Participating organizations

do deserunt
Id labore do tempor dolore duis qui. Nostrud adipisicing reprehenderit fugiat dolore irure occaecat.

do deserunt
Id labore do tempor dolore duis qui. Nostrud adipisicing reprehenderit fugiat dolore irure occaecat.

do deserunt
Id labore do tempor dolore duis qui. Nostrud adipisicing reprehenderit fugiat dolore irure occaecat.

do deserunt
Id labore do tempor dolore duis qui. Nostrud adipisicing reprehenderit fugiat dolore irure occaecat.
Context
Midwestern states in the US represent a rich agricultural producing landscape, characterized by the production of corn, soybeans and wheat crops, as well as dairy. The production of crops and livestock combined generates USD $14.5 billion in annual agricultural sales in the landscape.1 But the use of these lands and waters has taken a toll. In many places, there has been a decrease in water quality, loss of essential fish and wildlife habitat, and an increase in toxic algae blooms. Estimates show that extreme climatic conditions, such as prolonged droughts affecting over 80% of corn and soybean crops in 2023,2 economic pressures, like rising input costs, and limited availability of water and nutrients will negatively impact crop yields across the Midwest and strain the agrifood industry.3
in annual agricultural sales are generated by the Midwest
of corn and soybean crops were affected by drought in 2023
Key facts
Ambition of the project
The Soil and Water Outcomes Fund (SWOF) provides financial incentives directly to farmers who begin or expand on-farm conservation practices that yield positive environmental outcomes such as carbon sequestration, emissions reductions and water quality improvements. Operating in Illinois, Iowa and other Midwestern states in the US, SWOF uses an outcome-based approach – aligning with regulatory efforts at state and federal levels – to advance regenerative practices, build sustainable production landscapes and improve watershed health.
The Midwest Climate-smart Commodity Program is a five-year initiative launched in 2023, administered by SWOF, and funded through a USD $95 million grant awarded through the US Department of Agriculture (USDA) Partnerships for Climate-Smart Commodities and USD $62 million in corporate commitments.4 It specifically aims to deliver measurable greenhouse gas (GHG) reductions and water quality improvements by providing outcome-based payments to farmers who adopt regenerative practices. The program’s ambition is to support the delivery of ecosystem benefits and to create a scalable, multi-stakeholder model for landscape regeneration that can provide new market opportunities and revenue streams for farmers. Companies engaging in the program – such as PepsiCo, whose specific efforts and results this case study focuses on – do so to meet their scope 3 emissions reduction targets and broader sustainable agriculture goals.
grant was awarded through the USDA
in corporate commitments was combined with the USDA funding
The program at a glance
Through an open process supported by local partners, enrollment entails signing a one-year contract, which farmers can subsequently decide to extend. Between 2023 and 2024, over 95% of farmers reenrolled in the program.
The program supports growers financially and provides technical assistance for the implementation of regenerative practices such as reduced tillage, cover cropping, extended crop rotations, and fertilization management. The aim is to help improve soil health and water quality and reduce erosion, among others. The program disburses payments in two installments: 25% prior to verification to assist farmers in the challenging and costly early stages of the transition; 75% upon verification of reductions in emissions and nutrient losses. In 2024, the program invested approximately USD $40/acre (USD $16/hectare), of which farmers directly received USD $32/acre (USD $13/hectare).
The program’s data-driven approach empowers farmers and landowners through valuable insights. By providing clear and robust data on the environmental outcomes achieved on their farms, growers can make informed decisions about farm and land management, knowing how these will impact their bottom lines.
“We don’t have to work the fields as much and it’s going down every year. We didn’t spread fertilizer in the fall, so there, too, you are saving on the input expense itself but also on the fuel and labor. These changes have been beneficial in multiple ways that affect our bottom line.”
– Jeremy Chandlers, farmer in Minnesota
An equity component
The project reserves 20% of contracts for small producers and historically underserved communities, in alignment with the Justice40 commitment to direct 40% of federal climate investments to disadvantaged communities.5 Technical assistance from dedicated conservation agronomists supports these communities. Additionally, a minority and underserved outreach contractor develops custom outreach plans and bilingual materials for Hispanic farmers.6
Financing model
Funding for the program consists of a co-investment model of blended capital, with a five-year USD $95 million grant awarded through the USDA Partnerships for Climate-Smart Commodities and USD $62 million in corporate commitments, allocated by businesses in proportion with the sourcing volumes in a supply shed.
The grant awarded to this project by the USDA is part of the organization’s Partnerships for Climate-Smart Commodities, which is investing more than USD $3 billion in approximately 140 projects.7 The USDA’s ambition is to support a diverse range of farmers, ranchers and private forest landowners through the creation of market opportunities for US agricultural and forest products produced using climate-smart practices.

Credits: PepsiCo
These practices include innovative, cost-effective methods for the quantification, monitoring and verification of greenhouse gas and carbon sequestration benefits. The USDA estimates that projects, selected through a rigorous evaluation of a pool of over 1,000 proposals,8 will sequester more than 60 million metric tons of carbon dioxide equivalent over their lives.
Monitoring, reporting and verification
SWOF is an insetting program that incentivizes businesses to invest in the resilience of their supply chains and to achieve sustainability goals, such as scope 3 greenhouse gas emissions reductions. SWOF uses a combination of models, soil and water sampling, and in-person field visits – planned for each farm enrolled in the program – to quantify results. Third-party experts validate the results to ensure the reliability of claims, which are based on rigorous assessment methodologies.
Monitoring of the Midwest Climate-smart Commodity Program project includes remote sensing, field inspections, farmer operational records, field audits and soil sampling. When a farmer joins, the program establishes farm-level baselines and calculates GHG emissions and runoff reductions using the COMET-Farm tool.
COMET-Farm is a web-based GHG accounting decision-support tool used to run an entire GHG inventory within an entity, focusing on carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) from major on-farm emission sources, in addition to CO2 removal into biomass and carbon sinks within the farm-gate.
The program also verifies nitrogen and phosphorous runoff reductions using the USDA-supported Nutrient Tracking Tool and adopts the Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model developed by the Department of Energy to quantify soil health. Inputs in the GREET model include crop type, energy consumption, fertilizer and lime use, and crop protection application.
Table 2: Objectives and progress monitored per impact area

Endnotes
1 The Nature Conservancy (n.d.). Great Lakes. Agriculture in the Midwest. “Growing clean water” while feeding the world. Retrieved from: https://www.nature.org/en-us/about-us/where-we-work/priority-landscapes/great-lakes/great-lakes-agriculture-/.
2 Kramm, J. (2024). Investing in the future: 2023 Actions, Insights, and Lessons. Midwest Row Crop Collaborative. Retrieved from: https://midwestrowcrop.org/news-press/investing-in-the-future-2023-actions-insights-and-lessons/.
3 Leslie-Bole, H., Walker, C., Scafidi, A., Hosansky, B., & Melo Ribeiro, C. (n.d.). Rethinking biofuels in the US Midwest. Working Paper. World Resources Institute (WRI). Retrieved from: https://files.wri.org/d8/s3fs-public/2025-05/rethinking-biofuels-us-midwest.pdf?VersionId=q1j1lKJKG6fsDjiZfi.kb_CpxSqrtiV7.
4 Soil and Water Outcomes Fund (2024). McCormick® Joins PepsiCo to Help Advance Climate-Smart Agriculture with the Soil and Water Outcomes Fund®. Press Release. Retrieved from: https://theoutcomesfund.com/mccormick-pepsico-climate-smart-agriculture-swof
5 United States Department of Agriculture (USDA) (2022). Partnerships for Climate-Smart Commodities: Building Markets and Investing in America’s Climate-Smart Farmers, Ranchers & Forest Owners to Strengthen U.S. Rural and Agricultural Communities. Retrieved from: https://apply07.grants.gov/apply/opportunities/instructions/PKG00274212-instructions.pdf
6 United States Department of Agriculture (USDA) (2022). Partnerships for Climate-Smart Commodities Projects. A Greener World. Retrieved from: https://publicdashboards.dl.usda.gov/t/FPAC_PUB/views/PartnershipsForClimate-SmartCommodities/ProjectDetail?%3Aembed=y&%3AisGuestRedirectFromVizportal=y&%3Atoolbar=top
7 United States Department of Agriculture (USDA). Partnership for Climate-Smart Commodities - Legacy Site. Retrieved from: https://www.usda.gov/climate-solutions/climate-smart-commodities
8 Soil and Water Outcomes Fund. SWOF Partner Spotlight: Three Questions with USDA’s Katina Hanson. Retrieved from: https://theoutcomesfund.com/in-the-news/swof-profile-katina-hanson-usda