A group of investors, funders, and farming organizations are partnering with nonprofit the TransCap Initiative (TCI) to design a new finance infrastructure for regenerative agriculture in the Midwestern US.
Phase two of the “systemic investing prototype” will see participants designing a financial platform that can deploy multiple types of capital across the regenerative agriculture space.
Both the Walton Family Foundation and the Rockefeller Foundation are supporting the initiative, the second phase of which will last six months.
Critically, the initiative seeks to match the right capital with the right practices or interventions at the right time in order to finance the transition to regenerative agriculture at scale.
‘A whole ecosystem of capital solutions’
The transition to regenerative food systems is not a series of siloed events. Rather, it’s “a whole ecosystem of capital solutions that need to come together in a strategically orchestrated way if we’re actually to effect this transition at scale,” Ivana Gazibara, the TCI’s director of prototyping, tells AgFunderNews.
“There’s obviously quite a lot of money flowing into regen ag, and different kinds of money as well,” she says. “But those different types of capital allocators are not talking to each other, despite the fact that, implicitly, everyone is working towards the same mission.”
For example, a farmer growing oats will find plenty of regenerative agriculture programs—from nonprofits, corporates, and others—that will provide technical assistance for transitioning to certain practices in the field such as no till or cover cropping.
But the transition itself costs money.
“When you provide the technical assistance, you also need to think about providing the loans and the grants that can enable farmers to affect that transition in a way that still makes for a viable farming operation,” explains Gazibara.
Things don’t stop there. All of this requires insurance products favorable to regen ag practices, which are few and far between at the moment, not to mention storage facilities and supply chains that support the product, appropriate purchasing agreements, and, of course, a market for the end product.
This complex series of dependencies require “a whole ecosystem of capital solutions,” notes Gazibara.
More than that, it requires those solutions to come together in a strategic, orchestrated way, if financing models are to be deployed at scale—in and beyond the Midwest.
“I know that we’re doing this work in the Midwest, but I actually believe this to be true in other regions and other agricultural contexts as well,” she notes.
Towards ‘multifaceted’ financial solutions
To design those models, TCI has brought together what is says is a representative group across the agricultural sector, from grassroots farming networks, technical assistance providers, nonprofits, asset managers, investors, and philanthropic funders.
“Together, they should be able to build something or design something that can be built that can be really effective,” says Gazibara.
The 20 participating organizations are: the Platform for Agriculture and Climate Transformation; Transformational Investing in Food Systems (TIFS); Practical Farmers of Iowa; Minnesota Farmers Union, Walton Family Foundation; The Rockefeller Foundation; University of Minnesota Forever Green Initiative; Funders for Regenerative Agriculture; Zero Foodprint; Healing Soils Foundation, Environmental Defense Fund; Food System 6; CREO; Fractal Agriculture; Zell Family Office; McKnight Foundation; Midwest Row Crop Collaborative; Desert Bloom; PepsiCo; and Potlikker Capital.
The group, which is still in the midst of the six-month-long design phase, hopes to release an actual capital orchestrator in the next several months, according to Gazibara.
Right now, she adds, TCI and the participating organizations are “sleeves rolled up, thinking through everything from vision and impact indicators to the governance framework of this, to the legal structure, the capital, vehicles and instruments that need to sit inside it.
“People are starting to create financial solutions which are more multifaceted and more holistically supportive of the farmers and the transition writ large,” she adds. “There’s also more innovative lenders and asset managers in this space who are trying to take a landscape approach to things.”
