Levelling the playing field – developing market systems that support regenerative agriculture

Practical Action has five strategies that use market systems to support regenerative agriculture.

78 per cent of the world’s poorest people remain reliant on agriculture, 33 per cent of the world’s soils are degraded and agriculture contributes to about a quarter of global climate emissions.

This is not the result of an accident. Market systems have driven the development of an industrial agricultural system that has excessively low unit costs, at the expense of environment and people. For transformation to happen, we need market systems to drive agriculture that is regenerative.

How does regenerative agriculture differ to ‘conventional’ agriculture’?

Regenerative agriculture aims to optimise production whilst looking after soil quality, biodiversity, water and the wider ecosystem within which farming takes place. It uses the cycling of nutrients and resources to improve efficiency and sustainability.

In contrast, conventional, or industrial agriculture, aims to maximise profit from individual commodities, using linear production systems that rely on external inputs to achieve high yields. 

A shift to more regenerative agriculture has implications for market systems:

Fig 1: Shifting from markets that support industrial agriculture to markets that support regenerative agriculture

It also has very significant implications for gender, with women tending to be under-represented in, or only included in less lucrative parts of, the intensive agriculture market systems found in the left hand side of this diagram.

Market systems entry points for supporting regenerative agriculture

Practical Action has five strategies that use market systems to support regenerative agriculture. 

Facilitating shorter value chains in domestic markets
There is plentiful evidence from around the world that consumer demand for low impact agriculture is rising as a result of concerns over the environment, climate change and food safety.

One strategy to take advantage of this demand is to support markets that reduce the distance between producers and consumers, give consumers greater confidence, make traceability easier and enable circular economies. Support to ‘farmers’ markets’ and direct producer links to consumers are examples of this. From our own work, programmes in Kenya and Nepal have developed competitive local market systems that respond to urban demand whilst promoting regenerative agriculture and inclusivity. 

Influencing corporate business models
A total focus on shorter value chains would limit the role of larger companies who can be a catalyst for innovation, especially in export markets.

They can directly support the transition to more regenerative practices, as seen in recent commitments from Nestle and Unilever. They can also shift market incentives by buying multiple commodities from farmers, thereby encouraging diversification. For example, Practical Action is working with Yogi Tea to diversify the practices and outputs of tea farmers in Rwanda.

But perhaps the most influential impact of larger companies is through accelerating learning on what a transition to regenerative agriculture looks like, and through influencing other actors including governments.

Developing new input and service markets
Whilst some of the inputs required for regenerative agriculture come from within the farm, other inputs and services are needed. These require new input and service markets. For this to happen at scale, learning about viable business models is needed and market system incentives need to be aligned. 

As an example of the former, Practical Action in Kenya is supporting the development of businesses that produce poultry feed and organic fertiliser from local agricultural resources in an effort to test the viability of circular alternatives to intensively produced inputs. As an example of the latter, in Nepal we have worked with government on the incentives and regulations needed to enable organic fertiliser to be produced and used at scale. 

Regenerative agriculture also needs information systems that make more use of local knowledge, as well as farmer-to-farmer dissemination. The challenge commonly encountered when developing this sort of community extension model is how to sustain it and take it to scale. Learning is required, and in Kenya Practical Action are testing different models that include a mix of private sector and public sector incentives. 

Building the voice and role of small-scale farmers
Farmers are the holders of the regenerative agricultural knowledge and skills that the private sector needs to meet their ambitious regenerative agriculture targets. Therefore it's critical to ensure they play an influential role in market development and their voices are heard

The Practical Action Participatory Market Systems Development (PMSD) approach is one way to facilitate the engagement of farmers, women and other marginalised groups in market development. It does this firstly by strengthening market literacy and capacity to engage with market actors; and secondly by running participatory market forums giving farmers a fair opportunity to engage with and influence others. 

Creating a level playing field through policy change
All of the strategies described above have to contend with a system that is biased because of subsidies, tax breaks and other preferential policies which distort the market in favour of industrial agriculture. 

The creation of a ‘level playing field’, that does not distort the market in this way, is needed. 

In practice this means less incentives for damaging practices and more incentives for positive, regenerative practices. This could be enabled by the adoption of True Cost Accounting - the integration of the ‘true costs’ of agricultural production into markets. As an example, according to the European Commission, nitrogen pollution from conventional agriculture costs the EU up to 320 billion Euro a year. If these costs were added to the overall costs of conventional agriculture in the marketplace, it would make regenerative agriculture a more attractive option for businesses and investors. 

In the absence of the widespread use of True Cost Accounting other strategies can help progress, such as using concerns over climate change to shift the narrative. In Nepal, Practical Action used climate change policy development as a means to persuade the government to start recognising the importance of regenerative agriculture.

Conclusions 

There is no silver bullet that will enable the development of markets that support regenerative agriculture, but perhaps the most important thing for MSD programmes is to avoid being neutral. 

There is a direct link between the type of market systems development and the type of agriculture that is then normalised. Good market systems analysis can be used to understand these links and then ensure that market systems that promote agriculture that is good for people and the planet are the outcome. 

If you would like to find out more about Practical Action’s work on regenerative agriculture and markets please contact Chris Henderson or John Chettleborough

This blog is a shortened version of the original from the MSD Hub as part of the MSS Learning Series