A check in interview with Gijs Boers of Grounded on how their fair and transparent wholesale regenerative ingredient business is doing.
LISTEN TO THE CONVERSATION ON:
Why Gijs is more optimistic about the possibilities of building successful and profitable businesses based on regenerative agriculture practices? And why the focus on quality, taste and transparency of smaller food brands is creating the demand to make a significant change on the ground? Not all roses and sunshine though. Why even with all this experience and a significant track record is still difficult to raise capital for regenerative, agroecology businesses in the global South?
Switching from building businesses from scratch to working with existing SMEs
Seeking ways to scale regen agriculture, optimize the lessons and failures made in the past. Grounded and GIC (Grounded Ingredients Company) are going through one of the biggest transitions, which is about working increasingly more with existing entrepreneurs where there is already a team and stuff being produced, sold, and also lost in some cases. Grounded partners up with them to bring them to the next regenerative level. They are switching from setting operating companies up from scratch to partnering with already existing ones. Coming in touch with other entrepreneurs means a great click as they found there a lot of shared mistakes and challenges.
“I’m very proud of the achievements of our pipeline team. I think it’s super impressive also how not only finding them, but also, working together with them to, jointly, make a business plan, to present to our investment board, into the investment company.”- Gijs Boers
The challenges of getting investors to understand the opportunities
People have to understand what means operating in very degraded landscapes, where we have extracted a lot of value over the last hundreds, or even thousands of years. There is a debt to be paid. Money and resources, compost, etc., needs to flow back into that. We cannot extract immediately, or maybe we cannot extract ever. The returns are not going to be 20% or 30%.
The local entrepreneur and his skills come into play. They really work well within the current system, within the middleman and the traders. They know quality and where the good and reliable farmers are. There is the need to incentivize and compensate them for that.
“It’s also companies with significant opportunities for scaling that can absorb, and maybe initially need between $300,000 to $500,000 investment, but eventually can absorb $3 to $5 million investment within the next 5 to 10 years.” – Gijs Boers
“There’s a huge amount of supply available in either of these companies we’re looking into, and the market for teas, spices, coffee, cacao […] these markets are so big. For now there is enough opportunity. Finding the right entrepreneur I think is more important.” – Gijs Boers
“We are trying to show that risks are lower because, in the end, value is total return or profits and risks. And, with our approach, we try to de-risk investors. We do have investors that say “I was hesitant to make the step to Africa”. There is still this idea that working with people in Africa is difficult, can you trust people in Africa?”- Gijs Boers
The opportunities are in spices
Spices is where you see the challenges and the opportunities. It is a great agroforestry crop, and that’s also where the challenge is. We don’t know yet where the pepper thrives compared to the other plants in the system and what is a thriving pepper system. Regen agriculture is generally easier in more tropical climates as there is more water, which means growing is faster and shorter, and therefore you have more growing seasons.
‘If you create a market for organic pepper and work with the farmers to establish new plantations in areas that were previous spice areas you can bring them back into production, and automatically create some form of an agroforestry system’ – Gijs Boers
Smaller purpose-driven brands are driving the change with their focus on quality and full transparency
There are amazing brands that want to play a big part in changing the food system. From kombucha to tea to coffee brands. They’re doing great work spreading the word, but at the same time they hit so many barriers. For coffee companies may be easier, but for tea brands that can have 50 to 100 ingredients in the portfolio, how to source becomes problematic. The world is changing and new generations want a different product. It is possible to get great ingredients with full transparency, and support these producers with constant and continuous improvements on regenerative agriculture.
‘The biggest drive for the transition to regenerative agriculture is quality, but the current system doesn’t give a much better price for better quality. – Gijs Boers
‘You have the energy of these people to make a change and to spread the word and to tell the story and to provide people with the best products […] That gives so much energy. It started a bit of an in-house trial on a small scale with a couple of team members and now it’s growing like that. So that’s super to see.’ – Gijs Boers
‘Then we take a more traditional role and we say, we buy it, we store it, we bundle it, we ship it and we keep it ready for you when you need it. But we try to combine it with full transparency in saying: this is what we bought from farmers, this is our cost, this is our market fee, this is our fee for the regenerative agricultural facility.’ – Gijs Boers
OTHER POINTS DISCUSSED:
- GIC (Grounded Ingredients Company) and their different partnerships
- African wealth and local investment
- Looking beyond risk and return
- Grounded blog
- Dynamic agroforestry with coffee – how to control “horse hair fungus” by correct stratification
- Thekla Teunis and Gijs Boers, what African regenerative farmers can teach us
- Thekla Teunis and Gijs Boers, The Good, the Bad and the Ugly of regenerative agriculture
- Felipe Pasini – Trees bring water so when in doubt plant more trees and complexify
- Jasper Bertels on how to regenerate and calculate the returns in a landscape of 1M ha
Feedback, comments, suggestions? Reach me via Twitter @KoenvanSeijen, in the comments below or through Get in Touch on this website.
Join the Investing in Regenerative Agriculture and Food newsletter on www.eepurl.com/cxU33P
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.