Surge in greenhouse gas pledges from CPGs prompts Cargill to pay farmers to collect carbon

Dive Brief:

  • Food and agriculture giant Cargill will pay farmers to expand or implement practices on their farms that sequester carbon in the soil as the company looks to serve growing demand from CPGs to meet their greenhouse-gas emissions goals.
  • Cargill is paying farmers roughly $20 per metric ton of carbon sequestered that comes from adopting regenerative agricultural practices such as no-till or the use of cover crops that prevent the release of carbon into the atmosphere. The program, called Cargill RegenConnect, also will help the Minnesota-based company follow through on its own sustainability commitments.
  • Many food manufacturers are incorporating sustainability practices into their business operations as they try to address environmental, social and governance issues that increasingly are important to consumers when determining what products to buy. 

Dive Insight:

Much of the interest in sustainability comes from the commitments large CPGs make to reduce their environmental footprint through the use of less water, renewable energy, better packaging or sustainable ingredients, among other tools.

Earlier this year, Mondelēz International said it intended to invest in projects that protect forests, reduce carbon emissions or increase resilience in areas where it sources raw materials as part of a broader rollout. And this week, PepsiCo announced a sweeping sustainability initiative that includes restoring about 7 million acres of farmland — the equivalent of how much it uses — and finding sustainable sourcing for many of its key ingredients.

But for CPGs like Mondelēz and PepsiCo to procure the ingredients they need to help them follow through on their sustainability pledges, they need to find farmers across the globe that produce everything from wheat and corn to soybeans and cocoa in a more environmentally friendly manner.

Cargill’s RegenConnect program, as the name implies, signs up farmers to produce more sustainable crops that in turn can be used by food manufacturers to reach their greenhouse-gas emission reduction goals.

Cargill will pay farmers depending on how much carbon they sequester and provide them with economic research, data and support.

RegenConnect will include thousands of acres and hundreds of farmers during its first year, beginning this fall going into the next planting season. It will likely be scaled up depending on demand from CPGs, the interest by farmers and changes in the carbon market, Ben Fargher, vice president of sustainability in Cargill’s North American agricultural supply chain, said in an interview.

“The demand side in terms of the CPG food sector is very strong in terms of the target and the commitment but exactly how to operationalize that is still evolving,” Fargher said. “We see so much motivation, resonance, commitment and drive from demand customers … that we know we need to be able to provide a value proposition to the farmer to help meet that need, and that is what this program is all about.”

But for farmers, CPGs and companies like Cargill, the demand for sustainably produced foods comes from the consumer, generating demand for crops produced this way. According to a 2018 study from Nielsen, almost half of U.S. consumers said they were likely to change what they buy to align with environmental standards. Companies have little choice but to respond.

In Cargill’s case, the money it spends to help farmers makes it financially more attractive for producers to enter the program, while also meeting the needs of companies looking to lower their environmental footprint. It also ensures Cargill has access to at least a portion of the commodities it needs to meet this demand. RegenConnect also helps Cargill attain its own sustainability goals.

“We can add value by connecting [farmers and CPGs] together,” Fargher said. “What we’re not trying to do, is make sure we don’t overpromise and under deliver.” 

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