Money does grow on trees: investing in regenerative agriculture
Mustardseed was lucky enough to be able to attend a 4 day virtual conference back in September in the US: the Regenerative Food System Investment Forum.
This forum is only 2 years old and it was set up to enable to flow of capital investment into Regenerative food systems. One year ago 200 practioners and investors came together and they form the forum now. The founders of the forum felt that there was an increase in the desire to eat healthy food and tackle climate change at the same time.
This forum is to help investors to find emerging investments so they can successfully allocate capital for impact and returns. Regenerative is about farm economics, natural capital, climate resilience and community resilience.
What I learnt the most from the conference is that there are a staggering amount of people already active within the investment sector within regenerative agriculture and that has to give us hope.
Day 1 concentrated on having an impact on the food system
Day 2 concentrated on Building a Resilient Food System
Day 3 and 4 concentrated on discussing the learning from day 1 and 2
There were so many inspiring pioneers both on the ground, in the distribution system and in the financial systems. I will include a number of companies and individuals that really stood out from each day’s conference – however all of the speakers at the event brought amazing passion and knowledge to the sessions. Working with any one of those organisations or businesses would be valuable.
The conference is available to re-watch for a fee at this address: https://breakinggroundinstitute.thinkific.com/courses/RFSI-Forum2020
Matriark Foods - CEO Anna Hammond
Matriark Foods upcycles farm surplus and fresh-cut remnants into healthy, delicious, low sodium vegetable products for schools, hospitals, food banks and other foodservice. 10 million tons of perfectly usable vegetables never leave the farm gate because they are cosmetically imperfect, off-spec, or simply unharvested. 2 million tons of perfectly useable vegetable scraps go to landfill. 13 million children in the United States are food insecure, and 117 million people in the US suffer from diet-related illnesses. It takes $15 billion to grow, transport and dispose of the surplus that contributes 14 million tons of Green House Gases. Matriark Foods is a social impact business.
Grown By – CEO Lindsey Lusher Shute
The first platform cooperative for agriculture in the US. It has a network of 15000 regenerative farms with an income of 13.6 million, 3.6 million which is given back to farmers. Their impact is disrupting the system, stabilizing farming. They are a direct to consumer network, providing a buffer: the customer can find the farmer directly. The famers are joint owners of the platform and customers can find their local famers and who they can trust. ‘Grown By’ takes the risk out of buying local for the customer.
Paul McMahon, SLM Partners. Paul gave the investment case for Agricultural Farming. The main principles for their group are: Soil health; minimise external inputs; recycle nutrients & energy; exploit diversity; healthy food. They support this through the following practices: Crop rotation; cover crops; reduce tillage; agro-chemical avoidance; compost use; pasture based livestock
There is a compelling economic case and it can attract funders. SLM Partners has 43 agro-focused funds. It is an inflation hedge. The funds generate income and have capital appreciation. Their funds have positive ESG ratings and impact. Paul stressed that farm incomes are very low in the US and by and large living from subsidies- the US has spent 37 billon USD on subsidies in 2020 so far. But Regen Ag has ‘profit levers’: higher good quality yields; lower costs through use of solar energy and reduces artificial inputs; better prices (premium products) . Partner this with the increase in consumer trend towards healthy food, the social license, the natural capital and the resilience. Paul stated that Regen Farms are more profitable.
Alternative Financing Tools for Transition
Panel of Pioneers in alternative financing:
Dan Miller, Steward “creating a system that empowers farmers to steward their land sustainably, with consumers—the people with the most to gain from sustainable farming”
Robyn O'Brien, rePlant Capital: “cannot fix a broken food system with a broken financial system”
Phil Taylor, MadAg “My life work is to create a world where people and ecosystem flourish together. Radical love must be the root of all action”.
Phil Taylor, MadAg: we have the perennial fund to fund the transition the natural way; we support the middle farmer. We offer a 10 year note, borrow capital to transition to organic, hey pay back 150% of what they borrowed. Payback if based on profitability. 10 years allows for longer term thinking which is totally different from what happens in the mainstream funding sector. We have a community of rsisk, and we are looking to disrupt the system now.
Robyn O’Brien (RePlant Capital): we have a soil fund, which was listed in the Forbes Impact 50. It is a 250 million USD integrated capital fund. We have an arrogant, broken system affecting the health and well-being of farmers and consumers. New knowledge gives us new opportunities. We may only have 60 years of topsoil left! We say talk to us about profit not yield, there is no food security without financial security. Water is also a crisis to come. We need to trap water in the soil: not just obsess about carbon. It is also about nutrients and water in the soil. (Robyn came over very, very well during the conference)
Dan Miller (Steward): the challenge is that we have wiped away tradition, we work in the south with indigenous/minority farmers: they are often the farmers more likely to be excluded yet they have been the best at hanging onto their traditions.
Building a Portfolio that Fosters Social Equity
Malaika Maphalala, CPWA, Natural Investments
This investment fund has been investing in this area for 30 years. Malaika specialises in Regenerative Investing, which is investment that directly supports the regenerative capacity of communities and ecosystems. From microfinance to sustainable agriculture, worker-owned cooperatives to renewable energy, Maliaka and the other advisors help their mission-driven clients connect with investments that align with their deepest values and create positive change in the world. The investment firm also provides guidance and support in planning for trusts, charitable giving, estate transfers, tax management, and addressing family dynamics related to wealth.
They look in particular at racial and gender issues and where power is placed within the potential investment opportunity. They look at much wider social equity issues than most investment companies.