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AGRICULTURE

Feeding a world under climate pressure

How can agriculture help secure food supplies and support livelihoods while regenerating the natural systems it depends on?

The challenges

Land-based emissions remain hidden deep in food supply chains
Finance is slow to reach the farmers who need it most
Agricultural innovation is struggling to move from pilots to practice

The solutions

Build farm-level measurement systems that businesses can act on
Coordinate finance and technical support to unlock farm-level investment
De-risk and accelerate on-farm adoption of impactful innovations
Make carbon visible to create demand for lower-impact foods

Every day, billions of people rely on the yields of farmers, putting dairy, grains, meat and vegetables on the table to feed an ever-growing population. By 2050 there will be 9.7 billion mouths to feed, nearly two billion more than today.1

It's no small feat. Global food systems rely on growing conditions that are increasingly volatile and unpredictable. Changes to temperatures and rainfall patterns have already led to poorer yields, animal distress and degrading arable land. Food systems, meanwhile, account for 34% of global emissions, and remain the biggest single driver of deforestation and biodiversity loss.2 And despite agriculture’s drain on land and resources, roughly a third of food is still lost or wasted across the food system.3

The result is a vicious circle: the sector that most needs stable land and climate is also among those most responsible for destabilising both.

Changing a system this large and fragmented will not be easy, still, agriculture can break the cycle. It can regenerate the land it depends on, help provide reliable, affordable and nutritious food for a growing population, and build sustainable food systems. Left unchecked, the cycle will instead deepen — widening food poverty, malnutrition and inequality and placing greater pressure on farmer livelihoods and rural communities. The resilience of food systems will increasingly shape the resilience of the communities and economies that depend on them.

In numbers:

"The future of food does not have to mean choosing between productivity, prosperity and resilience. Done well, the transition can strengthen all three."

Sarah Laidler, Global Sector Lead, Agriculture The Carbon Trust

THE CHALLENGES

1. Land-based emissions remain hidden deep in food supply chains

'For most food products, the bulk of emissions is locked in before it hits the shelves.'

With most food products, the bulk of emissions is locked in before it hits the shelves. Around 68% of agrifood emissions are linked to farming and landscapes. Broken down, roughly half comes from crop and livestock production on farm; a further 19% is associated with land-use change.4

Most of these emissions occur beyond companies' direct operations, across highly fragmented supply chains. Commodities like cocoa beans come from numerous smallholder farms and can change hands and borders multiple times before they are turned into a chocolate bar. By the time the finished product reaches a food company, visibility of where its ingredients were produced may already be unavailable.

How food is produced further complicates matters. Agricultural emissions are shaped by everything from soil type and rainfall to farming practices and land-use history. The same practice can therefore produce different results between regions, suppliers or even neighbouring farms. In a study of a Canadian potato field, for example, nitrous oxide emissions following fertiliser application varied substantially across the same farm, with topography, soil moisture and soil characteristics all influencing emission levels.5

The dairy sector demonstrates how information gaps persist even where suppliers are known. A primary processor may know how much milk it buys, which farms supply it and how efficiently its factories operate. But it may have far less consistent information on the feed, fertiliser, manure and grazing practices shaping emissions on each farm. Two farms supplying the same product can therefore require very different action.

This fragmentation makes it harder for food companies to quantify where the biggest opportunities for emissions reduction and resilience gains lie. Without reliable information, it becomes harder to see which farms need support, whether changes in practice are delivering results, or which programmes warrant further investment, not least because it makes comparisons hard. This makes it more difficult to prioritise action across complex supply chains and build confidence that resources are being spent where they can achieve the greatest benefit.

Food companies have significant influence to drive change across their supply chains. Exercising it depends on seeing what is and isn't working. Without that visibility, companies risk backing the wrong interventions, and missing opportunities to reduce emissions across their supply chains.

For many food products, land-use change and on-farm production dominate carbon footprints, followed by food loss.

Source: Our World in Data

Much of the food system's emissions are concentrated among farmers and producers, whose financial power and influence remain limited. Across 570 million farms worldwide, most smaller than two hectares, this imbalance is a defining feature of the sector.

2. Finance is slow to reach the farmers who need it most

Farmers and producers form the backbone of our global food systems, which are under increasing strain. Every failed harvest, low yield or animal under heat stress shows the impact that severe rainfall and prolonged droughts are having on their land and livelihoods.

Compared with the 2014-2023 average, the harvest losses for wheat, barley, oats and oilseed rape felt among UK arable farmers are expected to lead to £4.8 billion in lost revenue between 2024 and 2026.6 These costs are even higher for low-income countries, where 27% of GDP comes from agriculture, forestry or fishing.7 As El Niño grows stronger, the financial pressure on farmers, especially smallholders, will be severe. This could disrupt the food system and push tens of millions of additional people into acute food insecurity by 2027 according to the World Food Programme.8

Against this backdrop, farmers face a mismatch: the need to invest in adaptation and recovery keeps growing, but with rising operating costs and thin margins, their ability to invest does not.

Agricultural producers need climate finance but often get little. First, traditional loans don’t accommodate the realities of farming, which depends on seasonal and weather-based income. Many adaptation and mitigation measures require upfront investment, while the financial benefits can take years to materialise. This means farmers take big risks when borrowing against their land, especially when returns are slow or uncertain.

Second, while the need for funding our food systems’ adaptation is not in doubt, only around $95 billion of climate finance flows into agrifood climate action each year. That’s far below the estimated $1.1 trillion required annually by 2030.9

Compounding the challenge, climate finance often fails to reach farmers. Though development finance institutions are stepping up to close the financing gap, less than 1% reaches small-scale farmers.10

Climate finance rarely moves directly from international institutions to producers. Instead, it passes through governments, development banks, local financial institutions and other intermediaries before reaching farms. Farmers typically need practical investments that improve resilience and productivity, such as rainwater harvesting, improved irrigation or changes in land management practices. A financing programme designed to support water-efficient irrigation for commercial fruit producers in northern Mexico will have limited relevance for small coffee farmers in Colombia or cattle producers in Brazil. Different production systems face different risks, investment needs and implementation constraints, making it difficult to translate large funding commitments into finance that meets local needs.

Beyond this, the scale is huge. There are about 570 million farms worldwide, more than four-fifths of which are smaller than two hectares.11 Funding needs to reach millions of individual farmers rather than a small number of large businesses. The scale and fragmentation of this capital flow can slow disbursement and make it harder for finance to reach those who need it most. As a result, many producers most exposed to climate risks remain least able to access the finance they need, particularly smallholder, Indigenous, and rural farming communities.

Despite contributing around 30% of global emissions, agrifood systems attract only a small share of global mitigation finance.

Agrifood share of mitigation finance in 2021/22 and corresponding share of global GHG emissions

Source: Climate Policy Initiative

"Climate finance should be structured and distributed in such a way that it reflects the realities of the farms it intends to reach."

Arturo Palacios, Deputy Director, Mexico and Head of Green Finance The Carbon Trust

3. Agricultural innovation is struggling to move from pilots to practice

'The challenge is no longer developing solutions alone but creating the conditions for them to be adopted at scale.'

Decarbonisation solutions across agriculture already exist. Feed additives can improve feed efficiency while reducing methane emissions. Better soil management and cover cropping can strengthen soil health and improve resilience to drought. Precision fertiliser application can help farmers use inputs more efficiently. Yet implementation at scale is where things falter.

Venture capital investors put $18.2 billion into upstream agrifood technologies in 2021, covering farming and food-production technologies.12 Seed and Series A rounds have dominated agritech investment over the past decade, while far fewer companies have secured later-stage funding or gone public.13

Yet commercial deployment continues to lag behind innovation. Low-emissions ammonia projects represent less than 10% of current global production, even when projects at feasibility and final-investment-decision stage are included.14 More broadly, the gap between a successful pilot and widespread adoption remains difficult to bridge. Innovators may prove that a solution works but still struggle to access customers and secure the commercial opportunities needed to scale. Food companies, meanwhile, face a growing range of technologies and practices, but often lack a clear route for deciding which are ready for wider use, who should pay and how adoption should be coordinated across the value chain.

A lack of incentives exacerbates these blockers. Farmers are often expected to carry the financial cost and risk, while it’s the processors, brands and retailers who benefit from the resulting emissions reductions and claims on progress towards climate targets. When yields, costs and farm viability are the immediate priorities, taking on additional risk without a sufficiently clear return is a difficult ask.

Changing established farming practices remains difficult too. Regenerative agriculture and precision farming require new knowledge, technical advice, and changes to familiar ways of working. The costs and risks associated with establishing new practices such as cover cropping arise immediately and need additional management while the benefits take several seasons to materialise.

This imbalance can make adoption particularly challenging for farmers operating under financial pressure. In North Dakota in the US, models showed that a shift to crop rotations, cover crops and reduced tillage required cuts in profits for the first three years, waiting until year eight to see the payback.15 Although soil fertility and water retention improve long-term, extreme volatility alongside low profit margins make adoption particularly difficult for farmers under financial pressure. The consequence is slow uptake: cover crops were planted on just 4.7% of US cropland in 2022 despite growing interest.16

THE SOLUTIONS

Farming livelihoods and food security are already being tested by a changing climate and a food system under commercial strain. Incremental fixes will not be enough to keep pace. The right interventions can help farms stay productive, protect people from falling into food insecurity, and build a more resilient, prosperous food system for the communities who depend on it.

1. Build farm-level measurement systems that businesses can act on

'For agriculture-dependent exporters, consistent farm-level measurement can become a market differentiator.'

Land-based emissions offer some of agriculture’s greatest opportunities for decarbonisation but are difficult to compare, let alone act on. Traceable farm-level data can fill that visibility gap. Measuring, reporting and verifying emissions across the value chain strengthens accountability, helps food companies target interventions more effectively, build credible transition plans, track progress, and gives buyers a reliable basis for procurement decisions.

Regulation can push supply-chain traceability up the agenda. Cattle passports and livestock identification systems, such as those introduced to contain Mad Cow Disease, show how traceability from farm to fork can be established on a larger scale. The same capability can be transferred to emissions: pin a product to its origin and follow its environmental data through the chain of custody. The EU Deforestation Regulation, coming into effect in December 2026, applies this logic directly, barring beef, cocoa, palm oil and soya linked to forest degradation from EU shelves and exports.

New standards are extending this approach to land emissions and removals. The Land Sector and Removals Standard (LSRS) gives companies clearer guidance on what information they need from suppliers, and at what level of precision. Together, the EU Deforestation Regulation and LSRS strengthen the commercial case for farm innovation and give companies a more consistent basis for tracing emissions and removals with suppliers at scale.

For agriculture-dependent exporters, it's possible to achieve both decarbonisation and market differentiation through consistent measurement at the farm level. The Irish food board, Bord Bia integrates carbon assessment into its beef and dairy assurance schemes. Participating farmers receive farm-specific footprints together with benchmarking information and practical advice through the audit process. These assessments feed into Origin Green, Ireland’s national food and drink sustainability programme. Its verified members account for 90% of Ireland’s food and drink exports, creating a shared framework for demonstrating progress to international markets.17

National programmes are one route to better emissions data; however, processors and cooperatives can also develop models to estimate farm and product emissions, with independent assurance giving these tools credibility even where individual footprints remain unverified. This allows them to provide brands and retailers with credible data for claims and reporting. As demand for that information grows, the need for better data travels back through the supply chain to farms. Wider use of assured methods can make credible emissions data an expected part of doing business rather than a voluntary differentiator.

Measurement alone will not reduce emissions. But reliable emissions data can turn measurement from a compliance exercise into a basis for action. Food companies can identify where investment will have the greatest effect, demonstrate progress and scale the interventions that are proving most effective. At the same time, producers, processors, retailers, financiers and governments can direct support and resources using the same evidence.

The systems that protect food safety can also trace emissions from farm to fork, giving businesses the evidence to demonstrate progress, support credible claims and show which interventions are working.

2. Coordinate finance and technical support to unlock farm-level investment

The core financing challenge of agriculture's transition isn't just mobilising climate finance but closing a missing link that brings finance into the hands of farmers. Without that link, financing commitments will remain disconnected from the people expected to adapt to climate shocks and transition to more sustainable farming practices.

Coordinated financing and delivery mechanisms are among the most suitable levers for identifying what farmers need finance for, especially as priorities differ across regions, commodities and farming systems. The real opportunity lies in establishing a pipeline of agricultural adaptation and mitigation projects. Bringing international development banks, local financial institutions, agricultural intermediaries and sustainability experts together to align which measures to support, who should benefit and how impact will be measured can turn large funding commitments into practical investments on farms. It can also translate the expectations of international funders into criteria that work in local agricultural markets.

Making these programmes accessible also requires the right infrastructure around the finance itself. FIRA’s sustainable finance programme in Mexico shows how international funding can be channelled through a national development bank and adapted to local farming conditions. This includes identifying eligible technologies and practices, offering incentives to underserved producers, simplifying applications and establishing clear measures of environmental impact and financial inclusion. The benefits flow across the financing chain: international funders gain evidence that their capital is delivering results; financial institutions gain the tools to assess and manage sustainable loans; and farmers gain a clearer route to finance for investments that protect their land and livelihoods.

Technical assistance should be built into financing programmes as raising awareness and building skills are just as important. Financial institutions need to understand which investments qualify for sustainable finance, while farmers need clear guidance on which financing options are available, what suits their farms and how to apply. Technical support can help farmers put that finance to work through practical changes on the ground.

Development-bank programmes are not the only route for getting finance onto farms. Food processors already work directly with farmers and depend on reliable supplies of milk, crops and other agricultural products. Investing in their suppliers – or even pooling the funding and insights with other companies across supply chains – can help processors protect future supply, strengthen farms against climate shocks and reduce supply chain emissions. Since processors already have relationships with farmers and a detailed understanding of local production systems, they can also help identify investment opportunities, aggregate demand and channel support towards the practices that deliver the greatest impact. Blended finance can combine this corporate investment with public, development or philanthropic funding. As these investments can take several years to pay back, government or philanthropic funding could provide a first-loss guarantee that absorbs some of the initial losses if investments underperform. This would give processors greater confidence to invest over the longer term while ensuring that farmers are not left to fund the transition alone.

Making agricultural finance work better for farmers could unlock significant investment at scale:

60 million

additional smallholder households could become financeable.

$110 billion

could be unlocked annually.

Source: ISF Advisors

Two ways that can bring finance closer to farmers:

When funders, local banks and agricultural experts work together, climate finance can be invested in ways that reflect local needs. Farmers gain a clearer route to capital, while funders gain greater confidence in where their money is going and what it achieves.

3. De-risk and accelerate on-farm adoption of impactful innovations

At the Carbon Trust, we believe the innovations needed to drive meaningful impact across food systems already exist. The priority now is to make them practical, affordable and widely available, including:

Low-carbon fertiliser

Learn more

Methane-reducing technologies

Learn more

Farm-level measurement tools

Learn more

Food loss solutions

Learn more

Better soil health and function

Learn more

Solar irrigation

Learn more

'Whether a solution scales often depends on who is willing to test it, fund it and take on the risk.'

Many impactful innovations already exist but getting them onto farms requires clearer ownership and system-wide collaboration. It is often unclear who will test them with farmers, who will fund them and who will carry the risk if they fail. Farmers, processors, retailers, innovators and financiers all play a role, but no single actor can move solutions from pilots into widespread use alone. Clearer routes from innovation to adoption are therefore as important as developing the technologies themselves. We believe the following mechanisms, adapted to contextual factors and requirements, can scale the uptake of these solutions:

Accelerator programmes. Many agricultural innovations struggle to move from pilot to practice because no single actor can test, fund and de-risk them alone. Accelerator programmes can help by bringing innovators, investors, industry actors and future customers together around a shared challenge.

Similar approaches have helped new solutions gain ground in sectors such as energy. The first cohort of the Food and Agriculture Systems Technology Accelerator (FASTA) supported eight UK-based agritech businesses working to address some of the food sector’s most pressing challenges. By bringing agritech companies, food businesses, financiers and producers together, accelerator programmes allow solutions to be tested on farms and shaped by producers’ needs. Producers can try unfamiliar technologies with practical support, without carrying the full cost and risk.

Testing solutions with producers also helps establish whether they are practical, affordable and ready for wider commercial use. Just as importantly, accelerator programmes create a direct link between innovators, producers and future buyers. This helps food companies identify the technologies most relevant to their supply chains, while giving innovators direct insight into how their solutions need to work on farms and what customers need.

Technical collaboration. Coordination gives the agriculture sector more confidence in new solutions by defining a common way to measure and compare their impact. Low-carbon fertilisers are a good example. Right now, different fertiliser types are evaluated in different ways, so manufacturers, investors and food companies arrive at different conclusions regarding the same product. By working together, fertiliser producers, food companies, technical experts and the standards organisations are able to develop consistent methods and thus enhance the evidence base for these products. The benefits for the sector are obvious: having a shared approach makes it simpler to compare the various options, allows people to invest in innovation with confidence, and helps lay the groundwork for future standards and regulation.

Food loss platforms. As climate change puts food supplies under growing pressure, losing food that has already been produced further weakens food security. Yet food loss varies across crops, countries and supply chains, making it difficult to know where action will have the greatest impact. Building on the existing Food Loss Impact Tool the Carbon Trust developed with IFC, a broader platform could bring food-loss data and evidence on practical solutions together in one place. It would identify where losses and emissions are highest, compare responses such as cold storage and local processing, and show their financial and environmental value. This gives businesses, governments and investors a shared basis for directing funding towards the right solutions.

Incentive agreements led by key food sector players. Food processors, manufacturers and retailers can promote the quicker adoption of lower-emission farming methods by making premium payments, sharing investments and entering into long-term purchasing agreements. Since they have relationships with thousands of suppliers, they are in a good position to share the initial costs and risks which often hinder take-up, thus enabling proven technologies and practices to go beyond the pilot stage and be scaled up throughout the supply chains. In this case, farmers gain the confidence to make investments while food companies are able to secure more reliable supplies and make progress in meeting their climate commitments.

How accelerators can work: The FASTA example

4. Make carbon visible to create demand for lower-impact foods

Easing the pressure food systems exert will require shifts in both what and how people eat. The environmental burden of today's diets is far from evenly distributed: the wealthiest 30% of countries are responsible for 70% of it.18 In many of these countries, red meat consumption also exceeds recommended levels. Even though health guidance advises eating no more than 350-500 grams per week, people in high-income countries consume more than 1 kilogram. In the US and Argentina, consumption exceeds 1.2 kilograms per person.19

The 2025 EAT-Lancet Commission estimates that following the Planetary Health Diet, designed to stay within environmental boundaries, could prevent up to 15 million early deaths each year by lowering the risk of heart disease, type 2 diabetes, and cancer. Healthier, lower-impact foods can therefore improve public health while reducing pressure on climate, land, and nature.

Changing eating habits is difficult when the impact of food choices remains largely unknown. Price, taste and convenience will continue to influence what people buy, but clear information at the point of sale can help them compare options.

Front-of-pack nutrition labels show that making information visible can influence both what people buy and what companies produce. Countries like Chile, Mexico, Canada, the UK, and France use traffic-light labels or warning symbols to show whether food is high, medium, or low in fat, sugar, or salt. In Chile, the share of packaged foods and drinks high in calories or nutrients of concern dropped from 71% to 53% after warning labels became mandatory.20

A similar approach could make emissions more visible. Just as calorie information has become a familiar part of purchasing decisions, carbon labels could help consumers compare products at a glance, showing whether one pack of coffee has a lower carbon impact than another one, or its previous version. Despite growing sustainability claims on food, a product’s carbon impact remains largely unseen. Making it visible would give brands and retailers more reason to reformulate or offer lower-carbon alternatives.

Taxes and subsidies will still be needed to build a market for healthier, lower-carbon foods, but making carbon visible can create a demand signal throughout the food system. Consumers can spot lower-impact options, retailers and brands can adjust what they stock and purchase, and processors can prioritise lower-carbon ingredients. Where that value is passed back through premiums, incentives or longer-term purchasing commitments, farmers have a stronger reason to change how they produce food.

In numbers:

2/3

of the products with ESG-related claims grew in sales faster than those without.

Source: NielsenIQ

66%

of consumers say labelling is good for consumer choice.

Source: The Carbon Trust commissioned YouGov research in 2023, based on 11 global markets: China, Colombia, France, Germany, Italy, Mexico, the Netherlands, South Africa, Sweden, the UK and the US.

125%

the average sales uplift for products on the Amazon Climate Pledge Friendly programme in the first year.

Source: Amazon Science

"Change is starting to happen across the food system. We see better evidence guiding investments, innovations moving past the pilot stage, and more demand for food produced with less impact. None of this is yet happening at the scale we need, but it shows that the cycle can be broken - and that a stronger, more resilient food system is possible"