- Royal Canin says companies can back pilots but cannot sustain scale up alone.
- Yara calls for shared risk, co-investment and strong collaborations.
- IKEA views regenerative agriculture as long-term sourcing strategy to secure future supplies.
We are all for regenerative agriculture. Companies, institutions, and governments have run successful pilots proving that regen ag practices can climate change, improving soil health and ultimately strengthening food security.
But as we move beyond the pilot stage, there is one question left hanging in the air: who is footing the bill?
During a regenerative agriculture forum held during the World Agri Food Innovation (WAFI) Conference in Pinggu, Beijing in September, panellists acknowledged that the industry was still working out how to share the costs and risks.
Pilots absorb risks, scaling is harder
Global pet food manufacturer Royal Canin, a subsidiary of the Mars Group has publicly committed to reducing its absolute carbon emissions by 50% by 2030.
Although agricultural production is several steps removed from Royal Canin’s core operations, the company believes it must engage with farmers and agricultural suppliers to achieve meaningful emissions reductions, said APAC commercial director Yang Ming.
According to Yang, Royal Canin has compensated farmers during pilots to take away the risks for them.
“At the very beginning, we tell farmers that we will bear the loss at the year’s end, because we understand along the year with regenerative agriculture, there is so much uncertainty.”
However, he acknowledged that the company cannot sustain this as things progress beyond the pilot stage.
So instead, Royal Canin explores a supply chain model that directs its financial incentives through its suppliers.
“When we run the bidding process, we try to identify whether the wheat comes from an area using regenerative agriculture or from a normal farming area…. We have multiple suppliers competing, so I’m not too worried about the price. In the end, I use internal funding to subsidise my suppliers, so they can subsidise their upstream traders, and the upstream traders can subsidise the farmers,” Yang explained.
Additionally, the company also works with Syngenta to implement regenerative agriculture practices and has seen tangible results from it.
“We are very lucky to work with Syngenta in different areas, such as Shandong Province and Hebei Province, to implement regenerative agriculture best practices. That makes the whole circle complete, so that finally Royal Canin is able to buy regenerative agriculture wheat from those specific areas. From the study by China Agricultural University, it indeed improved soil health and helped to reduce carbon emissions from the soil,” said Yang.
Sharing risks and rewards
Esther Van de Voort, director of ecosystem partnerships and innovation at Yara International said scaling regenerative agriculture will require a broader sharing of responsibility among all stakeholders, from farmers to agribusinesses to governments.
“Who pays for this? We should all have skin in the game. We are all interested in protecting our planet. We’re all interested in making this successful through regenerative agriculture, we need to all be committed to making it happen.
“Yara cannot make it alone. The other ecosystem players, from inputs and offtakers to NGOs, governments and academia, we all need to work together.”
She added that while companies can bring technology, agronomic expertise and market access, wider collaboration is needed to reduce risk and create the conditions for long-term investment.
“We have fantastic science, fantastic projects, fantastic organisations. The farmers also have an interest in succeeding in their business. But how do we bring this all together? We need to work together, and that’s our principle of ecosystem partnerships.”
However, the challenge lies in aligning interest among all stakeholders.
“It’s very difficult to align agendas, to align priorities, to align budgets, to align regions and to align timelines.”
Furthermore, financing remains a huge hurdle as the financial sector is often cautious about agriculture because of its exposure to weather, markets and production risks, said Van de Voort.
“A cycle of a crop can take very long, and sometimes the results are not positive immediately. We need patience, patient capital and collaboration with academia to keep implementing fantastic research, but actually in practice.”
However, she argued that advances in agricultural data, risk management tools and collaborative business models should help unlock greater investment in regenerative agriculture.
“There is a lot of innovation and knowledge now in risk management. Different industry players can help de-risk the financial sector through collaboration, and they can also open up a bit on their risk appetite towards the agricultural industry.”
The future of agriculture
Regenerative agriculture is increasingly viewed not as an optional sustainability initiative but as a business imperative that companies can no longer afford to ignore.
Leo Xiao, raw material developer at IKEA Supply Area East Asia, stressed that regenerative agriculture has become an imperative for the furniture giant.
“Most of you know IKEA is a furniture company and think wood is the most important material for IKEA. But I can tell you that agricultural materials are also very important for IKEA.”
The company’s interest in regenerative agriculture extends beyond emissions reduction and reflects growing concerns about the long-term resilience of agricultural supply chains.
According to Xiao, raw materials account for more than 60% of its overall carbon emissions, making changes at farm level increasingly important.
“Resilient agriculture is very important for us. It is not only focused on today’s sourcing. It is more focused on the long term, maybe five years or 10 years, or even longer. How can we source our materials more stably? This is very important for our business.”
Using cotton as an example, Xiao said the company’s analysis suggests regenerative production can deliver a significantly lower carbon footprint than conventional alternatives.
He affirmed that IKEA increasingly views regenerative agriculture as a future model for agricultural sourcing.
“We think regenerative agriculture will be the future agriculture.”
