The farming methods associated with regenerative agriculture may help improve the health of soil and cultivate biodiversity while also minimizing greenhouse gas emissions. Farmers who implement such practices may be interested to know that regenerative agriculture can also have a financial benefit.
Outlined below are three examples of actionable changes farmers can make as part of a transition to regenerative management and the associated ROI potential of each strategy.
If you’re looking for more information on this topic, download FBN® Finance’s free guide The ROI of Regenerative Ag.
ROI Potential = $10/acre per year
No-till or conservation tillage methods can help optimize productivity by improving the soil’s chemical and biological structure while increasing water retention. Conservation tillage methods can also help reduce erosion to keep productive topsoil in fields.
According to a University of Illinois report, a disk ripper and field cultivator tillage program can cost about $35/acre so eliminating this pass may immediately impact a farmer’s bottom line. In most cases this reduction in tillage will lead to a need for an additional herbicide pass, which can typically cost $20–$25/acre, but that cost is ordinarily sufficiently covered.
ROI Potential = ~$22/acre per year
Cover and double crops keep plant matter growing in fields year-round, reducing erosion risks and improving soil aeration, moisture, and nutritional balance. Cover crops are often planted after a cash crop to increase the amount of soil organic matter, which improves nutrient cycling and can ultimately reduce fertilizer costs.
A recent FBN study indicated that cover crops led to a 4.5 bu/acre higher average corn yield. Considering corn prices were approximately $4.88/bu in 2023, a farmer would likely see a benefit of $21.96/acre. Likewise, many soybean producers have also noted similarly positive ROI trends.
Monoculture production systems can strip the soil of essential plant nutrients and increase pest pressure and pesticide resistance risks, but crop rotation offers a sustainable solution. With live roots in the soil for 70% or more each year, crop rotation can manage pests, reduce overreliance on the same herbicide groups, and support beneficial soil microbial communities.
ROI Potential = $18–$50/acre/year savings after 3-5+ years
Incorporating practices that retain and restore soil organic matter, improve soil structure, and unlock beneficial nutrients already held in soils can contribute to regenerative ag’s ROI by allowing a farmer to reduce nitrogen (N), phosphorus (P), and potassium (K) application requirements. These practices can include incorporating systems that limit nutrient leaching, utilizing nitrogen-fixing cover crops, and supplementing a conventional fertility program with alternative products that focus on boosting the soil microbiome and making existing soil nutrients more bio-available.
Depending on a farmer’s soil type and preferred ag practices, it's possible to start reducing phosphorus and potassium after three years of regenerative ag management. Improved soil health can contribute to up to 15 lbs/acre of phosphorus after three years and 20 lbs/acre after five years. In fact, it may be possible to reduce potassium applications by 10 lbs/acre after three years, with some long-term scenarios benefitting producers up to 30 lbs/acre.
Nitrogen reductions, though they can be the most complex to implement, perhaps have the greatest potential impact on both the farmer’s ROI and on environmental outcomes. Excessive applications of N — stemming from synthetic fertilizers — can release nitrous oxide (N2O), a potent greenhouse gas, but too little nitrogen can lessen crop yield. Nitrogen balance occurs when an equal amount of nitrogen is added through fertilizer application and later removed during crop harvest. A nitrogen balance score of 25–75 lbs/acre helps to safeguard soil health and optimize yields.
Implementing reduced tillage practices and planting cover crops can lessen the need for nitrogen over time, especially if using a nitrogen-fixing cover crop. The significant reductions, up to 40 lbs/acre after five years, will more likely come from precision management and application of nitrogen in addition to regenerative practices. Reducing fertilizer usage can provide noticeable ROI, with returns typically spread over multiple years.
The free guide The ROI of Regenerative Ag explains how farmers can get rewarded for implementing these conservation practices.
Qualified farmers can get operating lines of up to $5 million through FBN Finance, and those who meet the climate and water quality benchmarks established by the Environmental Defense Fund, as well as other requirements, can get a 0.5% interest rate rebate through the Regenerative Agriculture Operating Line program.
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