Chapter 5 : Economic Prospects of Regenerative Agriculture

Key elements in successful regenerative agriculture practices are:

“1. By promoting soil biology and organic matter and biodiversity on their farms, regenerative farmers required fewer costly inputs like insecticides and fertilizers, and managed their pest populations more effectively.

2. Soil organic matter was a more important driver of proximate farm profitability than yields were, in part because the regenerative farms marketed their products differently or had a diversified income stream from a single field.” (LaCanne, 2018)

Four main benefits of regenerative agriculture include:

  1. Promotion and maintenance of soil health and fertility;

  2. Maintaining biodiversity and minimization of environmental damage;

  3. Minimization of pollution through minimal use of chemicals; and

  4. Enhanced economic resilience and profitability and long-term sustainability.

Several studies compared crop yields, input costs, and net returns of several crops produced on regenerative and conventional farms (Al‐Kaisi, 2020). The results demonstrate the economic sustainability of regenerative farms, even when considering monoculture production. When comparing crop yields from regenerative farms compared to conventional farms, there is relatively little difference: regenerative farms produce 90-102% of the crop yield of conventional farms (He, 2019; Al‐Kaisi, 2015; Al‐Kaisi, 2016; Acar, 2017; Huang, 2011). Input costs in regenerative farms are around 10% lower than in conventional farms (Al‐Kaisi, 2015; Al‐Kaisi, 2016), while net returns are 90-105% compared to conventional farms (Al‐Kaisi, 2015; Al‐Kaisi, 2016).

According to a different study, regenerative fields can generate as much as double the profit as conventional monoculture fields, through increased revenue and decreased cost (LaCanne, 2018). Increased revenue comes from integrating livestock with agricultural production, where fields are used for grazing when out of season. Cost reduction is achieved by reducing or abandoning tillage and pesticide use, and utilization of cover crops to suppress weeds, and reduce fertilizer usage. Although the corn yields of regenerative farms were around 29% lower, their diversified production provided around 20% higher revenue, and 78% higher profits. In addition, diversified production and lower dependence on outside inputs for livestock feed make regenerative farms more resilient to natural disasters or other adverse events like market shocks and stressors.

These studies not only demonstrate the economic viability of regenerative farming but show that it offers significant advantages over conventional monoculture farming while maintaining similar yields. This means that a transition to regenerative farming would not require additional agricultural land to maintain the current production levels, while the economic benefits are most evident in smallholder farms where the highest yield increases were achieved in parallel with the highest cost decrease (Al‐Kaisi, 2020).