How to Support Your Clients Embracing Regenerative Farming
The concept of regenerative ag solutions has been prevalent for a long time, first coined in the 1980s, though its practices and objectives have existed for much longer on a smaller scale. Today, as more grants, incentives, and funding opportunities arise—and as technology and equipment continue to advance—we’re starting to see a more steady embrace of regenerative ag practices.
Regenerative Farming is Well On Its Way
Let’s first level set on what regenerative farming is and what it’s trying to accomplish. Generally, regenerative farming focuses on maintaining living root systems, keeping soil healthy, and reducing CO2 emissions. Tilling the soil releases CO2, for instance, while no-till practices allow organic matter to decompose naturally, enriching the soil over time. Cover crops, often planted in the fall and grown through the winter, contribute to soil health by fostering beneficial microbial activity and improving nutrient cycling. These practices all enhance our soil’s ability to retain water, nutrients, and structure, promoting better crop growth in the long term and a healthier planet.
That said, regenerative farming practices take time to implement, creating some resistance within farming operations that are typically very efficient. For example, farmers can often plant crops like corn and soybeans within a week; in contrast, a regenerative approach can require changes in technologies, tillage, and fertilization practices that can significantly extend timelines and delay results. Some reports indicate it can take three to five years to see measurable results. As a result, many farmers feel inclined to stick with their existing profitable practices because there is no immediate financial benefit to investing in new tools.
That’s starting to change, especially as consumer packaged goods (CPG) manufacturers are eager to establish eco-friendly supply chains by incentivizing farmers to deploy sustainable practices, such as cover cropping and no-till farming. Nestlé, for example, aims to have 20% of its key ingredients sourced from farmers with regenerative agricultural practices by 2025 and 50% by 2030—a major nod to the consumer-driven demand for more transparent, sustainable food production.
Change within ag practices will come as the demand for regenerative solutions gradually grows. When farmers and producers decide to take their first step toward more sustainable practices, they’ll look to their lenders for financial guidance.
How to Support Your Ag Borrowers
Ag borrowers exploring regenerative practices will have different financing needs as they get started. Lenders that can accommodate these changes and expertly guide their clients in the right direction will stand above and apart from their competitors.
Key considerations to start planning for now:
- Specialized products: Are you prepared to offer specially designed loan products tailored for regenerative agriculture? Can you offer reduced interest rates to lower the financial burden as they transition their practices? Are there sustainability grants available to them? Ag clients will likely seek longer repayment periods to account for the delayed financial returns from these practices. Start mapping out your approach to the products and services you’ll offer now so you’re prepared when they ask these questions.
- Education: Will you partner with networks, universities, and other experts leading sustainability and regenerative practices so your clients can continuously learn? Will you have informational resources and toolkits available that explain the benefits and long-term financial impacts of regenerative farming? Ag lenders that learn and evolve alongside their clients foster long-lasting, trusting relationships.
- Collaboration: How will you foster collaboration between your borrowers and local conservation organizations, government agencies, and other stakeholders so they have a support network? When lenders help promote collaboration between their farmers and producers, they can more easily share resources and knowledge about regenerative practices and will view their lenders as the lynchpin of their growth.
Lenders are not just financers. They are crucial in facilitating the transition from traditional farming to regenerative agriculture, ultimately contributing to a more sustainable and resilient agriculture industry.
The Agri-Access team is here to help answer questions as your borrowers start to embrace regenerative farming and as you start to ready your products and services to support their journey. Contact a relationship manager today to start the conversation.
