PepsiCo to pump $216m into US regenerative ag: ‘We’re putting our money where our mouth is’

The initiative aims to deliver three million metric tons of greenhouse gas (GHG) emission reductions and removals by 2030.

The partnerships will help PepsiCo achieve its pep+ targets to drive the adoption of regenerative ag practices across 7 million acres (roughly the size of PepsiCo’s agricultural footprint) by 2030 and achieve net zero emissions by 2040.

PepsiCo recently faced criticism about its ability to reach its net zero goals.

Funding will be allocated to a variety of projects, from upfront cash to farmers to cover the cost of seeds for cover crops, to education projects, Margaret Henry, senior director, sustainable agriculture strategy and external engagement at PepsiCo, told AFN.

“The vast majority of the money will go directly to farmers, whether it’s to cover upfront costs, or through outcomes-based payments, where you get money depending on how much carbon you sequester, how much water quality improves and so on.”

Ultimately, she said, the aim is that projects become self-sustaining: “Farming is extraordinarily hard, so PepsiCo is putting our money where our mouth is and partnering with farmers to help them try new things that we absolutely expect to deliver a return.

“So that might be from nitrogen reduction, which has an obvious payback, especially with the cost of fertilizer these days. And maybe with the cover crops and rotation you don’t need as much pesticide or herbicide. Long term if the soil is healthier, you have stronger crops with fewer inputs, and when it gets going it’s a virtuous cycle. But you need good agronomic advice to make that happen.”

‘When it gets going it’s a virtuous cycle’

Asked why farmers aren’t routinely adopting regenerative ag practices if the return on investment is so clear, she said, “I see this as a three-legged stool, where you need all three legs or you fall over. So for the first leg, the timeframe can be hard, so maybe there’s a three or four-year payback, which is extraordinarily hard for a farm. So if we can partner with them, we can get them over that first leg.”

The second leg is agronomic advice, she said: “What if you add a cover crop and it fails and then jeopardizes your cash crop? You need agronomic advice to determine what makes sense for your farm.”

The third leg of the stool is cultural, she said. “I grew up on a dairy farm in Kentucky. My Dad could read books all day long about what we should do on the farm, or have an academic coming on the farm and suggesting he do something. But if you’ve got a neighboring farmer that has actually succeeded, that’s what speaks volumes, so we want to help farmers learn from each other.”

“Sometimes, the heavy risk of new conservation practices gets in the way, but PepsiCo’s partnership helps to lessen some of the risk involved for farmers to try a new practice and that will make a big difference.” Dirk Rice, Philo, IL farmer leader of ICGA

Could ‘regenerative’ become the new ‘natural’ (the most meaningless word in food marketing)?

But what exactly is regenerative farming, and is ‘regenerative’ a term that risks becoming the new ‘natural’—the most meaningless word in food marketing—if there are not more consistent and rigorous definitions?

“It’s definitely a risk,” said Henry, adding that PepsiCo is focused on outcomes rather than being super-prescriptive about how farmers deploy regenerative ag tools.

“This is why we’re focusing on outcomes, measurable improvements in five areas: Carbon, soil health [soil organic matter, water-holding capacity, micro/macronutrients etc], biodiversity, watershed health [more efficient use of water and reducing pollution], and farmer livelihoods.”

She added: “Even the north side and the south side of the same field might need to do different things to regenerate the natural ecosystem, so we’re not going to be prescriptive, we’re agnostic on practices and we’re not taking a position on particular technologies.”

Asked to provide an example of what regenerative ag might mean for corn farming, she said: “A great corn farm could have a diverse rotation, so it’s got soy, then wheat, then a leguminous cover crop after that.

“Maybe you also have a productive livestock system and there’s a little bit of manure going into that farm. So it might be about reducing tillage, planting cover crops, optimizing your nitrogen, things which are still not the norm today.”

Defining regenerative ag

But while there is no one-size-fits-all approach to regenerative farming, PepsiCo is working with the wider food and ag community to ensure there is consistency around what to measure, said Henry. “So we’re working with the Sustainable Agriculture Initiative (SAI) platform, which is bringing together our peers and the scientific community to talk about what’s credible when we talk to people about regenerative agriculture. We think that’s really important to avoid confusion.

“We’re also engaging with the federal government on its Climate Smart Commodities initiative [USDA recently allocated $3.1 billion for 141 ‘climate-smart’ projects in the US].”

‘This announcement is not tied to any sort of on-pack label’

As for labeling, while several food brands are now using terms such as “regeneratively farmed” on their packaging, “that’s not the focus of this program,” said Henry.

“We know that for our customers, our consumers, our shareholders, these issues are important at the meta-level, but this particular announcement is not tied to any sort of on-pack label.”

Carbon markets: ‘They call it the Wild West for a reason’

When it comes to carbon markets, she said, “We know that that market is very much in flux. They say it’s the Wild West for a reason. But we know that these [regenerative practices] are the right ones for farmers. As to how much they count towards carbon sequestration, we’re actively involved in the conversations and we’re part of the Science Based Targets initiative (SBTi), which has developed the flag guidance​​ on sequestration as well.”

‘It will take many of us to shift the system so regenerative ag is the norm, not the exception’

By 2030, PepsiCo will work with PFI to reach approximately 1.5 million acres; SWOF to reach nearly 1 million acres; and the ICGA to reach approximately 600,000 acres, said the company, which recently struck a deal with ADM to help farmers adopt regenerative ag practices on up to 2 million acres by 2030.

But stepping back, how significant is PepsiCo’s work on regenerative ag in the scheme of things?

“We’re committed to helping spread regenerative agriculture over 7 million acres, which was roughly the size of our footprint when we made the goal,” Henry told AFN. “We’re one of the largest food and agriculture companies in the world, so it’s pretty significant, but if you look at how many corn and soy acres there are in the United States, this is still not a huge amount of that.”

She added: “It will take many of us to shift the system, it will take the government collaborating with the private sector, the feed world, the fuel world, and the food world to really shift the whole system towards regenerative agriculture so that these practices become the norm, not the exception.”