Final episode Transition Finance for Farmers with Benedikt

The final episode of the special series dedicated to Transition Finance for Farmers in regenerative agriculture and food with the co-hosts Koen van Seijen and Benedikt Bösel.

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. Discover their journey to find out what are the key principles of transition finance for regenerative farmers. Find out more on
investinginregenerativeagriculture.com/transition-finance-series

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Koen van Seijen and Benedikt Bösel look back on the past eight months and concludes the lessons discussed in previous episodes Transition Finance for Farmers series. Hint: transition finance isn’t the most important thing for farmers to speed up the transition and increase the regenerative practices they use.

They also talk about the effects of COVID-19 on farming and how important are market access and long term off take agreements in transition finance. In the meantime regenerative agriculture is booming.

Find full show notes and links of the episode on
www.investinginregenerativeagriculture.com/2020/09/01/transition-finance-ep9.

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Transcript

SPEAKER_01 0:00

This is already the last interview in the series Transition Finance for Farmers, where my co-host Benedict Boesel and myself look back at the eight interviews we've done during the past eight months and what lessons we've learned and conclusions we can draw. Hint, transition finance isn't the most important thing for farmers to speed up their transition and increase the regenerative practices they use. 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 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 Transition Finance for Farmers And we've reached the conclusion of this series, which we started in December 2019, which obviously has been a crazy six, seven months, actually eight months when you listen to this. And we thought it was good to spend a few minutes to sit down with Benedikt and see what has happened both on the transition finance piece and the farm piece on obviously COVID and everything around it. So Benedikt, thank you so much for being back on the show and for our final episode together.

SPEAKER_00 2:40

Yes, hi Kun. Nice to be here again. What an amazing couple of months we've been through, as tough they have been for many of us. Also, I think some really positive things happened out of it. And what great guests we had. What an honor to speak to those amazing people. I mean, I'm really thrilled about what people we could actually talk to and to see how they think and which direction they are developing. It's been an amazing journey.

SPEAKER_01 3:07

Yeah, maybe even partly thanks to the crisis, we were able to get some people that otherwise would be traveling to conferences and et cetera, and in this case they were not. So that was a nice benefit from a very terrible situation. And we had some amazing guests. We discussed a lot from the financing, obviously, but also to the ingredients, to do you actually need transition finance, which Nicolas very passionately argued that you don't, and what kind of examples are already out there. But let's start a bit with these months. How has been this crazy COVID-19 months for you and the farm? As we're talking now, it's height of the summer. you're harvesting, what has been the last months like if you look at the crisis and the farm?

SPEAKER_00 3:49

Oh, wow. I mean, it's been incredible on so many levels. It's really been a time where you just realize how powerless you are in a sense, right? I mean, any kind of ideas we have, visions we have, projects we've got going on and friendships, family, whatever it is, all of a sudden you realize that we're all are dependent on an ecosystem that has to be intact and healthy and that obviously draws to soil immediately. I think what has happened, the crisis that has happened is just maybe the right crisis at the right time for us as a society to reflect on the kind of things that have been driven or driving us basically, right? So I think and I hope that we come out of this realizing that there's a few things that we have to maybe take more care of or take more into consideration, you know, when it comes to ecosystems, when it comes to also how we treat each other and how society works. And if you see that COVID was one thing, but there were so many other aspects in the same time that basically just showed us we can't carry on the way that we are or that we have been. So incredible times that we're living in. I mean, on the farm level, we have actually been incredibly lucky because no one got ill and none of the family members got ill, which I'm obviously incredibly grateful for. And on sort of the operation side, it has been a very valuable time for us, for me personally, because I was bound to be on the farm. So that was something that usually is not that easy or not that often that I am here on such a long time. day in day out because obviously i have

SPEAKER_01 5:41

where do you see the difference or what have you seen differences because you were basically blocked to be on the farm and not travel for conferences etc where do you see that change compared to other years

SPEAKER_00 5:53

i think you get much more sort of grounded and sort of also the speed of things kind of slows or not necessarily slows down because the work actually picked up but it ties you more to the cycles and the things happening on the farm level so you're more in tune with that which has a very nice also from a more sort of spiritual note very nice I guess it's an attitude that comes with it and you know obviously there's a lot of things that usually I wouldn't be doing or usually I wouldn't have time for that I could actually do when it comes to operational things as well so that was very that was incredible time and you really kind of honor what you are able to do and And you appreciate the luck that you have as an individual, but also as a team, as an operation, as a family, living on the outside, being able to do this incredible job and this incredible work that we're doing. I mean, it's just talking about privilege. I don't think you can be more privileged than being able to live on the land and care for the land and grow food and try to work in a community and with the community. I think that's something that I have never seen so clear in a sense.

SPEAKER_01 7:07

And did you see, like you obviously grow food, but you grow mostly large quantities. It's not that you are operating on a farmer's market with grain, et cetera. Did you see an interest, any way an interest from people as they were discovering again, where food is coming from? A lot of people I know in the local food movement had, have seen booms. I mean, we discussed it on a few episodes as well. Did you see any of that interest as well towards your farm? Because you're quite visible, obviously online. There's not a lot you can buy directly, but still, did you see an growing interest from neighbors, people around, Berlin, etc.?

SPEAKER_00 7:42

Yeah, for sure. I mean, there has been an incredible spike, I think, of interest on the regional household or local household level when it comes to baking your own bread and people asking for grain and flour. And

SPEAKER_01 7:56

you're asking how many tons can I send you? No.

SPEAKER_00 7:59

Yeah, exactly. I'm like, I deliver 25 tons per serving, so to say. And it was interesting to see the price developments in the supermarkets when it comes to flour for example things like that and I mean on the projects that we have that we are developing you know if it's you know the syntropic agriculture field or if it's our friends over at Acapulco that do the market garden there's been incredible interest

SPEAKER_01 8:23

it must have had a good year yeah

SPEAKER_00 8:25

yeah I mean they could they could scale so much it's incredible and the interest is huge I think people have really again drawn you know back to the basics and rediscovering food and the value of food and also rediscovering the area that they come from. So it's not only about food. It's a lot about food, but it's also not being able to go anywhere. Suddenly they realize how beautiful the areas they live in and suddenly they go on a kind of holiday just driving 200, 300 kilometers within Germany somehow and appreciating that a lot. I think that's incredibly valuable as well. Do you

SPEAKER_01 9:02

see that in the B&B you're running as well?

SPEAKER_00 9:04

Well, I mean, it was closed for most of the time. Of course. But Obviously, now it's, you know, many people come and want to stay and enjoy that. Yeah, so I think from many sort of aspects, it's been very healing in a sense. And I mean, on the farm level, we've had an incredible time, I have to say, maybe the most incredible time that I've had since I took over in December 16, because we had one agroforestry planting event. planned for spring of this year and we were planning earlier in the year, maybe December last year, that we'd go through companies that we kind of cooperative or that we have a good relation to like Ecosia or Patagonia or Dr. Bronner's asking them to do a little advertisement in order to bring people here to help us planting, have like a community planting agroforestry weekend or probably a couple over more weekends but basically try to work with them on getting people here to help us with the whole planting which of course because of the crisis wasn't possible anymore so we used a platform that was initiated in Germany where farmers were basically able to find volunteers or people that would come to work for you for harvesting or for doing farm related work and we basically just sat in there wanting to plant 10,000 trees, help needed. And after that, my phone, it rang, I don't know, for three days in and out. I've never, you know, I basically couldn't take it away from the charter because it was just empty all the time. And the amount of people asking to come to help and enjoying, you know, thinking about planting trees and the interest.

SPEAKER_01 10:57

How many people showed up?

SPEAKER_00 10:59

Well, in the beginning, we started with four. Then they The next day it was eight. And then it continued. Towards the end, we were a group of over 35 volunteers. Wow. Yeah, planting.

SPEAKER_01 11:11

How long did it take, the 10,000 trees? Because 10,000 is a nice number.

SPEAKER_00 11:14

Well, the 10,000 was a couple of days, I think four or five days, basically. But we kind of couldn't get rid of the people in a positive sense. So that after that, you know, we just continued. They're still there. Well, one is still there. Teresa, she's actually one that came and time and never left, which is obviously something we're incredibly grateful and happy about. But this is the kind of stories that we see constantly, right? And this is what gives me so much hope. And I mean, with that group, we planted 10,000 trees. Afterwards, we planted 100,000 tree seeds. We planted 10,000 old varieties of potatoes. We planted 300 blackberries. So, you know, it has been an incredible time and we've been working three weeks day in day out i was actually only uh cooking and buying beer and seeing that everyone's kind of happy and joyful he

SPEAKER_01 12:11

always says that this is this volunteer stuff is free labor but you have to buy a lot of beer to cook a lot

SPEAKER_00 12:17

yeah for sure and i mean it was really i mean we're joking about it now but i think it's it speaks for so much when it comes to farming because the outlook so often is grim and you know young people not wanting to take over and things like and of course it's Corona so that had an influence because people were stuck in their flats but you know we had people coming from the local area we had people coming from further away and there was some that were in some sort of tech company in Berlin that wanted to get out we had some that you know are very sort of alternative and all of them were you know talking the same kind of how should I say well They were all...

SPEAKER_01 13:02

Soil language.

SPEAKER_00 13:03

Yes, they loved each other. They loved what was happening. It was a real form of community. Even if new people coming in, they were part of the group immediately. It was really from a sort of like a social perspective or... Yeah, I don't know really to put it into useful words.

SPEAKER_01 13:27

How many corona babies will we see in seven months?

SPEAKER_00 13:30

Well, it's going to be a few, I think.

SPEAKER_01 13:34

We need more people on the land.

SPEAKER_00 13:36

We're planning on maybe bringing out something like wheat dating, you know. Actually, I stole that word from a dear farmer from Austria. But I think, you know, I mean, it's jokes. And I think that's what it's about. Yeah.

SPEAKER_01 13:52

better to meet than when you're planting a syntropic agroforestry field I mean that's there's no better way to start a relationship

SPEAKER_00 13:59

absolutely I mean there's a huge variety and diversity and you know it's complexity exactly and it's all about unconditional love you know so that is obviously a good door opener

SPEAKER_01 14:13

and to get back to because in that crazy period we also managed to record actually quite a lot because when we started obviously none of this was happening I think the first interview with Triodos was still pre-corona and the first interview we did was in December so obviously we didn't even know the word yet so we managed to record quite a bit looking back what has been the most surprising thing that immediately now if you think about the interviews what pops up as the most surprising thing or the thing that actually still is with you and a story or an insight that came out of these interviews

SPEAKER_00 15:24

Wow, that's a tough question. I couldn't put down one individual one because each of the people that we talked to brought not only one but a few amazing stories and incredible depth and insight. So I think it's difficult to take one out. But there are some things that have stayed with me with me in a sense, and that I've obviously then, you know, thought about more and more. Um, and I think one of the crucial things is really the, the, the marketing aspect of basically building a market for the product. Um, which if you think about it makes sense and you could think about why, well, obviously, you know, but, um,

SPEAKER_01 16:18

yeah, but it's easier said than done. I mean, you could say, oh, you have to find a market, et cetera, but exactly in this case, we went a bit deeper.

SPEAKER_00 16:24

Exactly. So helping the farmer with advising him or her on the kind of different systems that you can use or crops that you can use, that is one thing. Having a financial, let's say, support system in place is also incredibly important, but it's also just one thing. But really helping the farmer or the farmer himself or herself establishing a market first, in a sense, making sure that you have a reliable channel of selling a product at a certain price for a pretty long period if possible, I think that is really maybe the most important thing. Because if you have that, you have a kind of guaranteed cash flow or you have at least something that is kind of plannable. And if there is some way of you being able to make sure making it unique for your context in your situation then that will allow financing to come in that will allow investors to work with you in a certain way that will allow you know around that sort of frame of I guess business concept to see where you can tweak the system towards a direction that you want to go into so I think that has has been something that is incredibly valuable. And I mean, you know, Phil from the Perennial Fund of Mad Agriculture. What an incredible name, by the way. I'm telling everyone the story. I'm wearing the cap proudly and telling everyone how amazing.

SPEAKER_01 18:10

I have the caps here, actually. I'm showing them on video now, which is useless for if you're listening to the podcast. Good choice, Kun. They send us some very nice caps. I'll put a link below if you want to order them.

SPEAKER_00 18:20

Anyway, so this is something that they also are doing quite strongly. They say, look, we We work with the farmers and one of the first things that we think about is how can we find a different new form of marketing for their products so we have that covered. And once we have that established, we have a basis on developing everything else. And I mean, as I said, you know, you think, oh yeah, that's obvious.

SPEAKER_01 18:42

But it's not because we did a whole series on transition finance and unpacking that completely, not completely, but quite thoroughly and coming to the conclusion now, which I think is a very valid one. that unless you have long-term, which you said, and an okay or good price, even the best transition finance in the world is useless for a farmer if he or she doesn't have access to an appropriate market. So a long-term offtake agreement with a good price can change basically after that transition finance can follow because it is suddenly investable and knowledge can follow and peer network support can follow because you have a base for, okay, we're going to do this grain for this and this, or we're going to do this type of, um, rise, et cetera, et cetera. So let's find the best knowledge in the world to do that with the best regenerative practices, because we have a customer that wants this and is willing to pay for it and is willing to actually grow with it, let's say for the next few years. And you're saying basically that's the crucial bit is market access long-term and a partner in that way. And then the other pieces of a successful transition or successful start of a transition, because it seems to be never done. they will follow after having access to a good market.

SPEAKER_00 19:57

Yeah, absolutely. And I mean, it's, if you think about our farm, where as of today, we are still obviously very much grain dominated, we usually would have a situation that depending on our crop rotation, we have, you know, a certain acreage per crop, and then we would, you know, decide and analyze the sort of the crop, the crop's quality and quantity, of course, and then see to what which kind of resellers we will sell. Maybe you have a contract that we will do before the harvest starts, but usually you are just very dependent.

SPEAKER_01 20:36

Very ad hoc, very in the year itself.

SPEAKER_00 20:39

And it's very dependent on, let's say, global grain prices in a sense, obviously ecological grain prices in our sense, but it doesn't really matter. And depending on the market, it goes up or it goes down, it's a bit more, it's a bit less, but really you know you have no way of reliably working on a certain income or on a certain price because also your product you know it's I mean they can buy from anyone why would they buy from me there's no you know nothing unique about the grain that I will bring to the table if I not somehow establish it as such and that is marketing that is product that is marketing What are our values? What is, yeah, also the quality, of course, it has to be.

SPEAKER_01 21:28

Quality, but all the quality, I mean, like the full integral, the beauty of the landscape, the rotation, the values of the farm, all of that should end up in the quality and that's a much broader concept than a protein level.

SPEAKER_00 21:43

What's the story? And I mean, I think at this time, if you look around and I think this is something that we've experienced throughout, you know, those past months before we started and and up till now, the movement of regenerative agriculture is just incredible. I mean, obviously, I think most of us live in a certain bubble, so we tend to maybe overestimate it. No, never. I see it clearly. Everybody

SPEAKER_01 22:10

focuses on soil,

SPEAKER_00 22:11

right? There's this amazing caption where you have this poor guy or girl sitting alone at a party and wondering about, why is no one wanting to talk to me about soil? You know that? Yeah. Anyway, so I think if you look at the sort of development this topic has taken and people getting involved, be it large brands, look at Timberland, look at General Mills, look at Patagonia, obviously, but so many others that you wouldn't expect to be in the space, suddenly realizing, wow, there's something happening and we need to kind of get on it. I think it's only a matter of time until we will see the first sort of financial support system, the first sort of investors that will think about the space. much more differently. And I think, to be honest with you, the ones that will sort of be the early adopters from a financing point of view will probably be the ones that will have a big say in the kind of way it will develop and will obviously build the market not only for themselves, but also for the others to come. So that leads me to the conclusion that what now is maybe most important is to get as many farmers and practitioners as we possibly can to just start, to just get going. And it never has to be perfect as such because you have to start small and learn as much as you can anyway, I think, in the beginning. Or at least I think it's a wise approach. But we need to have many, many different small and big and family and, I don't know, the corporate structures that just start, get going, get the word out, have people come on the farm, visit.

SPEAKER_01 23:54

And get brands to buy it. Yes, exactly. That seems to be, and get those relationships and educate maybe those food companies, the small ones, the big ones, to at least start buying and start buying food rotations and making sure people understand what it means to start buying regenerative grown or ingredients grown with regenerative practices. Absolutely. And unless we have a lot of farmers annoying these food companies say why you're not buying this grain why you're not buying this why you're not buying that through a long-term agreement then they'll be all be the small ones on the farmers market which is great but it's not going to grow to broad acre crops etc because there's no direct sale basically and you need food companies and processors etc to be involved

SPEAKER_00 24:34

absolutely this is spot on and i think this is about to happen and if i was a large brand today if i was a supermarkt if i was you know whatever is has a certain reach selling product or being active in the space, I would get kind of nervous if I wouldn't already be doing something in this direction because this is gonna be the next big thing with all the problems and the things that might go bad and go wrong as it always is. It's never perfect from the beginning, but I think the direction is very clear and I think you can count on it getting more and more speed and growth and attention.

SPEAKER_01 25:15

And would that be for investors the way to maybe not transition finance directly yet, but to get involved with these farmers and to somehow help them to partner with these brands or to connect them with food brands they might have also invested in to start at least part of this new supply web to start building. And then the second step is, okay, we've established a market access for maybe part of your rotation, maybe the whole rotation, if you're super lucky or good, et cetera, but let's say part of the rotation. Second step is, okay, how do we finance you? speeding up your regenerative practices and basically get to that five or 10 year goal in a few years less, or basically to do a lot more or do it on all your acreage instead of a few, et cetera, et cetera. But the first discussion should be, where's your market? How do we build that market access?

SPEAKER_00 26:03

Absolutely. I think that would be a very progressive approach about doing this.

SPEAKER_01 26:09

So how have you been applying that to your farm? As you mentioned the system before, where you harvest, you test the quality and then you start looking around. Maybe you have some contracts in place, but not a lot, which seems a very unfair system, obviously, for the farmer, but it's what most annual crop farmers have in the world. Have you seen a change or an interest in those last months, maybe due to COVID, maybe due to other consciousness of brands that either contacted you or you contacted them and suddenly entered in another discussion? Is there movement happening, in this case for grain, in this case for your farm, obviously, very specifically? Do you see chances of a changes there?

SPEAKER_00 27:04

Yeah, for sure. I mean, I think there's amazing chances when it comes to rethinking that whole process. I mean, if you think about the sort of the status quo, right? If you're selling a grain that, you know, we can, we have a cleaner for the grain, we can dry it. So it's, you know, the quality is good, but it's not on a, let's say, consumable quality wise. So, you know, you have to clean it more thoroughly, of course, and you have to make sure there's nothing in there but good quality grain, basically, right?

SPEAKER_01 27:37

In this crazy baking months, you couldn't sell, unfortunately, directly to customers.

SPEAKER_00 27:42

No, not at all. So that's not possible. No, it's really, really complex. There's a lot of things in the grain which you didn't want there if you make flour out of it. So that whole cleaning process is actually not complex if you've got everything, but it's complex as a farmer to also be doing that. So we then sell our grain at the market price, maybe a little premium to a wholesaler that has obviously facilities to do all the cleaning, then store it, and then reselling it to the bakery, so to say. And the thing is the kind of value and margin that he or she makes on our product is... more or less the same depending how they obviously plan. But the process as such always costs the same amount. So the risk is relatively low. Of course, they have to figure out from which pharma they're buying, which quality and so forth. So that's some of their risk, but it's pretty... It's not as complex because obviously you can just play with what you have. But compare that to the farmer. We have all the risks. We have in winter the risk then about how evenly will it start to germinate and then come out. Then we have the risk over the winter. Is it going to freeze or not? Then we have a risk of whatever it is. We have all the risks, drought not even mentioned. to then finally have the product. And even the product, as we feel this year, which has been an incredibly challenging year when it comes to harvesting because it's raining more or less once a day, we have that another risk. Then we start storing it here, and it's another risk. It's just really, really risky. And the margin that we get out of it is very, very slim, right? So just that system does not make so much sense when it comes to risk return profiles. So what we are trying to do is basically find a way of leveraging that risk somehow. And then the question is, well, how can we, if we're not able to do that whole cleaning storage process after the harvest, the next thing is, well, how can we maybe utilize our own grain in a sense that we can market it directly through us or through a partner. And this is something that we've worked on and thought about and discussed quite a bit in the recent months. And Yeah, I mean, we, we're not there yet. Um, and, and it's, it's a long process and it's also very complicated. And again, there's obviously some risks involved in it, but I think this is something that, that, you know, we, as farmers can look into much more strongly because there's potential there. There's quality that we can add.

SPEAKER_01 30:51

You're

SPEAKER_00 30:51

saying

SPEAKER_01 30:51

there's interest. There's interest from these, because also for, let's say it's a brand that needs certain grains, et cetera. It's a risk and it's some extra work to not just go through the normal channels, but sort of go directly to you and still they need some kind of cleaning. So it's extra work, but you're saying because of the story, because of the quality, the whole quality picture, not just the quality of the product, but the quality of everything around for some brands that might be absolutely worth it because they need the storytelling and they need the values and they want to. And you're saying that, I mean, you're not there yet, but there's more movement than a year ago or seven months ago when we started this series.

SPEAKER_00 31:28

Yeah, I think so. And it's also the consumers that are driving it, right? I mean, by the way, I don't like the word consumers, but...

SPEAKER_01 31:37

Client is also horrible, so

SPEAKER_00 31:39

yeah. Yeah, right. Eating people, that always sounds a bit awkward, so you know what I mean. But I think, you know, people that eat, let's keep it there.

SPEAKER_01 31:50

Which is everyone,

SPEAKER_00 31:51

yeah. Which is more or less everyone, at least I... If you're

SPEAKER_01 31:54

lucky, yeah.

SPEAKER_00 31:55

I think they are, they like to have... a face or a story to the product you know why do we always need to have everything commoditized why does everything has to come out of anonymity

SPEAKER_01 32:09

because that's where the margins are when you're a brand i mean the margins in food are are

SPEAKER_00 32:13

higher up exactly i push that poor farmer right down there i know yes so you know i think there is demand for it i think there is room for it

SPEAKER_01 32:24

and do you see demand that's big enough to take like you have quite a large farm and maybe there's demand from like a very cute small bar maker in Berlin in his or her kitchen and garage that's making but a discussion I have often and also with Jeroen that actually is coming should be online when you're listening to this that's the farmer that makes the soy and the grain for the soy sauce we actually had in this series he says yeah the quantities of a lot of these local food systems are so small that it's great to sell your beans directly that it's great to do but it just doesn't make sense so do do you see, so long question, do you see interest from larger ones that can actually absorb significant amounts and does make a difference for your farm? Or is it smaller and does a lot of work and maybe nice margins, but very small quantities?

SPEAKER_00 33:11

I think, you know, the complexity with larger quantities is not getting smaller. So as soon as you talk about large quantities and suddenly there is demand and they want more, you can't, you know, basically offer that.

SPEAKER_01 33:26

That's also true, yeah.

SPEAKER_00 33:27

So I think it is And as it is in general in agriculture, it's all a question of context. And you obviously need to find your channel and your product and your way and the kind of story that you tell and the kind of people that you want to sell to. So I think it's always a matter of analysis and finding your spot. And that might take a while, of course, and it's an investment, but I think it's an investment that pays out towards the end of the day. And also, and I think this is again where so much potential comes in in this space, if this is something that more farmers start and this is something that more supermarkets see and realize and also derive value from because suddenly you have people wanting and asking, hey, do you also have that regional product that the supermarket across the street has? And people wanting that regional product where they There's a story and a face to it in a sense. Then suddenly, you know, you can have a farmer next door that hasn't been in that kind of thinking and he or she comes and is like, hey, you do that with that partner and can I join you in doing that? And suddenly maybe you have three or four or five farms that get together in a cooperative thinking or a cooperative, let's say, production and use...

SPEAKER_01 34:53

They can get their cleaning machines.

SPEAKER_00 34:56

Exactly. And use the same channel and suddenly they can afford to invest together for some sort of processing and then it grows from there so there is incredible potential from basically decentralizing many of the as of today commoditized products from farmers and this is something that investors will also look at because they realize suddenly you know we are talking about scale

SPEAKER_01 35:21

I had that discussion exactly yesterday recording another interview with Ed Byrne of Soilworks which I put down below on the decentralized processing. In the US, very different story, but very similar characteristics, let's say, not the same sector, not the same context, but decentralized, mostly in this case in meat, but it holds true in many others. We have to look at processing completely, which is a very dirty word, but even Dan Barber now calls himself a food processor. We have to look at processing completely different, which offers very interesting investment opportunities for investors and for farmers and for banks and for to get this product from the farm in a form or shape that can go to a consumer could be a restaurant could be a brand could be us directly but to have that transformation if you cannot sell directly if there are veggies if there are certain things of course but most of the food needs some kind of transformation or a lot of food needs some kind of transformation and needs obviously a market so I think it's a very interesting conclusion we're reaching after I wouldn't say a conclusion like an in-between conclusion because I'm very much looking forward to check in with you one you've signed hopefully more multiple off-take agreements that really give the farm a long-term view on markets and thus a long-term view on regenerative practices. And then we can have another discussion on transition finance.

SPEAKER_00 36:43

Right. And I mean, I just want to add something to that idea how, you know, starting through that kind of direct channel, then finding farms around you because you've proven it in your kind of scale and suddenly they you find this kind of cooperative way of producing and using that kind of direct channel in a regional context that obviously brings all of a sudden so much more potential that not necessarily has to do work exactly it has to do about work it's about also the kind of system change that might come with it so we're talking about soil again soil health the kind of quality the area in total is also gaining from it. I've spoken to someone yesterday, Sepp Braun, he's quite a famous farmer in South Bavaria, and he's pointed out that there's scientific studies that you only need a certain acreage, let's say 3,000, 4,000, 5,000 hectares, for example, in order to actually change the climate within that area. So I mentioned bringing cooperative structures together. And I mean, if it's three or four farms around our area, you are talking already about 4,000, 5,000 hectares. Suddenly, if we come into a realm of planting trees, making agroforestry, changing the system, growing soil. You're changing the microclimate. We are changing the microclimate. We are developing the area. We are going to have more rain because of it sooner or later. Hopefully, I guess.

SPEAKER_01 38:29

You're complaining about, you just complained about the rain. Sorry. I mean, in harvesting, it's not the best thing.

SPEAKER_00 38:36

Yeah, you're right. I shouldn't have said it. But you see where I'm going with this. Like there is so much potential coming out of it.

SPEAKER_01 38:42

Then we get into very interesting areas.

SPEAKER_00 38:45

Exactly. And suddenly we're talking about regional development. And when we're talking about a future and something that you can look out for and that you want to be part of, and you make a brand out of it, and suddenly you're We have other people wanting to join in that as well. They use some side product or something that usually you would have no use for, and they turn that into something beautiful and sell it as well. So I think that is something that I'm just incredibly, how should I say?

SPEAKER_01 39:12

Excited.

SPEAKER_00 39:13

Excited about, exactly. I

SPEAKER_01 39:15

can see the branding already. You want to stabilize your local climate. Buy this group. Yeah, exactly, exactly. Which is not the best slogan ever. I realize that marketing people have to figure that out. But I think it's the most exciting. It sounds very, I wouldn't even say high level, very ambitious. Like with farming, we can change, we can stabilize local climates and change local climates. But a lot of the research is coming out now and is actually showing that. And you need a certain acreage, you need a certain size. One farm is usually, even in Australia, is not enough because it's huge, but it's not big enough to have an impact on that. But as soon as we start bundling together, I mean, it becomes a very, and we can start thinking, okay, where should we plant the trees? On the different farms, not on one farm only, but okay, where does this set of trees and which set of trees have the biggest impact, et cetera, et cetera. We can start doing that analysis of a landscape and figuring out where are the most important hotspots to change agriculture first or to change the practices first. And then what are the second line of fields we need to attack? And then a third, fourth, et cetera, et cetera. You get a very different analysis. I think a lot of tech people would be very excited about that and doing that analysis. Okay, which fields, like you have a lot more acreage and hectares to play with and to change, basically.

SPEAKER_00 40:28

For sure. Because I think this is also one thing. I mean, as of today, if you are looking for new ways or solutions, you can find a lot, right? And you can have people that do advising. If you're lucky enough to find someone that is an independent advisor, then even better. If

SPEAKER_01 40:48

you don't know what that means, I advise you to listen to the podcast with Nikolas. As most advisors, the best advisors so far, or let's say the most expensive ones, are for free. I actually, but they come included in a very heavy chemical package you need to buy from certain companies that we can all imagine. And they are the ones that offer most advice to most farmers and thus obviously selling a lot of chemical inputs.

SPEAKER_00 41:10

Right. But I mean, exactly. So I would always only talk to independent advisors. And so they come and they can tell you, well, you can do this or you can do that. But if you are busy and you're stuck in a system and, you know, your cash flow is like as a zero-sum game or whatever, then do you really have the spirit and the heart and the emotional freedom to then say, well, okay, then I'll try this or that? I don't know. I think it's a big ask. If you have someone that comes and say, yeah, you can buy this big product and then this will enable you to do the same thing. So I think just having an option of coming somewhere, listening to people, I don't know if that's really going to change. But if you come and approach the farmer and offer something that will immediately help him or her that will immediately change the profitability of the operation because there is suddenly a new channel then suddenly the game changes suddenly like oh okay well you just took pressure of me you just helped me so now I have the made my life easier exactly now I have the emotional freedom to think about soil to think about this or think about that

SPEAKER_01 42:28

to attend a course to read to I think it's interesting how we reached this point after nine months wow actually if you look through the different interviews it's sort of a red line that goes through all of them and it's it's very interesting that's why we unpack transition finance to find that it's maybe not the most important thing and actually there's one step before a few steps before but a crucial one before that before you can even think about finance there needs to be a good business underneath as all investors know and a good business in farming depends on a good market and a long-term market and that's makes a lot of sense when we think about it but yeah it took us a few months better late than never better late than never definitely i want to thank you so much benedict i'm sure this is not the last time we have your own because i would love updates obviously over the next months and years of how the transition is going and at some point transition finance and market access etc but thank you really really a lot for for being my co-host and partner in crime in this series.

SPEAKER_00 43:30

Yes, I mean, thank you so much. What an incredible time we've had and what an incredible time we're living in. I mean, the movements and developments in farming are just going to be, you know, I can't even put it into words, but I think we have everything to win for. I think we have everything that we can make better. And I am just incredibly positive. So, you know, I can't wait to look back on this and, you know, be ashamed of the stupid things that, that I particularly, but we maybe also said, and the kind of visions that we have, which were proved to be completely wrong, but I think it will all make sense looking back. So like, like, yeah, like always. Thank you so much for having me. And yeah, was an absolute joy to speak with you and and obviously with all of our guests and yeah looking forward to speak soon again

SPEAKER_01 44:20

thank you for listening to this episode which is part of the transition finance series trying to find appropriate transition finance to speed up regenerative agriculture on farms for feedback ideas suggestions please contact us through twitter or via the contact page on the website investing in regenerative agriculture.com please share this episode with a friend and give us a five-star rating which really helps others to find the podcast all the episodes of the series can be found on the website and in your podcast app thank you and see you next time