Does regenerative agriculture pay? In a word, yes, says Arva CEO Jay McEntire. “We paid out $20 million to farmers engaging in regenerative practices in 2023, $40 million-plus in 2024, and we’ll pay out more this year.”
And to those who see big food & ag corporates quietly dropping sustainability commitments and backsliding on ESG, McEntire notes that the number of companies setting greenhouse gas emissions reduction targets with the SBTi (Science Based Targets initiative) continues to rise, requiring more companies to measure, manage and reduce their supply chain emissions.
And this is where Houston-based Arva—which helps companies quantify decarbonization efforts by collecting data from farmers and growers—comes in.
The firm, which began as a multi-year research collaboration between Lawrence Berkeley National Laboratory, the University of Arkansas, and Glennoe Farms, has a proprietary data aggregation and AI platform (CropForce) that pulls in everything from field level soil data to genetics, biogeochemistry, weather, satellite imaging, lidar, on-farm measurements, management practices, and telemetric information.
With this comprehensive approach to on-farm data collection, these data allow Arva to effectively quantify the impact of regenerative ag practices and underwrite environmental assets for carbon offsets, insets, and/or Scope 3 emission reduction programs.
Arva’s work meets the needs of CPGs who are looking to address their climate footprints and meet publicly stated greenhouse gas targets.
While greenhouse gas accounting rules are complex and standards are still being written, says McEntire, “We have a committed team that is able to collaborate with our CPG clients to create solutions for carbon accounting. We have doubled our business and team in each of the last four years we’ve been in business.”
Who pays for regenerative ag?
So how does it work?
Corporations outline their goals, and Arva then works with farmers via channel partners to collect the data needed to meet those goals. Farmers that engage in specific regenerative practices agreed by the parties then earn a fee per acre.
How or if that money is recouped varies. In some cases, carbon credits can be generated. In others, the crop produced may attract a premium in the market. As one example, tax credits for transportation fuels can be secured based on their carbon intensity compared to a baseline.
In other cases, food & ag corporates may regard investment in growers that engage in regen ag practices as a strategic move to help futureproof their supply chain, says McEntire.
For example, a small increase in soil organic matter might translate to a big increase in drought tolerance.
Designing programs to meet partners’ goals
As for what’s motivating the upswing in demand for MMRV (measurement, monitoring, reporting and verification) services, compliance is a key factor in several markets, says McEntire.
Under the EU’s Corporate Sustainability Reporting Directive (CSRD), for example, firms of a certain size are legally required to report Scope 3 emissions. Similar rules are also in place or coming in multiple markets including Japan, Australia, the UK, Turkey, and California.
Separately, a growing number of companies in markets such as the US where firms are not legally required to report Scope 3 emissions have nevertheless pledged to do so via SBTi commitments to both measure and reduce emissions, he says. And while these are non-binding, he notes, “There is some jeopardy if you don’t follow through. You may lose your right to claim you are following the SBTi framework, or you don’t live up to shareholders’ expectations.”
As a company, he says, “Arva’s role is to understand a client’s ESG goals and stay on top of all the latest protocols to make sure we deliver against these goals. Some don’t want carbon accounting quantification but want to participate in some regenerative practices, for example. Some may in turn have very specific carbon accounting requirements.”
Others may have targets around reducing water use, which translates into savings for farmers, he notes. “Rice for example can save water through certain practices [such as alternate wetting and drying]. In 2024, our work with Riceland Foods farmers yielded 12 billion gallons of water savings.”
Underwriting environmental assets
What Arva is basically trying to do is “align our interests with farmers’ to help underwrite environmental claims supported by their data and find a market for that claim,” says McEntire.
“We think about it in terms of a digital twin to the bushel. You can staple the environmental asset to the bushel, or the bale of cotton, and send it down the supply chain as a lower emission profile. You could use the term CI [carbon intensity] and we could then staple that… and provided there are certain other attributes, you can create a carbon offset.”
Here, he says, “The concept of additionality is important [farmers must show they’ve changed behavior compared to a credible baseline, such as adopting cover crops for the first time]. There are other requirements, but we’re capturing the data necessary to bring it in and underwrite it.”
To do this, Arva creates what’s called an environmental attribute certificate, he says. “We take the data, run different models on it depending on what methodology a client follows, whether its GREET, IPPC equations, DayCent, or MEMS [a new tool for generating spatial surrogates for emissions], to generate emission factors, CI scores, or quantify tons of carbon removals or reductions.
“So once we create a certificate on behalf of a farmer, we can potentially find value for a CPG as a Scope 3 emission reduction claim, or an empirical asset, allowing them to do carbon accounting, project accounting or inventory accounting.”
In practical terms, says McEntire, “We work through farmer coops and independent agronomists in some cases… those that have the relationship with the farmer. We share our software and help compile the data necessary to create environmental claims and assets.
“Then based on what we’re able to monetize, we will pay out to the farmer and to the channel partner a portion of what we get paid. But the farmer owns the data.
“So you might come to us and say, if you did this, if you did that, you could potentially occasion half a ton to a ton of carbon per acre per year. Now the question is, can we sell that? Do we have a buyer for it, and at what price?”
Defining value in regenerative agriculture
In the case of CPG companies, he says, “They are paying for a specific outcome, they are paying for environmental attributes at a certain price, underwritten in a certain way. Our job is to go get the data to prove the event happens.”
But he adds: “It’s a separate question as to how they valorize it. We’ve had large CPGs come to us and say, ‘Our board doesn’t want to do this unless we can get a premium [from the product using the regeneratively farmed crop].’
“I’m skeptical that for some retailers, depending on the shopper, they would pay more for sustainably-grown, but we have to put a value on regenerative practices to create an economic benefit to the farmer.
“Now I would make the case that like a buyer who has no other way to reduce emissions but buy carbon offsets, CPG companies have a goal to reduce Scope 3 emissions, and farmers are the people who can help them deliver that, so there has to be value in that.
“Now do I think there are other attributes that provide value here? Yes. We know there are water savings. There is also value in having a more resilient supply chain. There are also narrative claims beyond just the carbon around meeting climate commitments… am I helping my supply chain?”
The voluntary carbon market
As for the voluntary carbon market, which he says “suffers from an abundance of critics, what I can tell you is that data center demand for energy is going to increase the US carbon footprint by half a gigaton.”
And offsetting that with credits generated from tech such as direct air capture (which offers permanent carbon capture but comes with a hefty price tag, generating credits trading at up to $1,000/ton) is not viable, he says.
“Wall Street can come in and trade carbon once we’re able to put credit and duration on an environmental asset. Think about this as a mortgage bond. When we’re able to quantify how permanent it is, and quantify how certain we are, then we can start to compare [different sources of carbon credits].
“Because right now, if permanence [the confidence buyers can have that the carbon sequestered won’t be released back into the atmosphere], means 1,000 years, the only option is direct air capture. And at $1,000/credit, that’s not going to solve our problems.”
Soil carbon credits are often criticized because of the fear of reversal, in that tillage, drought, or land use change can quickly release stored carbon back into the atmosphere, or because soil carbon is unstable and can fluctuate over time.
But we have to start somewhere, says McEntire.
“Are we going to make the rules so hard that nobody does anything? What if we all did something and it only sequesters carbon for one year? You can price that and determine the value. There’s surely some value between one penny and $1,000.”
‘We need everybody to do something’
There is clearly uncertainty on the part of farmers as to who will pay for the transition to regenerative ag, he acknowledges. “But we have certainty when we commit to farmers to pay them. We have a contract from a client to deliver a number of environmental benefits, to get a contract with farmers to deliver them, and then we execute with the farmers. If the farmers do their job and we do our job, we have contracts to pay.
“As for the broader question, will there be the money we need to grow the regenerative ag market? Our view is that we need everybody to do something. You can have people saying this isn’t good enough and therefore do nothing or you can figure out what the value is and price it [the environmental asset] accordingly.
“And then Wall Street can come in with financial insurance products and ensure that if there is a tillage event [there is a mechanism to factor that in]… We know how to do this. It’s just like packaging mortgage bonds; we know some of them are going to fail.”
He adds: “I’m a believer that carbon markets will show up in 2027 and 2028 in part because of all the commitments that are supposed to be met by 2030. But I also think that people using data centers will have to account for the carbon emissions being occasioned.”
‘We are a trusted resource to help people on this journey’
Looking ahead, he says, “We’ve been successful in working with the CPG industry; we see biofuel coming, and we see the carbon offset market coming. We’re now operating with 13 crops in eight countries (12 by the end of the year) and see agriculture as a big opportunity.”
He adds: “Some CPG companies come to us and they know exactly what they want. And then we have people that say, ‘Our CEO just made this science-based target commitment and we don’t know what to do.’
“We are here to be a trusted resource to help people on this journey. We’ve got to get the data, compile it, underwrite it, and create reports that will withstand audits, and it needs everybody working together to do this. But it is an affordable solution to reducing climate emissions, and the co-benefits are massive.
“Regenerative ag is a climate solution that will deliver us more resilient supply chains, more drought tolerant supply chains, mitigate our dependence on chemicals and fertilizers, and improve our soils.”
>> Arva’s Guide to GHG Accounting: Pathways for Agricultural Supply Chain Decarbonization, 2025 offers a practical look at how companies supporting farmers through regenerative agriculture programs can account for their outcomes through appropriate GHG accounting pathways.
