By: The Nature Conservancy
December 2024

Farm and ranch operations have enormous opportunities to halt biodiversity loss and mitigate a changing climate through the adoption of regenerative farming practices. But adoption rates for techniques like cover crops, nutrient management and rotational grazing remain low and slow due to risks to yields and operations’ bottom lines.

Agricultural pilot programs are an opportunity to demonstrate how environmental and economic outcomes for farm and ranch operations intersect, shedding light on what sort of change might accelerate progress on a wider scale.

Warranty pilot programs

The Nature Conservancy (TNC) and Growers Edge, a financial technology (or fintech) company, co-developed an agronomic-backed warranty product designed to mitigate risk for both farm operations and agriculture retailers who want to test regenerative practices.

Two concurrent pilot projects were implemented from 2021 to 2023: one in Iowa, with a focus on cover crops, and the other in the Chesapeake Bay region, which centered on nutrient management practices. As major producers of corn and soy, both regions have a critical impact on the Mississippi River Basin and the Chesapeake Bay, respectively.

TNC provided up to 50% cost share of the warranty payments (if triggered) to participating farm service providers and agriculture retailers.

According to Growers Edge, “The warranty acts like a safety net for farm businesses: it’s designed to protect from financial risk if specific products or practices don’t deliver the promised results. This means farm operations can try out everything from seeds to soil amendments, and if the crop fails to meet pre-established yield benchmarks, they can cash in on the warranty to mitigate losses.”

For agriculture retailers, the warranty enables them to recommend regenerative products, processes and options with confidence, and without concern about yield losses for their customers.

Program takeaways

Interviews with 16 agronomists and farm operators from the two geographies led to the following key takeaways:

1.     Warranty boosts confidence

Agriculture retailers were more confident selling regenerative products and services, as well as experimenting with new options, due to reduced reputational risk. The warranty also increased the willingness of farm operations to use a set of new products. Even without officially enrolling, the warranty offers alone encouraged farm operations to implement covered practices.

2.     Trusted advisors are critical

Advisors, who are farm operations’ trusted sources for agronomic information, inputs and application services, played a critical role in encouraging farmer program participation and, ultimately, practice adoption. In these pilots, the advisors were private-sector, fertilizer dealer-affiliated entities.

3.     Profit drives decisions

The agricultural market moderates the impact of the warranty on farm behavior. The warranty does not change the economics of agricultural production. Farmers still depend on making a profit in agriculture; as the market is currently structured, this is largely dependent upon maximizing yields.

Given the cost of the warrantied products, such as biologicals, farmers felt compelled to pursue increased yields. Greater yields, rather than reduced fertilizer use and costs, were seen as more likely to cover the cost of the product.

4.     Ease of implementation matters

The yield warranty is more successful with practices that are “easy” to implement and when short-term economic risk is the major concern, such as utilizing alternative biological products. For practices that are “harder” to implement and/or measure, such as cover crops, a benefit/establishment warranty instead of or in combination with a yield warranty could better serve farmers.

5.     Potential improvements for the offer

There should be opportunities for in-field testing and comparison of the practices and products covered by the warranty against baseline practices. This will help farm operations answer the question: “Did it work this year?”

Additionally, the warranty could allow greater flexibility in which practices and products are warrantied and simplify the offer by not bundling multiple practices and products together.

Future program iterations and additional assumptions

The first iteration of these pilot projects also identified new assumptions that need to be tested in future iterations, as well as additional data that should be collected. The following are key questions to be explored in future iterations:

• If the warranty is short-term, does it lead to long-term adoption of regenerative practices?​ Does a long-term warranty have a different impact?
• How does the warranty compare to and/or complement other interventions, such as traditional cost share?
• To what degree does the warranty promote practice adoption among farm operations that did not enroll in the offer?
• How can TNC and partners reach beyond early adopters to a large majority of farm operations?
• If the warranty focused on alternative management outcomes instead of yield, such as profitability or environmental achievements, how would adoption be impacted?
• Would assumptions for the warranty be validated or invalidated when applied to other crop or farming systems?

Acceleration in progress

Building on the learnings from this pilot, Growers Edge is currently working with public and private collaborators to scale its warranty offer across almost 1 million acres — an effort supported through USDA’s Partnerships for Climate Smart Commodities awards program and other initiatives.

Experts from The Nature Conservancy and Growers Edge share learnings and insights from the warranty pilot projects in this webinar.