This was an active week for regenerative agriculture and food systems investment, with several deals along the supply chain, in addition to a fair amount of press on the role food companies are playing in supporting producers’ move to regenerative practices.
Investment Activity
U.S.-based organic food and feed supply chain solutions company Pipeline Foods leads this week’s news with the announcement that it has acquired SunOpta’s specialty and organic corn and soy business for $66.5 million. The acquisition includes five facilities in Minnesota and Iowa and will enable Pipeline Foods to offer food-grade organic and non-GMO corn and soy whole and milled ingredients, as well as complementary feed ingredients. Pipeline Foods’ mission is to accelerate “the availability and reliability of organic, non-GMO and regeneratively grown food.” The company does this through a farm profit program, through merchandising of organic food and feed grains and ingredients, and by building the assets and infrastructure for an efficient organic and regenerative supply chain.
BDC Capital made a significant $10 million investment in Vancouver-based cleantech firm, Terramera, maker of natural product alternatives to synthetic chemical pesticides and fertilizers. Terramerra has already raised more than $30 million since 2016 from ACA Partners, Maumee Ventures, S2G Ventures, Bold Capital Partners, Salix Investments, Golden Properties (VCC), Renewal3 Limited Partnership, IKEA GreenTech AB and EDC, according to Private Capital Journal. This latest financing, provided by BDC’s Cleantech Practice, will come in the form of subordinated debt and will be used as growth capital for research and development, facilities, equipment and staffing.
This week we’re also reporting on Iroquois Valley Farmland REIT’s latest farmland purchase. In early 2019, the organic farmland real estate investment trust purchased four Montana farms to form the 2,200 acre Hi-Line Farms LLC and scale organic agriculture in the Northern Great Plains.
Partnerships & Programs
Madison, Wisconsin-based agronomic solutions company Midwestern BioAg (MBA) has partnered with plant-based food and ingredients company PURIS to help support farmers transitioning to organic. PURIS will offer contracts to MBA growers for non-GMO soybeans and non-GMO yellow field peas.
This is just the latest of partnerships for Midwestern BioAg. In January, sustainable agriculture data firm, Mercaris, announced a new initiative in partnership with farmland services provider Peoples Company and Midwestern BioAg, called Mercoterra. In partnership with producers and other stakeholders, the initiative will work to increase transparency in the organic industry and produce a study about organic farmland as an asset class.
What We’ve Been Reading
After reading last week about Applegate Farms, LLC’s new commitment to regenerative agriculture through its premium culinary brand that will use pasture-raised meats, this week brought more news about the innovative ways food companies are supporting farmers using organic and regenerative production practices.
Here’s what we’ve been reading:
Food Companies Support Organic Farmers’ Rotational Crops
One of several barriers to farmers transitioning to organic production is that it requires crop rotation, in order to allow soil to recover and replenish nutrients. Unfortunately, these alternative (rotational) crops often don’t pay as well as high-demand cash crops. Normally this means that farmers may be sacrificing potential revenue when they grow their rotational crops. In an effort to support organic farmers and help mitigate this risk, some food brands are creating and modifying products to include more of these alternative crops. General Mills, through its Annie’s brand, has incorporated lower-demand rotational crops, such as yellow peas, into its product lines. Similarly, organic salad supplier Earthbound Farms has created some innovative products, such as riced cauliflower, to support the use of brassicas as a rotational crop for strawberry farmers.
How Agriculture Supply Chain Backs Sustainable Farming
To support farmers with the high up-front costs of transitioning to organic, some companies are offering creative financial solutions to their suppliers, according to a recent story from GreenBiz. Some of these programs include:
- Bronner’s, a main leader in the new Regenerative Organic Certification, has spent more than $3 million on crop financing, offers no-interest advances to suppliers, and investments in fair trade premiums for local social development projects.
- Land O’Lakes has created the SUSTAIN program that provides loans to farmers who want to adopt sustainable practices or technologies.
- Kashi has partnered with Quality Assurance International and started the Certified Transition label in 2016, which allows Kashi to pay transitioning farmers higher rates than they would normally receive before certification.
- Pipeline Foods launched its Farm Profit Program in 2017. The program provides support and services to grain farmers in transition. Services include marketing, access to financing, software, agronomics, education and more.