In the past decade, agriculture has become a popular class for investors looking for steady long-term fundamentals, attractive historical returns, and a way to use their investment dollars for positive impact. Investing in agriculture has the potential to move the food system forward and address enormous challenges, such as food scarcity, productivity and food safety, but some production systems can exacerbate climate change and create long-term challenges to sustainability. As rapidly growing population highlights the impending challenge of feeding more people with less arable land, and climate change simultaneously puts increasing and new pressures on production systems, a movement is forming behind an alternative to conventional agriculture. Regenerative agriculture uses production practices that focus on improving soil health to sequester and even draw down carbon into the earth, rather than releasing it into the atmosphere. Investments in regenerative food systems result in a cycle of beneficial outcomes that strengthen and regenerate ecological health, as well as the wealth and resources of all stakeholders including producers, food processors, retailers, consumers, and investors.
Through our Raising Regenerative newsletter and our event the Regenerative Food Systems Investment Forum, we are bringing attention to companies and organizations who are doing the work of addressing these enormous challenges as well as those who are bringing critical new capital to the expansion of the ecological and social benefits associated with these systems.
These five companies are blazing the trail for investment in regenerative agriculture and food systems, each using a unique approach.
In 2009, Farmland LP was formed with a mission to prove that sustainable, regenerative agriculture at a large-scale could be more profitable than the current model of commercial U.S. agriculture. The company buys commodity farmland and creates value by securing organic certification, investing in infrastructure and diversifying crops.
In 2010, Farmland LP purchased their first farm in Oregon. Today they manage more than 12,500 acres in Northern California and Oregon. The Farmland LP team applies expertise in agriculture, soil biology, real estate, and farm management to a new model of land ownership, management, and investment that shows sustainability and profitable investment are not mutually exclusive.
Farmland LP has also been a leader in developing strategies to quantify the ecosystem benefits of investment in organic and regenerative farmland. In their 2017 Impact report, Farmland LP released an in-depth analysis using tools developed with partners Delta Institute and Earth Economics and supported by a Conservation Innovation Grant from the USDA Natural Resource Conservation Service (NRCS). The results were able to quantify the ecosystem service value of Farmland LP funds and compare this to what results would have been in a conventionally produced system. To read this report in more detail click here.
Established in 2012, SLM Partners is an asset manager that acquires and manages land on behalf of institutional investors, with the mission of scaling up regenerative, ecological farming and forestry systems that deliver both environmental benefits and financial returns.
Clients include pension funds, insurance companies, and family offices and their land management strategy includes partnering with local operators who “know how to work with nature to deliver profitable and sustainable outcomes.”
The company’s first project was the SLM Australia Livestock Fund, which has acquired grazing land in Australia for beef cattle production. They also manage a sustainable forestry fund in Ireland called the SLM Silva Fund. At present, they are working on strategies for organic farmland investment in the United States.
SLM Partners has been an early investing leader in outlining both the ecological and economic benefits of investing in regenerative systems. In 2016, the asset manager published a white paper entitled, “The Investment Case for Ecological Farming,” which laid out the risks of industrial agriculture, seven reasons to shift to ecological production, and strategies for investing in ecological agriculture systems. To read this white paper in detail, click here.
Foodshot Global is a unique, integrated investment platform designed to support a transformation to a new, more sustainable food system through an annual challenge called “Moonshots for Better Food.” The platform brings together venture funds, banks, corporate strategic investments, and foundations to provide equity, debt, non-dilutive capital, and industry resources to finance winning companies seeking to improve the food system. Winners are awarded up to $10 million in equity and up to $20 million in debt funding. In addition, a Groundbreaker Prize of more than $500,000 in philanthropic capital is awarded to a winning researcher, social entrepreneur, or advocate.
Winners of the challenge have access to a “continuum of capital…that spans early grants into research, seed and venture stage investments, debt, and growth capital that can support a longer 10–15 year horizon.” Beyond capital, winners also have access to expertise, mentorship, and resources all designed to support investees in initial product development, scale-up, and commercialization.
“As we strive to feed a growing population while protecting the planet, a perfect storm has emerged creating an urgent need for change. But no one fund, bank, company, foundation or university can solve global food system issues alone,” said Victor Friedberg, founder and chairman of FoodShot Global in a press release. “FoodShot’s goal is to accelerate change through a uniquely collaborative effort among investors, innovators, and industry.
Dirt Capital recognizes that farming is risky and even profitable farmers may not qualify for conventional loans or have access to other forms of capital to invest in land ownership. The alternative to land ownership is often leased land, which can lead to insecure land tenure and can dissuade farmers from making long-term investments in soil health. By investing in farmland in partnership with farmers, Dirt Capital tries to bridge this gap. With focus on the Northeast U.S. and sustainable farms, Dirt Capital facilitates “farmland transitions, crafting long-term leases that allow businesses to expand securely, and providing defined pathways to ownership.”
In the past five years, Dirt Capital has made a total of 20 farm investments. In 2018 alone, the firm held a first close of its new Dirt Capital Partners 2018 fund, and invested $4.4 million in five new projects, spanning 689 acres of land and farm buildings.
Iroquois Valley Farms
Iroquois Valley Farms was founded in 2007 on the commitment to scale up organic agriculture by getting more organic farmers access to land through backing by socially responsible investors. The company now operates as a Real Estate Investment Trust (REIT) “offering equity investments and promissory notes issued by its LLC entity to institutional and accredited investors,” according to a February article in Stanford Social Innovation Review. What makes the Iroquois Valley Farms model different is that many of the farmers who receive financing are part of the millennial generation and the proceeds are used to assist farmers in acquiring land or leasing it for long periods of time.
Since 2007, Iroquois Valley has invested in more than 50 farms across 14 states, accounting for nearly 10,000 acres and approximately $50 million in investment. The firm, which is now a Certified B-Corp has a consistent record of profitability and has been recognized by financial services as a recommended alternative investment.
To keep up to date on the latest news on investment in regenerative agriculture and food systems, visit www.rfsi-forum.com or sign up for our Raising Regenerative newsletter.