-sensitive, and directly tied to cash flow, making access to short-term financing essential for farmers to sustain productivity and adopt regenerative practices without interruptions. Inputs including fertilizers, pesticides, seeds and planting material are often the largest upfront financial needs for farmers. Inputs can be provided at reduced prices, e.g. by facilitating aggregate input purchases at lower costs, or provided on credit.
- Capital investments: A transition to Regenerative Agriculture may also come with longer-term expenditures in farm infrastructure, equipment, tools, and technology, such as irrigation systems, soil-testing devices, storage facilities, or mechanization tools. Such investments often require larger sums of financing with longer repayment periods.
Types of financial products to offer to farmers include:
- Loans and credit: Can be offered either by financial service providers or value chain actors. A key challenge is that many smallholders lack land titles or formal collateral, while regenerative agriculture is seen as high-risk with delayed returns. Alternative credit assessments and de-risking mechanisms could be promoted such as group guarantees, crop/soil data, and digital records. Collaboration between value chain companies and financial service providers is often useful (for more info see also our Tripartite Financing Agreement Innovation Guide). For example, project MRV data as well as company procurement can act as de-risking mechanisms for banks to offer loans. Additional consideration include allowing farmers to repay loans directly at harvest by deducting the loan from crop payments, and delaying loan repayment in case of crop failure. Digital finance and fintech solutions such as mobile-based lending, pay-as-you-grow models, and embedded finance within digital platforms can lower transaction costs, expand reach to remote and dispersed farmer groups, and align repayment schedules with seasonal income flows.
- Blended finance: Regular financing is often short-term and high-interest. Grants or blended finance structures can help more patient, tailored capital with flexible grace periods that are suited to the long transition periods of regenerative agriculture. For example, Rabobank and the AGRI3 Fund offered a 10-year blended-finance loan to Agro Sao José, a Brazilian farm integrated into both orange and sugarcane value chains, to cover the upfront costs needed to transition to regenerative practices. The financing supported soil health improvements through composting, crop rotation, and intercropping, while the blended structure reduced investment risk and enabled longer repayment terms. [source: https://www.rabobank.com/about-us/impact/article/011445477/regenerative-farming-through-blended-finance]
- Insurance products: Crop insurance can provide a safety net against yield losses from climate shocks, pests, or unpredictable weather thereby giving farmers the confidence to invest in soil health, crop diversification, and other regenerative methods that may take several seasons to deliver full benefits. For insurers and financial institutions, designing these products requires careful consideration of affordability, accessibility, and transparency. Best practices include tailoring coverage to local agroecological conditions, using parametric or index-based models to reduce claims complexity and integrating insurance with training and advisory services.
- Savings and self-finance mechanisms: Farmer cooperatives, village savings groups, or revolving funds can provide a low-cost, community-driven way to support the transition to regenerative agriculture. By pooling resources, farmers reduce reliance on external lenders, strengthen local financial resilience, and create a shared incentive to invest in practices that improve soil health and long-term productivity. Best practices include transparent governance, strong social cohesion, and linking savings groups to formal financial institutions for scale and stability.
- SME or Farmer Organization lending: Provide loans to off-takers or farmer organizations based on their historical performance as supplier, giving them sufficient working capital that allows them to provide regenerative services to their farmer base (e.g. input financing) or providing capex loans to expand sourcing infrastructure related to regenerative volumes (e.g. eco mills, wastewater recycling & treatment, storage). For example, coffee companies in Kenya provide loans up to 30% of the value of the coffee volumes sold in the previous year to the Farmer Organizations.
Upfront investments into Regenerative Agriculture service models can be recovered by offtakers using the following strategies. Options for funding large scale models and investments from downstream supply chain actors are mentioned in detail in Phase 3: How to implement for scale.
- Sourcing-based cost recovery: Regenerative Agriculture can strengthen farmer engagements and improve product yields and quality. Additionally, volumes may receive higher prices. These sourcing benefits are often sufficient to recover initial investments costs after some years. For example, the below graph shows how small the investments were for a coffee offtaker to provide support for Regenerative Agriculture compared to the additional sourcing benefits.
- Service-based cost recovery:
Certain support services (e.g., agronomic advice, soil testing, input delivery) can be monetized by charging farmers or third parties, while still maintaining accessibility through subsidies or cost-sharing models. The below graph shows how an offtaker expanded its paid services to farmers in a transition to Regenerative Agriculture.
- New product streams:
Analyse how farm by-products or additional crops can be sold by farmers to new markets and play a supporting role in marketing by signing MoUs with other market actors. For example, a Ugandan coffee company provided avocado seedlings and training to support Regenerative Agriculture practices of the farmers. They signed an MoU with an avocado offtaker to provide access to market to their farmers, while charging a small fee to the avocado offtaker for the market linkage.
- Carbon assets: Carbon reductions and removals can be measured and monetized, thus leading to additional income streams. Carbon assets can be sold to interested value chain actors (insetting) or on a global market (offsetting). In most cases, a share of the benefits will go to farmers and a share to the service provider and/or offtaker. Within Regenerative Agriculture, there is high potential for carbon reductions via reduced chemical fertilizer use, intercropping (which spreads a farm’s carbon footprint over the multiple crops) and biochar production, and removals via tree plantings. Other carbon activities such as soil carbon sequestration are still too uncertain to be used reliably. In all cases, especially for offsetting, the accreditation of carbon schemes is a lengthy and costly process that is only cost-effective when implemented at a large scale. Various technical and agronomical hurdles must be considered in setting up such schemes.
- Public cost-sharing: Leverage government programs or public-private partnerships to subsidize the initial costs of Regenerative Agriculture initiatives, especially where broader environmental or social benefits are generated (e.g., climate adaptation, watershed protection).
Ensure business models are lean and scalable from the start by using digital tools, standardized metrics, and efficient delivery channels.
- Digital monitoring and verification: Use digital tools such as remote sensing, satellite imagery and mobile data collection tools to more efficiently track progress and verify local outcomes. This can significantly reduce monitoring and assurance costs (e.g., reducing the need for expensive physical field audits).
- Standardised outcome metrics: Adopt, or align on, standardised frameworks on common metrics for measuring Regenerative Agriculture outcomes (e.g., KPIs on soil organic matter, carbon sequestration), to facilitate consistent reporting across projects on ESG frameworks and credible benchmarking. For example, see the series of business guidance documents developed by the World Business Council on Sustainable Development (WBCSD) on consolidating regenerative outcomes and metrics with corporate reporting: https://www.wbcsd.org/resources/business-guidance-for-deeper-regeneration/ .
- Lean delivery:Companies can scale Regenerative Agriculture more efficiently by streamlining service delivery through farmer groups, cooperatives, or technical partners. As adoption grows, economies of scale, such as bulk purchasing of organic inputs, lower costs for both farmers and companies. Establishing regional hubs with demo plots and distribution centres tailored to local conditions allows for focused implementation and easier replication in other areas.
- Digital service delivery channels: Channels such as digital platforms for monitoring soil health or mobile apps that provide farmers with real-time training on regenerative practices could be leveraged for wider adoption, especially in more remote areas or to reach farmers that otherwise might be left behind. These digital innovations make it easier to replicate successful models across different regions.
- Joint target setting and monitoring: Co-develop Regenerative Agriculture roadmaps with suppliers and track performance collaboratively. Co-invest in digital tools or monitoring infrastructure to incentivise traceability and data sharing with actors further downstream.
Use data to track outcomes and optimise your approach over time. Results can be used to e.g. further optimise farming models and farmer services, or to inform when temporary support can be phased out.
- Monitoring and evaluation systems: Integrate impact tracking into company systems (e.g., through FMIS) for traceability and accountability. (For more detailed info see our FMIS guide). Once measurable targets are established, track the different environmental, social, and economic metrics to validate effectiveness, enable credible reporting, guide decision-making, and ensure continuous improvement.
- Feedback loops: Create feedback loops for farmers to regularly report on outcomes and collect their input regularly to identify and resolve inefficiencies early.
Phase 3: How to implement for scale?
After testing and refining pilot models, the next step is to scale Regenerative Agriculture across supply chains and regions. Phase 3 outlines how to embed Regenerative Agriculture into core business processes, including procurement, governance, funding, and partnerships, to drive lasting, large-scale impact.
Integrate regenerative principles into procurement policies, supplier onboarding, and contract structures to ensure it become a default way of operating as a business and signals the same to other supply chain actors. Updating a procurement cycle typically takes the form of:
- ·External risk and opportunities assessment: Sourcing risks and opportunities are continuously assessed, including climate risks, price volatility, supplier risks, opportunities for new market segments and consumer preferences. It must be made explicit how regenerative sourcing aligns with these needs.
- Internal assessment: Regenerative sourcing must align with existing internal business requirements and impact objectives.
- Define regenerative criteria: Alongside other volume and supplier requirements, companies must define the precise criteria that combine their sourcing requirements with regenerative ambitions. This can include setting numbers on regenerative volumes, product characteristics, field-level practices (e.g. agroforestry, reduced chemical inputs) and outcomes (e.g. soil health, carbon sequestration, biodiversity, farmer income and income resilience), and monitoring and traceability data.
- Make strategic buying decisions: Based on the set criteria, strategic buying decisions for regenerative volumes can be made, e.g. on the selection of certain suppliers (see Box 5) and specific support mechanisms.
Regenerative supplier models for downstream companies
Scale regenerative practices beyond initial pilots by formalising successful Regenerative Agriculture service delivery business models and adapting them to new geographies.
- Pilot in low-risk regions: Start pilots in lower-risk, most favourable conditions to build trust, gather data, and refine models.
- Replication and adaptation: Document what works, adapt to local contexts, and apply across sourcing regions and commodities.
Make Regenerative Agriculture a core part of internal decision-making and accountability structures to ensure strategic alignment. Good guidelines on company governance for advanced sustainability include IDH & Forum for the Future’s Integrating social and environmental sustainability (2023) and Gold Standard’s Nature Framework (2025). A few key elements include:
- Board-level commitment: Ensure high-level leadership champions regenerative goals through public commitments and integrating it in internal company policies. For example, Walmart has shared how it was able to suddenly work on a multitude of regenerative initiatives after there was clear leadership commitment that steered the organisation towards regeneration.
- Internal alignment and incentives: Align strategies and projects of procurement, sustainability, and finance teams to drive unified action. Incentivise internal teams (e.g., procurement) with KPIs or bonuses linked to Regenerative Agriculture adoption targets to ensure regeneration is not siloed.
A key lever for scaling and replication is to collaborate not just at the local level, but at a wider scale; e.g. across a landscape, country, region or globally. This opens the door to many new opportunities that are hard to access at small scales or by companies acting alone, such as efficiencies when replicating, better access to blended finance and alignment to government schemes. Some options include:
- Systemic and landscape approaches: When multiple companies source from the same landscape or farmer groups, coordinating efforts and implementing regional strategies can lower costs, increase efficiency and increase impact. Joint action avoids the confusion of competing messages to farmers, enables pooling of technical assistance, and can attract public or blended finance more easily. This is specifically for those Regenerative Agriculture practices that have positive environmental impact that goes beyond individual farms (e.g., watershed restoration, biodiversity protection).
- Sector convening: Pre-competitive global or regional platforms that allow companies to align on common approaches, targets, and methodologies, helps to reduce the cost of trial-and-error and signal consistent expectations to farmers. These collaborations can also influence public policy or attract large-scale investment. The Sustainable Coffee Challenge is one such platform, where companies align on regenerative goals and can collaborate on pilots, reporting, and farmer support mechanisms.
- Form strategic partnerships across value chains and sectors: Convene and establish strategic partnerships and alliances across the value chain and wider sector to scale Regenerative Agriculture (e.g., through joint investing, aligning incentives) and create a level-playing-field where downstream actors compete on sustainability outcomes rather than solely on short-term economics. For example, Rabobank’s Acorn initiative partners with corporates to provide capital for supporting farmers to adopt agroforestry practices (through facilitating a credible carbon credit mechanism).
- Coordinate with government programs: Government programs often have extension services, financing schemes, or subsidy programs aimed at improving soil health, water management, or productivity. Aligning with these can reduce duplication, leverage public funds, and ensure policy support for long-term regenerative outcomes. In India, for example, companies collaborating with state-led Zero Budget Natural Farming initiatives benefit from government-funded training while supporting market access for regenerative products.
A key challenge for implementing a transition to Regenerative Agriculture remains the initial costs involved. While a solid business case based on strong sourcing and service delivery is the foundation for a regenerative business model, offtakers may be able to attract additional sources of finance to start or grow their investments at crucial moments. Some options to explore include:
- Carbon and ecosystem markets: Additional revenue streams for farmers and/or companies can be created by generating tradable carbon credits e.g. Regenerative Agriculture projects can be verified under the Verra Verified Carbon Standard (VCS) to generate carbon credits that can be sold on global voluntary carbon markets. Similar mechanisms exist at smaller scales for biodiversity and water credits (e.g. the Water Footprint Compensation water offset scheme). Typically, such schemes are only accessible and cost-effective if they can be implemented at large scale, e.g. larger than 10,000 ha.
- Government funding: Governments offer grants, subsidies, and technical assistance programs to promote climate-smart and sustainable agriculture. Companies can apply directly (especially for projects in the Global North), partner with suppliers to access national programs, or collaborate with NGOs or local authorities to co-develop proposals.
- Blended finance: Blended finance combines public, philanthropic, and/or private capital to de-risk investments in sustainability, enabling larger or riskier regenerative projects to become viable. Often includes concessional loans, guarantees, or first-loss capital. Companies typically join project consortia led by NGOs, development banks, or platforms like IDH or Agri3, or co-develop investment proposals with intermediaries (e.g. traders, cooperatives) and impact funders.
- Development Finance Institutions (DFIs) and impact investors: DFIs and impact investors can provide patient capital to intermediaries (like traders, offtakers or cooperatives) for Regenerative Agriculture projects, infrastructure, or supply chain upgrades that offer measurable environmental or social returns. Companies can work with existing supply chain partners to structure investment-ready proposals or join DFI-backed platforms focused on sustainable sourcing and farmer resilience.
Further funding options for large & downstream companies
Further downstream value chain actors typically have additional funding sources baked into their business models to free up funds to invest into Regenerative Agriculture. Strategies include:
- Sustainability or ESG investment funds: Create a central fund within the company to invest in sustainability-linked supply chain initiatives, with multi-year budgeting. Best for funding pilots, innovation partnerships, capacity building; often governed by sustainability departments.
- Internal carbon pricing schemes: Put a price on emissions internally; use the “collected” carbon cost across business units to fund climate-positive interventions like Regenerative Agriculture. Example users: Microsoft, Unilever, Nestlé (some with actual funds, others shadow pricing only).
- Product-level cost allocation: Embed a small per-unit cost (e.g. $0.01/kg) on certain products to fund regenerative sourcing support, functioning like a self-imposed “sustainability levy” within the company. Often invisible to the end consumer (i.e., not passed on).
- Procurement budget integration: Build support costs into procurement budgets by redefining the acceptable Cost of Goods Sold (COGS) for key ingredients or materials. Allows buyers to account for long-term value (resilience, risk reduction) rather than just price.
- Marketing or Brand budgets: Re-direct a portion of brand or marketing budgets to fund regenerative initiatives that generate story-worthy sustainability claims.
- Corporate offsets / insetting budget: Use internal offset or “insetting” budgets (designed for emissions reduction within value chains) to fund regenerative outcomes (e.g. soil carbon, reduced fertiliser use). Funds must be tied to quantifiable climate benefits, but Regenerative Agriculture qualifies in many cases.
What is the impact of Regenerative Agriculture?
This section examines the impact of Regenerative Agriculture using data collected by IDH’s Inclusive Business Analysis team from global case studies since 2015, alongside aggregated farmer survey data. It analyses costs, returns, and value created for both farmers and companies, highlighting the investments required, how costs can be recovered, and the ways Regenerative Agriculture can enhance resilience, profitability, and long-term sustainability. In some cases, data from a broad set of diversified farming systems are used as a proxy for Regenerative Agriculture. While this approach reveals certain trends and patterns, the level of analysis in those cases is not sufficient to draw definitive conclusions.
Transitioning to Regenerative Agriculture typically requires high upfront investment by the farmer. To support this, companies tend to provide a wider range of services. While we have limited data to directly compare investment costs for regenerative models versus conventional approaches, our data shows that generally, more complex service models have higher investment costs per farmer than less complex service models (see graph below, taken from a subset of our coffee data. For more, see the full report Brewing Change). We expect regenerative models to be of relatively high complexity and follow this same trend.
Additional insight can be drawn from Inclusive Business Analyses conducted on specific regenerative case studies. For example, one coffee processor-exporter supported farmers to fully diversify their farms to improve soil health, thereby improving coffee yields and resilience. This diversification support involved relatively high gross investment costs; however, cost-benefit projections showed that by sourcing some of these crops directly, the company could recover those costs and achieve a net profit by Year 2.
Individual case studies demonstrate that there are multiple effective methods for companies to recover their investments in Regenerative Agriculture. The graphs below illustrate various ways in which companies were projected to increase revenues from regenerative practices over time. The most common approach is cost recovery through higher yields and sourcing volumes of the main crop. Other methods include generating new income streams from fee-based farmer services and additional revenues from sourcing diversified crops.
At farm level, Regenerative Agriculture aims to create value in terms of improved (future) profitability and enhanced resilience to climatic and environmental shocks, through practices such as crop rotation and soil conservation techniques. External evidence supports this approach: for example, a global, systematic review by FAO (2022) found that legume-based crop rotations increased main-crop yields by around 20% compared to rotations or systems without legumes, with the magnitude of the benefit influenced by nitrogen fertiliser rates and regional inputs. Consistent with these findings, one of our Inclusive Business analyses with a coffee processor-exporter committed to regeneration showed that severe soil degradation had reduced yields in the sourcing region far below the 15kg potential seen on well-managed farms. To reverse this, a comprehensive soil restoration programme was required to make soils responsive again, as fertilisers and good practices alone were no longer effective. Once soil health was restored, yields could be sustainably increased through compost use, good agricultural practices, and regenerative methods such as mixed cropping, shade trees, and year-round ground cover.
Restoring soil health through Regenerative Agriculture can triple coffee yields (as seen above, from 4.5kg to 12.5kg per tree) and, in turn, increase farmer income threefold by Year 5. This income improvement is due to higher productivity, lower fertiliser and pesticide costs through the shift to organic inputs, and healthier, more resilient farm systems. Reduced chemical use also benefits soil, water and biodiversity, supporting long-term sustainability.
Analysis of aggregate data from all our Inclusive Business Analyses shows that farmers incur lower costs for their main crop when they adopt a diversified farming system.
Across our full dataset, farmers in diversified business models tend to experience lower income uplift on average. However, in specific value chains, such as coffee and cocoa, the opposite holds true: diversifying is associated with both higher incomes and greater income uplifts. In maize value chains, we observe a positive impact on income uplift but lower overall net income. Note that these findings relate to crop diversification rather than the full spectrum of regenerative agriculture practices and should therefore not be taken as a direct measure of the broader impacts from regenerative agriculture. Our research and technical support for several companies indicate that the main drivers of higher net income and income uplifts are: (1) strategic, context-based diversification; (2) blended service delivery for diversified crops, including input provision and market access; and (3) rejuvenation of coffee or cocoa trees or access to quality inputs. Together, these factors contribute to sustained improvements in farmer incomes over time.
Where to find more inspiration?
Internal case studies and Resources
IBA Touton, Uganda, Coffee: https://farmfitinsightshub.org/resources/inclusive-business-model-analysis-touton-uganda
IBA Mountain Harvest, Uganda, Coffee: https://farmfitinsightshub.org/resources/inclusive-business-model-analysis-mountain-harvest-uganda
IBA Ugacof, Uganda, Coffee: https://farmfitinsightshub.org/resources/inclusive-business-model-analysis-ugacof-uganda
IBA Kenyacof, Kenya, Coffee: https://farmfitinsightshub.org/resources/inclusive-business-model-analysis-kenyacof-kenya
IBA CMS, Kenya, Coffee: https://farmfitinsightshub.org/resources/inclusive-business-model-analysis-cms-kenya
IBA ECOM, Kenya, Coffee: https://farmfitinsightshub.org/resources/inclusive-business-model-analysis-ecom-sms-kenya
Link to Ugandan Handbook: https://ugandacoffee.go.ug/sites/default/files/2024-01/Coffee%20Reg%20Ag%20Handbook%20Uganda%20Final.pdf
Link to Kenyan Handbook: https://cgspace.cgiar.org/server/api/core/bitstreams/1926ff90-7033-4acc-8e59-687c7cd2a8d3/content
In this article
-
What is this guide and why does it matter?
-
What is Regenerative Agriculture?
-
Why implement Regenerative Agriculture?
-
Context matters: What are enabling conditions for Regenerative Agriculture service delivery business models?
-
Why not? Key limitations, risks, and unintended consequences
-
How to build a Regenerative Agriculture business model?
-
What is the impact of Regenerative Agriculture?
-
Where to find more inspiration?
Your Insights Hub journey has just started
Sign up here for access to updates - and industry insights and innovation - from the Smallholder Inclusive Business Newsletter.
