177 Bert Glover on investing over $600M into regenerative farms in the US and Australia and selling soil carbon credits to Microsoft

Bert Glover of Impact Ag Partners, comes back on the podcast for a discussion about soil carbon credits, operating his fund in Australia and North America, as well as the importance of biodiversity and more.
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Finally after 3 years a check-in with Bert Glover of Impact Ag Partners in Australia, who over the last years for investors put over $600M to work on farms using regenerative practices. 

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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.

Transcript

SPEAKER_01 0:00

Finally, after three years, a check-in with Bert Glover of Impact Ag Partners in Australia, who over the last years, for investors, has put over 600 million to work on farms using regenerative practices and implementing regenerative practices. They managed to sell some of the world's first soil carbon credits to Microsoft and are launching an Australian-focused fund. So why, with all these achievements and all this work to do in Australia, did he decide to also start operations in North America? What does he see happening with the soil carbon market And I'm talking about geese in this interview, which obviously have to be ducks. I'm very, very sorry. So ducks, not geese. Enjoy. This is the Investing in Regenerative Agriculture and Food podcast, Investing as if the planet mattered, where we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land and our sea, grow our food, what we eat, wear and consume. And it's that we as investors, big and small, and consumers start paying much more attention to the dirt slash soil underneath our feet. To make it easy for fans to support our work, we launched our membership community and so many of you have joined us as a member. Thank you. If our work created value for you and if you have the means and only if you have the means, consider joining us. Find out more on gumroad.com slash investing in RegenAg. That is gumroad.com slash investing in RegenAg or find the link below.

UNKNOWN 1:50

you

SPEAKER_01 1:55

Welcome to another episode. Today, a very special one. We have Bert Glover back on the podcast. We interviewed him twice in 2019, and that feels like a long time ago, which it is. I mean, it's three years. Actually, to today, three years we released the first interview. And there's so much to catch up on. There's so much work that has been done on the ground at different continents, actually. So I'm very, very much looking forward to catching up, to talk about the different technologies we discussed last interview, because I will put it in the links below. We did a full interview just on tech with a lot of virtual fencing, actually, which since then we've unpacked more and more. And so put all those links below. But first of all, welcome back, Bert.

SPEAKER_00 2:35

Thanks, Koen. Thanks for having me. It's

SPEAKER_01 2:36

great to be back. Lots happened in three years. I mean, we do check in every now and then. It's not that we didn't talk for three years, but we didn't talk on air. We didn't record it. So I'm very much looking forward. Let's do a very brief intro into Impact Ag Partners for the people that didn't listen to the other interviews. Obviously, go and listen to them. Not now. I mean, stay here. with us. But in a few sentences, what is Impact Ag Partners? And then we're going to unpack a bit what has happened or what has changed in the last three years.

SPEAKER_00 3:04

Well, lots changed, Cohen. I mean, you know, there's been a lot happening with pandemics and geopolitical issues. And again, it comes back to why we believe agriculture has got such an important role globally in terms terms of climate change you know there's so many pressures on food systems and the environment we think agriculture is a great solution and can be take a leading role in tackling climate change by building resilience towards its impacts and through decarbonizing the atmosphere and our economies and so with some of the global challenges that we're facing as a society we believe agriculture can can play a major role in a lot of those and really impact ag partners you just don't believe

SPEAKER_01 3:59

you just don't believe that actually yeah you've been working on that i think for 10 years plus now like i think a lot of people on this podcast believe that that the agriculture is a big part of the solution but going from belief until putting hundreds of millions to work because that's what you've done there's quite a step in between so where would you describe impact ag partners now as we're talking what is it may 2022 um depending on when you listen to this obviously let's say spring in the northern hemisphere at 2022, where does Impact Ag Partners stand?

SPEAKER_00 4:28

So, you know, we currently manage over$600 million of assets under management across Australia. And we've now, you know, as you alluded to, we've expanded into the US. You know, there's 500,000 acres under management and it's a lot broader than what it was three years ago, Cohen. You know, we've got permanent tree nut crops. We've got, you know, wheat, barley cropping in Western Australia. We've got ranch in the US. We've got carbon projects, renewable projects, biodiversity projects. We've done green finance deals. We've sold soil carbon. A lot's happened in three years. And if you think about what was in that last podcast around, I think I probably spoke to you about environmental finance and I spoke to you about monetizing soil carbon. Well, you know, we've probably done the very first of some of those for us as a firm. And some of those were first in the world. So we're really proud of what we've done. We've got a lot of work to do. You know, there is, we haven't got all the answers. We're trying really hard. We're scaling up. We've got fantastic, I've got a fantastic team of 10 people here in Australia, plus on the ground staff that manage our farms who are all amazing people. and a team of three or four in the US. So trying to demonstrate what we do globally, Cohen, we believe some of the things we've learned and practiced here in Australia can have global impact and we feel like we're getting really prepared to try and help demonstrate the role that agriculture can play in terms of food security, landscape management, addressing climate change in how we manage grasslands and bringing more financial returns as well back to the farm gate so that farmers can reinvest in their farms, reinvest in their assets. And this helps fund things like carbon projects, like development, like improved biodiversity, improvement in waterways. So we're excited. As you can tell, we're scaling up And yeah, I mean, where do you want to start?

SPEAKER_01 7:00

Let's start with how did that happen? Because how did the move, let's say, or the growth to another continent happen? Because it's, I mean, Australia is very big. As many people know, there's a lot of work to be done there. You could have stayed there, not stayed there, you could have worked there for many more decades before you were quote unquote done or the regeneration is complete, which it never is. But you decided to make your life a bit more complicated, be in different time zones with different teams on the ground in different continents. How did that happen and why did you decide to become also active in North America?

SPEAKER_00 7:37

Good question. There's three main reasons, but I think the word you used that resonates with me the most is why. And the reason why, it goes back to our fundamental core values as a business and what we believe in and really what we want to achieve and for us if we can help be a thought leader around how agriculture can play a major role in decarbonizing the atmosphere producing nutrient dense food and demonstrating how livestock have a critical role to play in landscapes and the role that external capital can play in catalyzing that change I I felt like by going to North America and potentially going a bit broader globally, just maybe we can take some of our learnings and share those. Maybe we can share some of our successes and also share some of the things that haven't worked so well. We're quite transparent. We're very data-centric, so we can show our performance with data. But we talk about creating a ripple effect through societies and through industries and hopefully have an impact on some governments about how we think we can approach the production of food and fiber different and i felt like we had to get a footprint in the u.s so going back to your question one reason so where do you start then

SPEAKER_01 9:13

like how do you how do you start that like feeling like you should have and it makes a lot of sense you i mean things get more real if you can see and touch them as long as they're for many people far away in a We can always say, yeah, but it works there because there's a government that supports something or they have different climate or soil. And all of those things are not true and true at the same time. So to show it somewhere else, like, look, we can replicate somewhere else as well is very, very, very strong. But then the step to do it and start managing large farms, because these are hundreds of thousands of acres. This is not, let's start a market garden somewhere, which is also not easy, but this is definitely on the scale of not easiness quite high. Like, where do you start then going from there? from what would be nice to start something in North America to actually buying your first property, start managing land, hiring people? What was the first step there?

SPEAKER_00 10:03

I think the first step was getting investor confidence. And investor confidence came off the back of the fact that we generated primarily soil carbon off assets here in Australia. We had the data to back it up. We did the deal with Microsoft selling the soil carbon credits. And I think... You know, the pandemic changed a lot about investor perception around how we grow food in relation to nature. Really? What's the biggest

SPEAKER_01 10:35

advantage? What's the biggest surprise or how do you see that, that the pandemic has changed that? Is it you get more phone calls, you get better, more interesting phone calls, you get more deeper conversations about the role of land and livestock? Or what do you see when you say it has changed? How does that manifest itself?

SPEAKER_00 10:55

I think what the pandemic was, what the impact was that the pandemic slowed everyone down. And that is people that live in cities, you know, and let's think about the capital flows that come to impact ag, you know, investors sitting at home, thinking about where their food comes from, thinking about if things get worse, do I have a vegetable garden? Where do I source my food from? How's it got here into my house? Like a freezer full of stuff, yeah. know humanity getting closer to nature and then you investors thinking about well you know how does food production interact with nature and what what is the outcomes of that for nature and how are we going to interact with nature moving forward and on top of that you got this whole climate change discussion and then COP26 happened as well and so I think it seems like there's been a little bit of a reset and even I've seen traveling since borders have opened up, both in the US and here in Australia. So you got

SPEAKER_01 12:35

investors that got interested and more comfortable in these kind of investments and you took them basically to say, okay, let's focus on getting a foothold in North America. And currently, what are you managing there? Like in terms of, is it equal to size or what you're managing in Australia? Is it smaller Is it bigger? Or everything is bigger in the US, so it must be bigger. What's the current ratio, let's say, Australia versus US for you?

SPEAKER_00 13:06

So the US, it's probably 40% or 50% of... you know, what we're doing here in some regard. I mean, from an area point of view, it's a large amount of area, you know, 300,000 acres in America. So that's quite a footprint. But in terms of the business and intensity, it's nowhere near as intense as some of the Australian businesses. And it's primarily a large cattle ranch. So, you know, it's not diversified and, you know, it's not row crop. It's primarily beef production in in a semi-arid environment which has cold winters. So that creates some different thinking that's going to be required for us, especially with our focus on natural capital and soil carbon sequestration. So, you know, it's going to be a good challenge for us. We're already making some good headway, but it's really exciting and I'm hoping that we can take a lot of our learnings. Some of our specialist team have already been there We've got some great plans. We've got some new pilots. We're already starting to roll out there, working with universities. So, you know, it's a good move. It's a substantial move for us. It's large enough for it to be efficient and effective and, you know, it could be a great launching pad for us but also a great demonstrator of how we can go about things. to address climate change and food production. So it's exciting for us. And so what are the

SPEAKER_01 14:50

differences? What are the differences you see now in like ranching, like let's say a farm or ranch you bought in Australia and the one you now bought or you're managing for your investors in the US, like what does the implementation look like? What are you going to do there? Is it very different from what you're used to in Australia or is it relatively simple? Like, look, we have the guidebook, recipe book we we perfected it over the last years of course it's a different regulatory environment etc but we we know yeah we know step one to ten really really like intensity goes up or we do different grazing systems we need to get in fact like what what what does it look like on the ground try to to describe it as visually as as possible because i think it's difficult to understand the sheer size and and then what livestock there can do or what role it could play which what you obviously have shown in in australia

SPEAKER_00 15:42

yeah so um I guess the first thing to say is that the core principles that we stand by, the practices we implement, our tactics, they're all very transferable. So we stick to those. We've got the playbook. We've got the processes and the systems. We can roll this out pretty much everywhere. It's just we're in different climates in the US, different landscapes, different culture, as you said, different regulatory environment a lot more complex, Cohen. So, you know, environmental groups, you know, dealing with wildlife, just different. And I think for us dealing with, you know, different climates, so dealing with winter, dealing with snowpack, dealing with elevation, you know, it's, we're learning, but we're, you know, we're transferring the same principles and the same It's just in a different environment, different climate. more stakeholders that are involved and have an opinion and have a say. So it's exciting and we're really up for it. I'm really excited about what we could do there. And I think, too, for us, being so close to so many consumers in the U.S. is really exciting for us. So one of the things that– one of the parts of the puzzle that we feel– a little bit as pioneers in this space that we haven't cracked. We feel like we've got enough background and evidence now around soil carbon, biodiversity credits, renewables on farm, you know, premiumization of carbon credits, these sorts of things. We feel like we've got some knowledge and some experience and expertise and we've demonstrated that. What we probably haven't done enough of yet due to the kind of the demographics and the markets in Australia is that we haven't quite premiumized enough of the food and the fiber that we produced. So that's always been an ambition of ours to try and attract a premium for food that's produced in an environmentally and socially conscious way. And so we feel like the fact that we're all of a sudden in a country that has, you know, so many more 10 times more the consumers um and wealthier consumers most probably in some key key cities um that's exciting for us because if we can bring those premiums back to the farm gate you remember on our first podcast that was my kind of golden wish if i if i could bring more um you know better returns better returns back to the farmers so they could reinvest in their assets that to me that's gold Thank you.

SPEAKER_01 18:50

And are you planning or thinking, like, are you going to set up your own brand, which of course in the US is very competitive market? Let's say, are you going to partner with some of the ones, like, well, how do you see that happening or playing out over the next years to make sure that those premiums, that hard-earned premiums are flowing back to the farm and not get lost in the commoditization of many of those markets, which you might be more prone to in Australia, where a lot of this is going to export because it's a relatively small local market and and then of course setting up setting up supply webs and lines that are are premiumized is very very difficult now you're in a market that is i mean relatively close quote unquote but it feels a lot closer and what do you see there what's your role there is it going to be which directions do you do you see it taken is it this big enough to set up your own brands are you going to do on-site slaughtering and processing and what what do you feel there are next steps you want to explore Obviously imagining you haven't figured out the whole piece here yet.

SPEAKER_00 19:55

That's right. Haven't figured all the piece out, all the pieces of the puzzle out yet. But I mean, I can share with you what we are thinking about. And what we are thinking about is we think we've got a great story to tell. We feel like we have some elements that could make up a really great brand around carbon neutrality and product origination and I feel like due to the size of the market and our target market that we will most probably start and we have started to have discussions around partnerships with people with existing brands but they want that next level of sort of brand awareness or taking a new product to brand that says something about carbon neutrality environmental services single origin, premium product. So we've started those conversations and we're thinking about our production systems so that we can feed into that supply chain. And so it's very early. And in my experience, you might remember, we spoke about a vertically integrated business we had in Australia around grass-fed beef. So in my experience, we need a really robust product here's this word, resilient again, resilient supply chain that can deliver the quality and quantity that you need to support a brand. So we will focus on the supply side probably considerably in the next one to two years, but we've already started the discussions around partnerships and what the product needs to be to create brands with those partners. So yeah, that's kind of our strategy so far but you know we're only you know six months into the journey

SPEAKER_01 22:28

and let's start to unpack a bit of the the carbon side of things and the the natural capital first carbon i mean you um were instrumental in the deal with microsoft and we had actually christian of region network i'll link the interview below as well um so how did that happen probably the first soil carbon credit sold internationally or sold even in generally to a very high profile um and buyer obviously how did that happen and then what happened since then or how do you see that you talked about biodiversity credits as well like let's start to unpack the natural capital side a bit but let's start with the carbon deal the soil carbon deal that happened I think a year and a half ago maybe or a year ago I don't remember the exact details

SPEAKER_00 23:12

yeah February I think it was February 21 so yeah a bit over 12 months so I guess going back to the thought and I think I explained last time about we are quite a data centric business and we have had since about 2010 consistent soil data taken in the same GPS location across some ranches using the same lab to test our soil all of this time and off the back of this data set and actually after meeting Christian and in San Francisco actually where I think I was where I saw you in 2019. So we were on a, at that point in time, we were actually on a bit of a mission to find the best technology to measure soil carbon, the best markets that we wanted to partner with to sell soil carbon, and who we thought the leaders were in this emerging space. And spending time with Christian, and we went and met four or five other parties whilst we were there, a colleague of mine, the head of our natural capital division, off the back of that and with the data we had we felt like we could we knew the amount of carbon we'd kind of sequestered we knew the trend line from our ranches and so off the back of that and with satellite data to verify the what had also happened we were able to sell what you call vintage carbon so it was carbon that was generated between 2017 and 2020 so it was three years of carbon we call it vintage carbon so it wasn't carbon that we were going to sequester in the future it's carbon that we already had sequestered and so that's what um we worked with with Christian and Toby and my team worked with Christian's team to um help validate that and we had some third parties audit that as well and Microsoft had their own DD team on this so um it was the relationship with Christian and the region network and then and then those guys approached um Microsoft when Microsoft you know you may have seen they put out expressions of interest they chose our product you might be aware that you know Microsoft have a commitment to offset emissions back to 1972 and they wanted a terrestrial based carbon credit solution to go in their bucket of offsets for that cohort and it just so happened that we were about the only one that had had a chunk of carbon and of three assets that we managed here in Australia so that was great we didn't sell all the credits we sold a percentage and yeah the deal was done and it was great so I think your question was what's next or

SPEAKER_01 26:09

what's the future since then yeah what happened because I'm imagining the phone started ringing since the press releases went out and what has happened since then let's start on the carbon side first and then we go to the rest of the natural capital stack

SPEAKER_00 26:22

yeah so the phone did ring and it was large global emitters that are in the oil and gas sector trading houses that wanted to trade carbon institutional banks investors we had people saying we're flying up in the morning we want to talk to you about some credits and we're saying don't fly anywhere don't leave home like we've got no more to sell you just right now and so so since then we have you know so that was a private market deal that we did with Microsoft. Since then, we have continued to generate under the same protocol carbon. So we can credit again under the same method with Regen Network and we most probably will either this year or next. So that's what we've been doing with carbon under that private protocol. We've also registered under the Australian government method as well we've got I think three projects registered under that as well so we've taken on that we've been involved in supporting the government in helping sort of iron out some of their initial issues around permanence and crown cover and carbon what we call carbon stacking and so they're making legislative changes to enable more farmers to participate in the Australian government regulated soil carbon method because there was just a few too many barriers to entry and one being cost to participate, primarily the cost of the soil testing. So we've registered more projects and continue to sequester carbon. And then we will start crediting when we think it's financially feasible to credit on those new projects.

SPEAKER_01 28:16

And just to mention, basically there is a regulated market in Australia. on soil carbon, so below ground. How has that been going in terms of, is it been interesting in terms of pricing for you? Like this comes out of the Australian government's pockets or because it doesn't get sold to Microsoft, et cetera. This is a public project basically to incentivize farmers. Has it been interesting so far? Have you sold anything? Has it been important for the returns or has it been mostly also helping to build this example as well, just as you mentioned before, because I think it's the only one globally where there is a regulated market for soil carbon that is public and not voluntary like you see in many other places.

SPEAKER_00 29:01

Yeah so it is public and we haven't sold anything in that market as yet and you're right it is the government has been the market as well and they have created an auction and they've had a reverse auction and they've also been the regulator so just recently they've said that they don't feel like they can be the market and the regulator which is you know from a conflict and governance point of view it's the right thing so That has had an impact on the Australian government, what we call ACCU market, Australian Carbon Credit Unit market. It's had an impact on that. It's primarily saying we're now letting the market go private and that has had an impact on price. The price has come off. I think that's probably a short-term change in price. I'm sure it will get momentum back to where it was and maybe even excel But that's where we're at. We're getting a lot better in Australia with the government around what we call stacking. So not only can you on one farm or one piece of land, not only can you have a soil carbon project, you can now also have a veg carbon project. And we're hoping that when this is finally legislated, you'll be able to also have your, if you want to do a cattle herd methodology or a savannah burning method methodology you could so in theory you may be able to have one two maybe three different carbon projects on the one parcel of land and that's when the returns get somewhat interesting

SPEAKER_01 30:45

yeah let's talk about that let's talk about the returns first and then about the carbon potential what you've been seeing so has this been like also the the deal with microsoft which i don't think the price was released but has it been significantly interesting or has it been so far like for the returns on like on a ranch level because you're managing this obviously for investors I don't think any of your models or investing models are based purely on the carbon side or selling off credits it's based on production it's based on margins it's based on markets and premium markets as you mentioned now how important has this natural capital selling been and where does it go like is this going to be an interesting profit driver for land owners at some point or is it already the case maybe

SPEAKER_00 31:30

well understand some methods. So we have a method in the Australian government system here called HIR. It's human-induced revegetation, and primarily it's to stop farmers clearing land of woody vegetation. And under that method, the carbon market has pretty much now underpinned that whole business model. So there is funds and investors that are buying assets in Australia purely to put into a HIR project and the returns are purely from the carbon. And those returns are very respected in the market. We've bought some of those assets for investors, but it's not really our bread and butter in terms of where we want to see impact. We think soil carbon is where we can have the most impact and is best for climate. And if we're going to be nature positive, we think in the soil carbon markets is the place to go. And so back when we did the soil carbon deal, we're seeing annual cash yield, you know, upticks of say 40 basis points and in some, of some farms up to 100 basis points. So on an annual cash yield basis. So, and that's at a price that's, you know, in the teens, let's call it. We're now talking about prices that are in the mid to high 20s. So maybe, you know, you start getting 50 60 basis points on an annual basis just from one carbon project a soil carbon project um so it's starting to be more significant depending where you are and if the price continues to rise um you know if we follow europe as an example um

SPEAKER_01 33:20

i think

SPEAKER_00 33:20

we're at 100 per yeah you're 100 euros i think yeah i think you're 100 euros so that becomes substantial um and don't forget One of the key core drivers here is to improve soil health. So whilst you might be monetizing excess carbon once you've offset your emissions, but your asset base is becoming more resilient at the same time. You're storing more water. Your soil is healthier. Your plants should be healthier and you should be producing healthier food. So it's becoming significant. It's still complexed. You need specialists to help you with it. We're building out our team, doing more in this space, but it's exciting for farmers that are doing the right thing.

SPEAKER_01 34:12

Is it one of the reasons you're also wanting to be closer to consumers, in this case, actually, consumers of carbon, soil carbon credits and other credits, like being in the US, putting you closer to the Microsoft of this world? Was that a strategic move also there to to see, okay, can we get closer to a voluntary market, but a market that is potentially willing to pay? I mean, we have the stripes of this world that are doing a lot of experimental work and paying significant prices per ton. I put the interview with Jim Mann, I think on enhanced rock weathering and biochar, they are at 50 or 100 and 200 per ton. Was that the reason to go to the US as well and be closer to that market, not just the market of the produce and

Where is the highest carbon potential?

SPEAKER_00 35:00

the we're always challenging ourselves around, can we solve someone's problem? And I think for some large corporates in the private sector in the US, we can solve their carbon challenges or more so their emissions problems. And I feel like there is an opportunity for a firm like us to partner with some big corporations and deliver ongoing carbon credits to offset some of their emissions and I think it may underpin and or enable us to raise capital off long term commitments with some of those partners in the US so we'll be talking to more of those partners around solving some of their problems through a nature based solution and being nature positive so I hope I answered your question but the answer is yes.

SPEAKER_01 35:57

Absolutely and then to switch a bit to the carbon potential from all the different crops you mentioned the different soil types etc and all the measurements you do where do you see the largest carbon potential because of course if you go and talk to Microsoft or to others and they would say okay what do we need to do of course we need to produce the food but what systems do we need to put in place depending where you are that see that is that the silvopasture that we see in drawdown is it the regenerative grazing like what have you seen in the field with doing all these measurements that really is there something that stands out and what is the potential there like is it is it worth the hype we're having now basically on solar carbon um or or is there a bit more nuanced message that comes out of the field

SPEAKER_00 36:58

I think if in our experience, I mean, and others will have other experiences, but in our experience, what excites me the most is, you know, I think the planet has covered something like 50% grasslands or 60% grasslands or savannah, right? So there's all these plants out there that if only we could stimulate them with livestock more, we could sequester more carbon. So for me, it's a no-brainer. And that's why we're so passionate about the role that livestock play in ecosystems is that we think that they're the key to taking a low value product as in savannah grass a lignan high quality high high content lignan product and convert it into nutrient dense protein being beef whilst at the same time asking these plants to function and work and draw down carbon and sink that excess carbon exudate into soil for us that's that's where the rule of opportunity is we also so that's kind of at a macro level and that's where we've got experience and that's where we've got you know track record so to speak what we are looking at at the moment is we like some of the triton permanent tree crops and so in Australia as an example we have we're testing out macadamias because they're a native tree they do on a per hectare basis or a per acre basis sequester and store in their biomass a large amount of carbon as well. So there is some specific plant species that we like to focus on from a carbon point of view. But, you know, again, all of these models are going to stack up financially for investors and we have to demonstrate good financial returns. So in that sort of lens, we're open to other opportunities because we are looking to diversify and I guess manage our carbon risk, our generation risk as well.

SPEAKER_01 39:00

And do you see a role, I mean, this sounds like different properties, but a role of integration there as well between going towards a more silvopasture system, like an integration of trees in agriculture and livestock operations? Have you done that or do you see it or is that too complex still to do that on the scales you operate?

SPEAKER_00 39:24

I think, so when it comes to the integration for us um i look at the does it help

SPEAKER_01 39:32

the tree to grow better faster like if the grass around is managed by animals like is there i mean there's there's a lot of research obviously on that mostly on smaller scale i'm getting for sure emails now but like what what do you see that from like putting your financial glasses on is it something you you would like to do and see potential in

SPEAKER_00 39:50

yeah we see potential in it we'd like to do it um we think it stacks up from an environmental point of view and i think from an efficiency point of view it just to us, it makes sense. So in these intensive tree crops, I think the, I think the integration for me of choice is birds. And, um, we haven't quite worked out. I

SPEAKER_01 40:11

didn't expect that sound like, okay, birds. So you mean as in poultry? And I think I was like, what is he going to say? Birds? I mean, some birds coming in, like what are you planning?

What about methane?

SPEAKER_00 40:20

Yeah. Yep. It's, it's, it's poultry. It might be, um, yeah, it might be chickens, for meat or eggs or turkeys or something along those lines. But I think large animals or even pigs and sheep, my team are telling me it's getting more and more complex to have them in the system. Could be wrong, but just with the way we harvest and the things we do in those intensive tree environments, I think birds may be the go there. And so we're interested in exploring that. um so yeah i think financially it'll make some sense because what we mainly find if wherever we bring in an animal to to into an existing system and use them as a tool it makes us more efficient it brings down our cost um and it produces a cleaner product so we're all for that

SPEAKER_01 41:19

i've heard very interesting things on geese actually because i think it's the only one that fully can be fully raised on pasture it doesn't need outside doesn't need grain, et cetera, like many poultry need. And shout out to, I think it's one of the only organic geese egg producers in the UK that reached out recently. Anyway, I learned a lot on the video they shared. So thank you for, I hope they're listening to this one as well. But there's very interesting roles for animals on the farm. And then let's tackle a big one. What do you say when people say, of course, the livestock can, or not of course, let's say livestock can store X amount of carbon. What about the methane? What What is your natural response? You must get this question all the time. Let's say, especially ruminants get a very bad rap, especially the cow even worse. What do you say when people bring up the methane elephant in the room, let's say?

SPEAKER_00 42:14

Yeah, it's a good one and it's an interesting one because I guess, and that's a little bit why we have focused on sequestration as opposed to emissions up until now. Now, I say that living in Australia. If I was in Europe, I would be saying something different because I think it's my understanding that the focus is a lot more on emissions as opposed to sequestration, but that's my personal view that I don't have a lot of data to back that up. So, to answer your question, I think think for us we like to think that we can sequester more than what we're what we're emitting and we'll be in that positive yeah yeah and and you do that through life cycle assessment and we wouldn't have carbon credits to sell if we didn't do that and if we couldn't if we didn't produce more than we emitted um i think there's definitely a a uh an interesting um piece of industry work and and experimentation to come out of what we're doing around asparagopsis and seaweed in the beef sector. We're actually, not only is it happening in Australia, but we're actually doing something with UC Davis out of California on the ranches we have in the US around feeding seaweed in a grass-fed system. So not just in a feed yard, we're doing that as well, but we're doing one in a grass-fed system as well to see what the emissions is in that environment and can we raise cattle in a grass-fed system with asparagopsis and what's the emissions reduction in that environment. And, you know, so I think that's a real solution. How do you measure

SPEAKER_01 43:55

that? Because I've seen, I think most of the research on methane is, has been done historically in closed environments, so the CAFO operations. I've seen very little outside or grassland ones because I think it's very tricky to do. And that sort of leads to a potential question of if all of this data is based on grain fat and soy fat cows, it might be that the methane is a lot lower if it's a diverse grass fat system. But we'll never know as we don't do that actual analysis. burping research. And could all this research on the methane and all of these bars where the cow is, of course, the worst thing of the climate we ever did, be based on the standard of the industry, which is CAFO? But that might put the regenerative ranching ones in the wrong corner. They're being accused of something that might not even be happening because the cows are much healthier. They're not burping so much. There's not a lot of methane being produced. I showed that there's a significant reduction if cows are healthy. In a good grassland situation, cows are much healthier and you lose about 80% of the methane emission, which is a lot. I feel that we're not really comparing apples and apples there. Have you seen that as well? What's the discussion there in the deeper weeds as soon as you start wanting to sell these credits because people will ask those questions?

SPEAKER_00 45:26

Yes, and that's exactly why we want to do this. There's two reasons why we're really want to do this research with UC Davis one is we want to see if the product works in in the feedlot environment and we do want to compare it to the grassland natural grazing system so they'll both run side by side both trials will have controls and and those animals within the trial so that will be great the other thing is that if you take a step back Cohen me majority of livestock still spend a large majority of their time in grasslands so if we don't solve the emissions problem for livestock whilst they're on grasslands then we're not really solving the emissions that come out of let's face it agriculture majority of them you know livestock are a big contributor to agriculture's emissions so if it's true that there's a large number of livestock out in grasslands globally then we have to have a solution to reduce the the methane in that environment so So if these trials are successful and you asked how do you measure them, well, we have this thing called a green feeder where when an animal puts their head in into a feeder, the feeder has a reader for an RFID tag and it determines whether the animal is in the trial or part of the control group. And when it puts its head in, then the feeder either drops– some feed that the animal likes. So, you know, it's obviously high in energy and or salt. And if it's part of the trial group, it also gets asparagopsis. But if it's not, it doesn't. The other thing it does is whilst it's in there, it measures the hydrogen, methane, and also the CO2 of the animal while it's in their feeding. So that's how we get the numbers. And that data is... pushed up in the cloud and it can be seen in real time all of those emissions out of that animal so that's really interesting and that's how we're going to see and then how do

SPEAKER_01 47:39

you do that in the field like how do you do that if the cow like bends down to you to start nibbling on the grass and gets that interaction going with with the roots and the soil carbon it's being released etc etc etc like how do you measure it there like how do we because this is in an inside environment i understand because there we have the sensors but out on the field when the cow was actually self-selecting whatever he or she wants to eat like how do we then add the the seaweed to that and how do we make it a fair comparison so i don't know the answer i'm just wondering like how do we do that yeah

SPEAKER_00 48:14

so just just to be clear and so i may not have explained that correctly these feeders are going to be out in the pasture so the animals are going to be eating grass but they've also got access to the feeder so i think it's the first time this kind of trial's been done in that environment. And that's what we're really interested into seeing the outcomes of that.

What about the biodiversity?

SPEAKER_01 48:37

Super interesting. No, it's very interesting, the whole methane discussion, because I've yet to meet someone who's deep into, I mean, obviously because they're biased, but into livestock and into the potential that is really worried about the methane part. And it seems mostly people that are not connected to agriculture are very worried about it. Or, and I see now finally a bit more attention for the methane coming off, I mean, the flaring, et cetera, but also the methane coming off of, let's say the fertilizer used in the chemical, like there's a lot of methane that's not connected to livestock and which might be a lot easier to solve. But anyway, on closing the methane part, so you're going to do some very fundamental research, a research that has never been done before. Do you see then taking it to the next levels, let's say, or the natural capital stack, what has been happening in water and biodiversity, what you've seen, like the other big, maybe even bigger topics, like if we run a, carbon is a nice side benefit from increasing increasing biodiversity and water storage. What have you seen there? Has the market been waking up? Do we see proper management? Have you sold something or do you see interest coming to, because it seems like biodiversity is getting a bit more buzz at least, but have you seen that too?

SPEAKER_00 49:54

Yeah, I think there's a little bit more buzz there. I don't think the markets have really matured greatly. I think measuring biodiversity has still become somewhat of a challenge. We have actually sold some credits off one of our farms in Australia to a large utility company that needed to buy some offsets. And those offsets, those biodiversity offsets were relatively high value because because on one of our farms, just based on our management, our large rotational grazing, as you know, supports biodiversity and regeneration of plants. It just so happened that we regenerated a native grass species that was historically native to the area and had been missing from the environment for years and years. But under our management, this native grass came back and it increased the value of the biodiversity credit. I think there is small pockets of biodiversity credits being sold valuing it I think has still got some work to do I mean we've been offered off one farm here in Australia the farm might be say 20,000 acres we've been offered something like 40 million dollars for the biodiversity credits off that farm that have been generated it's one thing to have the credits and the value on them it's another thing to take them to the market so you know whether you get paid for that biodiversity value is still yet to be seen in full we've seen it in and we've been paid for in isolated cases but for big chunks of biodiversity credits we haven't done a big deal with that yet and not to say that that won't happen but I'm interested to see if the market does does does meet where it is, you know, in theory, valued at.

SPEAKER_01 52:00

And do you see it as almost more important than carbon? Do you see it as equal or could it be, because this whole carbon focus, like very single-minded focus on carbon seems a bit off. If you look at a landscape, you look at a farm, if you look at it holistically, or because it seems easier to measure, which maybe it isn't even, but the carbon piece have been hyped so much in a sense, we have to fight carbon and climate change. So we have to, carbon is the enemy, et cetera, et cetera. What is missing on the framing almost of biodiversity to get it to the same level of attention? Because we lost 60, 70% of insect cover we lost. I don't know how many plants, most of them not even named. That seems to be almost the real crisis we're not really willing to face.

SPEAKER_00 52:49

Well, it's really interesting, isn't it? Because there's been all this, as you say, hype about carbon and it's linked to climate change and global warming. It's so happens that you know the big industries the big companies globally governments have realized that you know they're going to have to reduce emissions so they buy carbon offsets that creates a market and to your point all the hype but it's a really good question you ask what about biodiversity and as you say we have lost a lot um it's so important in our systems right like it's so important in our landscapes the role it plays um And it's so important if you're in the business of producing food.

SPEAKER_01 53:36

Because that one grass type that you mentioned could be fundamental for the health of that cow and the grazing system that was there. I mean, there are so many things we don't know in terms of interactions and more diverse and more complex, unfortunately, I mean, for your team, but more complex and more diverse in many cases is more resilient, like you mentioned at the beginning and might uncover things and interactions that we haven't had no clue about, and we only can find out if they're still there. And there might be some seeds hidden somewhere, but until the right management practice is applied, they won't come up because they need certain things that maybe the elders still remember, but we don't.

Starting a natural capital and real asset fund in Australia

SPEAKER_00 54:13

That's so true. And the key in our business, in our extensive agricultural production systems, in our suite of assets, plants are just the key for us. Without a diverse set of plants in our system, we don't have soil health without these biodiverse healthy plants we don't have healthy animals I mean we can't produce you know healthy crops without our plants and soils being 100% healthy so we need all this stuff we need biodiversity in our systems and so you know we talk about it all the time you know in our team you know plants are the key to this and so I don't have all the answers around biodiversity. I just know that we've got to measure it, manage it and try and enhance it and so we're working on this. Measuring it is not easy but you've got to start somewhere. We work with a lot of third parties and ecologists to help us get this done but it's so important and I think everyone's got a role to play in improving biodiversity.

SPEAKER_01 55:25

And Yeah, we will be hopefully paying a bit more attention on the podcast as well on this. And then I know you have some exciting news of that's why you're in a motel in Sydney to actually focus. Not only, I mean, it doesn't mean like this, a lot of this conversation was on North America, but it doesn't mean that you're no longer working in Australia, actually doing some very exciting work on a domestic fund in Australia. Can you share a bit more about it? I think it's early, but what triggered that instead of of going from managed accounts for investors I mean mostly outside investors that want to invest in Australia to raising the money up front building a fund and then deploying it what triggered that transition because it's a big transition as a team as well

SPEAKER_00 56:13

yeah so I guess the first thing to say is it's just offering another for us offering another product because through separate managed accounts that attracts a certain investor profile but what it also does is it excludes other investors from the asset class and from our management and the outcomes that come from our management and those returns both financial and environmental returns so we wanted to open up a product to a larger segment of the market so that more investors could invest with us just from an efficiency and a return profile point of view in Australian dollars we couldn't really take in capital under say 10 million dollars in a separate managed account so so what this is doing that reduces the market a bit yeah it does so so therefore by offering um this new product to the market which is a natural capital and real asset uh fund it will just open it up to more and more investors and investors that you know want to have some exposure to the asset class but probably haven't had the capacity to go on their own in a separate managed account So this fund will focus, as I said, on real assets in agriculture. We've got some future ambitions to bring in other things such as venture capital around ag tech and climate tech and also emissions reduction and even some financing options. I think we spoke about green finance and environmental finance. So that's in, say, year two, three, whatever, but first and foremost, real assets and carbon. And within that portfolio, there will be, um, very succinct strategies there and some tactics in investing in, um, in real assets that operate livestock and carbon and others that do cropping livestock and carbon and then permanent tree crops and timber. So three real pillars to the real asset initiative. Um, to start with, and that's all about managing risk, driving financial returns, and I guess giving us some levers and tools to pull that will reduce our costs but hopefully result in better outcomes and good carbon returns along the way, along with biodiversity and good financial returns. So that's the plan.

SPEAKER_01 58:53

And what are your targets? When would you like to, I mean, what terms of size are you considering and when are you thinking of first close or something like that?

SPEAKER_00 59:06

So, yeah, I think first close would be in the next three to six months. I mean, that's yet to really be defined. And the first close, you know, we would like to have$100 million raised by the end of this calendar year here in Australia. The longer term plan is to have$500 million under management in this fund. And that would, again, bring in probably the venture capital and the finance piece. In the short term, though, We'll try and, you know, first bite would be a$50 million investment to get out and get that deployed, start getting action on the ground, start baselining for carbon, getting the right people on the ground, getting the strategy deployed. So that's step one.

SPEAKER_01 59:56

I think it's a perfect end of this check-in. I want to thank you so much for your time this morning. Let's make sure it's not going to be another three years before we check in again and to be able to follow. And thank you for sharing and allowing us as the podcast to follow your journey as it evolves and as it comes to fruition. Thank you so much for the work you do and for coming on here to talk about it.

SPEAKER_00 1:00:23

Thanks, Karin. And thank you as well. I mean, you're building fantastically awareness in this space so um just with the numbers you get on your downloads on your podcasts it's you should be proud of that and uh we'll support you pardon the pun till the cows come home so i hope we get to see you soon and um thanks very much

SPEAKER_01 1:00:47

Thanks again and see you next time.