Koen van Seijen: You’ll be listening to an interview with Chuck, an ex investment banker returned regenerative farmland manager. We talked about one of the great bottlenecks of scaling the regenerative agriculture business: the shortage of good professional regenerative farmland managers and the role of retail and processing companies in this transition.
Chuck de Liedekerke: A light bulb went up in my head where I realized that. Obviously there are clear environmental and social benefits for regenerating land whether it will be through livestock management or through any form of regenerative activity. But economically: if you can buy a marginal asset which is unproductive and transform it not only into a fertile piece of ground but also have an operation that is yielding cash flows on it, then you’re very powerfully aligning environmental outcomes and good financial performance.
Chuck de Liedekerke: The moment you demonstrate that the right economic choice is regenerative you have the potential to completely transform how capital is allocated in agriculture and there are trillions of dollars allocated throughout the agricultural value chain.
Chuck de Liedekerke: If you want to drive meaningful environmental change you’re going to need to make it more profitable than the current state of affairs.
Chuck de Liedekerke: Our approach has always been to look at these operations and incrementally change them as to not compromise cash flow generation.
Chuck de Liedekerke: Typically what we do is we look at the agro-chemical package that is currently being applied on the land and through a more fine tuned analysis of what the plant requires in terms of nutrition and protection, we adopt a package that is all too often very standard and very conventional. To the plant’s needs that will immediately allow for some savings to occur and part of those savings we flow back to the owners of the farm. Another part of those savings we reinvest in trial areas to demonstrate that the regenerative practices will deliver better financial outcomes. So we’ll will plant to cover crop. We’ll apply some composts. We’ll invest in some no till equipment and really try to demonstrate as fast as possible that no short term negative economic impact was necessary to kickstart the transition and to continue that transition.
Chuck de Liedekerke: The idea is really to get the landowners or the farm managers that are on location convinced about the merits of our approach.
Chuck de Liedekerke: And unless they can really see it for themselves the risk of setting yourself up to fail is very big. So that initial trial period for us is necessary, simply in order to have the right relationships with the farm managers.
Chuck de Liedekerke: For us we have five principles and we should build this into some form of a common definition of regenerative agriculture. These principles are minimal land disturbance. Permanent cover of the soil with vegetation. Maximisation of biodiversity in time which means rotations but also in space which means companion crops. And it also means the introduction of ruminants, livestock in the system.
Chuck de Liedekerke: And the last pieces what we call context specific design and this draws from the principles of permaculture and we tried to apply really an adaptation of the production units to its environment to the topography to the climates to the features of the landscape on large scale farms.
Chuck de Liedekerke: It’s just as important to have an extremely professional farmer as to have a regenerated farm.
Chuck de Liedekerke: You need to trust him or her. And this person needs to be able to execute a plan in very challenging circumstances.
Chuck de Liedekerke: The isolation and the willingness to be different is probably the most complex piece. But you need to add on top of that this person needs to be financially literate.
Chuck de Liedekerke: You know, when we’re raising capital, we talk about regenerative agriculture. But from the point of view of the farmer that day in day out practicing this thing it’s still a very different reality. And it’s very clear that we need to open our eyes to what their reality is. But it’s just as true that they need to be open to what the investors reality is and what the investors expectations are.
Chuck de Liedekerke: We have realized that the farmers usually are very good at controlling their costs, very good at optimizing their volumes. But when it comes to price, most farmers are still price takers.
Chuck de Liedekerke: What we believe is, you know, a plant grown in a healthy soil will have a greater ability to metabolize complete protein chains will have an ability to metabolize the plant secondary metabolites or what is more commonly called essential oils that are responsible for the flavors, but also some of the health benefits that we recognize in fruits.
Chuck de Liedekerke: And so when we say that a fruit has lost you know X amount of its nutritional value since the moment our grandparents we’re eating at our age what we mean is that the soil is not alive enough to allow the plant to feed itself from it and to metabolize its minerals into a full protein chains and complete secondary metabolites.
Koen van Seijen: But we need to be ready when the sector changes in the sector meaning the food sector went to farm to fork. Which now somehow stops at the farm gate having a farm before it movement starts looking in nutrient rich food or dense foods look more and more a taste which you see already a bit and that line between healthy soil, healthy plants, healthy produce and healthy gut and does healthy people becomes a much straighter one. In the next, let’s say, hopefully five years we need to be ready to supply that demand which is probably going to get quite big.
Chuck de Liedekerke: We often say with the team here that farmers could come to regenerative agriculture for the premium and stay for the cost savings.
Chuck de Liedekerke: I would encourage investors to meet with regenerative farmers and to have meaningful conversations with them because it’s still a work in progress and there’s a lot that’s being invented.
Chuck de Liedekerke: I would also talk to the investors that have already a few years behind their belts. With capital allocated into these projects to understand from them. You know a few years down the road what they what they’ve benefited and where they feel improvement is still needed.
Koen van Seijen: And final question, if you could wave your your magic wand and you could change one thing in the regenerative ag space overnight.
Chuck de Liedekerke: A metric to measure the carbon we store in our soils.
Chuck de Liedekerke: Adding carbon to your soil sustainably.
Chuck de Liedekerke: If it’s true that the soil is the biggest carbon sink. And on our planet then it’s urgent that we find a straightforward way to measure it.
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