Making the investment case for regenerative agriculture

October 3, 2019

Farmers and investors are making financial gains from regenerative agriculture, according to several speakers at the inaugural Regenerative Food Systems Investment (RFSI) Forum.

A no-till farmer in Ohio earns a net of $500 more per acre than the average in his county, geomorphologist and author David Montgomery said during his keynote alongside other case studies. (The average is a staggering $100 loss per acre.)

Craig Wichner, managing partner at Farmland LP, a farmland fund that transitions conventional farmland to organic using regenerative techniques, detailed the 6% annual appreciation in farmland value that the strategy brings. The firm’s 15,000 acres of owned and leased farm properties also bring in 5% annual cash flow. Wichner attributed part of Farmland LP’s success to its reliance on agtech. The firm benefits from “satellite imagery on 100% of our 15,000 acres every 1-3 days,” stated Wichner during a panel entitled, “Strategies for Investing in Farmland.”

And SLM Partners, which regenerates farmland in Australia by holistically grazing livestock, will realize A$25 million ($16.9 million) in revenue over the next 10 years, profiting from more than 2.5 million tonnes of CO2 credits. The fund purchases land then enters into a 10-year lease with a farmer (who retains the right to purchase at lease’s end). Unlike short-term leases, this lengthier lease agreement provides more security for a farmer who needs 5-7 years to allow a transition to regenerative agriculture to return to profitability. 

Food System Potential

Held in Oakland, California at the beginning of the week, RFSI highlighted our food system’s potential to end up in disaster compared to its potential for regenerative growth.


The data surrounding global soil health and atmospheric carbon can be both sobering and stimulating. In her opening speech, Shauna Sadowski, head of the Sustainability, Natural & Organic Operating Unit at General Mills, educated the audience with these facts:

  • Globally, we waste 1/3 of our food.
  • We have lost 50% of topsoil in the last 150 years.
  • Wildlife populations are down over half in less than 50 years.
  • Today, 815M people go hungry worldwide.
  • 75% of the world’s land area has been “significantly altered” by people
  • 24% of usable land is degraded.

Yet, Sadowski also shared the inspiring actions of General Mills subsidiaries Annie’s, Cascadian Farm, and EPIC:

  • Annie’s is launching its second edition of “direct from farm SKUs,” in partnership with four Montana farms.
  • Cascadian Farm is partnering with Grain Millers, the largest US organic oat supplier, to advance regenerative agricultural practices on 11 Northern Plains farms.
  • And, EPIC supplier White Oak Pastures is now offsetting up to 85% of the farm’s total carbon emissions, and 100% of its allocated beef carbon emissions.

The thrust of Sadowski’s opening address was that not only is regenerative agriculture worth investing in, but the largest food companies in the world are already doing it. The remainder of the forum was filled with insight into how to affect positive change on our planet through focused investments.

Limitations in Regenerative Agriculture

Scaling regenerative agriculture is challenging and the speakers did not shy away from the topic.

Talent Pool

Many speakers and panelists at RFSI stated that the bottleneck in rapidly expanding acreage was a limited availability of experienced regenerative farmers. Hesitation was expressed by several fund managers in hiring first generation farms, or even experienced farmers of multi-generational operations who were new to regenerative farming practices.

As progressive fund managers, while their mandate is expanded to increasing the health of soils, food, and our climate, the majority must still ensure a positive yield for investors.

Regionality

Geographically diverse panelists in a session titled “Strategies for Investing in Animal Agriculture: Values to Consider” shared candidly their returns. While all panelists agreed on the immense value in the ability of rotational grazing techniques to sequester “liquid carbon” down into the soil, which is made possible in part by cattle trampling forage and spreading manure, financial yields did differ:

  • In Australia, Bert Glover, managing director of Impact Ag Partners, enjoyed a steady 2.5% cash return on pure livestock
  • In Montana, however, Zach Jones, cofounder and CEO of Restoration Beef Company, saw cash returns hover between 0.5% and 3%.

Jones also hinted at the importance of remembering regional variances and understanding the unique attributes and challenges of a particular piece of land. Although not discussed in detail, future programs could dig deeper into potential methods for helping farmers identify the techniques, investment vehicles, educational resources, and partnerships that apply to the region where they farm.

(Hopeful) Food for Thought

Despite the challenges, speakers at RFSI’s final panel were more than hopeful. Their reasons may have varied, but the moderator and speakers were outright bold in their ambitions for regenerative agriculture.

Tina Owens, senior director of Agricultural Funding and Communication at Danone, saw “earth-shattering technology” as an imminent agent for change. “I happen to think it’s coming, whether the current food system is ready for it or not,” stated Owens. Moderator Ethan Soloviev, chief innovation officer at HowGood, added his thoughts, “I think the demand for biodiversity is going to be a key driver in big growth.”

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