Across the food industry CPG players are betting on regenerative agriculture to deliver environmental and commercial benefits over the long term. But scaling adoption across an industrial food system will require practical solutions around financing, data collection, standardized measurement and supply chain alignment, according to a panel featuring Nestlé and its supply chain partners during Climate Week in New York City.
Nestlé’s sustainability strategy for its dairy business centers around improving operation standards for its farm partners, according to Katja Seidenschnur, global head of sustainability for nutrition and health at Nestlé.
Nestlé reported that greenhouse gas and methane emissions in its dairy supply chain decreased by 26% and 25% since 2018, respectively, Seidenschnur said. But she acknowledged that scaling those efforts requires broader collaboration, noting that “we need technical support. We need data, and we need the right conditions, policy, enabling policies, and as well value chain collaboration with our peers.”
Climate Smart broadcast is now on demand for free
Climate Smart's two-day broadcast features exclusive interviews from industry leaders on how to build a more resilient, low-impact food system. We take a closer look at how the food and agriculture industry is rethinking climate-smart strategies from regenerative agriculture and sustainable sourcing to upcycling, regulatory compliance, artificial intelligence and food-tech.
Watch on demand for free here.
One example of Nestlé’s dairy farm collaboration is with Royal Dairy Farming, an industrial and regenerative dairy farm located in Washington. With roughly 7,000 cows, Royal Dairy’s operations focus on recycling carbon and nutrients through natural processes like composting or worm-based biofiltration.
Through regenerative practices, the farm is measuring carbon reductions, waste upcycling, fertilizer creation and overall soil health improvements, but finance remains a significant barrier to scale, according to Austin Allred, owner, Royal Dairy Farming.
The big opportunity is proving that sustainable dairy only works when farmers are at the center of the solution.
Dixie Martinho, sustainability manager, California Dairies Inc
“Farmers don’t have capital to put into long investments,” he said. “The return on our investment needs to be like six days, maybe six weeks if we’re having a really good year and if diesel’s prices come down, we can do like three months,” said Allred.
A question Nestlé and many CPGs are working to answer is how supply chain players can collaborate to provide financing and enable long-term investments for the farms they buy from, while the farms receive incentives to meet their specific regenerative goals.
Farmers need incentives, flexibility and support
A combination of financial incentives, technical assistance and farmer flexibility are critical components of adoption, according to Dixie Martinho, sustainability manager at California Dairies Inc. CDI’s cooperative of nearly 300 independent dairy farms serves as one of Nestlé’s milk suppliers. Altogether, CDI farms supply approximately 17 billion pounds of milk annually to the cooperative.
“Sustainable dairy only works when farmers are at the center of the solution,” Martinho said.
CDI’s partnership with Nestlé “creates a model where farmers are directly supported and rewarded for those investments,” without requiring them to implement new practices, Martinho said.
Still, she noted several persistent barriers, including upfront incentives.
“Farmers really need the confidence that there is that return on investment,” Martinho said.
She also highlighted challenges around data collection, saying that “collecting high-quality farm data in a way that’s practical and trusted and useful still does remain a challenge,” while emphasizing that “sustainability practices cannot be one-size-fits-all because not all dairies are a one-size-fits-all operation.”
Supply chain partnerships can help scale adoption
Farmers not only need technical and financial support to adopt regenerative practice, but “peer-to-peer exchange groups where you can learn from what other farmers have been doing,” according to Axelle Bodoy, global head of regenerative agriculture at global processing company Louis Dreyfus Company.
In 2024, Nestlé partnered with Louis Dreyfus Company to help Argentine farmers adopt regenerative agriculture practices that lower the environmental footprint of soy and corn grown for cow feed, highlighting how strategic partnerships can address emissions across the dairy supply chain beyond the farm gate.
Standardization could move regen ag beyond pilot programs
While the food industry explores different programs and methodologies to scale regenerative agriculture, the challenge (even beyond food) is moving from successful pilots to industry-wide adoption, according to James Havlock, VP and managing director of commercial at regenerative agriculture data platform Arva Intelligence.
Arva’s approach relies on local networks to scale pilot programs.
“Our secret sauce is that we work with boots on the ground. We work with co-ops. We work with retail agronomists who are trusted by those growers,” Havlock said.
Still, he cited “two primary blockers” to broader adoption: geography and program design.
“So often, each CPG or retailer has a different program design that they’re implementing,” Havlock said, calling for stakeholders to “co-invest in programs around a common program design.”
As Allred put it, “in order for this to work, we need to collaborate across our own farming level, and then we need to collaborate across the supply chain.”
