Soil Builders, updates on green bonds in regen ag and the land ownership in the commons in the US

Ian McSweeney of the Agrarian Trust and Fabio Sakamoto of Rizoma Agro are the guests of the new episode of the Soil Builders series. In the series we welcome back previous friends of the podcast to understand their progress and we discover new companies, startups, farmers, investors engaged in building soil all over the world.

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Previous interview connected with this episode:

• Ian McSweeney

https://investinginregenerativeagriculture.com/2018/08/21/ian-mcsweeney/

• Fabio Sakamoto

https://investinginregenerativeagriculture.com/2020/06/30/fabio-sakamoto/

• Sean Kidney

https://investinginregenerativeagriculture.com/2019/07/10/sean-kidney/

More about this episode and the Soil Builders series on https://investinginregenerativeagriculture.com/2020/11/03/soil-builders-2/

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Chapters

• 1:23 Green bonds in regen ag with Fabio Rizoma Agro
• 5:53 Land ownership with Ian of the Agrarian Trust

Transcript

SPEAKER_02: 0:00

Welcome to Soil Builders, a series where we follow who is building soils at scale. This is an experiment, so please share any feedback. Today we check in with Fabio Sakamoto of Rizoma Agro, who just raised a 25 million Brazilian Reu, which is about 3.7 million euros or 4.3 million dollars. Green Bond, the first ever in agriculture, certified by the Climate Bond Initiative, led by Sean Kidney, who we interviewed last year. And we're checking in with Ian McSweeney of the Agrarian Trust, who shares how much has happened at the Agrarian Trust around land ownership in the commons in the US, how they have been acquiring farms into the commons, and how they've launched 12 community-centered agrarian commons throughout 10 states in the US. Why this show, soil builders? I believe that most change in regenerative agriculture and food will come from, and is coming from, entrepreneurs building ways to regenerate soil at scale. I call these soil builders. Soil builders are entrepreneurial farmers, agtech companies, investment funds, food startups, new seed cooperatives, teams within food companies, robot startups, investment vehicles, etc, etc, etc. All regenerating soil beyond their own farm gate and with more than their own money. This series allows the community of the podcast, which is you, full of funders, investors and fellow soil builders to follow their progress, their challenges and their breakthroughs. I hope you enjoy it and please reach out with any comments, feedback and ideas. First up, a short update from Fabio Sakamoto. Why am I so excited about green bonds in Region X? Because it shows that Region X can attract traditional, maybe even lower cost capital and thus scale. Green bonds are an enormous market and so far have largely ignored agriculture. So this could be the first, and let's hope this, of many green bonds in the space. Hi Fabio, congrats with the launch of the first ever green bond certified by the Climate Bond Initiative in agriculture. How did this come about? Why did you decide to raise a green bond?

SPEAKER_01: 1:54

Hi, Kieran. Thank you. We've been thinking about a green bond for quite some time now. As you know, our central thesis at Rizoma Agro is that regenerative agriculture will scale because it is a good business. And in being a good business, we should be able to access mainstream capital. Yeah, so we've been studying this topic for a while. I know CBI had been looking at this and developing the criteria for agriculture for some time. They're very serious. serious so when they opened the criteria we were ready we had all the information we you know hats off to my team for being very quick and yeah so this is how we got to admit the first green bond in the world for agriculture and it is an honor and yeah and for me what was great about the process was that it confirms our hypothesis the green bond was sold out in two hours it was oversubscribed by more than four times and when we we didn't know any of the investors that bought the bond and when we talked to some of them we realized they were not investors that usually invest in agriculture or investors that are necessarily impact investors looking for sustainability when I talked to them they said well we bought the bond because we think you have a good business which to me is the biggest compliment I could receive and which makes me yeah very optimistic about how fast RegenAg can grow with this type of market access.

SPEAKER_02: 3:32

And what will you use this green bond for, which was, by the way, heavily oversubscribed?

SPEAKER_01: 3:36

This green bond will be used mainly on investments on our existing farm. So here at Rizomagro, we are trying to produce regenerative organic at the same cost as conventional. And right now, our priorities are in expanding our bio-inputs factory, where we multiply fungi and bacteria that we use as crop protection. We're also expanding our composting and a compost tea operation. We are investing in ag tech tools to digitalize our farm management. We're also investing in a few machines. So that's our priorities here. And a smaller part of the green bond will also be used to exchange short-term working capital debt for longer-term debt, so thus strengthening our balance sheet and creating a more resilient operation. And what

SPEAKER_02: 4:30

will you do differently next time? What have you learned? Obviously, if you're going to raise another green bond at some point in the future.

SPEAKER_01: 4:37

I think there will be a next one, Coen, because we've been pretty busy with our expansion plans for 2021. And because this first experience was very positive for us, not much I would change. What I am considering is opening this next green bond for investors abroad. We had some inquiries, but the first emission was just for investors in Brazil. And if there are any investors listening out there that are interested, please reach out and And it would be great to get a sense of level of interest. Anything else you would like to share with the podcast community? I'm just excited about everything that's happening in the space and how quickly it's developing. My business partner, Pedro, helped co-produce the Kiss the Ground documentary that's on Netflix now. And I see a lot more people joining the conversation. I also see people in the industry, the food companies and in the investment industry, understanding the role and the opportunity that is here. So I'm just excited about everything that's happened, even though it wasn't an easy year for the world. It was very positive for Region Ag. And it was a pleasure talking to you again. Stay safe and take care. And next up, an update from Ian

SPEAKER_02: 5:56

about the thorniest of thorny issues in agriculture, land ownership. Why are some people born into lots of land and not interested in farming at all? Why are some people who want to farm cannot access any land? And why are others pushed of their ancestral land and what can we do about all this and what's the role of money. The Agrarian Trust is taking on this long and difficult work in the US to make land more accessible, not extractively managed and equitable. They have made huge progress since we last talked over two years ago, so enjoy this update. Hi Ian, could you give us an update on what has happened since you were on the podcast more than two years ago?

SPEAKER_00: 6:29

So what has happened over the last two years at Agrarian Trust? We as an organization have grown. We've grown our staffing capacity. We've grown and manifested our work through the different initiatives we're involved in. Agrarian Legal, Faithlands and Agrarian Commons have really developed into their own bodies of work. Each has active work underway. Each has staff and focus attending to them. Agrarian Commons and Faithlands, both through committee work and network creation and collaborative learning, has developed a body of knowledge. And that knowledge and learning for both of those individually are being developed into online open source resource tools that should be available right around the end of this calendar year to really provide resource examples and knowledge to those in-faith communities and those with interest in commons and community-centered farm ownership. And those toolkits will provide examples, models, templates, resources, learning, as open source kind of assets for all community that seek to use them to expand their work on land ownership, access, and tenure. Of most significant growth over the last two years has been the agrarian commons work. We've developed relationships, brought together partners and stakeholders in communities, and on May 1st of this year, We incorporated 10 community-centered local agrarian commons in 10 different states across the United States. We've since added two additional agrarian commons where we now have 12 community-centered agrarian commons, 501c2 landholding entities in 10 different states, California, Washington, Montana, Minnesota, West Virginia, Virginia, Tennessee, Virginia, Vermont, New Hampshire, and Maine. And those commons are community-centered land holding entities with their own boards, their own identity, their own mission, and are moving forward with farm land projects. In June of this year, we launched forward our first crowdsource capital raise, a philanthropic capital raise to raise the capital needed to acquire a 104-acre organic farm in central Maine. We launched that at the end of June. At the end of August, we had raised$480,000 from over 1,500 donors from across the country, some across the globe, who donated in on average$144 to make this possible. So, With that capital raise, we were able to acquire the 104-acre organic farm into the Maine Agrarian Commons, the Little Juba Agrarian Commons, where the majority of that board is New American Somali Bantu community members in Lewiston, Maine. And on October 1st, we conveyed secure, equitable lease tenure to liberation Farm, a collective farm initiative of the Somali Bantu Community Association. So they now have secure tenure and a home to continue to grow food and to expand their ability to address food security and to move towards a community that can hold up and live into a food sovereignty. So that farm ownership is in the very common structure. We had also taken donation of a farm into the agrarian common structure, donation of a farm on Whidbey Island at the end of 2019. So presently, the model has two farms in ownership within the model. We have a number of other farm projects. In total, we have 17 farm projects that we've done initial evaluation and vetting and exploration of. and have agreements in place to move forward, engage people, raise capital, acquire the farm, complete the real estate due diligence, in some cases accept the donation of farm in others. It's a discounted acquisition of farm in, but to acquire those farms into the structure and convey lease tenure out. Regarding the agrarian trusts, what is the key news here? Well, really, as with sharing, the key news of Agrarian Trust is the launch of the Agrarian Commons model. The fact that we have 12 community-centered nonprofit boards that have come together local to their community, valuing a new way to hold land, to own land and farms, a new way to convey tenure, and a new way to address equity is considerable. The fact that there's recognition for the importance of addressing ownership, tenure and equity in farming and expanding the work of land trusts to focus in these areas is significant. This is a new innovative model in the United States. This type of structure does not exist in the United States until we brought it forward. So, you know, there's kind of significance to that. It also doesn't exist at this scale at all either. So the kind of scale of 12 community centered agrarian commons across 10 states across the United States of America is significant. Additionally, really the way we've stepped forward with this work and engaged with a crowdsource capital raise to raise philanthropic dollars that, um, you know, there is a lot of activity with online fundraising platforms that exists over the last 10 years or so. Um, what we did was we created our own, uh, internal platform to raise that capital. Um, so that is unique in and of itself. And, and we also raised, um, significant capital over$480,000 in a very short amount of time. Um, from over 1,500 donors. That's significant. The crowdsource platforms that exist do not raise money to acquire farms or land in general. Those that are focused on agriculture, it's much smaller dollar raises for buildings, infrastructure type needs. So our work to create our own version of a crowdsource fundraising structure, and then raise the significant amount of capital needed to acquire a farm, um, is, is really significant and unique in the model. Um, you know, also speaking to just the number of people that gave to that campaign, uh, over 1500 people is significant and the reality is that of these, you know, we have 17 total farms who are moving forward on, um, Of these 17 total farms, the farms involve their farm communities, their CSA membership, and the other board members and stakeholders on each of these local agrarian commons, their communities and networks. We have a kind of aggregate community now engaged in the agrarian commons that has over over a quarter million social media followers in total across all these entities. So our ability to replicate those type of crowdsource fundraisers where the average donation was$144 and engage multiple other communities across the United States to give similar, to give$50, to give$100, to give$200 towards transformation of how we connect with land, how land is owned, how tenure is conveyed on that land and how we consider and hold equity in that whole equation has significant promise and it has real developing and growing energy and momentum towards this work. We finished the project in Maine. We also own farm in Washington on Woodby Island. We're about to launch forward a fundraiser to acquire a farm, philanthropic fundraiser to acquire a farm in West Virginia, followed by fundraise work and farm projects in Tennessee, Virginia, and New Hampshire. So that kind of ready queue of projects that are vetted, that have community engaged, and the coal communities we have around each of these commons and the farms and the structure by which we can and how we've shown that money can be raised to really transform ownership, equity and tenure is significant. And what is happening around the agrarian commons in the US? So the agrarian commons across the United States are really unique and specific to place. From one agrarian commons to the next, their focus and priorities and stakeholders involved differ. And so each has their own work, their own story, and their own vision and priorities. From the main little Juba agrarian commons that I touched upon that's really focused on bringing food security to the Somali Bantu community in Maine. Maine is the least diverse state in the United States of America. Maine is a state where first-generation Black Mainers are 52% food insecure, and those rates increase significantly when you deal with new Americans, refugees, and immigrants. The Somali Bantu to community in Maine faces significant obstacles yet has come, persevered and really developed community and shaped identity of place and is really manifesting an American dream that we all should learn from and be inspired by. So centering the work on bringing land security, creating a home and creating a farm for Somali Bantu community in Maine is significant. We have other New England agrarian commons in Vermont and in New Hampshire. Those agrarian commons are really focused on larger, organic, diversified food production, community-engaged farm operations. So in Maine, there's Bread and Butter Farm and there's Eagle's Flight Farm in New Hampshire Brookford Farm, Vernon Family Farm, and Normanton Farm. All of those farms represent kind of a focus on organic regenerative agriculture, a focus on community engagement, and really food production to serve that local community, and in a number of cases to serve the broader regional food system as well, so that those projects are moving forward with the due diligence diligence of the real estate moving forward to develop fundraising steps forward. And so that's the work of those commons. One of those farms will be coming into ownership. It's a donation of farm that'll come into this common structure in the near term, in the next few months. And others will move forward as fundraising launches and success is achieved in raising the capital. Moving from there, West Virginia Agrarian Commons and fundraise that I mentioned, that's a partnership with county, with nonprofit, with other governmental stakeholders in Fayetteville, West Virginia. And it's around bringing ownership of land and resources locally into the community in a way that's secure and can assure that the land will not be extracted from, the land will not be exploited for a benefit, financial or otherwise, from those from afar, that bringing land into local centered ownership, ensuring secure and affordable, equitable tenure for a farmer-led producer cooperative and a nonprofit farmer will allow food production, farm business training, education, food access areas addressed. So really that, you know, that is the work of West Virginia in what is, you know, West Virginia and Montana, another agrarian commons we have are real examples of states across the United States that have seen significant extraction of natural resources to really create the United States, create urban centers, create extractive natural resource wealth that exists. So healing those lands, regenerating those lands, bringing ownership into local centered structures, ensuring equity locally is critically important and layering that on regenerative farming that's producing food is that much more important. So that's the work of of those commons. In Tennessee, there's two farms, Windy Acres Farm and Long Hungry Creek Farm, that represent two of the oldest and first organic farms in the state of Tennessee. And Windy Acres Farm represents one of the only organic non-GMO grain farms in Middle Tennessee. Both are serving local community and the larger regional food systems that serve Nashville and Nashville Metro. Nashville is one of the fastest growing mid-sized cities across the country. And land and land pricing and land development create significant pressures in a city that values its food, values its land. And so ensuring these legacy inspirational organic farms can be held in this model to ensure the practice and stewardship continues forward and to ensure that they can transition from one generation to the next. That both of these farms are exiting landowners. That Windy Acres, Alfred Ferris, the primary farmer, just passed away earlier this year in February. The other farmer on Long Hungry Creek, Jeff Paupin, is nearing retirement in farming. So ensuring that Next generation farmers have access and secure equitable tenure on the land and ensuring that the legacy and career stewardship that both the Ferris's and Jeff Poppin have carried forward on their land and their farms and with their community will continue on is the work there and continue on as farmland is lost, land transitions are lost. into other uses and more people develop and live across the landscape. And there's a greater need for local food security and food access. Ensuring these farms are islands of health and islands of organic food production and community engagement is critical there. So that's some examples. There are more examples of what the commons are up to, but that really paints a picture of the diversity across the commons. There's also work on agrarian commons in the Richmond, Virginia area that's focused on manifesting land justice and addressing racial equity in a way that the commons through a nonprofit can, that there's limitations of a nonprofit, there's limitations of the commons. But the structure and what it can bring to bear to manifest a just land ownership tenure relationship that is centered on equity is critically important. And land trusts have a significant role to play in that. And this agrarian commons and others will be illustrating models by which that can be addressed. So, you know, many examples, but those are some of the work of the agrarian commons and the uniqueness of place and people involved.

SPEAKER_02: 26:43

Thank you so much for listening to another episode of Sower Builders. Please let me know any of the feedback you have. Reach us through investinginregenerativeagriculture.com, reach us through Twitter, reach us through Instagram, LinkedIn, and I hope to see you next time.