HSBC grant already benefiting fields and farmers across the Midwest

The Midwest plays a large role in the global agricultural system – about a third of the world’s corn and soybeans are produced in the region. With so much of the world’s row crop production occurring in a geography that is increasingly experiencing the impact of climate change, extreme weather, and decades of unsustainable agricultural practices, it is critical to protect the environment and ensure the region’s continued productivity.

To that end, Midwest Row Crop Collaborative (MRCC) members are working with partners to address system challenges and develop scalable solutions that will support a more resilient landscape and food and agricultural system.

A key partner to MRCC, HSBC Bank USA is helping accelerate conservation efforts and the adoption of these climate-smart practices through a $1.6 million grant awarded last year that is helping grow the number of farmers implementing nature-based solutions. Scaling these practices can increase biodiversity, recover soil health, improve water quality, and enhance ecosystem services in the landscape, and this work builds on five existing projects in the Upper Mississippi River Basin developed to do just that.

While only in the first year of the grant funding, great strides have already been made to support farmers and help scale the adoption of climate-smart practices.

Protecting soil health in Iowa and Nebraska

Teaming up with Practical Farmers of Iowa, MRCC members PepsiCo, Bayer, and Cargill are deploying the HSBC funds to encourage more farmers to add small grains and legumes as cover crops into corn and soybean rotations. The program offers financial and technical assistance for growers to reduce fertilizer use, demonstrating the benefits of adding nitrogen-fixing cover crops and reducing greenhouse gas emissions. With the HSBC grant, partners were able to leverage an additional $268,000 of cost sharing from public and private funding sources.

Participating farmers incorporate small grains such as oats, winter wheat, cereal, and hybrid rye into field rotations, providing cover on their soil during the winter and spring to help reduce runoff and erosion. These farmers eliminated or greatly reduced the amount of synthetic fertilizer applied to their fields, and about half said they used no tillage on their small grain. While still in the early stages, farmers have expressed interest in the small grains cost-share program, and there’s been good progress made in the first year.

“They (Practical Farmers of Iowa) helped by giving me an extra incentive to practice the small grain route. My farm needed an extra boost from the small grain crop to help heal the soil,” reported a farmer participating in the Nebraska program.

Adoption of this practice is still scarce, partly due to a lack of markets. This project is piloting cost-share and market-based mechanisms with grain and animal protein supply chain partners to grow the small grain market and support farmers in the shift to regenerative agriculture.

“Over half the farmers in the program said they are interested in increasing their acres of small grains, showing there’s an opportunity to expand the acres of legume cover crops with proper market development,” said Lydia English, field crops viability manager for Practical Farmers of Iowa.

Illinois farmers receive financial support for cover crops

The Precision Conservation Management program of the Illinois Corn Growers Association works to produce measurable improvements in water quality while ensuring farmers benefit from these positive conservation outcomes. Funding from HSBC is being matched by partners including Cargill, PepsiCo, Illinois Corn Growers Association, and the Illinois Soybean Assocation. Participating farmers also have access to an exclusive pool of funding through NRCS’s Regional Conservation Partnership Program. This pool, coupled with the cost share funding from HSBC and other partners, covers the cost of implementing cover crops for farmers.

The HSBC and partner funding allowed the program to expand into a new region, already reaching 25 more farmers as of January. About 1,110 acres of cover crops were planted on the enrolled fields in this region last year. Participating farmers are gathering data on the impacts of their practices, which will be used to help other farmers make informed decisions about adding cover crops into their rotations.

“The funding available in this program can help reduce the financial burden of cover crops for farmers by partially paying for the seed, application, machinery, or cash crop yield loss,” said Clay Bess, PCM operations manager. “This funding puts farmers first by minimizing the economic risk of these practices.”

Customer-led incentives

Kellogg Company and The Nature Conservancy (TNC) teamed up in Illinois to identify ways for supply chain customers, including consumer packaged goods companies, to incentivize farmers to improve or maintain conservation on their working lands. These MRCC members are working with Saving Tomorrow’s Agricultural Resources (STAR) staff to develop a model and process to incentivize growers and help farmers understand the soil and water quality impacts of their management practices.

This work is being implemented in a pay-for-performance pilot that began in two Illinois counties last year, with a cooperating merchandiser conducting outreach with farmers. An insight gained from the first year is the importance of outreach and engagement to recruit farmers to enroll in these programs. In year two, partners will focus additional efforts on enrolling farmers and sharing knowledge about the impacts of these practices. STAR leadership also developed an engagement guide that allows companies to utilize the model developed through this grant and pilot program. The STAR model, developed through the HSBC grant, was made public in February and is intended to help companies incentivize growers to implement climate-smart practices.

Sustainably grown grain pilot takes off

Support from HSBC Bank USA is helping The Nature Conservancy and Kellogg Company develop a program for farmers in Michigan’s Saginaw Bay watershed that incorporates incentives for climate-smart best practices in the supply chain. Like many sustainability initiatives, the partners hope to work their way out of a job; the goal is to eliminate the need for third-party entities like TNC to provide incentives and verification and to support a broader shift to nature-based solutions by showing the benefits and business case for conservation practices.

“On-farm practices benefiting the environment and society without a visible financial payoff for 3-5 years are difficult practices to embrace. This grant allows us to prove out the financial benefit and break down some of the barriers to adopting regenerative practices,” said Carrie Vollmer-Sanders, farmer, MRCC co-chair, and agriculture engagement strategy director at TNC.

In the first year of the grant funding, the impact of the existing pay-for-performance program was greatly expanded as the partners worked with grain processing partner Star of the West Milling Company to house the program within the supply chain. The existing grain-buying framework with incentives and programs to distribute information to farmers is being used to create the new sustainable wheat program. Star of the West and TNC are working together to build this, drawing on lessons learned from TNC’s pay-for-performance program.

While still in the first year of funding, progress has been made in expanding projects that help create a more resilient landscape and food and agricultural system. The portfolio of projects provides measurable positive impacts on climate mitigation and adaptation, benefits for people, and mobilization of finance that can be used to bring more companies and farmers to these practices. There is still much progress to be made in scaling the adoption of these practices, but the HSBC funding is a big, collaborative step in the right direction.