Transition Finance for Farmers with Benedikt - Phil Taylor and Brandon Welch, Mad Agriculture

Phil Taylor and Brandon Welch of Mad Agriculture are the sixth guests of the Transition Finance for Farmers with Benedikt Series.

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Koen van Seijen and Benedikt Bösel are the co-hosts of this special series dedicated to Transition Finance in regenerative agriculture and food.

In this series Koen is joined by Benedikt Bösel, owner of the Gut&Bösel farm (www.gutundboesel.org) and former Venture Capitalist with a focus on environmental technologies and AgTech startups. Follow them on their journey to find out what are the key principles of transition finance for regenerative farmers.

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Welcome to Investing in Regenerative Agriculture and Food.
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What does it mean to truly partner with a farmer to provide a fair and skin-in-the-game transition finance investment in her or his farm to help the farm speed up their regenerative journey? We go deep into these questions with Mad Agriculture and Perennial Fund’s Phil Taylor and Brandon Welch.

Find full show notes and links of the episode on
www.investinginregenerativeagriculture.com/2020/06/16/transition-finance-ep7.

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For feedback, ideas, suggestions please contact us through Twitter @KoenvanSeijen, or get in touch through the website www.investinginregenerativeagriculture.com.

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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.

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Transcript

SPEAKER_00 0:00

What does it mean to truly partner with a farmer to provide a fair and skin-in-the-game transition finance investment in her or his farm to help the farm speed up their regenerative journey? To answer that question, we go deep into the why, the how, and the what of MAD Agriculture and the Perennial Fund. So take a cup of tea or a cup of coffee and enjoy this long episode with Phil, Brandon, and of course, my co-host and partner in crime, Benedict. Welcome to Investing in Regenerative Agriculture and Food. This is a special dedicated series on transition finance. Why are we recording this series? Many farmers are ready to speed up their regenerative transition. They've looked for learning, done the courses, read the key books, hosted the gurus on their farms, explored farm-sized regenerative designs, and most importantly, started their pilots and feedback loops. This is where transition finance is key. A local bank loan often isn't feasible because of the short duration, lack of flexibility and the farmer's lack of collateral. Furthermore, there's a limit of how much equity a farmer is able or willing to give away. That is why my co-host aspiring to be regenerative farmer, Benedikt Beusel, and I are embarking on a journey to find out what are the key principles of transition finance for regenerative farmers. We are interviewing leading practitioners in the regenerative agriculture and food finance space. They share their insights, how they would finance the speed up of the regenerative transition on benedict's 1000 hectares which is almost two and a half thousand acres farm in germany close to berlin this is an open process we are sharing our lessons through the podcast episodes as we go along we don't have the answers yet just a lot of questions so please share with us any examples of transition finance you've seen other inspiration people to interview etc get in touch via the contact page on the website investing in regenerative agriculture.com that is investing in regenerative agriculture Thank you. Welcome to another episode of the Transition Finance series where me and my co-host Benedict are interviewing the key thinkers and doers in terms of transition finance. And today we're very excited, I can say we because I know Benedict is as well, to have Phil and Brendan of Matt Agriculture and the Perennial Fund on the podcast. And I don't want to take any time away from that. So let's get going immediately. Hi, Phil and Brendan. Welcome. Hey, thanks for having us on. Thanks for having us. It's great to be here. And of course, welcome, Benedict, my partner in crime in this series.

SPEAKER_03 2:37

Yes. Hi, guys. It's awesome to meet you and to hear you. I'm incredibly excited to hear how you arrived at this place, what you were thinking, and obviously telling us a bit about your approach and talk us through some of the steps that you follow through with the farmers. And I think, you know, not putting up the pressure too high, but you're obviously at the very forefront of changing the paradigm of thinking about financing agriculture. As of my thinking, you know, one of the big situations as of today is that the debt structures are overwhelmingly high and that a obviously makes people and farmers stuck in the system. And I mean, this is what we have to get out of. So amazing to have you guys. So let's, let's have you share the good shit.

SPEAKER_00 3:17

No pressure, but the listeners cannot see that, but we can see on the video that the sweat slowly starting to emerge from Phil and Brandon to all this pressure that we're putting on them. No, I'm kidding. I'm kidding. Please. Can you give for anybody that doesn't know the things, mad agriculture, that sounds mad. What is it? What's the group? What's the bit of the backstory? And I would definitely link to some resource is obviously below, a bit of the origin story there.

SPEAKER_02 3:40

Yeah, so Mad Agriculture is inspired by Wendell Berry's Mad Farmer poems, and Wendell Berry is sort of a great agrarian of our time that wrote a series of poems in the 70s called the Mad Farmer poems, which call us to a radical reformation of economy based on a set of virtues that we often don't see guiding our current financial economy, our current commerce, and those virtues are love, reciprocity, compassion, passion and a good dose of radicalism. And so we are wholly inspired by Wendell and his work and really stand on the shoulders of his wisdom, among many others in various wisdom traditions. And the madness comes from this, really this feeling that the world that I believe in and that we believe in is so different than the one that exists that everything we do is touched with a sense of madness and insanity. And so we really embody that spirit in the way that we work. We're very bold about it. And I would say that the emergence of mad agriculture comes from two different lines. One is my own journey in life. My wife and I founded this two years ago, which was the culmination of many different journeys in life are just profoundly interesting. A lot of cyclical light-dark cycles and self-discovery. And when you're full of passion and zeal and you want to manifest something important in the world. It can take a long time to find that. And my wife and I went through a really exciting and challenging journey through academia and many different dimensions of life where I was like, wow, this is really hard. And what happened was, is we realized we really needed to ground into our heart and listen to that wild essence inside of us and listen to this, not only the song of ourselves, but the song of the universe that's calling for a new and more beautiful and just paradigm to come into being. And so the madness, while it's our work, it's also the work of the world. And I think what's so beautiful about it is that the organization attracts people organically because it feels true. It feels righteous in the best sense of the word. It feels bold, ambitious. And I think that that's our essence. It's our core, is revolution. And I'm working in academia for many years, which I I have a PhD in soil biogeochemistry. I really loved and appreciated my time traveling the world, studying the way the world works. But I wasn't able to freely break the categories needed to create whole change. So how do we pull on poetry and science, head, heart, soul, all the spiritual dimensions, those lineages, the elders? How do we bring it all into a manifestation that feels real? It feels unknown. It feels exciting. It's challenging. And we're just possessed with this. And it's really fun. So mad agriculture is very much about creating whole system revolution by breaking those categories open in a way that's very open and excited about the future. Not one that's full of fear and doom and gloom, but potentiality and the power of life to come back. And when humans work with nature and not against it, which is a very lofty ambition, given the paradoxical I mean, we've been working in the last, you know, 10, 20,000 years. When we can start to tilt the systems into that kind of working with, really powerful things can happen. Yeah, that's our essence. I could tell you a longer story, but that's the core.

SPEAKER_00 7:21

Thank you so much. And actually, you touched upon many, many different things we're going to unpack, but also the story of how, I mean, it attracts organically people that are interested in this. And Brandon, could you, because I know the background story and actually podcasts play an important role in that, how did you end up in mad and how did you start working with the mad group?

SPEAKER_01 7:41

Yeah, that's a good question. It was a winding road and to make a very long story. You're not that

SPEAKER_00 7:48

old. Come

SPEAKER_01 7:48

on. Essentially grew up in Massachusetts, went to Vermont, went to UVM, went to school there, studying mechanical engineering. It was a little too mechanical, rigid. There wasn't really any room for creativity when you're in calc three and magnetism physics and and all of those classes that just didn't seem to grab me. So I ended up actually going on a long hike called the Long Trail through Vermont. Took me three weeks with a couple of buddies. And along that hike, I just realized something was missing with just connecting with nature, with being outdoors, with how I was living my life. And I went back to school that next semester, ended up switching to environmental science with really no plan, just wanted to focus on that realm, specifically looking at climate change and environmental degradation. So graduated with that degree, then went on a long bike ride, had planned to move to Portland, Oregon, but I had met my partner right before I left, so I ended up living in Vermont for another year. Worked in a water quality testing lab doing organic volatiles testing for the EPA. Also pretty rigid and didn't allow for any expansiveness. It was just running samples all day. So I wanted to get out and figure out, just find something new. So my girlfriend and I hopped in the car about a year later. This was in 2016. Went on a big road trip across the U.S. for three months. looking for a new place to live. We weren't really sure where that was going to be. I actually started a podcast myself along the way in order to just learn and listen to people and just find an easy excuse to talk to people that I was interested in learning from. So I actually met a guy named Brad here in Boulder, Brad Smith, who had started this cool EV program. He was the first person I spoke with. And then about two months later, after I had interviewed him, he ended up sending an internship opportunity my way to work with a group called Natural Capitalism Solutions. I ended up interning there and then managing a nonprofit called the Colorado Carbon Fund. That is a local carbon offset fund focused around the state of Colorado and investing in local carbon removal projects. I learned some of the inefficiencies of carbon markets. They're pretty early. They are very expensive. They take a long time to get up and running. There's a whole host of issues in the world. I met Phil, as he was starting to talk about carbon farming, he was starting Matt Agriculture and it had just begun with a gathering of carbon farming series with local farmers and practitioners and people who are interested in learning about carbon farming at the local Grange Hall that we have up here in Longmont. So I think it just started with a coffee. And then from there, Phil's magnetic, it just, he pulled me in. I learned about regenerative ag, its potential to remove CO2. And I thought, well, let's just focus on this of growing good food, helping people get healthy food into their body, helping farmers make more money, helping sequester CO2, let's improve water quality, biodiversity. It just seemed like such a better place to focus my energy than carbon markets, which are kind of external and on the outside of the system versus something at more of a foundational level. So, you know, worked for a long time, just kind of exploring the full landscape of the food value chain and the food system with Phil. We were going out to California, meeting all the usual suspects out there, driving through Kansas, Nebraska, meeting farmers, bankers, people in the various aspects of the supply chain. And then we landed on our model of change from there. And then we were able to get some donations into the nonprofit and Phil hired me. And now we're here a couple of years later. Yeah. Well,

SPEAKER_03 11:45

it's such an incredible story to hear both of your individual backgrounds and I mean it's so fascinating how the straight lines never seem to lead to what your real you know I guess task is in life and having had those different experiences having you know the good ones as well as the bad ones and shaping your sort of idea and perspective on what it is you want to contribute I think is so incredibly important to have those and this relates so much to that new way of thinking about farming I think because I just spoke to someone today And we were talking about basically why the hell would I decide to start a journey on a road on which I'm basically just observing and adapting, observing and adapting. And there is no end to this. And there is no, let's say, like he said, so when are you ready? I was like, I'm not going to like, you can't get ready. It's a complex ecosystem. It's a journey. It's an approach. And he's like, well, so what's the motivation? I said, well, what's the motivation? This is what life is about. Uh, love what I'm doing. This is where I get all my joy from. I have problems. I try to solve them. I have disappointments. Some things work out especially well, but this is what shapes me. This is what brings the energy to my life. This is what brings the energy that draws other people to come here because there is real life happening. It's the complexity. It's the luck. It's the joy. It's the downfalls as well. I think this is often, when you look at the classical, let's say, old way farming, what is lacking. We have to start telling the positive stories. We have to tell how much joy it brings, how much the complexity of ecosystems brings that quality and that color and the body to your life. Whereas today, it's very much about how much yield per hectare. We're not allowed to use this and that. The consumers want this and want that, but they don't know what the reality is. Instead of putting your energy in some things that are difficult to change, like it's not raining enough, use it for something that you love, that you live in that you can build. And I think that is, it's more on a psychological level, but it's fundamentally important because as a farmer, you live farming, you know, it's not a job, you just have, it's your life. So you ought to look after using your energy and the inputs on what brings, makes it worthwhile doing. So yeah, just a little excuse, but it's, I think it's so fundamentally important and such a huge part of it.

SPEAKER_02 14:45

It's a big piece of where we start the farmer in their place because it's very easy for a farm planner to come in and say, hey, you should do all this stuff and then you leave and you're done and then nothing happens. See, what you have to do is you get in and you empower and you inspire what's already living within them.

SPEAKER_00 15:30

You sort of allow them, I think you've used the phrase before, allow them to dream, right? That's one of the questions you asked. What can you possibly imagine here? What would you love? What do you dream about?

SPEAKER_02 15:40

That's right. We try to create the conditions that unshackle whatever is holding them back and give them permission to imagine and act and many many cases they're so unfamiliar and don't even have the psychological tools to go there because they've been working in the scarcity mentality for so long there's actually significant trauma that we is unrealized across the entire farming i mean the entire rural commodity economy has been colonized whether they acknowledge it or not but we live in this the entire middle of america because in a welfare state on the farm bill. And it's so unhealthy. The entire thing has been extracted by the corporate behemoth that's extracted the soil, the heart and soul, the value of the entire economy. And it's very difficult to see outside of that system and know how to change. And so the perennial fund was designed in order to liberate farmers out of the traditional financing systems, give them permission to dream big and go for it. And that's that's really We can get to the perennial fund in a minute, but what we do is we start with the farmer. There's a series of three concentric circles. The middle circle that we always work on first is the farmer and the value system, their essence. Not only the essence of the farmer, but of the whole decision-making team. And so Alan Savory would call this the holistic context. What's the vision of the farmer? What's the conditions? What's the sacredness, the sense of stewardship and belonging? Most farmers aren't there to turn a dollar and make money. They're there because of heritage, of other reasons due to their long history intergeneration immigration and all of that is wrapped up in their story and so we ask them what story do you come from and what story do you want to create and after we do that significant grounding

SPEAKER_00 17:28

how do you do that you sit down at the kitchen table have a lot of coffee and spend hours on this I'm imagining

SPEAKER_02 17:34

well sometimes it's implicitly sometimes it's explicitly and that's where we sense we have to be careful in our sensing with someone that might be far more on the conservative end of the spectrum and their fresh relationship to us. It might be several meetings where we build trust. And we have story after story where I'll be in the middle of Nebraska in a truck and the farmer will literally pull over on the side of the road as we're scanning their fields. The farmer's clearly voted for Trump. I've clearly not voted for Trump. And the farmer says... my goodness, I shouldn't agree with everything you're saying, but I agree with everything you're saying. Like, how can we be friends? I mean, these are real conversations. And when you start having that softening across the polarizations that typically divide us, you know that you're getting somewhere on that deeper human level of shared beliefs. And many people call this the radical center. And that's where we like to operate around shared human values, which are far more common than our differences. And so we have human strategies and approaches that we use to do that. And sometimes it's explicit. Like if we work with a group of fellows in a workshop, we have a series of frameworks. A lot of it's inspired by a mix of the best TED Talks we can find. And then a lot of the work from Carol Sanford, the regenerative life and her work. She's been an amazing elder in the regenerative movement and has provided a lot of frameworks that we've adapted and used to help farmers guide, sense themselves and guide that visioning process. And And so, yeah, it's interesting because people immediately say, well, this isn't scalable, but it's entirely scalable. It's called human to the grassroots level, right? It's called community. And that's where real durable change happens. And we have to trust that, even though it doesn't sometimes feel like a big policy win or feel like a big title shift that you can see. It's happening. It's happening quick. And so I think, you know, going back to our sort of framework of change, we start with the farmer deeply and then we consider the next concentric circle, the farm itself. And so we use seven of the 10 scales of permanence. It's a P.A. Yeomans, Regrarians adaptation where we systematically work through things that the farmer cannot change about their operation to the things that the farmer can change, has more influence over. So we start with climate and then we talk about water and geography, landform, infrastructure, the tools and equipment they have, the plants and the animals they work with, the balance of wild and cult And so we work systematically through those lenses of the farm and we slow down because a farmer might want to immediately talk about markets because that's where they think the solution is. scale and then the third concentric ring outside the farmer then the farm itself is then how does the farm interact with the world at large and there are three or four dimensions in which it interacts with the world the first is who is your community of change Who are you surrounding yourself with? Now, who you surround yourself with is who you become. And so you've got to be very careful about where you source and curate wisdom, who you lean on, who you laugh with, cry with, who you read poetry with, what YouTube channels you participate in or Instagram feeds you follow. All of that matter. It's real. And then that community of practice really can span the kind of grassroots level stuff all the way to the policy stuff. So we kind of hold that whole dimension. The second lever of change that really can influence how a farm interacts with the world is what capital they source from. Not all farms need money. We can talk about that. But many farms do, and many farms lean on an annual operating loan. And so what we do is we design farms that take full advantage of whatever public dollars are available for the farmer, which often they have trouble getting access to because it's number 10 on their to-do list. And then the other thing we do is we design farms that access new sorts of private money. We went out looking for innovative working capital and operating capital. We found none. And so Brandon led the creation of the Perennial Fund, which is an alternative bank for farmers to transition to organic using regenerative practices. And so the farm is now interacting with the community. It's interacting with capital. And then the third big dimension is the markets. How do you get paid for your products, for your animals, the plants you're working with? What's your business model? We really work hard to decommoditize the crop. We believe there should be full transparency, soil to shelf. Value systems need to be fully articulated. Right now, the supply chains that wrap the world hide injustice all too well, and we've got to resolve that. And so we really work on reimagining supply sheds. We do that on two parts. We work on behalf of the farmer. to decommoditize and find new locations for their crops. And then we also work with brands to revamp their supply chains back down to the soil. So last point, and I'll finish my monologue, is... We also work to help farmers get paid for building public good. And in this case, we're starting with helping them get paid for sequestering carbon and soil. We work really closely with Nori, the pretty recently, the fresh sort of carbon drawdown marketplace. And we're really in the deep end with them on measuring, monitoring soil carbon, using kind of the latest, coolest, greatest things out there. It's a big challenge. But I would say that I'm highly cautious about commoditizing nature and do not like the term ecosystem services at all. It's a very utilitarian. I don't

SPEAKER_00 23:48

think anybody likes it in this space, to be honest.

SPEAKER_02 23:51

So we're just calling it public good. We do believe that farmers should be valued for the whole wealth that they're creating and how to we do that? And so for me, Regen Network and what Soil Heroes is working on and what Nori is working on are sort of the gold standards from a philosophical grounding that supports these kinds of virtues that I'm hoping become more part of the current world. So that's kind of our general framework of working. We have all kinds of theories of change that actually underpin that sort of general model, but that's how we work with every farmer. And it takes a process. It's a human relationship. We don't come on the farm trying to peddle chemicals or this or that. We show up and build authentic relationships rooted in trust and a sense of shared destiny. It's critical. I spent tons of time in academia all around the world overlaying my white man imperial ideas over all kinds of interesting people with the best intentions. But it was completely what didn't work practically. And then I think I think it missed the whole point of being human, which is crafting a shared sense of a healthy, vibrant future together. I

SPEAKER_00 25:07

will link some of the interviews below. Actually, we had Paul of Nori on the podcast. We're going to have Jeroen of Soar Heroes soon and also Region Network completely at the beginning. I have to do a check-in interview with them, but I think one of the earliest talks with them on that. But I will definitely link them below. Thanks.

SPEAKER_03 25:23

Getting a bit sort of on the actual, let's say, management questions and production ideas, what What would be sort of after the phase where you get to know, build a relationship, get a shared sort of vision once you basically look into each other's eyes and say, okay, let's do this. Like what is first, like the first step? Obviously you probably analyzed sort of the background, but how is that first, you know, tipping the toe in the change as in on the field? Like how does that happen? Where do you start? And what's the sort of communication or reaction that you have come across?

SPEAKER_02 25:58

The key is to start small and find an early win. We really believe that taking risk is not easy for a farmer. And with how robust the systems that currently prevail are, we've got to be really careful in how we disrupt them. And the change has to be in, you know, attuned to their appetite for change. And so we do a lot of work. For instance, I'll give you an example. We have a farm that we work with. It's a broad acre farm, 376 acres, two pivots, swirling. They typically grow alfalfa for a organic dairy. And the organic dairy is, you know, it's a confined feedlot kind of dairy. So it's not the pinnacle of organic production. And they want to reimagine how that farm is used. And so we still have one pivot completely on alfalfa. That's sort of their breadwinner, their anchor, their foundation. But the other pivot now, it has kernza on it. It has a perennial sand foin.

SPEAKER_00 26:59

Just for the list. What is Kernza and what's the other one you mentioned?

SPEAKER_02 27:02

Okay, yeah, sorry, I'll back up. Kernza and sand foin are both crop innovations coming out of the Land Institute in Salina, Kansas. The Land Institute has long been the thought leader around how do we perennialize agriculture. 10,000 years ago or more, humans made an interesting decision to work with annual-based plants. And annual-based plants, it makes a lot of sense. They have all of their nutrition in their seed heads. And so to harvest the seeds and eat them is really nutritious and it's a great way to feed ourselves. And so as we domesticated plants to work with, we favored annual plants. The big downside of annuals is that you have to get into the field and you have to till the soil every year. And you're basically running your system in a state of emergency year after year after year. And you're basically working with primary succession in an ecosystem. And if you know anything about primary succession in an ecosystem, it's where invasives come. It's where weeds feel the most happy. It opens up all of the space for invasion. And it's really difficult to manage. It requires tons of tools. It requires tons of inputs. It requires pesticides for management. So all of these things that we bemoan about our current industrial system are a product of our early relationship with annual plants. And so one of the ambitions of the Land Institute and many others now around the world is to create a perennial agriculture where you never have to go in and disrupt until You're creating perennial polycultures that you can still harvest with the best of technologies. So it's not going back. It's kind of going back, looking for lost virtue while reimagining a new system with the best of human innovation. It's a nice little marriage of a lot of different ideas and philosophies. So Sanfoyne and Kernza perennial wheatgrass are really front edge kind of leading ideas. And we have local markets within a couple hours of this farm where we can directly place these kinds of things into. We have several different mills that are popping up. These mills will pay a premium dollar for these things. They can capture that margin to their direct consumer pricing. And so we've been working on annual, basically perennializing part of it, working on annual grain on another part of it and then working on hemp on the other part for seed actually not for CBD and so it's taking a traditional farm that is ready for some change and being very cautious about how we create the change and lining up early wins where it's like oh we can sell this wheat per pound at least 50 cents if not a dollar per pound and when you can sell it at that rate the farmer is going to pencil out favorably for the farmer. Because, you know, right now, for instance, wheat, wheat's four and a half cents a pound on the open market, which is unbelievably low. And when you can sell it, you can sell a wheat directly for human consumption in a local market for 50 cents a pound or a dollar a pound, your economics, your net profitability goes way up, even if the yield is like four or five times lower. You know, these heritage and ancient grains that are land-raised varieties you can take a huge yield hit and be far less extractive on the soil and require far less inputs and still pencil out the net profitability of 2 or 3x. So that's an example of how we will work with a farmer and use our full wealth of connections. That's why we don't just do farm planning. We do farm planning with cognizance of market, farm planning with cognizance of capital, farm planning with cognizance of community so that we can bring that whole system of change to bear when we work with a farmer. It's really critical to not, you know, we've been told for generations that do one thing and do one thing well, specialize, reduce, Be reductionistic. And for Mad Ag, our secret sauce is being generous and being a community and just being free flow with all the dimensions of humanity. I mean, it's so much fun. And it's where all the good work happens.

SPEAKER_00 31:11

And I'm just thinking it's definitely where all the fun happens and the interesting people are. And I mean, they find you as well. And then, because he said the connection to capital and you didn't find anything, you decided to set it up yourself, which is, I mean, I think many people imagine, okay, I wish there would be a bank for transition finance and I wish, but then going from that wish to doing that, it's an enormous step. Can you share a bit about the journey? How did that happen? Where are you now? We'll get into that. But how did that happen? When was the first time you said, okay, I wish there was a perennial fund? And then somebody probably said, oh, let's build one. As a joke, I can imagine, over a few beers, maybe on a Friday afternoon. But how did that happen? Both Brendan and Phil, actually, because you were both there.

SPEAKER_03 31:58

Maybe even just shed a light really quickly on the concept itself so that if some of the listeners don't know it yet, that you just have an idea which direction it is going that we

SPEAKER_01 32:07

Yeah, just like any startup, I think we thought it was going to be easier than it's been. It's taken a lot of effort and a lot of learnings to get it to where it is now. The idea had initially come about, it was early 2019. Phil and I were just sitting in a boardroom at a previous co-working space. We were, I think it was a Friday. We were about to go into the weekend and we were just kind of spitballing ideas of, where is help needed and how can we create something that would actually make sense for farmers to transition to organic specifically because Through 2018, we had come across the obvious organic premium, especially in grains where it's 2 to 4x. We had learned the difficulties that it takes for farmers to get there, experiencing tea yields at conventional prices, which usually result in the loss of profitability through the transition. And we didn't find any banks willing to lend on profitable land.

SPEAKER_00 33:12

So just to unpack that a bit, that means that the period of a farmer when he or she goes for certified organic, obviously in this case we're talking regenerative organic maybe not certified regenerative organic but not the feedlot organic you mentioned before so don't be scared listeners we're talking about regenerative agriculture here but we're going for certified organic because of the premium and there is that three-year period where you're being paid for basically as you were still extractive agriculture which you're not but obviously you're making the investments and you have if depending on how bad your soil has been treated you're taking quite a yield hit meaning that you're losing money for a around is anybody willing to fund that gap, basically.

SPEAKER_01 33:51

Exactly. Yeah. And the gap kept coming up again and again, and we weren't finding anybody that was funding it.

SPEAKER_00 33:58

Would you imagine that somebody would do that? I mean, there's a ready market after. There's a two, three, four X you mentioned even in terms of price of grains. And if you get your, I mean, I hear the best regenerative grain guys and girls are almost at par with the best grain ones for way lower costs. So in terms of profitability, margins, et cetera, et cetera, makes a lot of sense. but you have a gap but nobody was willing no bank would say oh that actually sounds very interesting

SPEAKER_01 34:23

exactly yeah it just kept coming up again and again we thought well obviously there's a hole here so let's fill it and let's create something that will work for farmers to effectively transition to organic so I think we immediately we're like let's put a stake in the ground we went and we came up with the name pretty much on the spot we went and bought the domain and now that we had a website it was official so we had to So, you know, over the course of the next six months, it was a lot of back end research. So writing a huge white paper, just analyzing different regions throughout. Which is

SPEAKER_00 34:59

amazing, by the way. I still like it. I know you're not super happy with it, but I really like it.

SPEAKER_01 35:04

Yeah, I'll update it in time. Those were early days. I feel like we've learned quite a bit since then. But, you know, we basically analyzed Minnesota, Nebraska, and then Iowa, looking at the profitability of organics, the market opportunities, the banks that were there willing to loan or not willing to loan, the amount of farms, and just did a full bore landscape analysis of what is the state of organics and conventional and farms that are trying to transition to organic. And through that, that really shed the light on a lot of holes in the system beyond just, okay, it's hard to find a loan to effectively to transition to organic, but the financial system is just also not working for farmers right now. You know, if a bank gives a loan and they don't get their principal plus interest, they're coming after the farmer's land, they're coming after their track Everything that they have securitized. the farmer is not able to service their debt.

SPEAKER_00 36:32

So none of these banks are taking any risk on their loans, basically.

SPEAKER_01 36:35

They're basically not taking any risk. So to just couple that with this idea of transitioning to organic, we thought we would start thinking of some radical financial ideas.

SPEAKER_00 36:46

Because none of these banks are going to do that, obviously, because they already make very easy money in the extractive space. Why would they bother with these weird transition guys and movements? And I had a profit margins down the line, but why would I bother? So nobody would move if they don't

SPEAKER_02 37:04

have to. The power is completely out of the farmer's hand. And I feel like with the markets and the financial system where they are and the lack of ability to control the cost of inputs and the value of the crop, the farmer is pinched from every possible mechanism into this one type of production system. And it's completely constrained their ability to do what they want. And so I think back to what Brandon was saying, you know, we wanted to create a a farm finance that was truly in the trenches, so to speak, with the farmer, where we truly share risk and co-journey and live with the farmer so that if they fail, we fail. If they win, we win. And so there's a complete skin in the game approach where over that transition period and payback, we're with the farmer, we're providing them technical assistance, market connections, capital, like the whole thing comes with the capital. I mean, what capital comes with, dare I say, wisdom? I mean, like once you get that money from the bank, you better show up at the end of the year with interest and pay it back. For us, it's about, okay, let's lend money very strategically to the farmer for what they need. And let's live with them through the entire process of generating the revenues to pay it back. But I'll let Brandon talk a little bit more about the revenue-based financing that I think is really important because Gen 1 regenerative finance was all asset acquisitions. It was real estate plays. It was safe. It was secure. Wonderful organizations. SLM and Iroquois Valley, Farmland, Dirt. Great people.

SPEAKER_00 39:10

Interviewed them all. Yeah.

SPEAKER_02 39:12

Great people and awesome ideas. There's just not enough innovation in working capital and operating capital. And in other areas, there's been awesome financial innovation like in the social impact zone and around fair trade coffee and in solar financing. But in agriculture, operating and working capital is just untouched. There's an awesome group, Zach Deschanaux from the Intertribal Agricultural Council is working on some fantastic stuff that I just got to know. Robbo has it.

SPEAKER_00 39:39

Please share. I want to interview them. Yeah. Robbo with Pipeline.

SPEAKER_02 39:42

Yeah. And Robbo with Pipeline. And that's about it.

SPEAKER_00 39:46

Carbon Yield.

SPEAKER_02 39:47

Yeah, Carbon

SPEAKER_00 39:48

Yield. Sam, but it's not public yet. Yeah, that's about it. Now, that's my great frustration. Like, where are all the other people? I mean, please get in touch if you're listening to this and I should be and you think I should be on that list. But where are the other people thinking about working finance, transition finance, and not buying the land?

SPEAKER_02 40:05

Yeah, we really like the idea. I mean, there are two big questions that always come up for me, which is, what does the land want to be? That's very difficult to reconcile our production systems with, right? Asking that question is a big one. That's like a multi-decadal, century-level kind of question to answer. What does the land want to be, and how do we live in reciprocity with it? The second is, is colonization, land ownership, and all of that, particularly where we are. We are white settlers in a foreign land. Everything around us in Colorado and beyond is the product of genocide and trampling over indigenous peoples. And when we talk about funds owning land, that's a heavy, heavy, heavy issue to wrangle with morally. And I think we need to crack open our current conceptions of ownership like the agrarian trust is doing fantastic work in this area and we don't have to get there now because I don't actually have a very sophisticated solution or understanding of it I just know that it's big and we need to go there

SPEAKER_03 41:12

yeah I mean for sure and in line with that if you ask me is actually a discussion we have to we have to have about the definition of capital so what are we talking about monetary capital or is it soil capital is it eco capital is a social capital I mean there is so much of what we are already addressing in the model that we use the land and work with the land and these are values these are values that we can measure without a doubt and they we can monetize them right so in that realm of thinking about you know investment and return on what values on which capital are we basing this you know if we do save the soil build the soil if we you know clean the water then that's capital we have to find ways of monetizing that and going the way that you were going I think from a financial institutions point of view is obviously a tough thing to do because they are so stuck in their system that obviously they will have difficulties basically getting into that realm of thinking differently but there is some hard facts that we can use in the discussion and they can be used as a banker just to give you an understanding if we for example in Germany or I guess anywhere if you do maintenance of your machines or you care for the machines you do the service on the machines that is a bell value to the machine. So the hypothetical value of your machine is going up. If we use cover crops instead of taking some, I don't know, mechanical process to kill the weed, then that's just basically our cost. It has no value effect on the soil, although it is basically more or less the same thing. So there's actually accountable, measurable numbers and ways of calculating that kind of capital that, as of today, is basically ignored. So there is different entry points that we can actually use. So, yeah, I mean, it would be interesting to hear if you have some regard of that sort of capital. For instance, you know, if you speak to one farmer compared to the other, if you see, well, there is so much, basically so... social, maybe on an educational side or bringing kids in or whatever that makes him stand out compared to maybe someone else. And you say, well, because he's thinking in this way or that way, we actually want to support him even more so. Although maybe on a sort of, you know, the estimated timeframe until getting into the fun zone, so to say, it might take a bit longer. Is that something you guys can take account of?

SPEAKER_02 43:35

Yeah, there's a great, one of the frameworks that we use, Gregory Landau and Ethan Solovey from a Howgood wrote The Eight Forms of Capital, an early paper in regenerative ag. I thought that was a really profound sort of constellation of capital understanding and asking the question, what do we over-serve and what do we under-serve? And, you know... the paper dollar is the one that we over-serve and the ones we under-serve are things like ritual and sacredness. And I think, you know, just going to like regenerative ag, I mean, we often talk about regenerative ag being the use of these tools and techniques, but for me, it's something far beyond that. The use of those tools and techniques toward a vision that creates ritual and reciprocity with seed and place and the sense of terroir and beauty and long living and right living together. And I don't think we talk about that enough in the regenerative paradigm about what we're moving toward. And I think that the eight forms of capital that you were mentioning, Benedict, are all wrapped up in that ultimate expression. And yeah, we've been tampering with that. I mean, it's in the current system that we're trying to disrupt, the paper dollar rules the roost. And that's what everything, all of our pro formas and everything live and run and die by. Yet underneath that, whether measured or unmeasured, is all of that that kind of deeper, juicier human stuff. And we don't have currently a framework for measuring that impact.

SPEAKER_00 45:05

And non-human stuff.

SPEAKER_02 45:06

Yeah, non-human stuff, exactly. So great question. It provokes me to think about a little bit how we analyze the creation of all forms of capital in the systems that we finance. We've been currently thinking about how do we, if regenerative ag is both financially more profitable and ecologically more profitable, how do we go about measuring that? And how do we go about tracking that progress and success over time with kind of a constellation of metrics, quantitative and qualitative, that really showcase the overall creation of a better system? And it takes a lot of resources to do that well. And I think where being a startup nonprofit, we don't have all of the expertise and staff, you know, to really go for it. But I think you're hitting on something important that I think we're actively talking about as a piece of the perennial fund is how do we track and monitor and tell the story of change, right? And we've been working with Farmers Footprint a little bit about preparing sort of how are we going to showcase a number of these farmers as they transition? Because particularly around how we think of our theory of change, which is farmers listen to farmers foremost, right? And if you can have shared experience and eureka moments between farms, it creates pockets of change. And if you look at organic adoption, for instance, you'll find there's a social factor.

SPEAKER_00 46:36

The hotspots.

SPEAKER_02 46:37

You know, underlying the adoption. And that's very, very true of any kind of agricultural adoption.

SPEAKER_00 46:42

Probably any adoption. If you look at solar panels, if you look at... Different garden. I mean, anything, we look at each other and we look at neighbors if they are, depends how big the fence is and how far they are, but we look at each other. Yeah.

SPEAKER_02 46:55

There's something careful in there from a kind of diffusion of technology.

SPEAKER_00 46:59

It also keeps you locked, obviously. If you don't have any neighbor going, then.

SPEAKER_02 47:03

That's right. Yeah. And there's, we find that from like the first movers perspective, that a lot of folks that are first movers are often iconoclastic and rebellious and actually put a lot of their neighbors away. But after maybe a decade worth of work and or even more as they attract what we think are like first adopters or early adopters

SPEAKER_00 47:24

they're better spreaders

SPEAKER_02 47:25

yeah then you have people that are part of a social fabric so there's a we're being strategic and who we fund.

SPEAKER_00 47:31

They're more accessible. So you fund the second group, if I'm correct.

SPEAKER_02 47:35

Yeah, you would fund the second group. But I also think that there are first movers that are transitioning. They're starting to attract others. They're starting to attract the early adopters. And so I think from our perspective in the perennial fund, what we're looking for are lead farmers that will become beacons of change in those communities so that when we expand in the PF2, that those become that nexus point in which we can attract, create field days, have barbecues, basically live and journey together. A key piece of the perennial fund is that all the perennial fund farmers will be a community of change. You know, there's going to be quarterly meetings on Zoom and we're going to be talking about successes and failures. And it's going to be a shared experience where we grow together. And that's just, it's critical to have that kind of human social fabric of change for a variety of reasons.

SPEAKER_01 48:26

Yeah. And then beyond that, another interesting piece is that we're actually going to have yearly field days where the investors themselves, which are typically black box behind a fund or behind the bank or behind a pension, you have no idea where that money's coming from and where it's going. Our investors are actually, our LPs are going to be meeting with all of our farmers every year to actually put a face behind these loans, behind the land, behind what's transitioning, what's being grown, and showing that resources and capital come in many different forms. And sure, an investor has the paper dollar, the thing that we value or society is valuing most right now. But farmers have the ability to grow food. And that is just as important.

SPEAKER_00 49:09

Which we're valuing a lot, actually, in this crisis. We're recording this in May, end of May 2020, while still a lot of people are struggling to find food.

SPEAKER_02 49:19

Yeah, do you want to talk a little bit about the revenue-based kind of payback?

SPEAKER_00 49:22

Yeah, I should probably do. Or Benedikt, do you have a question first?

SPEAKER_03 49:25

Ben? No, I mean, I was actually just, you know, we talked about sort of social capital and that whole universe of value that is being added, you know, as this thing about it'd be amazing to be able to measure energy because this is, I think, what happens. You create this incredible energy from which so much then sort of leads to the next and this happens and this happens.

SPEAKER_00 49:48

You probably can.

SPEAKER_03 49:50

I think this is what draws people in.

SPEAKER_00 49:52

You can probably measure like your your farm visit day, how excited are people? Are they leaning in or not? The level of voice they use, somehow you can probably measure excitement.

SPEAKER_02 50:04

We often call it a happiness project.

SPEAKER_03 50:06

I was just going to say, we have to create a gross national happiness index for farming. Do you know what I mean? This would be just the best thing.

SPEAKER_02 50:15

You know what's so fascinating? This is another kind of imperial lens on how we view the world. There is a happiness index that's around, and I think like outliers are like Burma and Costa Rica are surprisingly happy given their economic development status you know and it's conditioned completely around wealth creation and that's like so we just have to reformulate the index and always be cognizant that quantitative measures often fail to capture the essence

SPEAKER_00 50:45

they are important by definition they're reductionist yeah

SPEAKER_02 50:48

yeah by definition they're reductionistic no matter how complicated the index and how many things you aggregate in the expression or the number but does raise the question I mean for us we're actually our ultimate goal is to work toward beauty and happiness and joy and as you touched on earlier this idea that like you are curious your life your energy your color comes from your exploration of how to belong and live with the land like that is beautiful and I think that that is whether a farmer is in that manifestation mode and full consciousness or not that in there. Whether they have the language tools to express that, often they don't. Often it's much more rudimentary. It could just be a slap on the back or a smile, but it's there. That same essence is there. And I think that we're playing with that. We're playing with happiness. And that's the core of all of these complicated solutions and everything is it's about how do we create happy people on the land that are deeply considering what it means to belong here.

SPEAKER_03 51:51

It's so fascinating to hear what you guys basically experience and the way you think and the way you talk about it because it's just you know I relate to so many of the things it's basically it's interesting how from very different places on the earth and coming from very different experiences and doing very different things we all see and feel and it's fascinating and I think that is why I am so incredibly positive with regards to the future because I mean there is this huge amazingly active aware group of young people the Friday for future generations, so to say. They are more aware than we have ever been. And they will bring so much energy now to this table. And, you know, they will make sure that we do change. And the fascinating thing, and Kun, you know this from Jan Gisbert as well, once you have realized the potential and you see the beauty and the love and the holistic thinking, it will never lose you. I have never met someone that has actually, you know, grasped it, has sort of, you know, even if they have been a bit critic they had some time they had some interest they they asked you again they came to visit again but if they did you know take it in it changed everything changed you know and this is i think what we're gonna see in the next couple of years and and so i'm just you know i'm incredibly hopeful and positive about the whole future of land use and on that level on the whole idea of economic systems and that comes in you know how do we think about capital the money system obviously it's not going to change tomorrow but there's huge changes

SPEAKER_00 53:23

in front of us i think yeah just to give one piece of background the person we mentioned is a longtime supporter of the podcast and has visited i wouldn't say seen the light but longtime investor in internet companies a lot of experience on that side and basically saw the potential of regenerative agriculture and i think like many of us you cannot unsee that like there's not going back to what you were doing before maybe it's taking your experience of before and applying that which is actually what he's doing so a shout out to that and i think there are many that could once you at the depends. It could be a TED talk, it could be a visit to a farm, it could be a book, it could be... I've heard many of those stories because I always ask the first question, why soil? But once you've seen that and experienced it and have seen successful regenerative farms and farmers, you're not going to unsee that. It's not that you're going to go back to commodity trading or go back to designing houses. I mean, it's very difficult to unsee.

SPEAKER_02 54:16

Yeah. Two important things I think come to mind. One is, I forget who said this but you know once your consciousness is expanded it'll never take its original shape again and i think this is the importance of eureka moments for farmers where they have these ahas and going oh my goodness and then you have a breakthrough and to whatever degree we can create the container in which they self-experience that is the best thing they have to own it

SPEAKER_00 54:47

facilitate it yeah

SPEAKER_02 54:48

it has to be completely their agency authentic experience and so that's I would say it's an implicit goal. We don't set up to create that. It's just an implicit goal in which we look for those wins.

SPEAKER_00 55:02

I think it's time to dive a bit into the technical weeds, Brendan, because we've touched upon the perennial fund. We've mentioned revenue sharing and flexibility, et cetera. So what is the current iteration? We're in the end of May 2020. I'm probably going to ask you in a few months it again. What is the perennial fund as we speak now?

SPEAKER_01 55:19

Yeah, good question. 59 minutes in, a lot of foundations philosophy that we're grounded in now?

SPEAKER_00 55:25

I would say six seconds and we're in an hour.

SPEAKER_01 55:29

So the perennial fund is an organic transition operating loan that helps farmers transition conventional acres to organic. We couple in our technical assistance. So all of the farm planning that Phil went over, we wrap the payback in a revenue share. We cap the payback with a return cap at one and a half X. And at the end of 10 years, and Anything that the farmer owes that hasn't been paid back is forgiven and their debt is erased. So to get into the nitty gritty of how that works, what we're doing is issuing operating capital through the transition, which takes 36 months via the USDA organic certification. So from the last application of a prohibited substance, whether that be glyphosate or planting a GMO seed, you can then begin the transition to organic. The issue there is that you cannot sell it as an organic crop, you can only sell it as a conventional crop while experiencing reduced yields. So usually that results in losing money on an acre by acre basis. So what we're doing is giving out operating capital through those transitioning years that is flexible on its payback during those 36 months. The farmer pays what they can through the transition. Sometimes we can even give them a grace period if that's warranted, but likely they might be paying$50,$100,$100 back on our loan. So they'll definitely be coming up short through the transition. And that's us understanding that they are seeing a loss on an acre by acre basis during those years. Once they hit certified organic, then the payback on the loan begins. It's based on a revenue share targeted on a five-year payback until one and a half X, whatever we loaned out is paid back. So let's say we were to give a loan of$100 an acre per year for three years,$300 total that farmer would then owe$450 over the total life of the loan. So let's say they took a three-year grace period. They didn't pay anything during the transition. They're now certified organic. We would base the$450 payback on a five-year payback. So$90 a year for the course of the next five years. And that would fluctuate depending on the anticipated rotation and what we would expect between what they're growing, what they're yielding, where they're selling to over the course of those five years. It's likely to range between 20 to 40 percent of a revenue share. Really, the highly dependent factor there is whether they own or lease the land. The cost of leasing is about twice the cost of ownership. You know, difference between paying rent at four percent of the land's value versus owning it, which usually is around two percent of the land's value on an annual basis. So three years of transition, five years of targeted payback. And then we build in two buffer years to account for varying market and weather conditions. So those are just zero years. You know, if the crop gets hailed out in year six and the farmer can show us that and prove it, they will not owe us anything at the end of that season.

SPEAKER_00 58:35

Also because there's hardly any revenue. Yes,

SPEAKER_01 58:37

exactly. There's nothing to pay us and we're not...

SPEAKER_00 58:39

There's no discussion,

SPEAKER_01 58:41

yeah....going to take their land or, you know, their house or truck or whatever that may be just because they couldn't pay back in an individual year. You know, this is an investment in them. You know, it is a loan, but we just think of it as an investment, you know, we're investing into their future over a longer term lens. So it's the total of a 10-year note, three years of giving out capital, five years payback, two buffer years. If we can't help connect them to the right markets, attain reasonable yields, help them access other types of capital that they might need for equipment and infrastructure, and they owe a 1.4x at the end of that 10-year period, and they're still short 0.1, we're going to forgive that in that instance. We've tried our best to help them successfully transition to organic. We both agreed to the terms. We went through that together and we're trying to tie our risk

SPEAKER_00 59:32

to the

SPEAKER_01 59:32

risk that they're taking. So those are more of the mechanics of how it's laid out. And last year, just I guess to build on the story of after we wrote the white paper and we realized that it was practical, we applied for an NRCS conservation innovation grant through June and July. We were granted that in So that's$817,000 over the next three years supported by the USDA to get this thing up and running and support our efforts for the next few years. So we're actually not even charging a management fee on the fund in the essence of testing this pilot, proving its viability, bringing in the right farmers, putting in the infrastructure, you know, financially, socially and farm planning wise so that we can scale up in Fudge 2 and go for a more serious$50 million fund,$70 million

SPEAKER_00 1:00:22

fund. As a fund, what's the current, what are you targeting as a fund, let's say in terms of size and how many farmers and how many acres, because probably it's connected to the farmers. What are you more or less looking at? What is the potential return? Let me ask the investor question as well, the financial return. What are more or less those pieces just to understand what we're talking about? Obviously you're developing, it's a pilot one. Nobody knows, but you have an idea.

SPEAKER_01 1:00:44

Yeah. So it's a$5 million fund targeting a 9% IRR based on the 20 years of historical organic data that we've collected. And working with various extension agents, Finbin, to collect all that information. Farmer-wise, we're looking at 20 to 25 farmers across the upper Midwest. So Iowa, eastern Nebraska, southern Minnesota, Indiana. So

SPEAKER_00 1:01:07

200,000, 250,000 per

SPEAKER_01 1:01:09

farm. Well, it's going to be a more diversified approach. We might have a couple farms in that 250,000 to 350,000 range and then have many more farms. farms in the$25,000 to$100,000 range. We'll have some efficiency in terms of deploying more capital into farmers that we're very confident in that are larger, and then diversifying and testing different solutions on the smaller farmers. We find there's just varying ideals based on size, varying access to different markets. You're talking local markets that you can sell directed to consumer, actually putting the farmer's face behind a bag of beans. Then at the other scale, you're filling up an entire elevator with a single farmer's crop. So we're trying to diversify, learn, really understand those systems over the next few years. So looking at likely 5,000 to 8,000 acres between those 20 to 25 farmers, that could vary, could go a little higher or a little lower, really just depends on who we ultimately choose to work with after running the full due diligence. Right now we have 24,000 acres in the pipeline and 60 farmers in the targeted area that you know we're looking to work with we've had conversations with all of them and phil and i are actually hopping in a sprinter van in july and going on a road for a month to just get on the land talk with all of them get to meet them in person and hope sounds amazing those two

SPEAKER_02 1:02:38

yeah yeah we would invite you to come if it wasn't uh the pandemic

SPEAKER_03 1:02:43

i would have been there yeah could you um maybe shed some light i'd be interested to know like because you're going through so many experiences of which are many of which are going to be very different, but there's going to be kind of quite a lot that are sort of similar or kindly similar, like growing that number of farmers on that scale. Do you have any sort of data driven processes? Do you have any sort of monitoring process in the back that allows you to take as much as you can from the experience that you go through with the different farmers? That's one side. And the other side, do you also, you know, on a sort of strategical way, think about basically leveraging certain products inside I guess, buying behaviors that you can then basically share within the group. Is that something you also think about?

SPEAKER_02 1:03:28

Yeah, big time. We are really starting to develop more of our market dimension and we'll probably be hiring in that zone here soon where we need someone to be the liaison between the farmers and their products with the potential market offtakes with a whole host of CPG brands, consumer packaged goods brands that we know. Boulder is an epicenter of

SPEAKER_00 1:03:53

consumer... It's a food

SPEAKER_02 1:03:55

hub. Yeah. So we actually can come to the plains with a lot of those connections and do that matchmaking. You know, we're already working, for instance, with Quinn Snacks. They sell in hundreds of whole food stores across America. They work on gluten-free pretzels. And so we've actually been helping farmers here transition and diversify their crops into like a food-grade white sorghum. And that uses less water. It has a short growing season so you can squeeze it in rotationally. But actually... could be a really good thing for your farm, Benedict. I didn't see that in your crop list. And it's good for milling. It's great for the kind of gluten-free, celiac-sensitive zone, et cetera. And so we're starting to pull and develop more relationships. You know, everyone from like Patagonian provisions to pipeline foods, you know, and everyone in between are possibilities. It's about what is the most efficient model to kind of hold that portfolio of farmers and that wide diversity of farmers and bottleneck them through these conversations Thank you so much.

SPEAKER_00 1:05:22

Not easy. It's very important, but it's not easy.

SPEAKER_02 1:05:24

Not easy, but it's very important. And so, you know, there are ways to use the existing infrastructure and be strategic. We're going to try to bundle as much as we can with these farmers. If we can work within a community of practice that are already linked through a social network, like the Practical Farmers of Iowa, or through Moses, or through a variety of other on-the-ground social fabrics that already exist in those states, then we'll do that.

SPEAKER_00 1:05:49

Do you then invest in all of them, or you pick a few and then create social stress, maybe.

SPEAKER_02 1:05:54

Yeah, we pick a few. We're not going to do it all. We don't have the resources and capacity to manage all that diversity, which is part of the purpose of our road trip in July.

SPEAKER_03 1:06:03

Yeah, definitely. I mean, that community aspect of that is just incredible, right? Bringing all these people together who came from, you know, shared certain experiences together. Now they see new light, new opportunity. So again, you know, the sort of the effects that you bring on a social level, because they're obviously going to talk around in their area and they'll be interested. And so this is like, you can see it already spreading and the demand being bigger and bigger and bigger. And I sincerely think that, you know, on your side, you're going to be like, fuck, what did we get ourselves into? Because now we have just so many people to look at and screen. And basically you just can't help them because there's others have to step in. And which again, obviously is a great opportunity, right?

SPEAKER_02 1:06:47

Yeah. One of the strategies is we're not We're not from the upper Midwest. to be the glue of that farmer to farmer network and manage that conversation because they already have existing relationships and us not try to come in there like a bull in a China cabinet with all of our high ideals and lofty ambitions and financing solutions. It certainly matters and it's good to be there, but you've got to ground it, always ground it. And that really means funding the people in their place. So that's a big part of, so, you know, in the next couple of months, we'll have people with Matt ag, you know, trucker hats in the Midwest.

SPEAKER_03 1:07:54

Send us some, please.

SPEAKER_02 1:07:56

Oh, I will. Yeah, we'll send you some. We'll put you on our journal mailing list to swap writing.

SPEAKER_00 1:08:02

Perfect. Any, I mean, I want to be, I think we can literally fill a lot of hours and I know that Brendan has to go at some point. Phil said he had three hours. Don't worry, we're not going to fill it all. But we could, we could. Any, I wouldn't say tips because tips sounds too cheesy and easy. Any suggestions ideas for Benedict, who obviously is a farmer that probably now is wishing he was in the Midwest and could be part of perennial fund, but he's not. He's in Eastern Germany and is wrestling, challenging, loving the challenge, but it is a challenge of potentially putting money to work. And any, what would be some ideas, directions, suggestions you would, questions you would ask? What are the questions you would ask him?

SPEAKER_02 1:08:47

Yeah, I mean, I think if I were there with Benedict now, we would take a whole day and kind of work through our farm planting process and we'd start with that kind of essence discovery and values alignment and we'd spend a whole day together and work through the scales of permanence because there's a the summary of your farm what you're doing is really impressive the things that pop out to me really quick are maybe some more dryland things and more perenniality working with 17 inches of rainfall or 450 millimeters or 450 millimeters rainfall it's just it's a really delicate zone if you make a mistake you're going to pay for years and so looking for for ways to really looking for ways to keep the soil and the plant life intact. So maybe expanding more into kind of a grazing ruminant animal husbandry system and linking that into kind of market plays that are clearly direct to consumer. The ambitions of an education farm are awesome. I think that's needed. So to whatever degree you can turn it into a regenerative ag center, particularly because you have all that deep philosophical underpinning and that belief structure that I think is where a lot of people are finding themselves called to being that center of change that attracts, you know, and turning into that kind of more stone barns type center might be the best fit for that farm. Just because you're an attractor already, you're eloquent, you have the ability to harness social imagination and live with it. And I think that your farm is going to be unusual compared to the broad, what a commodity farm can do. I think it's really hard for a commodity farm to diversify and do direct consumer market because they often aren't evangelicals for their product and we can't expect them to become that. And so you have a unique set of personal tool, a unique social and language toolkit that I think is well suited to that kind of direct marketing regenerative ag center type thing, which is utterly unique business model. If you think about a food hub, it has to be situated deeply in its place. And that's a customized process that is unique to the space and the person. And so for me, I sense that that's your potentiality and that's what's to pursue. And we can get into the weeds of like interesting crops. I think sorghum is super interesting, perennializing, grazing, but you're dry and you're brittle. And I didn't see if you had irrigation or not or whether it was all rain fed, but if you do have irrigation, that's a whole different conversation. If you're all rain fed, that even speaks more to a revitalization of the grasslands that were probably there.

SPEAKER_03 1:11:17

Yeah, I mean, I'm not sure about all the nice and positive things that you see about me but what I can tell you though is that yesterday evening we had another 30 cows arrive of which 20 are pregnant so by the end of the year we should be looking at around 100 heads going strongly and I mean I totally agree with you I mean this is pretty much what we focused right on as of having more sort of you know the whole grasslands cover crops and basically bring down the acreage that we use for grain production maybe only on maybe 40-50% of the whole agriculture potential area and use the rest with the cows obviously you know in the holistic management sense and have basically the cover crops and the grazing parts basically revitalized through the what the cows bring to the table in many fronts to then if we grow a crop we actually go you know harvesting five tons a hectare whereas as of today will be like around three tons per hectare and the whole idea of having perennials is something that we are very keen on learning as much as we can but because of the missing rainfall because of the late frost risks, because of obviously the sandy soil. What we have to do is just to go crazy on species and kinds. So we have the highest diversity of plum trees and pears and all those different bushes and trees because out of a variety of 60 different species, probably only three or four can make it. And as of today, no one can tell you that, right? So we have to do that first little step. And although it is time consuming, I think if you don't do it, then... It's not a clever decision to invest in that kind of thing because it could be the wrong species. And then you're like, okay, that's a bugger. But obviously that's also the exciting part of it, right? And things move so incredibly quickly, right? I mean, if I think back, just, I mean, the first cows arrived in end of April last year. We founded the company that we're doing all those kinds of projects with at the farm level at the moment, only in March last year. We do, basically we have that small... We found at a small agriculture company that we're doing all the sort of different multifunctional land use models from holistic grazing to agroforestry, centropic agriculture, the cold composting parts. Because on paper, or theoretically, they're all sort of in the gray zone in Germany as far as you're allowed to do certain things, which has no theoretical backing, but they just don't fit into the German rules and regulation framework sort of thing, right?

SPEAKER_00 1:13:48

I'm

SPEAKER_03 1:13:48

going to get angry emails. I know already. We use that to have... to be more free in the way that we can try, right? And if we have visitors come and experience it, none of them is going to say, well, that doesn't make sense. No, they're all like, wow, fuck, yeah, that's incredible. Let's do that, right? So I think that making it experienceable, not just hypothetically talking about, you know, wouldn't it make sense, you know, in a dry environment to plant thin tree rows spread across evenly about the field to reduce erosion, wind erosion, water erosion, also change the microclimate within the rows. Everyone will be like, yeah, I'm not sure planting trees on the field is such a clever idea. But once they come and they realize it and see it and also have basically, if you can, scientific backing and sort of development, then that obviously can leapfrog the change in thinking. And I think that's so crucial, right? But in the end of the day, to be honest with you, obviously, we have an incredible time doing what we're doing because obviously there's so many people that come and that help us and that work with us and live with us. And it's just an awesome community but to be honest with you that like the idea of course is to find land use models that work right and that can be scalable so what we try to do is bring in technology basically we try to find groups and friends and like-minded people who come from different other angles in the industry that develop the machines that we use right because there's just such a huge potential and different machines that we can use and that we can develop and i think that is also part of it so i mean it's just i'm very very grateful for being able to do what we're doing or what we can do

SPEAKER_02 1:15:26

yeah yeah i think that um i love that i mean when i when i go to stone barns or any other ag center i think they're really important for inspiring not only culture and society but also providing that like tip of the spear push that lets others not bear that risk so if you're the one experiencing machinery and farmers can come for field days and see how it's working like you're de-risking that technical solution and the opportunity. I think there's a really important role for those kinds of institutions that are regionally situated. The other thing, too, that came to mind, two things in your card was, what is your pulse rotation in a dry land? So I think of it, garbanzo beans and lentils, two plant-based proteins that are on the rise. They'd probably do well in your area if you have enough growing degree days and you don't get too much rainfall in the late summer. What was the first one you said? Lentils and? Garbanzo beans. Chickpeas.

SPEAKER_03 1:16:24

Oh, chickpeas. Yeah.

SPEAKER_02 1:16:26

The other thing is, is a little bigger idea is the idea of, you know, not only demo demonstrating all of these possibilities, but also being an aggregator. So if you have an ability to actually create demand, so like, let's say you buy a grain bin for all your grains, or you buy a big barn for all your hay, like you could actually create an attractor for those in your region, which becomes an invitation for others to change. You know, I wonder if you're yourself moving from that, like first mover to early adopter, like, where are you in that sort of, you know, level of being an versus a community leader? And what's that kind of personal landscape for you and where you want to go individually?

SPEAKER_03 1:17:09

To be honest with you, like, I think it's too early to tell. We are at the stage where everything we do, we do wrong and we don't know anything and we just do it. And once we think we have figured out something a bit better, we do just as much mistakes, just different mistakes, right? So I'm far away from either being able to tell others how they can do it. I'm far away from knowing how, what works. So basically I, you know, the, I think, you know, we're doing things that not so many other people are doing right now. And this has some value in itself because I realized that certain things, people that are here realize certain things. There's sort of an energy happening from it, but it's, I would feel much more comfortable if I could look back on a time and say, look, this is where we started. This is the road that we took. This is where we are today. And I can basically show you certain numbers. I can show you certain developments as far as the ecological side is concerned, the economic side is concerned, but maybe also on a social attitude or on a social level. I think once you have that, you still have to be very aware that this is what worked in your context. And it has to be a farm that's just 500 meters away it doesn't necessarily mean that it works for her or for him, right? So I don't know. What my strongest belief in all of this is, is that it's the narrative, it's the doing it, it's the story, it's the passion and the love that you bring into it, the energy. Because I think I was a really, really bad student and I generally don't like being told things, right? I think there's quite a few of us who are like that. So I think if we look at ways of how we can change, how we can make others also change you know it's never good to say well don't do that anymore because that's bad or whatever and do this or do that but try to do something yourself that has so much that people feel or see or realize because they also want that they also oh you guys are laughing all the time what are you doing I want that too what is it that you're doing so basically create an energy that draws people in and they come basically to you and so we are at the very very beginning so I don't think we're anything than, you know, a couple of people who have a certain vision and just the possibility and the freedom to just plant weird stuff on fields and have animals and like do mistakes all day, basically.

SPEAKER_00 1:19:38

But that's why we're here. I mean, I was in Berlin, we got connected through a mutual friend and you said, come over and that, and not even a year ago and look where we end up now. So I think you already are attracting a lot of that energy and those people that want to build compost systems like we discussed in the episode with Robin and attract market gardeners and attract cows apparently and bees and a lot of other stuff.

SPEAKER_02 1:20:05

Yeah, you're doing it. That's exactly what your mantra or your purpose is in the doing. It's like thoughts without action are dead. And I think that we have to It's all in the practice and not being afraid of quote unquote failure. As we say, we're building the ship as we sail and that's all you can do.

SPEAKER_03 1:20:26

The Germans obviously have a word for this all day. They call it, we cross the bridge when we get there.

SPEAKER_00 1:20:33

I'm imagining like this cartoon where you jump out of the plane and on the way you have to build or like almost stitch the parachute. That's the sort of the feeling I think sometimes some of the farmers I know have. I think it's a, I mean, we're one and a half hour in. I have the feeling we, as always, I say that a lot of times we scratch the surface, but I think it's also a good moment to stop and to stop at least for now. I want to thank, I can open it up obviously for some last thoughts, et cetera, but I want to, first of all, thank all of you for taking this time early morning, early evening, and obviously coming here and share from a place of learning and openness and caring. And I think that doesn't happen enough and it's good to see that it can happen on this spot Yeah,

SPEAKER_01 1:21:18

well, thank you, Ken. It's awesome that you've put this great community together. You know, we've been able to meet some wonderful people just through this podcast, just through this now global community that's building. So I really appreciate both of your works. Thanks for having us.

SPEAKER_02 1:21:36

Likewise. Deep gratitude. I was reflecting on Benedict's comments around how remarkable our cared feeling and sense of purpose is. I think that's a beautiful thing. That's something larger calling us into being. It's the feeling of emergence. It's the feeling of living in a paradigm shift. I think we're at that edge. It's tumultuous. It's beautiful. It's like a galaxy expanding. We've We don't know what's going to come yet, but let's participate.

SPEAKER_03 1:22:07

Yeah, I couldn't have said it earlier, but much more beautifully. But this is what I see also, particularly in this space. There are some incredible gifted people as you are, and you can bring so much beauty and so much simplicity in the most complex system. So there's a lot of this that we need. So also from my side, thank you guys so much for your time. This is just incredibly valuable, not only to me, but I think to all of us. So yeah, keep rocking. Keep sailing while you're building the ship. We'll see you in

SPEAKER_02 1:22:39

Europe sometime.

SPEAKER_03 1:22:40

Yes, please. Anytime. You're always welcome. Obviously, my door is always open for you guys.

SPEAKER_02 1:22:44

That's great. That sounds fantastic. It'd be fun to follow up late summer after our road trip or maybe even during a road trip. Do a follow up then and that way we continue the journey together of discovery and possibility.

SPEAKER_00 1:22:58

Absolutely. Yeah. Thank you for listening to this episode, which is part of the Transition Fit Thank you and see you next time.