As part of the Transition Finance for Farmers series, Benedikt Bösel and Koen van Seijen discuss something rarely covered, the profitability of regenerative and non-regenerative farmers. Does a farmer need transition finance to start or speed up his regenerative transition? Benedikt and Koen dug deeper into the connection between farm profitability and regenerative agriculture practices, with the co-founder and COO of Soil Capital, Nicolas Verschuere.

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Is Transition Finance The Key?

Many farmers are ready to speed up their regenerative transition. They are adequate in terms of learning, explored farm size regenerative designs, and most importantly, started their pilots and feedback loops.

This is where transition finance is key. A local bank loan often isn’t feasible because of the short duration, lack of flexibility, and a farmer’s lack of collateral. Furthermore, there’s a limit of how much equity a farmer is able or willing to give away.

This is the reason why the duo is interviewing leading practitioners in regenerative agriculture and food and finance space.

Scaling Regenerative Agriculture Worldwide

Nicolas, an agronomist based in Belgium, is also the COO of Soil Capital. The company is involved in several operations helping farm managers to transition their farm to regenerative agriculture in Latin America, Europe and in some parts of Africa.

“We are now working on the tool to help farmers and agronomists to understand where they are and how they can improve and how they can benchmark themselves against the local community.” Nicolas Verschuere

Capital Not Always Needed

Nicolas shares that most of the time, the farms that are the most profitable are also the most successful at sequestering carbon. It is not always the case, but Nicolas shares they are actively coordinating with the farms and are devising techniques to find a correlation. 

Benedikt poses a question of why, if it is good and valuable, isn’t everyone doing it. He also concluded that the biggest barrier to entry for those farmers starting the transition for more regenerative ways is capital, since profitability is very thin and the additional risks are a bit high.

I strongly believe you CAN transition without external finance.
We also understand that if you want to transition massively and fast, that money is necessary to push and help farmers who don’t have enough confidence, support, etc.” Nicolas Verschuere

Another Option For Farmers 

There are numerous factors at play why farmers do not opt for external financing. Generally, the upbringing and character of farmers makes them very independent and self-sustaining. 

At Soil Capital, they opt to find internal solutions within the farm, within the farmer him/herself, or with the independent agronomist to free up funding and divert that to other investments. He discusses the purchase and usage of agrochemicals, the inefficiencies, the unutilized option for purchase power and discounts, and many more. 

“There is always space in the inputs that are coming on the farm. Reduce that, without hurting your yields, thus reducing costs directly, which means more money in the bank to use for regenerative agriculture transition, financed by yourself.” Benedikt Bösel expounding on Nicolas’ idea

Soil Capital Farm Diagnostic

Nicolas and Soil Capital are continuously on a mission to help farmers, but their first mission is to convince the farmer that they need more information. There are a lot of factors that needs to be considered, such as the relationship, dependency, trust and history between the farmer and his/her advisors.

This is why Soil Capital came up with Farm Diagnostics.

“We focus on dashboard, metrics, more than ever. The farmers have no clear view of what is happening in the farm, which is now a complex system with a lot of interactions. The farmer is super busy at making operations going well, the paperwork increased, he doesn’t know the production cost. Calculating production cost, benchmark that, to have a discussion with others to understand, is very rare. This is where we’re working now, to help farmers with economic figures first.” Nicolas Verschuere

To hear more about the process a farmer needs to take in order to improve yields, reduce costs, save more capital and transition to regenerative agriculture, listen to this episode!

This is an open process, we are sharing our lessons for the podcast episodes as we go a long. So please share with us any examples of transition finance you’ve seen, utter inspiration, people to interview, get in touch by the contact page.

Discover more about the Transition Finance for Farmers with Benedikt series.

Guest Bio: 

Nicolas Verschuere

With a background in bio-engineering, Nicolas has 20 years of experience in large-scale farming project management in various parts of the world, advising on fruit, grain, vegetables, sugar beet and cane production. He is an expert in regenerative agriculture. In 2009, he founded GreenFarm in Belgium (www.green-farm.be), a farming consulting and contracting company, advising on soil conservation and managing agricultural properties.

In 2013, Nicolas co-founded and still holds the position as Chief Operating Officer of Soil Capital (www.soilcapital.com), providing large-scale farming management and consulting based on soil regeneration, in Europe, Africa, South America and Australia. Soil Capital is currently active on more than 100.000 acres. In addition, he worked as Chief Operating Officer in the Fruit Farm Group (www.thefruitfarmgroup.com) for a few years.

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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

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