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Involving 1000 farmers in the transition to regenerative agriculture – which supports soil, biodiversity and water quality – that is the goal of the ReGeNL project, in which Utrecht ľ¹Ï¸£ÀûÓ°ÊÓ will be working for the next seven years. It does this together with governments, the financial sector, partners in the food chain and several Dutch knowledge and educational institutions. A challenging undertaking: farmers are confronted with financial challenges, complex legislation and regulatory pressure. The School of Law, School of Economics (U.S.E.) and the Sustainable Finance Lab (SFL) will support the agricultural sector in this transition.

ReGeNL is a seven-year, transdisciplinary project with four Dutch universities, several universities of applied sciences and more than 60 partners in the field, says assistant professor Helen Toxopeus of the Utrecht ľ¹Ï¸£ÀûÓ°ÊÓ School of Economics (U.S.E.). The project of almost 130 million euros is financed by the National Growth Fund. Within ReGeNL, Utrecht ľ¹Ï¸£ÀûÓ°ÊÓ works on transition paths and the creation of administrative, legal and financial preconditions for transition. The interdisciplinary collaboration within the university is coordinated by Jerry van Dijk of the Copernicus Institute for Sustainable Development.

Transition to regenerative agriculture

A transition to regenerative agriculture means that agricultural practice also supports soil, biodiversity and water quality, in other words, that farms help to realise and preserve public goods, explains Toxopeus. At the moment, many farmers simply do not have the money for such a transition, because their profit margin is small, the regenerative revenue model is unclear and because they already have a lot of debt. At the same time, the action perspective is also difficult for Rabobank, for example, because loans to regular farmers are part of their current revenue model.

We know that it is difficult for farmers to switch to a regenerative business model and find financing for it, agrees of the Sustainable Finance Lab (SFL), which is a financial think tank housed by U.S.E. and is involved in the project. For more than ten years, the SFL has acted as a bridge between the financial sector, policymakers and the academic world on the theme of sustainable finance.

What we are going to look at, for example, is the role of alternative ownership and financing models that support regenerative business activities. The question then is, for example, how a bank assesses the legal structure and the risks associated with it.

To get 1000 farmers on board from conventional to regenerative agriculture, a lot of pieces of the puzzle have to fall into place. Think of how business financing can become less dependent on the high price of land in the Netherlands, which depresses the profit margins of novice farmers. Together with financial institutions (such as InvestNL, Rabobank and van Lanschot Kempen) and researchers from Rotterdam School of Management (RSM) and Wageningen ľ¹Ï¸£ÀûÓ°ÊÓ & Research (WUR), concrete solutions are being sought.

The idea is that all stakeholders that can take action in this transition are part of the project.

From the School of Law, Sybe de Vries and Pauline Phoa contribute their expertise to ReGeNL. A lot is expected of cooperation in the chain and between farmers, and this leads to legal questions about competition and state aid when funding is provided by the government. In addition, farmers are confronted with mainly European regulations in the field of food and agriculture. Because we combine legal, business and financial knowledge, there is a greater chance that we will come up with working solutions that make this transition possible, says Sybe de Vries.

The idea is that all stakeholders that can take action in this transition are part of the project, says Toxopeus. The Ministry of LVVN, the financial sector, industry associations, chain parties and sector organisations – they are all in the project and have committed themselves to actually being part of this change. An important reason for this is that they want to learn together how to achieve this transition, and need each other to do so.

Three-level approach

ReGeNL researches and supports on three levels how the agricultural sector can achieve the transition. The first level is the enterprise level, says Helen Toxopeus. What will be the business model for a regenerative  farm, how do you finance it and what legal questions are involved?

The risks and costs of the transition must be distributed fairly and actors must move at the same time – a kind of synchronized swimming.

In addition, the project looks at parties in the food chain. There is a long chain between farmer and consumer with influential parties, such as FrieslandCampina, supermarkets and banks. They also have to move along. The risks and costs of the transition must be distributed fairly and parties must start moving at the same time – a kind of synchronized swimming.

Finally, attention is paid to the landscape perspective. If you want to achieve social and ecological goals, you have to look at the local region together with farmers and local actors,' she says. 'In one area, water retention is important, in other areas biodiversity objectives play a role, or both. There may be local public and private actors  willing to compensate farmers for local ecosystem services. Customization is needed. This means that the way in which farmers in different regions arrive at their revenue model can differ.

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Challenges for farms

There are several challenges. We are talking about regenerative, not organic agriculture, says Dieuwertje Bosma. When you, as a consumer, buy an organic product, it has a certification, and you are willing to pay a little extra for it. This is about the challenge of offering food on a large scale that is not yet certified, but is better for society, nature and the economy in the long-term.

It is important to really think through this transition from the farmer's point of view for financing

Specific thought must also be given to characteristics of the farming sector. Farms are often family businesses, Toxopeus adds. People who have a connection to the soil. It's not just their business, it's also their home, sometimes for generations, and where they pass on a certain way of living and working. That is why it is important to really think through this transition also from the farmer's point of view for financing. For example, they will not easily take high investment risks, and might tolerate low profit margins from regular agriculture, because they do not want to lose their family business.

Bosma adds: In addition, the price of agricultural land in the Netherlands is the highest in all of Europe. This also makes it very difficult for farms to get a loan to, for example, purchase more land for the expansion of livestock farming. They then carry a high debt burden because their agricultural land has speculative value, which drives up the price. This makes it virtually impossible for newcomers to the agricultural market to start a new farm. So you can really only inherit or continue - and then the expensive land is not very useful. It is only useful if you sell, but then you also lose your (family) farm.

Furthermore, there is a lot of European regulations coming at the farmers that they and the ministry are struggling with. Think of the new European Nature Restoration Act that imposes binding targets and obligations for nature restoration for all ecosystems, adds Sybe de Vries, or European competition and state aid law that determines the scope for cooperation and financing. Incidentally, these and other European rules often also offer opportunities for farmers to switch to a more regenerative agricultural model.

Collaborating on solutions

The question is: what do the various actors - farmers, financial institutions, chain companies and governments - need to support the transition and to change it themselves? In concrete terms, these parties will work together on financial chain innovation. A number of discussions are already underway about area funds, natural capital, solutions for the high price of land and new financing instruments.

We expect, among other things, that we will find solutions in the public-private sphere, says Toxopeus. What can the government do in terms of legislation? What can financial institutions contribute by changing the way they work? How can value chain actors contribute? Stakeholders such as water boards and provinces are also involved, who benefit from, for example, water quality and the achievement of nature objectives, and can contribute financially to the transition to regenerative agriculture. It will be a kind of longitudinal puzzle with which this transition will be jointly financed and realized.

More information

If you would like to know more about this project, please contact Dieuwertje Bosma (Sustainable Finance Lab) d.bosma1@uu.nl, Helen Toxopeus (Utrecht ľ¹Ï¸£ÀûÓ°ÊÓ School of Economics) h.s.toxopeus@uu.nl or Sybe de Vries (Utrecht ľ¹Ï¸£ÀûÓ°ÊÓ School of Law) s.a.devries@uu.nl.

For the latest developments of the ReGeNL project, visit the website: