September 11, 2024

By Gerelyn Terzo, Global AgInvesting Media

Farmland LP, an investment fund manager that generates returns by converting conventional commercial farmland to sustainably farmed crops, has received a major endorsement from Big Tech. The firm has announced an investment by software giant Microsoft’s Climate Innovation Fund into Vital Farmland III, Farmland LP’s massive $250 million real asset-based fund that supports regenerative agriculture, a climate-smart approach to farming.

Farmland LP, reportedly one of the 15 biggest farm managers in the U.S., oversees over 18,500 acres of farmland across Washington, Oregon and California over a trio of funds. The firm has invested in cutting-edge technologies, including satellite imaging, electronic monitoring and automated harvesting, to drive profitability of its large-scale sustainable agriculture acreage.

As part of the deal, Farmland LP will develop soil carbon credits on its vast farm portfolio while concurrently expanding the market for regenerative soil carbon credits, according to the announcement. Spearheaded by Vice President Eoin Doherty, Farmland LP also will prepare the necessary protocols taking the form of guidelines that define how regenerative ag and carbon sequestration practices are managed, measured and verified. Farmland LP plans to generate carbon credits from diverse regenerative ag practices using Verra’s carbon system, Verified Carbon Standard, the world’s most widely used greenhouse gas (GHG) crediting program.

Farmland LP’s Eoin Doherty shed more light on the innerworkings of the deal for GAI News:

1.) GAI News: Will Farmland LP have certain projects that are created specifically for the Microsoft carbon fund under your leadership?

Doherty: “We are currently developing several carbon credit projects, and Microsoft is interested in purchasing all of the credits that we generate and meet Microsoft’s criteria for high-quality carbon credits. We also plan to develop carbon credit projects on future Fund III acquisitions, and Microsoft’s recent investment in Fund III will accelerate the pace and increase the scale of those acquisitions.”

2.) GAI News: Could you provide any details on how the Microsoft fund investment came to be?

Doherty: “Microsoft seeks to accelerate the adoption of regenerative agriculture practices and achieve their corporate goal of being carbon negative. Microsoft reached out to us to identify potential opportunities to partner and ultimately determined that investing in Fund III was the best way for them to achieve their goals.”

3.) GAI News: Anything else you’d like to add about this win?

Doherty: “While the global carbon sequestration potential of soil is enormous, only 1 percent of all carbon credits issued globally to date have come from agricultural projects. Microsoft’s investment in Fund III will allow us to generate additional carbon credits, which will demonstrate to other growers that generating carbon credits from regenerative agriculture is feasible. Further, Microsoft’s investment will allow us to contribute to the development of carbon credit protocols that currently make it difficult for growers to monetize the carbon that they sequester, and thus incentivize more growers to implement regenerative practices.”

Carbon Credits, Regenerative Ag and Fund Mechanics

Corporations are increasingly looking to carbon credits to shrink their carbon footprints and bolster biodiversity, for which Farmland LP views through a lens of soil, crops and animal species. Launched in 2020, Microsoft’s Climate Innovation Fund has earmarked $1 billion to accelerate technology development and deployment of climate innovations needing capital to gain scale. For its part, Microsoft has committed to becoming “carbon negative” by 2030.

Erika Basham, director of Microsoft’s Climate Innovation Fund, stated, “Farmland LP’s use of regenerative agriculture practices to ensure healthy soils, and therefore high-quality soil carbon credits, is a critical element of advancing nature-based carbon removal solutions. We’re excited to invest in their fund and work with them to create a more sustainable agriculture sector.”

Farmland LP Founder and Managing Partner Craig Wichner, a self-proclaimed “science geek” with roots in biotechnology, said, “This investment from Microsoft is a significant milestone for Farmland LP and the broader regenerative agriculture sector. Microsoft’s investment in our Fund III is a powerful validation of our approach to regenerative agriculture, and this capital will allow us to acquire additional properties and increase our fund’s economic and environmental returns.”

Farmland LP launched its third fund focused on organic and regenerative ag in August 2023 with a view toward transforming conventional farms into sustainable and organic operations. In recent months, Farmland LP expanded fund access to accredited investors through a partnership with fintech platform AI Insights by iCapital, providing financial professionals with alternative investment education and compliance training. Additionally, Farmland LP recently emerged as the winner of a trio of farms purchased at auction amid the insolvency of private equity farming company Trinitas Farming.

In recent activity, Microsoft’s Climate Innovation Fund participated in a $21.5 million Series A round into Houston, Texas-based Applied Carbon whose technology converts crop waste into biochar, improving soil health and permanently removing carbon from the atmosphere.

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