The role of the crowd in the transition finance for farmers

What is the role of the crowd in transition finance for farmers? Not just to speed up regenerative practices, but also for transitioning from active farmer to retirement and freeing up the land to the next generation (without selling out but still have a comfortable pension). Could Benedikt, by partnering with the crowd to free up capital, invest in his regenerative transition?

As part of the Transition Finance for Farmers series, Benedikt Bösel and Koen van Seijen discuss with Thomas Kliemt-Rippel of Kulturland Genossenschaft of the role of the crowd in transition finance. They talk about the transition from active farmer to retirement and freeing up land for future generations, as well as investing in regenerative transition.

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The Commons

The commons is a community where citizens put their capital in a pool and use that capital to secure land. It’s a cooperative that secures legal structure that makes the ownership of the land neutral. In essence, its purpose is to take out private capital and to ensure that lands never get sold again.

People now can invest in shares within the cooperative while farmers can purchase lands that they “can’t afford.” It also enables retiring farmers to hand over their land to the future generations.

”We have, in a way, invented a new type of ownership. It’s not private ownership, but it’s also not the classical sense of community ownership. Rather the land gets removed from the ownership mind frame. The land belongs to itself, and then we make it available to those people who can be the best stewards of the land.” – Thomas Kliemt-Rippel

Ownership of Land

Investing in the cooperatives means that the land is the executive party and the community and the farmer are the stakeholders. The community makes sure that the land they secure is farmed organically or regeneratively, while 10% of the land must be put aside for ecological reserve. They care mostly about the social and regional support of the farm.

As long the criteria are followed, the farmer will own the land forever. They have also set up an interesting process and system when it comes to passing the ownership of the land to younger generations.

”I really believe humans are good beings by nature. We are able to create rules that bring out the best in us, but we all know this from ourselves and from other people that, when we are in a tight spot, we will sometimes act selfishly, and that has very long term consequences. We thought about how we can set the rules, that kind of selfish behavior is not possible; at least in that, with regard to the ownership of the land, and then how we make it available.” – Thomas Kliemt-Rippel

For Future Generation

There are discussions about young people not wanting to take over farms or continue farming. The community wants people to change their minds and make them see its amazing potential. There is so much more value in land than just primary production and they want to encourage growth for the future.

“It’s up to the next generation, whether they want to make it a community farm, or find other ways with direct marketing or whatever creative way they want to farm the land.” – Thomas Kliemt-Rippel

Individual Investors

Each shareholder only has one vote, regardless of how many shares they have or how much they give. With 700 members, the community only allows shareholders to invest five percent of the total capital. This is to avoid too much capital from one source that might withdraw their shares and leave the community in a tight spot.

For instances such as an investor passing along their shares to an heir, they are not automatically part of the community. There is a transition period where the cooperative can approve them as new members.

“We don’t allow automatic inheritance of shares because we want the people to be investors not just with their money, but with their hearts.” – Thomas Kliemt-Rippel

Creative Potential

Seeking a loan from the bank does not give much of creative freedom since they only understand classical production models. Banks do not understand what community-support farms are and often decline the request for loans. The land that they secure are community-support farms and these farms are able to extract natural products that become hotspots of growth and creativity.

“If you don’t have that financial pressure, then all of these creative potentials are unlocked and we can try different things.” – Thomas Kliemt-Rippel

To learn more about Thomas Kliemt-Rippel and the role of the crowd in transition finance, download and listen to this episode.

Guest Bio:

Thomas Kliemt-Rippel is a Swiss bio farmer who has enabled local regenerative farmers in Germany to raise over 4.5 Million euros from the crowd.

Links:

Thomas Kliemt-Rippel is a friend of the show, where he has already been on for two episodes. Previous interviews with Thomas: