Long term off take agreements are more important than transition finance for farmers

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In the final episode of Transition Finance, Koen van Seijen with co-host and partner-in-crime Benedikt Bösel look back on the past eight months and concludes the lessons discussed in previous episodes Transition Finance for Farmers series. Hint: transition finance isn’t the most important thing for farmers to speed up the transition and increase the regenerative practices they use.

They also talk about the effects of COVID-19 on farming and how important are market access and long term off take agreements in transition finance. In the meantime regenerative agriculture is booming.

LISTEN TO THE CONVERSATION ON:

The Negative Effects of Covid-19

Many plans and schedules put in place for 2020 were unfortunately cancelled as the pandemic took a turn for the worse. For safety, the world was put into a lockdown that affected everyone. 

“It’s been a time where you just realize how powerless you are in a sense, right? Any kind of ideas, visions, projects we’ve got going on, and friendships, family, whatever it is ⁠—all of a sudden you realize that we all are dependent on an ecosystem that has to be intact and healthy.” – Benedikt Bösel

Covid-19 was one of this awakening moments. However, many aspects prove that there are few things to take into consideration when it comes to ecosystems, and how society treats one another. Although the work on the farm has picked up, the pandemic changed Benedikt’s attitude towards work and tied him more to a cycle in what’s happening on the farm. 

I think what has happened, maybe it’s the right crisis at the right time for us as a society to reflect on the kind of things that have been driving us.” – Benedikt Bösel 

Unexpected Development

At the end of 2019, Benedikt planned some agroforestry planting with a cooperative. Unfortunately, the plan was cancelled and he ended up using a platform initiated from Germany and gathered volunteers that will work in harvest and other farm-related work. In the beginning, they planned on planting 10,000 trees that started from four volunteers to eight, until they were a group of 35. They planted 10,000 trees after four or five days and continued to go from there.

“I think it speaks for so much when it comes to farming because the outlook so often is grim. Young people not wanting to take over and things like that and of course, Corona that had its influence because people were stuck in their flats. But, we had people coming from the local area, we had people coming from further away and there were some that were in some sort of tech companies in Berlin that wanted to get out. We had some sort of alternative, and all of them were talking the same kind of soil language.” – Benedikt Bösel 

Market Access

In doing the podcast series and the interviews, for Benedikt learned the marketing aspect of farming. One way to help farmers is to give them advice on different systems they can use and another way is to have a market for their products. To have access to a market can give financial support to the farmers and open opportunities for investors to get to know them. 

“Making sure that you have a reliable channel of selling a product at a certain price for a pretty long period if possible. I think that is maybe the most important thing because if you have that guaranteed cash flow.” – Benedikt Bösel 

Long Term Off Take Agreements

Long term off take agreement is an arrangement from a producer and a consumer to purchase the producer’s upcoming goods. The key to a successful transition is to have access to the appropriate market where long term off take agreements can’t change. 

“Even the best transition finance in the world is useless for a farmer if he or she doesn’t have access to an appropriate market.” – Koen van Seijen

Regenerative Agriculture is Booming 

Since the Transition Finance for Farmers series started, the regenerative agriculture movement is incredible. More people are talking about soil and more people are curious and interested in what regenerative agriculture is about. It is crucial by to get more farmers and practitioners to start small and learn as much as they can. The wise approach is to get the word out to different small and big families in regards to regenerative agriculture to get brands to buy. There is a need to educate small and big food companies to start buying products that are regenerative grown, or ingredients grown with regenerative practices.

“Look at Timberland. Look at General Mills. Look at Patagonia, obviously. But many others that you wouldn’t expect to be in the space suddenly realize, ‘wow, there’s something happening and we need to get on it.’ I think it’s only a matter of time until we see the first financial support system, the first investors that will think about the space much more differently.”  – Benedikt Bösel 

To learn more about Benedikt Bösel, agricultural economist, founder and managing director of Gut&Boesel, and transition finance, download and listen to this episode. 

Guest Bio:

Benedikt Bösel is an agricultural economist and founder and managing director of Gut&Boesel near Berlin.  In addition to the operation of traditional agriculture and forestry Bösel tests and develops different forms of regenerative agriculture such as agroforestry, holistic grazing and syntropic agriculture. The estate is offering testing grounds for agricultural startups, research projects as well as regenerative agricultural entrepreneurs. Bösel holds various voluntary advisory boards and mentoring mandates. He is a board member of Soil Alliance – Association of Regenerative Agriculture e.V. as well as Chairman of the AgTech platform of the Bundesverband Deutsche Startups e.V. 

Links: 

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

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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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