4.3.3.7 Strategic interventions to enable positive tipping points in food systems

Embracing new technologies and compensation schemes to support farmers and incentivise shifts towards more plant-based food and ‘regenerative’ farming

Current subsidies in many countries, such as in the EU and US, incentivise farmers to not embrace regenerative farming practices and produce animal products and feed rather than plant-based food for human consumption (Vallone et al, 2023). While demand-side shifts and clear market signals are an important lever for shifting towards more plant-based food production, it is important to incentivise and support farmers in shifting towards more plant-based food production. For example, targeted innovation policies could support the scaling of agri-photovoltaics in combination with the production of plant-based food to offer farmers a new income source when shifting their business model from feed or animal products towards plant-based food production (Fesenfeld et al., 2022). 

Innovation and rapid reductions in the costs of such new technologies at the nexus of the energy and food systems can also help to reduce climate adaptation costs for farmers by protecting plants against extreme weather events. Moreover, in some regions and for some crops, new technologies such as agri-photovoltaics can increase overall land productivity by up to 70 per cent (Weselek et al., 2019; Tormer and Aschemann-Witzel, 2023). Other technologies, such as smart and precision-farming tools, can also reduce the costs and environmental burden of plant-based food production and thus help farmers to shift production (Finger et al., 2019; Walter et al., 2017; Finger, 2023). Here, targeted financial support and on-the-ground consultancy are important to foster the uptake and diffusion of such technologies. Focusing on farmers that act as important nodes in social networks and regions can be very effective to foster social contagion and innovation diffusion. 

Novel satellite and result-based payment schemes can substantially reduce the administrative burden for farmers and thus resistance to more environmentally friendly and plant-based food production methods. Rapid improvements and economies of scale in digital farming technologies and high-resolution remote-sensing technologies thus offer new opportunities for accelerating transformation towards more sustainable farming methods, such as agroforestry (Teraski Hart et al.,2023). Moreover, the use of bio-char or other carbon-sequestering practices in plant-based food production and the potential integration into carbon markets can offer new income to farmers and increase their production resilience, and thus lower their risks when switching towards plant-based food production. 

Targeted compensation schemes, especially designed to switch production of large feed and animal product producers with high environmental footprints, are another important measure to reduce resistance against production shifts towards plant-based food and regenerative farming. Focusing incentives for production-shift, emission-pricing (e.g. nitrogen surplus fee, methane emission trading), phase-out and compensation schemes on large producers in key regions (e.g. regions and farms with excessive nitrogen pollution or organic soils) is particularly promising because it reduces the number of affected farmers, can facilitate the negotiation process between farmers and governments, foster network effects and create positive political feedback (e.g. reduce backlash from smaller, unaffected farms). Using new revenues from emission pricing to support most affected regions and low-income groups (e.g., via reduce VAT rates on plant-based food), foster innovation, and create alternative income sources can reduce opposition. This can open a window of opportunity for more fundamental changes in agricultural subsidies that are also needed for accelerated food system transformation.

Packaging and sequencing policies along the supply chain that focus on transformation opportunities: The example of the Danish Plant-based Fund

Importantly, production-focused policies that target farmers (Box 4.3.10) should be smartly combined and sequenced with policies along the entire supply chain that foster demand-side shifts and provide a clear signal for a growing plant-based food market. Such measures can include public procurement standards, innovation subsidies for the development and scaling of alternatives to animal products, and nudges in supermarkets and restaurants, but also consumer-sided price instruments such as tax reductions on plant-based foods or new pricing instruments for emission-intensive food products. The combination and sequencing of different policies not only increases the effectiveness but also the feasibility of policy change, by creating enabling conditions (e.g. shifting social norms and increasing public support for transformative policies) and reinforcing feedback (e.g. creating economies of scale in plant-based and alternative protein supply chains) (Fesenfeld et al., 2022b). 

The Danish Plant-based Fund is an example of a recent policy change that takes a packaging approach and integrates measures along the supply chain by focusing on the opportunities of food system transformation. The new policy involves funds for plant-based food product development and marketing, plant-based eco-schemes that pay premiums to farmers who grow plant protein crops for human consumption. A programme to promote environmental technologies targeting innovations in plant-based food-processing facilities and a strategy and projects to develop ‘green proteins’, particularly proteins produced from fermentation and cultured meat. It also includes an action plan to promote plant-based foods and dietary shifts (e.g. via nudging in public canteens, restaurants, supermarkets, etc). Importantly, the establishment of the fund involved deliberation among key (partially opposing) stakeholder groups, such as environmental NGOs and farmer associations, and inputs from scientists focusing stakeholders’ attention on the opportunities of shifts towards plant-based food.

This strategic approach to policy design and framing might function as a best-practice case and be diffused to other countries and regions to create the enabling conditions (e.g. norm shifts and increased support) and reinforcing feedbacks (e.g. economies of scale) to accelerate food system transformation.