Food companies have spent years investing in climate-resilient agriculture to secure reliable access to sustainable key ingredients. Many are partnering directly with farmers to promote regenerative practices—such as reduced tillage, cover cropping, and nutrient management—in the cultivation of row crops like corn and soybeans. PepsiCo, for example, plans to support regenerative farming on 10 million acres by 2030 and is already a third of the way there. Nestlé has set specific sourcing targets for ingredients grown using these practices. Across the industry, efforts to build resilience into supply chains with climate-smart agricultural practices are well underway. These practices also yield lower-carbon inputs.
Powerful forces could change the equation.
If current regulatory momentum holds, incentives would likely accelerate demand for those same low-carbon-intensive crops as feedstock for clean transportation fuels. As an example, based on interim guidance, in the US, the Clean Fuel Production Credit (often called the 45Z tax credit) would reward biofuels producers using feedstocks grown with climate-smart agricultural practices. Specifically, as of June 2025, the credits would be available only for feedstocks grown in North America. Farmland conversion would no longer count toward biofuels’ carbon intensity, further improving scores for agricultural feedstocks relative to non-agricultural alternatives.
While it’s possible regulations could evolve, based on current guidance, biofuels producers could afford to pay farmers at least twice as much per acre to adopt regenerative farming practices, according to our analysis. And unlike food companies, biofuels producers are not expected to require complex measurement, reporting, and verification, making them especially appealing partners for growers.
This could both significantly accelerate the adoption of regenerative practices and also introduce complex competitive pressures for food companies—from higher prices and reduced ingredient availability to threats to both sustainability goals and supply chain resilience.
Emerging competition
The economics are clear. Corn and soybeans grown using regenerative practices could unlock up to $180 per acre in tax credits for biofuels producers under the interim 45Z guidance—a good portion of which is expected to flow to farmers. By contrast, sustainability initiatives led by food companies typically offer $15 to $35 per acre today.
So, while food companies need these ingredients, other, larger market participants do too, and those groups may be in a stronger negotiating position. In 2025, 9% of domestically grown corn is expected to be used for human food and ingredients, according to USDA datacompiled by the University of Arkansas. The rest will be used for ethanol production (35%), animal feed (38%), and exports (18%). Soy is similar: Only 8% of the US crop will be used for human consumption.
Some of food companies’ biggest competitors for these crops don’t have a single product in the grocery store. Biofuels producers’ growing appetite for them could reshape the competitive landscape in ways few food executives anticipated.
With global demand for biofuels expected to rise in the years ahead, food companies could face a more fragile, more expensive, and less predictable supply of critical ingredients (see Figure 1). Imagine a snack brand that has invested in establishing sustainable soybean oil production, with the expectation it could later buy the lower-carbon crops produced. If renewable diesel producers can outbid it for that same crop, the brand could be left unable to source, or afford, a sustainable version of the ingredients it most needs.
