Large amounts of money will begin to flow into regenerative agriculture around the world next year, as organisations become more comfortable with the financing, an executive at Pollination has predicted.

Momentum from key financial actors in the food and agriculture value chain is about to reach the point where transactions in the sector increase at scale, as investors look for alternative sustainable options to renewables, Dave Haynes, a managing director at the company told Carbon Pulse.

Next year “is where we’ll see larger swathes of capital being deployed”, following a period of implementation, experimentation, and data collection this year, he said.

“In 2025, we’ll look back at 2024, the lessons learned, and become more comfortable in deploying larger amounts of capital into the space.”

Regenerative agriculture is a farming approach that focuses on improving the health of soil, alongside ecosystem and community benefits.

Climate change investment and advisory firm Pollination is planning a regenerative agriculture blended finance fund that could raise billions of dollars, Carbon Pulse reported in February.

Large institutional “buckets of capital” are mobilising focused on regenerative agriculture, as many investors have a mandate to deploy a certain amount of capital into climate-related solutions by a deadline, Haynes said.

“Historically, they’ve been looking at large projects in the renewable energy sector. They’re now eyeing the multi-trillion dollar agriculture market, and saying: ‘How do we play here, what are the solutions that we can actually finance at scale.’”

“There’s an appetite globally to be able to facilitate this kind of transition. It’s a question of coming up with solutions that satisfy the return expectations and the risk profile of the various institutions that want to play in the space.”

These investor types differ around the world but range from institutional investors to pension funds and philanthropy, he said.

In the US, regenerative agriculture solutions have focused on traditional row crops like wheat, but fruits, nuts, and vegetables also have potential for innovation, he said.

Corporations will begin to use regenerative agriculture practices across their supply chains after successful trials, he predicted. “The ambition is there.”

In June, Pollination published a report with The Rockefeller Foundation setting out the innovative financing instruments that could be used for regenerative agriculture.

These included:

• Regenerative operating loans
• Climate risk-adjusted insurance
• Blended finance

Emerging biodiversity, water, and reef credit payment mechanisms offer some promise for revenue streams for regenerative farmers, the report said.

Last week, an Australian finance collaboration focused on ecosystem services and regenerative agriculture was announced.

By Thomas Cox – t.cox@carbon-pulse.com

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