Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food podcast features the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Hosted by Koen van Seijen.
Investing in Regenerative Agriculture and Food
108 Mark Drewell, raising £20M to build UK's biggest regenerative farm
This interview with Mark Drewell, Executive Chairman of New Foundation Farms, is the first episode of a new series where we dive deep into New Foundation Farms, unpeeling the different layers of what it means to build a regenerative agri food enterprise!
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New Foundation Farms is an enterprise raising 20 million pounds to buy a thousand acres in the UK. Their goal is to build a regenerative AgriFood enterprise, which will produce food and fiber in order to support soils, communities, and health, which they call radical natural farming.
More about this episode on https://investinginregenerativeagriculture.com/mark-drewell.
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First of a series of deep dives into new foundation farms raising 20 million pounds to buy a thousand acres in the UK to build a regenerative agri-food enterprise, which will produce food and fiber in a way that supports soils, communities and health. They call it radically natural farming. So let's find out more on why they focus on scale, vertically integration and what a regenerative enterprise means to them. Welcome to another episode of investors, big and small, and consumers start paying much more attention to the dirt slash soil underneath our feet. In March last year, we launched our membership community to make it easy for fans to support our work. And so many of you have joined as a member. We've launched different types of benefits, exclusive content, Q&A webinars with former guests, Ask Me Anything sessions, plus so much more to come in the future. For more information on the different tiers, benefits and how to become a member, check gumroad.com slash investingbridgeandegg or find the link below. Thank you. Welcome to another episode. Today, a very special episode. The first in a short series where we unpack new foundation farms in the UK. Starting with the executive chair, Mark Drewel. Welcome, Mark.
SPEAKER_00:Hi, Kun. Nice to be here.
SPEAKER_01:And the question I ask everyone, and in this case, I'm obviously very, very interested. Why are you doing what you're doing? Why you ended up being so deeply involved in rebuilding soils?
SPEAKER_00:Well, short version or long version? Long version. Long version. Okay. So I grew up in the UK in the countryside and I watched the countryside decline. That's quite
SPEAKER_01:short, actually. But there's a much longer one coming.
SPEAKER_00:The longer bit that goes on from that is I spent 20 years in South Africa and I got very involved in the political transition there. So much so that as a young manager of 27 years old, I co-created a community forum that became replicated for me. 4,000 times and was the peace committee structures that managed the political transition out of apartheid. And that taught me something really fundamental. And that was that you can use business to be a massive agent for change in times of profound transition. So that was kind of like then informed the rest of my business career from that stage on. And so I got things like the Cambridge University Institute for Sustainability Leadership into South Africa, because I was really obsessed with this issue of the way we built the economic system doesn't work and of course that meant I got exposed to climate change experts and that made me really miserable but it also made me realise that we needed to do something and it's not a short leap from there to realise that the core structural problem that the way we grow our food is at the heart of our own extinction in the future is something that could be interesting to be engaged with so it's been a long journey which involved also one stage owning a 1500 acre regenerative farm in South Africa and learning the hard way what you can do and or could do then and couldn't do and recognizing that actually we can do something really disruptive.
SPEAKER_01:I mean, this was relatively short. I mean, I think we're going to pack a lot of things here, but it's interesting how I've heard that story, not exactly this, but the story before people ended up looking at business, being very concerned, very depressed and very miserable. I think many people listening to this will be nodding now about climate change. And then I wouldn't say discovering or stumble upon the role of food and ag and the potential there. And then suddenly finding, I would say, hope and optimism, maybe a mix of those to actually, there's stuff we can do here in a lifetime and in the next lifetime that make a lot of sense. And then you decided after owning this massive farm and you could have stayed there, you decided, no, I want to disrupt the food system in, let's say, Europe and specifically the UK. How did that come about?
SPEAKER_00:When I was 40, I was sort of C-suite executive in a big diversified industrial business.
SPEAKER_01:Like last year.
SPEAKER_00:Yeah, like last year, only a few years before that. And I told all my friends I'd leave corporate life when I turned 45. So I did, because I wanted to do something different. And kind of semi-retired to the coast in South Africa, beautiful surfing beach in Cape Town. But I found myself in this conversation with my children, like in my mind, 20 years later, and they were saying, Dad, did you know what was going to happen in the world around climate change? And I said, well, yes, I did. And they said, well, what did you do?
SPEAKER_01:But I was serving, so yeah.
SPEAKER_00:Yeah, what did you do? So I stayed involved in an initiative that was transforming business education. And they said to me, would you come and run it in Europe, in Belgium, in fact? And so I said to my wife, we need to talk. She said, where are we going? And I said, how about Belgium? And she said, well, thank God it's not England. And at the time, she's South African. The reason was that her perception of England was a place where nothing innovative was happening. And it was a sort of dead old dinosaur empire, sort of waste of space country. But coming back and spending a few years living in Belgium and spending more time here, she discovered there were people who actually had an ambition to do something different. And then with all the stupidity of Brexit and the rise of a kind of absurd nationalism, at the same time, we also realise that people are really looking for an opportunity for change. And in the UK, 60% of, for example, English farms are not profitable without subsidies. And the subsidies are all going, at least being replaced by something that requires ecological outcomes. So this place is so ripe for change and people are looking for it. It's really exciting.
SPEAKER_01:Yeah, so let's unpack that a bit you say 60% of farms survive on subsidies basically you wrote a very nice paper on that and a few articles which I'll definitely link below so it's ripe for change subsidy systems are changing so that's the let's say the incentive part what about the other part what about the farmers the land stewards what about the consumers why now it cannot be just a story about incentives because then they might have changed before or then it might have changed or they will never change what's the why now that I always like to dig a bit deeper in
SPEAKER_00:so why now in the UK? Really honest answer. First level is because we live here.
SPEAKER_01:Very good answer in terms of roots, in terms of, yeah.
SPEAKER_00:Yeah. So all entrepreneurialism is about people coming together with an interest to do something. And the reality is most people think afterwards they tell clever stories about how they created things. But the real truth is entrepreneurs get together because they share a passion for something and then they start doing it. And usually what they end up doing is completely different from where they started. So three years ago, when we started really thinking about agriculture in the UK, we had a really clear picture that there was all this international experience around regenerative approaches that we could bring into the UK and it would all be about farming. And it was motivated by this view that actually we wanted to demonstrate something here that others could be inspired to imitate or follow or learn from. And so that why for us was all about the sort of imperative to do something to make a difference and the fact that we happen to be here at the time and then when you start looking you think hmm it's actually possible to do something because okay as you mentioned you know as we talked the the context is from a producer point of view we talked about you know 60 58 percent to be precise of English farms are not profitable without subsidies but equally 80 percent of the topsoil has gone in the UK in the last 150 years eight zero okay
SPEAKER_01:now I just want to emphasize it's not 1-8, it's 8-0.
SPEAKER_00:8-0 in 150 years. It's mind-boggling when you stop and think about it. But then when you start to investigate it, you say, hang on, it's not surprising because for 12,000 years across the world, we've been doing this. And every time we put a plow in the ground, we set back soil biology by 15 years. And we didn't understand that, but we now do. And so
SPEAKER_01:now
SPEAKER_00:it's time.
SPEAKER_01:Coming back to the discussion with your children. Yeah.
SPEAKER_00:Yeah. But Kun, you say why now, it's also because it's very clear to us that not only in terms of the production side, if you like, the supply, but on the demand end of this equation, you just look at any indicator you care to name about patterns of how we as people, I hate the word consumers, by the way, so I'm not going to say consumers, we as people in our role of buying food are looking for better ways of doing it. And whether that's the growth in demand for organic, in demand for consumption of locally grown food. The pattern is the same, particularly in the millennial generation. The interest in well-being and health and the connection of that to The environment is central and it's not being met by the mainstream. That's what we think needs to be done.
SPEAKER_01:So to set a bit the stage, what are you building in the UK? I mean, we'll unpack it in many different ways, but just to set the stage a bit, what are we talking about? Is this a nice vertical farm? Is it a container somewhere? Is it a hip food brand? What are we discussing here?
SPEAKER_00:So what we're discussing is building a disruptive, regenerative agri-food enterprise. Okay, so three words, disruptive. Disruptive, regenerative, agri-food. Well, four words if you add the word enterprise.
SPEAKER_01:Which I would like to unpack as well. Yeah. So let's do four.
UNKNOWN:Yeah.
SPEAKER_00:So what does disruptive mean? Well, the starting point for that is to build something that is of a scale and visibility and degree of radical difference that it changes the logic of the agri-food system. So that's the first element of it. And I'll describe how in a The definition of regenerative agriculture is the growing of affordable, high quality, nutrient dense food on regenerating soils. It's an outcomes-based definition. And we live in a world where the word regenerative is being used by all sorts of people for all sorts of definitions.
SPEAKER_01:Really? I didn't see that around the last 12 months or so. But it's good to put it out there. Very, very clearly stated.
SPEAKER_00:Affordable, nutrient-dense, high-quality food. Sorry, I didn't mention and fiber on regenerating soils. And that's our clarity of what we mean by that. So it's about the food. So it's about the farming, regenerative agriculture. But it's also about building a regenerative food proposition as well. So it's taking that food from what's grown in the field or reared in the field and processing it and then selling it right the way through to the end consumer. And for us, that's important because if you want to disrupt the system, you need to tackle the production end and, if you like, the consumption end of the equation. So we're focusing on both. And then the third piece in the puzzle for us is doing it within an enterprise framework that's regenerative by design. And that means things like you distribute the profits more fairly up front you hardwire the purpose of the organization up front and you make sure that the assets can never be sold in the short term because somebody sees a casino moment in the marketplace there's those three elements that come together
SPEAKER_01:and what will that mean concretely let's say in the UK countryside what are you planning to buy to build and then we'll unpack obviously the four words further
SPEAKER_00:we're on a five-stage journey stage one we're two years of research and development. Stage two is to acquire a thousand acres of farmland as a first regenerative platform, transform it, build out the field to fork system capabilities in terms of processing, farm retail, and the digital platforms and brands that go with it, and put in place all the infrastructure then to grow to scale. Phase three is to move to 10,000 acres within the same region, and phase four is to grow to roughly 60,000 acres in footprint across the UK. And I'm talking about acquiring land and transitioning it. And then phase five is international expansion beyond that. These phases are not, what's the word, sequential. They may overlap, but It's a five-phase journey to build a scaled regenerative enterprise. Within a decade, we would anticipate that we'll have 60,000 acres of our own farmland. Who knows how big the supply chain that we can enable will be, a quantum above that. And we will have a home for well over half a billion pounds sterling, which is about 20 euros these days, in capital, which can be deployed.
SPEAKER_01:Yeah, so basically the first phase is to acquire this 1,000 and I want to emphasize the size and the scale of this acres in the UK. And why so big? Because that's larger than a lot of other things people will have heard or have seen. And it's not a normal, let's say, between brackets play of buying the land, regenerating it and selling it. Then we've seen many funds going to that scale and way beyond. But this is a very different one. And still, you're going for a large, large scale. So why the 1,000 acres? What's the reason behind that?
SPEAKER_00:Before I answer the why 1,000 acres, What also makes clear is that we're building an operating enterprise. So on that fourth word, enterprise, the assumption often, because there's so much of it going on, is this is about an investment vehicle that does a deal with land and puts somebody on to run it. This is about building an operating business.
SPEAKER_01:And not selling the land.
SPEAKER_00:And not selling the land. Actually, we're structuring the company so the land can't be sold
SPEAKER_01:in perpetuity. Very important to mention that. Yeah, it was going to be another question. So no casino, no flipping land. This is buying and holding. Yeah. Eventually 60,000 acres in the UK.
SPEAKER_00:Just to be clear, it's not 60,000 because that's a magic number. And what it is, is you've then got six 10,000 acre footprints in geographical regions, which pretty much allows you to cover the whole country. And the logic of that is all about...
SPEAKER_01:Almost like hubs.
SPEAKER_00:Yeah. For two reasons. Hubs because you can then, from a business point of view, you can then channel scale through partnerships. But also hubs because if you're in every part of the country, Other farmers can literally come and look over the fence and see what you're doing. And hopefully we can make a contribution by providing a platform that people can learn from too. You did ask me another question and I've now forgotten what it was.
SPEAKER_01:Now I'm wondering, so this 1,000 acres, why 1,000? And then, of course, I would love to paint as a picture what's going to walk on that, what's going to be planted on that, how it's going to look different from when you buy it. And also maybe for people that are not in the UK, how does land like that, it doesn't have to be the specific pieces you're buying, but how does it currently look and where does it go? So first of all, why so big? That's I think the first question. And then let's walk us in a visual way through... how that land is going to evolve over the next decade.
SPEAKER_00:There's a famous story about the U2 rock star Bono when he first went to talk to the General Assembly of the United Nations. And he said, I'm feeling really nervous. He said, I'm feeling really nervous. And everybody was sort of thinking it's because he's talking to the General Assembly of the UN. And he said, I've never spoken in front of such a small audience. The size really depends, you know, what is big. It depends where you're looking at it from. From a conventional European perspective, if you look with the long history of agriculture, we have relatively small agricultural operation. So 1,000 acres seems like a lot. If you were sitting in the US or Australia, it's not even the veggie patch behind the farmer's house. It's
SPEAKER_01:a very big market garden, but yeah, we get the point.
SPEAKER_00:But there are a couple of reasons that it matters. The first one is that in this next phase, our primary aim is to demonstrate what's possible sufficiently that we can handle almost every different context that we will then subsequently expand to. That's one reason. The second reason is that we are really clear that our role in this transformation is about demonstrating how scaled agriculture can change. And we fully honour and acknowledge and recognise the role of smaller farms and small holders in regenerative approaches. But we think our contribution can be to sort of break the logjam of, call it, you a sort of visible and genuine alternative in that space and then the third very practical reason is that we're raising 20 million pounds at the moment and With that capital, we need to bring the initial platform through to full profitability, including carrying the cost of all the core capabilities and people that we need for then scaling the operation. And if you're too small, trying to do that on a couple hundred acres, it just doesn't make sense. Because if you talk about accounting terms, the overheads the farm would have to carry make it nonsensical. So 1,000 acres you're talking about as a regenerative enterprise, something that turns over close to£10 million, may makes two million pounds of profit a year, even carrying all the operating costs. That's a viable basis on which you can then go on to create more subsequent scale.
SPEAKER_01:Basically saying you need a certain scale to do a lot of the farm to fork, obviously in-house and not having to sell into commodity markets, etc. A lot of overhead that only makes sense if you get just like, I mean, the magic number you always hear when somebody is raising a venture fund, like you need 50 million to have a proper management fee and thus pay for the costs and anything under that is very, very difficult. I know some people disagree and start emailing me, but there is a certain minimum level you need to go over and in your calculations and in your approach, that is about a thousand acres and around 20 million to get going.
SPEAKER_00:I'm just laughing at your comment about venture funds because part of my life, I spent 20 years heading up investor relations and big sort of listed companies. And the great joke is every fund you ever visit when you're talking about your business, they've always got the top floor of the smartest building. And so, you know, the overhead cost also includes the kind of status that's necessary to be taken seriously sometimes.
SPEAKER_01:With a long elevator ride.
SPEAKER_00:It's all changed in COVID.
SPEAKER_01:It's changing. Yeah. But it's, I mean, there is a certain scale to things if you want to do a lot of things and if you want to do things at a scale in terms of impact. And that's, I think it's going to be very interesting to follow because a thousand acres in this context in the UK is a lot. And you're planning to do a lot of things on it, not just a monoculture grain or et cetera. So let's unpack that a bit. What's the average acre you're buying? What does it look like? currently or you're going to buy when you raise? And what kind of transformation can we imagine if we look a decade ahead?
SPEAKER_00:So one of the things that we often start with in these kind of conversations is making clear that really good regenerative agriculture is principles-based but context-specific. And that means that you can talk in general terms, but until you're standing on a particular piece of land, it's very difficult to be precise. So having given that health warning, I'll then take you through so it's likely to be a conventional mixed farm which means it's going to have some crops it's going to have almost certainly some animals and a fair chunk of grass and overall it's probably going to have two or three products going out the door we're agnostic about whether that happens to be predominantly dairy or beef or or even you know some significant form of arable rapeseed whatever it is it's going to be located in an axis between if you know the geography of the uk between London and Birmingham and to the left. So it's not the flat wheat lands or crop lands of the east of the country. So it's likely to be rolling countryside. It's probably going to have relatively small fields in it. And it will look like the kind of picture that most people have of rural England with these hedges and tiny lanes that you have to reverse down when you meet somebody because they're only one car wide. What it will look like, and that farm will employ four to six people on a full-time basis. Typically, it will have a farmer and his wife because it will be a he, and they will be on 65 times out of 100, they will be over the age of 65 statistically, and they'll have some low-paid seasonal work. What it will look like five years later is, let's work backwards from where I just finished, and that is that it'll have over 100 employees full-time on the farm.
SPEAKER_01:Well-paid, just to be...
SPEAKER_00:Yes, absolutely. We talk about both well-paid and meaningful work. They will have, by the way, they'll have a minimum, the way things are designed, a 25% profit share in the whole enterprise, which will be divided equally between the employees, not on the basis of who's paid the most and therefore all And there's
SPEAKER_01:a, if I remember correctly, a max of the ratio between the lowest paid worker and the people at the
SPEAKER_00:top, if we want to think in a pyramid, which I hate. They'll say a hundred or a thousand, you know, you should be able to earn an infinite number more. And if they're very, very egalitarian, they'll say, no, everyone should be paid the same. But when you ask, change that round and say, if we have to reach a compromise, what could you all live with? Everybody ends up going to somewhere around 10 or 12. So we've set a maximum of 12 between the highest and lowest paid, which is interesting because in the UK, that is also the difference between the highest paid in the soldier which is fascinating
SPEAKER_01:that's an interesting uh and we learned something i mean we are learning a lot of new things but we learned something very unexpectedly today
SPEAKER_00:so you you asked about what does it look like
SPEAKER_01:yeah there are 100 people that's a lot yeah it's a lot buzzing that means people renting places locally buying houses that's rural economy
SPEAKER_00:yes and that's part of the mission of what we're about is that we know that a fully integrated regenerative approach will transform rural economies and that's part of the reason why the food business is really important because on-site, first of all, the agriculture will obviously look completely different because you'll go from probably three products to, I would say it's 103. I mean, we don't know what the final number will be, but you'll have almost certainly cattle, sheep, goats, pigs, chickens. If you just talk about the animal side of the equation, you're going to have a market garden operation. There will be a whole mix of different arable. There'll be nuts, trees that will have been planted, though they're probably not not in five years time. They won't be producing anything. You'll have row cropping. You'll have, there'll be no plowing, all the normal sort of standard principles you'd expect in regenerative agriculture. But then the bulk of that produce will be sold through the enterprise's own retail operations. So what you'll find is there'll be a processing facility. And again, it's situation dependent because it may or may not be that there'll be, for example, a milking herd on site. And if there is, then there'll be a creamery there'll be a butchery, there'll be a charcuterie, there'll be a smoker.
SPEAKER_01:But this really depends on what you end up buying. Exactly. But some of that, I mean, the bulk will be processed and actually sold through the farm shop, restaurant, etc.
SPEAKER_00:Yes. And that's really important because when we looked across the UK at farm shop, at farm retail, it's as serious and technical a business as the production side. And so to do it effectively, you need to do it properly and you need to do it a reasonable scale so that you can present the opportunity for people who come and buy to effectively buy the bulk of their food purchases if they choose to. Sounds obvious,
SPEAKER_01:but yeah, it's booming. But like if you envision a farm shop, you think very small, a few products here and there and not very, I wouldn't say sophisticated because it definitely is, but something people do on the side that might be open a Saturday. But there are actually operations that are way more sophisticated. And in order to do it well, you need to do obviously also that, like it needs to be almost mimicking a smaller scale supermarket where you can get almost everything, obviously as fresh as possible. And you need to, yeah, it shouldn't be just an extra, it should be your prime place to buy most of your food or 50, 60, whatever percentage of your calories should come from there. Then it becomes interesting.
SPEAKER_00:And equally, where we started this conversation was that this is about disrupting the agri-food system. So if regenerative agriculture provides us with a knowledge base to disrupt the production side, then the low cost of technological disintermediation, which basically means we can connect production with the the people who eat the food at low cost means that we can build a relationship and a network and a sales platform digitally that allows us to connect with everybody locally and beyond local as well. So you can do that well, you can do it badly. If you do it well, then it's an effortless, one rapid click experience to fill my shopping basket and then decide to come and pick it up at the farm or have it delivered, whichever you prefer. And hopefully you come to the farm and you'll also wander around because you'll also have an opportunity to learn all about this whole regenerative And you'll go into the coffee shop and you'll meet your friends there and you can imagine the picture. That's what it's all about. It's one of the reasons why in our team, we have one of our co-founders, Kirsty Sadler was the marketing director of the Leon Restaurant Group. And in the UK, for those who are not familiar with it, Leon is famous for producing high, for essentially taking the fast food business model, but then putting high quality food through it, organic and so on.
SPEAKER_01:Yeah. Actually, they are a bit spread out in Europe as well. I've seen them definitely in Amsterdam, et cetera, the airports, but yeah, it's still mostly UK, I think. Yes. It's a very interesting model, but then you go one step further after that as well. Like it becomes a food brand as well. It's not between brackets again, just the farm shop where you can buy your stuff if you go there, but actually you mentioned it just now, you can also have it delivered and you can also have that seamless experience for in case you don't want to drive or you don't want to get to, or you don't live nearby the final spot you end up choosing. And I think that add-on is going to be crucial because that seems to be not the case with many other even well-run farm shops.
SPEAKER_00:Well, the way we describe it is that none of the individual components of what we're seeking to do, what we're doing is fundamentally new, but it's putting them all together. That's disruption. So you can run a brilliant farm shop on an individual farm. You can do it in a conventional farm as well, and you can buy in the stuff that you don't grow yourself, and that's great. But if you build a national brand or around it and engage people around the movement that regenerative food represents then you supercharge the whole thing and it also means that when you build out the next site on another farm people already engage with the brand and they're already excited about it and they're already interested in it and in that sense you're driving change because it's a huge education job for us all to do because people don't know it's not the cow it's the how they don't know that
SPEAKER_01:if they've seen the movie that almost was called like that but now called sacred cow they do. But yeah, that's actually a good question. Like, because in the plants and obviously it's context specific there are a lot of animals involved because the topsoil has to be rebuilt and it might be part of a transition and there's good margins in it to another extent and but for people that say yeah that's a lot of animals then shouldn't we all be eating less like what's the education journey look like for the average person i'm not saying consumer that comes to the food shop maybe to the restaurant and is maybe expecting less animal protein on the menu
SPEAKER_00:the first thing i would say is that there is nothing about a regenerative approach that requires animals. What I would say is that with the level of knowledge that we currently have, it's easier with animals. And that's important because we are all babies in our knowledge base in this space. And what we'll be able to do in 10 years' time will be completely different to what we can do now. So that's the first comment. The second is that the educational journey is about outcomes. So at the moment, if I walk into a shop, I'm ecologically concerned. I buy something because it's got an organic label on it. What I don't realise is that if I look at the science behind the ecological effect of what happens in many organic contexts, the reality is that it's not materially necessarily any better than a chemical approach. We'd like it to be, but nothing in the science necessarily tells us that it is. So the question, the consumer journey, the conversation around our consumption is all about switching people from looking for a label that is about a process to seeking to understand what's the actual impact of how my food is grown. You know, is it genuinely regenerating the soils? Is it genuinely providing local livelihoods? Is it all of those really, those kind of questions, you know, outcomes, not process. And that's a big education.
SPEAKER_01:It's a huge, but of course, it's much easier if people come to the farm and see and experience and walk around instead of buying some anonymous product somewhere with a label on it in a supermarket where you have maybe three seconds or maybe even less to like if somebody comes like you have a lot of interaction moments and touch points where waiters can do certain things where the chefs can do certain things the menu can explain the view people have like please go for a walk around please see holistic management how it works in practice please see the market gardens and the raised beds why they are so different than no-till etc why i mean there's you have a lot of people coming to the side which gives you a lot more opportunity to go on that journey if they want to if they choose not to it's
SPEAKER_00:absolutely and it may be that they only do that once because they're passing through but it'll change their lives and in changing their lives they'll start driving different questions to the places that they normally shop and it may be that they do it once but then most of the time they order online that's also fine yeah you've opened up awareness and you covered some of the things but if you think about regenerative by design and you say farm is a place that's not closed and unwelcoming it's open and welcoming then you start thinking about things like okay let's lay out the land so that you can handle large numbers of people coming through and walking around and learning what's going on and you can create visual interpretation and you can create walkways that you wouldn't otherwise do and you know simple things like making sure you build enough parking i mean very dull but that is actually often
SPEAKER_01:often goes wrong yeah often goes wrong it becomes in a mud bath somewhere that people didn't think about too small whatever and you mentioned something before like we hope that neighbors and other farmers look over the fence. I'm imagining the fences are going to be very low, or at least you can look through them. But what's it from preventing being, these are the outsiders coming in, just like SLM back in the days in Australia, the stupid land management. These are the weirdos doing things very different. How are you going to make sure you are regenerative by design? Also, apart from hiring a lot of people locally, obviously, which would be interesting, but being embedded in a place that you didn't grow up in and don't have 200 years of roots and And making sure that you're first of all being accepted for a certain time before you show things. And then how do you get more farmers, the neighbors, et cetera, to take down the fence and actually join you on that journey?
SPEAKER_00:Well, there's several answers to that question. But the context in the UK is one that has changed quite dramatically in a short period of time. So if you'd have asked me that question five years ago, I'd have said it's really difficult because people are very closed. They're not open to new ideas. They're not interested in change.
SPEAKER_01:Like your wife said when you suggested Brussels, basically.
SPEAKER_00:Exactly. But that's changed dramatically. And for some people, it's changed in a positive way because it's about the kind of acknowledgement that the way we farm now is an ecological challenge. For other people, it's negative. It's because I can't make any money. And now the subsidies are going, what the hell am I going to do? So funnily enough, that's from the point of view of what we're doing. We're not anticipating this is a major issue. Equally, though, we're also really clear that the philosophy of any good regenerative enterprise is you're deeply embedded in the communities in which you operate. And that's not just surrounding farmers. It's also the villages and towns which are near. So there's some very routine things that you can do to address that.
SPEAKER_01:Everybody should do anyway.
SPEAKER_00:Yeah, which is essentially you open up lines of communication with everybody. You talk to them about what you're doing. You make it visible. You share it. You discuss it. The philosophy is not one of arrogance that we know something other people don't, but one of humility that says we've all got the same challenge and we're on a journey to try and do something better. And we'd love to learn from everybody around us. If we can contribute something, that's great. But you have to do it from a perspective of the regeneration of the land is a journey, not a destination. And that's, I think a lot of the history of agroecological land management and practices has has been about saying, the other way is wrong. I'm right. I'm morally superior.
SPEAKER_01:I've seen some examples of that. It usually doesn't end well.
SPEAKER_00:No, it doesn't. But it is the basis that puts people in conflict. And we're saying, actually, regeneration is the direction of travel. And if every year everybody does something that's a little bit better than last year, in a decade from now, it all looks very different. So it's not about critiquing someone because they're not regenerative. It's more about saying, how can we all move the And what are the things that we can learn from each other in doing that?
SPEAKER_01:So what do you envision? Let's say I'm a neighbor farmer. I'm looking over the fence. The first few years, I'm a bit suspicious, but I'm also interested because I see things changing. How could I get involved in the process of new foundation farms?
SPEAKER_00:So if you're a neighboring farmer, there are two main possibilities. The first one is that we will have an educational platform on site. So we're in the business of education as well. In that respect, we partnered with three who are the Savory Hub for the UK. And what we will enable is a physical site that demonstrates a lot of the practices of holistic management, both day-to-day and over time. And secondly, we'll say, if you start the regenerative journey, then we can provide an access point for the products that you're growing.
SPEAKER_01:Which is not banal. That's a big thing for many, like where can I sell if I start a chicken caravan or start rotations or et cetera, et cetera.
SPEAKER_00:And we will have that retail pipeline that means that you will have a market. And the good news is that because we're disintermediating all the other players in the supply chain, Rx expectation is that we will be able to pay a decent premium for the products that you're able to grow for. So I'm looking, you can't see, but I'm looking out because I'm surrounded by fields of a company called Riverford. And I don't know if you're familiar with it. No. somewhere around 100,000 boxes a week of food going out. Employees, again, I'm not accurate on the figures, but it's my eldest son is currently working there in his gap year because in COVID he can't travel anywhere.
SPEAKER_01:And let's say COVID has not hurt their business.
SPEAKER_00:No, it hasn't, but they employ at least 500 people. And they are a focal point for supply for farmers right over this region. And the result is there's barely a farm that isn't nearby that isn't supplying Riverford. And one of the things that Riverford has done consistently is say to its supply chain of farmers, and they call them cooperative partners, we will guarantee offtake because we know that our customers will buy and we'll guarantee the price. So you grow it and we can sell it. And just imagine how enabling that is compared with living in a context where you're growing your produce, you're hoping that there isn't going to be a glut of it or even if it does grow and the price is going to be reasonable. Riverford just fixed the prices a year in advance and everybody's happy. And they guarantee the offtake. And usually they take more than the farmers grow. And that's a model that should really be working everywhere. There's no reason why it can't.
SPEAKER_01:Let's switch gears a bit to the finance side of things. So I've always a few questions I love to ask. Let's see if we can get through them with the time. But I want to stay one step back because you mentioned holistic management and 3LM, which I will definitely link below. This is a very big question, actually, a rabbit hole. What does holistic management mean to you? And why did you choose this as an operating or as a management system for I
SPEAKER_00:spent five years running a global coalition of companies and business schools to transform business education. It was called the Globally Responsible Leadership Initiative. One of the things that I realized is that it is the frameworks within which you make decisions that determine the potential number of outcomes you can produce. And conventional business management is really bad at optimizing economic outcomes and ecological ones simultaneously. It doesn't have a framework to do that. It thinks of these things as trade-offs. And whereas for us, holistic management is the best tool we have found that allows you to integrate questions about land use, about profitability, about social impact, and answer them in a way that gives you an action plan that you can work with. So a lot of people are very focused on the use of animals for rehabilitation of land when they think about holistic management and savoury. For me, that is important, but very secondary compared with the genius of a management framework that allows you to think about and resolve multiple challenges simultaneously. I would also say that it's really, you know, it's coupled with the principles of the Ecological Health Index, or it's, if you like, commercial framework, ecological outcomes. as an outcomes-based measurement system. So you're using holistic management to think through the issues you're wrestling with. You're using ecological outcome verification to see whether you're winning or losing from an ecological perspective. And putting that together, you've got a system that is as sophisticated on the ecological side as conventional accounting is on the financial side. And our view is without that, it's trial and error as to whether or not you're going to succeed to run an effective regenerative enterprise that makes money and does has an ecological positive ecological result you need that management system
SPEAKER_01:and you'll be tracking on the ecological health index basically very specific things over time over the next decades like are you hitting your goals and your outcomes you're looking for that you through the management system have identified and which dials you have been turning etc
SPEAKER_00:yes and the ecological health index goes between minus 140 and plus 100 And zero is the transition from degenerative to regenerative. And we know that almost any farm that you walk onto in the UK that's either conventionally organically run is going to be somewhere between minus 10 and minus 30. And we also know that within four years, you can bring that to somewhere between plus 30 and plus 60. And as you do that, you also start getting the economic. So the economics is also connected, because when you've got that healthily functioning ecological system, you've got the platform on which you can drive the product. profitability as well. So these things, you're not doing it purely because you like to know that you're making ecological progress. You're also doing it because it delivers the economic results you're looking for.
SPEAKER_01:It unlocks a lot more things. So let's say tomorrow morning, you're no longer the executive chair of New Foundation Farms, but you're running a$1 billion investment fund. I'm asking this question always because I love to ask questions, bigger numbers, because there's just a lot of money flowing into the space, wanting to flow into the space. And I'm imagining the next year is trying to flow into the So we need to get used to larger amounts. And I'm asking specifically, like, what would you prioritize? Not down to the dollar, obviously, like I would put X, Y, Z, but what would be the first few things you would really focus most of your attention if you have basically unlimited resources to a certain extent? What would that be with a billion dollars?
SPEAKER_00:I'm going to avoid giving you two answers, even though I'm
SPEAKER_01:desperate to do that. You can invest in multiple things, obviously. You can say I would invest half of it in X and 25% in Y. So
SPEAKER_00:if I was a financial return-based investor, I'd create a special purpose vehicle and I'd go and buy a shed load of conventional farmland. And then I'd be talking to people like us to do deals to transition it. That's what I would do. And the reason I would spend the money doing that is because I would want to see scaled demonstration of what's possible in as many places as possible in order for other people then to also replicate it. And I know because we run the numbers that the economics of that would be very attractive. And part of the reason why we're doing this in the UK, people say, but agricultural land is in the UK. Why don't you, we know of investment funds that have looked at a regenerative approach and said, well, we can make more money by doing it in the US or Australia. And we say, well, that's fine, but we're comfortable that we can make a very good return out of doing it here in this integrated way. And if we can prove it's possible here when you're paying 10 to 12,000 pounds an Then you can do it anywhere.
SPEAKER_01:You would go to expensive places just to show it's possible.
SPEAKER_00:Well, I probably also, I'd spread my risk, you know, if I'm a portfolio manager, but I would be shopping in the UK and mainland Europe for farmland and then looking for people to help me transition that.
SPEAKER_01:And what if you would be, let's say, mostly impact focus, impact outcome focus. So you would love the money at some point has to flow back, but you don't need, you don't have a return target. Some return would be great, but it's not a grant but it's let's say impact first as an investment portfolio what would you do
SPEAKER_00:it's very boring but i do the same thing and i'll tell you why because my theory of change is that the way change happens is you create examples of the new so there's a model of change called the beccana model of change of how societies change and it was created by a thing called the beccana institute and i'm going to spell it wrong but it's b-e-r-k-h-a-n-a
SPEAKER_01:i'll put it in the show notes for any very interesting
SPEAKER_00:yeah and essentially what it says is that you get outliers who do something they all think they're doing something unique but actually there are several of them they then start talking in small groups to each other and then they realize they're part of a bigger movement and then they all start joining up and they create a common narrative and this is true in all societal change throughout history it's nothing fundamental
SPEAKER_01:it seems that we're getting there like we're in that talking to each other that's
SPEAKER_00:where we are now we're on the edge of this third phase so stage one you do it on your own Stage two, you connect with others. Stage three, you start creating a common narrative.
SPEAKER_01:And start fighting about regenerative washing and it's being watered down, diluted, et cetera. Yeah, that's where we're at now.
SPEAKER_00:Exactly. But stage four is you start seeing proof of application emerges in multiple places at a sufficient scale that people say, hmm, this could be the future. So mentally they've switched from this is innovation, but we don't know if it is the future to now this is the future, but it's small scale. And then stage five is when it replaces the old. But at the heart of that is people demonstrating this new future. And the more people that are demonstrating this new future, the better. So I wouldn't be, for example, spending my impact money necessarily on creating networks of farmers who you're trying to persuade to change. I'd be backing those who are changing and providing the capital for them to get on and do it. And then, you know, the more sites you have doing, demonstrating and learning, the faster you create the change.
SPEAKER_01:And what if if you could change you have a magic wand and you can change one thing overnight in food and egg let's say even in climate but i'm imagining you're going to say something in food and egg what would be the one thing which could be global consciousness it could be banning gmos or banning animals to be inside i mean it could be anything what would you change
SPEAKER_00:i would put in every human being's mind and heart and soul the question i want to know what the ecological impact is of the food that I'm eating. I want to know whether this food is actually coming from a place that is improving or destroying nature. because that would transform everything overnight because suddenly the demand would be there. The producers would change because we wouldn't be able to keep up with the volume of demand and it would drive innovation. That's what I would do. I would put that one question. Is the food I am growing?
SPEAKER_01:Is it building soil or not?
SPEAKER_00:Yeah, grown on regenerating soils. You know, great question. Is the food I'm eating grown on regenerating soils? Yes or no?
SPEAKER_01:I like the version of, is it destroying nature or not? Because I think it's beyond the field as well but yeah it's a
SPEAKER_00:and you make the point about it's beyond the field that's really important so if you have a look at the new foundation farms website we deliberately building or started the process of building a consumer brand so everything that we're starting to do and talk about is targeted at changing the consumer conversation so we published a manifesto there it's not our manifesto it's the manifesto for a radically natural future for farming why because we want to talk to the next generation and change tune in to what they're looking for by starting to help them understand what the answer is to the question, how do I eat in a way that's more healthy and more aligned with creating a better world and a better earth?
SPEAKER_01:And to end with, I mean, this is always dangerous because I usually have follow-up questions, but a question inspired by John Kempf, what do you believe to be true about regenerative agriculture that others don't believe to be true?
SPEAKER_00:What I believe is that every single facet of the agri-food system can become regenerative. It can be super profitable and it can restore nature. And there is no excuse for us not doing that everywhere in every part of agriculture.
SPEAKER_01:Yeah, I don't think I should ask a follow-up question after that. That's just the perfect ending of this conversation. Thank you so much, Mark. You'll be back a number of times on the show and we'll be unpacking all the different facets actually of New Foundation Farms with a number of your co-founders over the next weeks and months. So I'm very much looking forward to that, but I think it was a great kickoff of this journey and I'm very much looking forward to keep following that and see how it unfolds.
SPEAKER_00:Thank you very much. We love the conversation and I'm looking forward to seeing the being challenged and questioned and seeing where this all unfolds. The podcast is really important for the change that we're all looking for.
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