A check-in with Chuck de Liedekerke, CEO and co-founder of Soil Capital and one of the veterans of the regen space, whom we interviewed almost 6 years ago! We talk about paying farmers for ecosystem services and why they seem to have hit an inflection point in the last two years. Working with over 1600 farmers to get them paid for carbon and more through corporations that buy from them. Corporates in the food space finally start to wake up to the opportunity and necessity of investing in their supply sheds. And to top it off, we talk about water cycles and landscape-scale regeneration!
Last week Soil Capital has completed its €15M Series B funding round.
LISTEN TO THE CONVERSATION ON:
PAYING FARMERS FOR ECOSYSTEM SERVICES IS CRUCIAL TO GETTING THEM STARTED ON THE REGEN JOURNEY
Farmers seek economic incentives to adopt regenerative agriculture practices:
”The first incentive, the most important incentive for the farmer is I want some form of economic incentive for this. And I’m willing to take risks if there’s an economic incentive […] So if you can provide that economic incentive to regenerative agriculture, then potentially you can unlock change.”
– Chuck de Liedekerke
”What we mean by supported is that it needs to be financed, which means that change needs to be rewarded, and the farmer needs to see the monetary value of that change paid to him. And so, the question when you run a regenerative agriculture program is, not how many hectares do you have in a program, but how many supported hectares do you have in your program? Because a supported hectare is loaded and is obviously in the program. And that’s a much more, I would say, rigorous way of looking at it. It forces you to not just go and grab hectares because that’s not going to work anyway, it really forces you to make sure that value is recognised at every step. And that there’s the loaded piece happens because farmers are actually convinced, and they’re improving year on year. And the supported piece happens because the off-takers in the value chain are there to support the farmers” Chuck de Liedekerke
”Paying as many farmers as fast as possible for their regenerative outcomes. Because these benefits are only going to accrue in value down the road. And if you’re financing them because, today, some corporations aren’t, then you’re probably standing to make a margin there.” Chuck de Liedekerke
IF THE FOOD SYSTEM FAILS, EVERYTHING ELSE FAILS
Chuck prioritises investing in regenerative agriculture, focussing on holistic management and rotational grazing.
”My second, and probably more long-term, response to your question would be to make sure that your investments and your portfolio as an investor are future-ready, and to make sure that, as you know, the CFOs and the procurement departments understand that if the food system fails, the whole system fails. And that something absolutely can be done today to be on the front foot ahead of those risks. We see it with farmers; the story of the farmer planting into his cover crops while it was raining is a very, very telling one. I hope soon enough, we’ll be able to come out with more granular data on the actual resilience of regenerative agriculture. But I think that should be the driving force behind an investment decision: let’s make sure that we’re investing in the safety of the system.” Chuck de Liedekerke
SUPPLY SHEDS VS. SUPPLY CHAINS
Corporates investing in supply sheds for resilient agriculture, carbon payments, and environmental benefits.
”An important topic on the science-based targets initiative is that today, 1/3 of the world’s market capitalisation has made commitments under SBT to decarbonize. And effectively, what that’s done is given the industry, the supply chains, but also policymakers, a huge mandate to demand from suppliers, from constituents, and from corporations that these targets be met. […] And I think that slowly, we’re coming to terms with the fact that regenerative agriculture is resilient agriculture, that if you want to have a business at all in the future, then you need to start investing in your supply sheds, and you’re seeing very targeted but significant investments in supply sheds where corporates are going to be investing for the future.” Chuck de Liedekerke
WE ARE ONLY GOING TO SOLVE THIS IF WE BRING IN THE SUPER-COMMODITISED PLAYERS INTO THIS MIX
Chuck highlights how corporate are now taking investing in their supply sheds seriously because of regulation and resilience due to the issues with sourcing everywhere.
A solution was offered to farmers to address risk-taking by measuring carbon, using tools, and connecting with buyers in the food and agriculture industry.
”When we realised that we had one corporate, it was Cargill, in this instance, who said, Look, this carbon quantification piece is really interesting. And if you can get it certified into a program with the right level of integrity, then we’re off-takers, and then we started working on that. And so, we built this program. It’s a bit of a Field of Dreams reference; if you build it, they will come. And they needed to come from both sides; we needed to bring farmers into the mix, and we needed corporations. So, we had Cargill; we had a few other corporate clients who had made early commitments, which allowed us to bring in 100 or so farmers.” Chuck de Liedekerke
OTHER POINTS DISCUSSED
Koen and Chuck also talked about:
- Carbon sequestration program for farmers, with a focus on incentivising early adopters
- Regenerative agriculture, scalability, and the need for diverse players in the industry.
LINKS:
- Soil Capital
- Orca Plant
- Science Based Targets
- Corporate Sustainability Reporting in EU
- Frédéric Thomas
LINKED INTERVIEWS:
- Chuck de Liedekerke – We need more regenerative and financially literate farm managers
- Is Transition Finance key for every farmer? with co-founder and COO of Soil Capital, Nicolas Verschuere
- Matt Chatfield – I’m too lazy to farm against nature
- Jason Hayward-Jones – Corporates paying for low carbon grains and why virtual twins are key in gaming and Scottish whiskey
- Peter Byck – Roots So Deep (you can see the devil down there)
- Dan Kittredge – Local, regenerative and organic have no connection to nutrient density, soil health does
- Eric Smith – Commoditization is the root cause of all ecological destruction and human health impacts
- Water Cycle series
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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.