BOSTON—October 16, 2025—Bain & Company today published Food vs. Fuel: Why US Sustainable Crops Are Suddenly in High Demand, which shows how recent clean fuel incentives are altering the economics of sustainable farming – and exposing the food industry to new strategic risks.

The study finds that new incentives notably the 45Z tax credit, could allow biofuels producers to pay farmers at least two times more per acre for sustainable crops than most food companies currently offer. That shift could place food makers into direct competition with fuel companies for the same low-carbon-intensive ingredients.

This new dynamic could lead to disruption in agricultural markets, upward pressure on prices, tighter ingredient availability and reduced supply chain resilience – just as food companies face mounting pressure to deliver on sustainability and resilience goals.

“For major row crops such as corn and soy, we expect there will be much greater competition between food and fuel for low carbon crop production going forward” said Andrew Keech, Bain partner and member of the Agribusiness practice. “Biofuels producers will likely be able to provide greater incentives to farmers for climate-smart practices, while requiring less stringent measurement, verification and reporting.  Food companies need to act now to get ahead of this shift”

Biofuels producers can afford to pay more

Bain estimates that corn and soy grown using regenerative practices could unlock up to $180 per acre in tax credits for biofuels producers – compared with the $15-35 per acre typically offered by food companies. As a significant share of these incentives is expected to flow to farmers, biofuels producers are likely to become the preferred buyers.

Unlike many food-company incentive programs, biofuels producers are not expected to require complex measurement, reporting and verification processes, making them especially appealing partners for farmers. This could accelerate the adoption of regenerative practices – but also introduce complex competitive pressures for food companies seeking sustainable ingredients.

Food companies risk higher prices and reduced availability

In 2025, only 9% of US-grown corn and 8% of soy are expected to enter the human-food supply, while the rest will flow into biofuels production, animal feed or exports. For some commodities and ingredients, food companies’ biggest competitors do not have a single product in the grocery store. Increased demand from biofuels producers for sustainably produced crops could reshape the competitive landscape in ways few food executives anticipated.

As biofuels players bid more aggressively for regenerative acres, food companies could face higher input prices, reduced access to sustainable ingredients and challenges in meeting both sustainability commitments and supply chain ambitions.

Food and fuel can be complementary

The relationship between food and fuel markets is not purely competitive. It can be complementary. Agricultural commodities such as corn and soy serve multiple purposes, and when different industries rely on the same crop, their interests sometimes align.

For instance, increased production of low-carbon-intensity soybeans for oil for renewable diesel also increases the production of other sustainable byproducts such as soybean meal. As the supply of sustainable soybean meal rises and prices fall, food manufacturers that use soy proteins and farmers who use meal in their animal feed could both benefit.

The report highlights three ways food companies can get ahead of the curve:

1. Pinpoint exposure and quantify risk

Start by mapping your most critical ingredients and sourcing regions. Identify overlaps with crops used in biofuels and regions that are likely to see growth in biofuel demand for low-carbon feedstocks. Quantify how these overlaps could directly or indirectly affect your ability to secure sustainable supply, and at what cost.

2. Design for flexibility and resilience

Explore sourcing alternatives and develop contingency plans before constraints emerge. Consider alternative sourcing regions first, then evaluate the potential to flexibly reengineer formulations. For example, Yoplait’s reformulation from high-fructose corn syrup to sucrose during the previous ethanol boom of the 2000s was a response to market pressure, but it also allowed the brand to position itself as healthier for consumers. The same approach can help companies manage rising costs through reformulation, premiumization, or both.

3. Create partnerships with biofuels producers

Partnering with biofuels producers can support regenerative farming and provide access to sustainably grown crops. For example, a food company and an ethanol producer could jointly support farmers in a soy-corn rotation. The ethanol producer would benefit from low-carbon-intensity corn and qualify for 45Z tax credits. The food company would secure access to sustainably grown soy and achieve Scope 3 emissions reductions. And the farmer could transition more confidently to regenerative practices, supported by greater financial incentives.

These types of collaborations can remove risk and align incentives across growers, biofuel companies, and food brands alike.

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Media contacts:

Dan Pinkney (Boston) — dan.pinkney@bain.com 

Gary Duncan (London) — gary.duncan@bain.com

Ann Lee (Singapore) — ann.lee@bain.com

Rachel Ng (Kuala Lumpur) – rachel.ng@bain.com

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