September 30, 2020

By Lynda Kiernan, Global AgInvesting Media

On World Soil Day 2019, the UN Food and Agriculture Organization (FAO) called for the protection of the world’s soils, noting in 2015 that one-third of the U.S.’s soil had been lost over the past five decades, and that by 2050 erosion has the potential to decrease crop yields by as much as 10 percent, or the equivalent of the loss of millions of hectares of productive land. 

“We must stop soil erosion to save our future,” said Eduardo Mansur, director of the Land and Water Division, FAO. “It takes up to 1,000 years to form one centimeter of topsoil, but this one centimeter can be lost with just one heavy rainfall if soil cover is not protected.”

It is understood that agriculture, like mining, is a primary sector of the economy, meaning that the growth and development of other economically important sectors depend upon it. And like mining, since the 1800s, it has been widely accepted that farming, by its very nature, is an extractive industry. But whereas mining is obviously so, the extractive nature of farming is much less so – embodied in water pollution, soil degradation, erosion, and loss of fertility.

Along with this, we have done a poor job in modernizing how we look at the profit and loss associated with farming. Higher crop yields and more animals, partnered with low cost of inputs, have traditionally meant higher profit. For centuries, the unaccounted losses tied to traditional extractive farming have been viewed as unavoidable, and inherent – but it need not be this way, according to the Union of Concerned Scientists, who stated that a shift from extractive to regenerative agriculture is not only possible, but profitable, when taking a more modern, learned, and complete approach to the costs and output of agricultural production.

To bolster this shift toward regenerative agriculture, Boulder, Colorado and Oakland, California-based rePlant Capital – a first-of-its-kind financial services firm that brings together a range of impact investors and family foundations dedicated to addressing some of the greatest challenges we face from climate change – has launched its $250 million Soil Fund I, of which $200 million will be earmarked for loans dependent on soil health. 

With this financial backing from rePlant, farmers will be more able to smoothly transition to regenerative production methods and models, and have more tools to creatively combat climate change – an opportunity for rePlant that represents $426 billion in U.S. farm debt and more than 900 million acres of arable land, according to Forbes.

Co-founded earlier this year by Robyn O’Brien, a leading impact investor and lister on this year’s Forbes Impact 50, together with Don Shaffer, former CEO of RSF Social Finance, and David Haynes, former managing director at a pioneering impact VC fund, rePlant was created to provide farmers with novel and non-traditional means of financing as they face the challenges of climate change. 

Facilitating the launch of the fund is DealCloud, an Intapp company that offers configurable solutions regarding tracking sourcing, deal pipelines, fundraising, and communicating with investors and partnerships. 

“Our team has unparalleled access to large food companies and leading-edge regenerative farmers throughout the U.S., coupled with established investor networks and solid track records in making direct loans & equity investments,” said O’Brien. “We need a platform like DealCloud that can support these incredible dynamics.”

rePlant began building out its dynamics from the start – announcing a partnership with Danone North America, the largest Certified B Corp in the world, in January of this year.

As part of the partnership, rePlant will invest up to $20 million, or 40 percent of its $50 million impact investing fund, to support Danone North America’s farming partners with expenses related to transitioning to regenerative or organic farming with the goal of increasing biodiversity, strengthening ecosystems, and improving the soil.

Danone committed to regenerative ag in 2018 when it announced its intentions to invest $6 million over the next five years into a ground-breaking soil research initiative with renowned experts and academic leaders to build best-in–class soil programs. 

This action was initially undertaken with products involved in the Dannon Pledge. Started in 2016, this program is the company’s commitment to a range of progressive practices centered on sustainable agriculture, transparency, and nature. 

“Soil is the foundation of our food system, with an estimated 95 percent of food directly or indirectly reliant on soil,” said Ryan Sirolli, agriculture director at Danone North America, in March 2018.

The first loan offered by rePlant Capital through this partnership has been provided to McCarty Family Farms in Kansas, the co-owner of MVP Dairy LLC along with VanTilburg families, and a farmer partner of Danone North America for nearly 10 years.

“Providing these loans mitigates the financial stress that transitioning to regenerative and organic farming practices places on our farmers and allows them to focus their energy on driving sustainable agriculture on their farms,” said Mariano Lozano, CEO of Danone North America.

Owners Mike, Clay, David, and Ken McCarty will use the capital from rePlant to install moisture probes on cropland surrounding their dairy – where they’ve had concerns about water access issues – to reduce water used on forage crops for their herd.

The McCartys are also working with the local watershed authority and other local partners to explore how the program can be expanded to other farms in the area, and gathered farmer partners and rePlant’s investor network to discuss further collaboration on funding opportunities for farmers to transition to regenerative or organic practices.

“At rePlant, we are dedicated to investing integrated capital into food companies operating from soil to shelf in order to reverse the effects of climate change,” said O’Brien.“When we look at the work Danone North America and its network of farmers are already doing in the area of regenerative agriculture, it is clear they share our commitment to improving soil health.”

“We are very excited to work together to make conversions to regenerative and organic farming practices more accessible for Danone North America’s farmer partners and drive sustainability across American farms.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.