Regenerative business design

How can a business embedding Regenerative Agriculture principles be successful and profitable?

The regenerative system aims to reverse rural abandonment by making farms profitable, based on the following principles:

1. Avoiding dependence on external inputs, mainly those coming from the agrochemical sector;
2. Using technologies accessible to all and applicable at different scales;
3. Promoting job creation, especially for young people;
4. Establishing new ways of selling products;
5. Recovering food sovereignty to finally improve the economic profitability of farms.

The regenerative model responds to the main challenges of restoring activity in rural areas. When applied, it can reverse rural abandonment by making farms profitable. Moreover, it allows production in harmony with the environment in conditions where the current model is not viable.

Economic profitability can be achieved through a number of factors. We’ll explore five of them.

1. Limiting dependence on external inputs

The conventional production model is highly dependent on multinationals that manufacture inputs such as pesticides and fertilisers. This means that such agriculture is directly linked to the oil industry, which is necessary to produce and operate them. Fertilisers, pesticides, seeds and other direct costs are on average the main expense on a conventional farm._[1]

This creates a dependency, which means that producers have to achieve higher and higher yields in order to be able to afford them, which is not viable for small and medium-sized farms. In contrast, the regenerative model tends towards minimal or no tillage and does not use agrochemical inputs (pesticides, fertilisers, etc.).

With this model, production costs related to external inputs are reduced and the dependence on oil and large multinational agrochemical companies is minimised. This makes it possible to restore the profitability of small farms. However, regenerative farms tend to increase the human-work cost, which will be detailed in the next section.

2. Job creation

The regenerative system facilitates the creation of continuous and qualitative employment, especially for young people and other disadvantaged groups. There are two basic reasons for this:

1. It makes projects profitable that were not or did not even exist, especially in areas where rural employment opportunities are limited;
2. But also because the main expense becomes workforce.

It also favours job creation in regions with a high rate of rural abandonment, where old abandoned farms are brought back to life. This not only revitalises villages and areas far from urban centres, but also maintains the national agricultural heritage and protects the environment.

Agroforestry systems, like other agrosilvopastoral systems, represent a good way of reducing the risk of fire, which has been increasing in recent decades due to the disappearance of open spaces (crop fields, pastures and meadows) and the densification of forest masses (horizontal and vertical increase in vegetation).

The maintenance of land through the application of a profitable system not only increases landscape diversity, but also generates landscapes that are less vulnerable to fires due to the preservation of open and clean areas. In addition, grazing with an appropriate stocking rate in undergrowth, forest or pasture reduces the vertical continuity of vegetation.

3. Innovating new product sales models

The regenerative system considers that both production and marketing must be approached in a sustainable and profitable way. For this reason, restoring relations between people (consumer groups, local markets, direct producer-consumer relations, etc.) is a basic principle to be developed.

The very diversity of products promoted by the regenerative system favours the establishment of local markets with a direct relationship between producer and consumer. This allows both to advance together in the challenges of today’s society: reuse of packaging (circular economy), return and recycling of the organic fraction to the production system (i.e. all organic waste involved in the production and processing of food), supply of quality fresh produce and the possibility for the consumer to get to know and visit the farms where the products are produced. In addition to a diversification of marketing channels, resources are also diversified as several species are cultivated simultaneously.

4. Recovering food sovereignty

Food sovereignty is the right of each person to decide on theirown food and production system and to protect the local market from international markets. The value of the regenerative model for regaining food sovereignty is based on several of the aspects discussed in the previous points:

1. It makes it possible to feed the entire population in an affordable way;
2. It produces safe and healthy food through processes that, in addition, make it possible to sequester CO2 and conserve natural resources and biodiversity
3. It does not depend on large external lobbies;
4. It establishes a direct way of linking producers with consumers, promoting local, diversified markets based on fair prices;
5. It proposes a different way of eating, based on a local diet adapted to the production characteristics of each area; and
6. It proposes direct contact between consumers, administrations and farms, so that the knowledge behind the production sector and its role in the fight against climate change and the conservation of biodiversity can be discovered and valued.

5. Transition to regenerative agriculture

The economic profitability of farms based on the regenerative model is higher than those using the conventional model. Indeed, as we have seen in the previous paragraphs, the regenerative model has lower operating costs than the conventional model.

Moreover, this system aims to optimise production by taking advantage of the resources of the forest, livestock and crops on the farm through: (i) a circular economy in which there is a complementarity of products at the farm level that reduces expenditure, since what is left over from one use is applied to another, and (ii) the complementarity between space and time usages, which also contributes to lower costs.

One challenge – perhaps the greatest one – facing farming in the 21st century is to maintain production levels that will ensure affordable food for the world, while keeping methods and inputs sustainable. Research shows that while regenerative methods, which minimise or avoid tilling and chemical inputs entirely, can lower yields, this varies greatly depending on the crop and local conditions._[2]

In some cases regenerative and organic methods can lead to similar yields, and even yield increases._[3]

Thus, the transition to regenerative agriculture is mainly a question of culture and a change of mentality rather than a lack of profitability. Therefore, institutions and the state must support and accompany farmers who take the step.

We’ll discuss the role of these organisations in the next steps.