Fundamental Regenerative Ag Investing White Paper Gets Highly Anticipated Update

The wait is over!

For those of us who have been zealous supporters of regenerative agriculture investing for years, the release for SLM Partners’ highly anticipated new white paper – Investing in Regenerative Agriculture: Reflections From a Decade of Experience – is cause for celebration. For anyone interested in the space – regardless of your level of zeal – the new white paper is the necessary addition to the small but growing trove of literature on regenerative agriculture that exists today.

But this isn’t just another report, there are several things that make it uniquely special:

  1. This report is a follow-up to SLM Partners’ 2016 white paper – The Investment Case for Ecological Agriculture – a foundational piece of literature for the space. While the 2016 paper remains useful (and is definitely still worth a read), the landscape for regenerative agriculture has changed dramatically and, along with it, the opportunity for investment into it. This is the report that articulates this revised case for investment.
  2. This report seamlessly pulls together the story behind and the case for investment in a clear, data-driven, and comprehensive manner. Having spent more than a decade investing in the space and with more than a half a billion dollars invested across multiple geographies, SLM Partners has learned a lot. Cofounder and Managing Partner, Paul McMahon shares these lessons here.
  3. It will serve as a useful tool for both those exploring investment in the space and anyone who wants to better understand the unique opportunities that exist to both transition land using regenerative agriculture and create beneficial environmental and social outcomes for the system and financial outcomes for investors.

To launch this exciting new white paper, RFSI partnered with SLM Partners to hold a webinar featuring  key insights from the report shared by Paul McMahon. You can watch that here.

We also had the chance to sit down with Paul and talk to him about then (2016) and now in the world of regenerative agriculture investing and what his top take-aways are. Here’s what he shared with us.

Paul McMahon, Co-Founder & Managing Partner, SLM Partners

RFSI: The original white paper came out in 2016 – can you tell us about what prompted you to write it then and what the landscape looked like in 2016?

Paul McMahon (PM): We established our business in 2009 to scale up investment in regenerative agriculture and forestry. We were excited about the pioneering regenerative farmers that we were discovering around the world, and there was a certain amount of evidence on the benefits of regenerative agriculture starting to appear, although it was not yet mainstream. We wanted to bring this opportunity to the attention of investors and explain why regenerative agriculture had such potential. 

RFSI: You and SLM Partners were a leader in this investment space back then just as you are today, yet as you say, you’ve also learned a lot in the past 10 years. Can you tell us what the biggest lesson has been?

PM: I think the biggest lesson we learned was the importance of partnering with the right farmers on the ground. Investing in land is the easy part. The hard part is farming. Regenerative farming is even harder because it requires a higher level of knowledge and skill. We now develop all our strategies by starting with the farmer first. We then find ways to help these farmers scale up. 

RFSI: What was the impetus for writing a follow-up white paper now?

PM: There has been an explosion of research on regenerative agriculture over the last few years. Encouragingly, the type of research has also shifted from ‘grey’ literature – farmer case studies, NGO reports, educational videos – to peer-reviewed academic studies. We wanted to synthesize this research and present it to the wider world. In addition, we have learned a lot from our experience investing in regenerative agriculture across 3 continents over the past decade and wanted to share this. We could see a lot of investor interest in regenerative agriculture but there was often confusion about what it meant. We wanted to create a primer for investors that would set out the opportunities, risks and challenges associated with regenerative agriculture. 

RFSI: The landscape has clearly grown and evolved. For good or bad, what do you see as some of the biggest differences between today’s regenerative ag investing landscape and the one you were working on back in 2016? 

PM: Back in 2016, no one was really talking about regenerative agriculture in investment circles. The large, established asset managers tended to dismiss it (and organic farming) as something for environmentalists who knew nothing about the realities of commercial food production. This has all changed. Now everyone is embracing regenerative agriculture – governments, food companies, asset managers, and investors. Many groups are claiming they are regenerative even though they are doing the same things as before (business as usual). Some new entrants are exaggerating the potential of regenerative agriculture and promising investors venture-type returns and the ability to deploy billions of dollars of capital. The preponderance of greenwashing and hype is one of the reasons why many investors are not sure what to make of regenerative agriculture. But there has been real progress on the ground, with farmers scaling up regenerative practices and demonstrating positive impacts and financial return. At the same time, investors are more interested in real assets, such as farmland, and are more willing to allocate capital to strategies that enhance natural capital. As a result, there are now more opportunities to build and fund investment strategies that connect the dots. 

RFSI: Was there anything that surprised you as you were writing this update? 

PM: The science around the environmental impact of livestock is contested. Soon after we wrote our 2016 paper, many reports came out casting ruminant animals (especially cattle) as environmental villains because of their role in generating methane and other greenhouse gas emissions. More recently, the pendulum has begun to swing back, as others point to the ability of soil carbon in grassland ecosystems to offset emissions and highlight the importance of livestock to human food security. We believe that well-managed livestock, raised on pasture, can play an important part in regenerative farming systems. We present the evidence for this in our paper. But there is plenty of debate on this issue and we need more systems research on livestock and land use to better understand it. 

RFSI: Who is this report for and how do you hope it serves the space?

PM: The paper is primarily for pension funds, insurers, family offices and other investors who are considering making investments in regenerative agriculture, especially those with a real assets approach. But it should be valuable for anyone who wants to understand what regenerative agriculture is and why it is important. We hope that there is something in it for farmers, entrepreneurs, food companies, policymakers and environmental activists. 

RFSI: Can we count on you to do another update in 5-8 years when the landscape has evolved even more?

PM: I hope so! I have no doubt that the research base for regenerative agriculture will continue to deepen in the coming years and that we will continue to learn new things from our investments. I am a firm believer that you only really know something when you write it down. So, writing the next paper will help crystallize this knowledge.

Download and read the white paper here

Watch Paul present the white paper in a recorded webinar here

Sarah Day Levesque is Managing Director at RFSI & Editor of RFSI News. She can be reached here.