CHICAGO, ILLINOIS - On February 16-19, during the American Society of Baking's BakingTech conference, Tim McElroy of Shepherd's Grain underscored how regenerative agriculture can help U.S. bakers meet sustainability goals while strengthening supply chain resilience, a message that resonates across the broader agricultural sector as climate volatility and market pressures intensify.

Speaking at a technical breakout session, McElroy, business development manager at Shepherd's Grain, emphasized that regenerative agriculture is not simply a soil conservation strategy but a systemic approach to restoring ecosystem function. For food manufacturers navigating tighter environmental benchmarks, shifting consumer expectations and evolving farm bill priorities, the concept is gaining operational relevance.

"I've seen the benefit of incorporating regenerative systems, where we see soil aggregates building and water capacity increasing and organic matter increasing and soil carbon levels rising," McElroy said. Those improvements, he noted, extend beyond crop performance to broader biodiversity gains, including the return of wildlife species to previously degraded farmland.

At its core, regenerative agriculture seeks to restore carbon, mineral and water cycles through practices such as reduced tillage, cover cropping and maintaining living roots in the soil. Traditional tillage systems, widely used in commodity grain production, release stored carbon into the atmosphere and disrupt soil structure. In contrast, regenerative systems aim to keep biological processes intact, enhancing resilience at the field level.

McElroy framed carbon not as a liability but as a biological asset. "Carbon is just food for bacteria in the soil and that bacteria in the soil, in turn creates the health of the whole ecosystem," he said. By supporting microbial life, farmers can build soil aggregates, improve nutrient cycling and stabilize yields under increasingly erratic weather conditions.

The water management implications are particularly significant for U.S. grain producers facing heavier rainfall events in parts of the Midwest and prolonged drought in other regions. According to McElroy, a 1% increase in soil organic matter can raise water-holding capacity by as much as 10,000 gallons per acre. That capacity allows soil to function like a sponge, absorbing intense rainfall and reducing erosion risk - a growing concern for both producers and crop insurance providers.

For bakers and food manufacturers, the relevance goes beyond agronomy. As environmental, social and governance (ESG) reporting becomes more embedded in corporate strategy, ingredient sourcing is evolving from a procurement function to a measurable sustainability metric. Verified regenerative grain programs offer traceability and documented soil health outcomes that can be integrated into sustainability reporting frameworks.

McElroy encouraged food companies to broaden their perspective. "We have an opportunity to zoom out from just a procurement question sourcing and look around our organizations and see where else sourcing ingredients and verified supply chains can benefit us in marketing and sustainability initiatives," he said.

This shift aligns with broader trends across U.S. agriculture. The USDA has increased support for climate-smart commodity programs, and discussions around the next farm bill continue to include soil carbon, conservation incentives and sustainable agriculture funding. At the same time, volatile commodity prices and rising input costs are pushing growers to evaluate practices that enhance long-term soil productivity without excessive reliance on synthetic fertilizers.

For grain co-ops and producer networks, regenerative systems can also represent a value-added market channel. Buyers seeking lower carbon intensity ingredients may be willing to enter longer-term contracts, offering price stability in otherwise volatile grain markets. That dynamic could prove especially important as supply chain disruptions and trade uncertainties continue to reshape global food flows.

While adoption rates vary by region and crop, the momentum behind regenerative agriculture reflects a broader recalibration in U.S. farming: balancing productivity with ecological stewardship. For bakers gathered in Chicago, the message was clear - sustainability commitments increasingly begin at the soil level.

As climate variability intensifies and corporate sustainability targets tighten, regenerative agriculture is emerging not only as an environmental strategy but as a competitive advantage across the U.S. food supply chain.