Editor’s Note: Lauren Manning is a senior associate at the Croatan Institute. She’s also an adjunct law professor at the University of Arkansas School of Law, and raises livestock regeneratively on her small farm near Fayetteville. She was a contributor to AFN for many years and you can read her work here. Email her [email protected].
Having attended the first Regenerative Food System Investment Forum in 2019, one thing was clear during this year’s event – capital holders are spending less time asking why they should deploy capital in the space and focusing more on how and where they should deploy capital.
Although this momentum is powerful and inspiring to witness, the road to financing more regenerative agriculture is not without its potholes.
During this year’s conference, I had the honor and privilege to participate in a panel exploring farmers’ perspectives on financing. After the panel, a capital provider approached me regarding the frustrations I expressed about financing a small processing plant to service local pasture-based meat producers in my region. The capital provider didn’t flinch when I named $10 million as our price tag.
“What happens when we encounter a two-year drought that cuts our production numbers in half?” I asked.
“Well,” the capital provider replied, “I guess that’s just business.”
Although this statement first hit me like a trailer of day-old offal, I later realized that it provided some much-needed sobering against the swelling seas of regenerative agriculture. Here are my main takeaways from this year’s program.
- The number of capital providers in the room doesn’t matter if they aren’t ready to think of themselves as capital partners instead of capital providers
It is unfair to expect a new capital provider to understand all of the nuances of this movement. But it is fair to expect them to be open to new ideas and opportunities to educate themselves. This could include ensuring producers are represented on all panel sessions to provide context; spending time on farms and at value chain businesses; and driving through rural communities where consumers don’t have time to evaluate the attributes of regenerative or organic because many of them aren’t always sure they can put food on the table. As a community, we need to figure out how to make regenerative agriculture accessible for more than just the 1% of consumers who frequent Whole Foods.
That also means making flexible, patient, and non-extractive capital accessible for producers. Conventional agriculture is a risky business but for better or worse, our current system is built to give producers various financial safety nets whether they have a successful harvest or not. Until we have similar policies in place to give regenerative producers a hand, the capital community may need to help shoulder some of the risks that producers face – and often have little ability to control. This may look like concessionary capital, recoverable grants, philanthropically supported loan guarantees, flexible loan terms, land access support for historically disadvantaged producers, or purchasing agreements that spread risk across multiple supply chain stakeholders.
- 2. If we removed our carbon blinders, we’d see that there are more pieces to this puzzle
Carbon continues to be the belle of the ball for many capital providers and a hearty share of capital seekers. There is nothing wrong with pursuing targets around carbon reduction or advancing financial products that more adequately compensate farmers for the panoply of benefits that they can offer.
But the carbon narrative can overshadow so many other essential components of this conversation like biodiversity, revitalizing rural economies, improving farmer livelihoods and growing healthier foods. As I alluded to during my panel, 96% of farm households receive off-farm income and those earnings provided 82% of total income for all family farms in 2019, according to USDA ERS data.
What does it say about our society that the people who feed us rely on off-farm income to feed their own families?
The carbon narrative may also be blinding us from the importance of integrating health and nutrition into the regenerative agriculture movement. For many proponents, this space is about moving from a quantity-focused food system to a quality-focused one where food is also viewed as preventative medicine. And with this interdisciplinary approach comes an opportunity to engage in a broader array of asset owners and managers. Can we make room at the regenerative finance table for investors whose bottom line includes health, communities, and equity? It will be cheaper to invest in the transition to a more regenerative agriculture system than it will be to treat the diseases that are just a symptom of our broken food system.
- 3. We need to be intentional about how we define progress and success in this space
It is hard as humans to fight the urge to quantify our existence on this planet in terms of numbers and goals. There is something satisfying about seeing your success mapped out in a spreadsheet, a term sheet, or on the front of the Wall Street Journal.
Conventional ag finance is all about numbers with little room for other factors on the balance sheet. Combine this with the “Get big or get out” mentality of the 1970s and it’s easy to see how we helped pave the road that led us to rampant soil erosion, biodiversity loss, declining human health, and collapsing rural communities.
It is also a perfect lesson as to why the why must always be our North Star. Food is not just a commodity. Food nourishes us, builds community, and is one of the few things that can remind us that we are part of this place and not just existing within it. In an increasingly divided, digitized, exhausted, and climatically upended world, there is a lot to be said for how powerful and deeply grounding the act of growing food and feeding your community can be.
Perhaps instead of seeing potholes and seeking shortcuts we should see opportunities for progress even if it means the finish line is farther away. A chance to educate a capital provider on how deeply the weather impacts my bottomline as a producer and the possibilities we could unlock if they had the flexibility to shoulder some of the downside of that uncertainty with me.
If we aren’t careful, we will end up reducing regenerative agriculture to statistics, metrics, and spreadsheets all for “success’” sake. At the very heart of this movement is the desire to put human and planetary health at the focal point of everything we do and so far I haven’t seen a spreadsheet or a splashy corporate press release that can adequately wrap itself around that endeavor.
Although my own definition of progress and success in this space is constantly evolving, there is one thing I can hang any of the many hats I wear on – and what I wish I would have said in response to that capital provider: this work is anything but just business.