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
365 Philip Kauders - From Goldman Sachs to investing hundreds of millions in agroforestry in Brazil
A conversation with Philip Kauders, CEO and co-founder of Courageous Land, working on reforesting landscapes via large-scale biodiverse agroforestry.
We can invest hundreds of millions into regenerative agroforestry, maybe even billions. No, we don’t need new regulations or new technology (drones that prune, for example— sure, they’ll help, and they’ll come, but they’re not essential). According to Philip the puzzle pieces for making large scale multi strata agroforestry systems are there. The place: Brazil. The land: the former rainforest which is currently bare or maybe grazed a bit, so underperforming financially and ecologically ecosystems. The knowledge is there because of 10000 years of agroforestry experience- the Amazon is a managed agroforestry system-, the financial system is ready because agroforestry is a thing in Brazil. Companies are sourcing products from these systems, bankers are investing, and large-scale projects are already on the ground.
More about this episode on https://investinginregenerativeagriculture.com/philip-kauders.
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In Investing in Regenerative Agriculture and Food podcast show we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Hosted by Koen van Seijen.
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If regenerative agriculture has X percent IRR and it can remove vast amounts of carbon, why don't we just put a trillion dollars into that? Right now, everyone makes money and we solve climate change. What that means is that you're able to unlock financing for the project. That wasn't there before. So what can happen is you can either have a corporate that wants the future carbon credits, invest upfront into the project, and then they will be the partner in the project and they will have the future carbon credits used to offset their emissions, or you can have a player that wants to pay for the carbon upon delivery and offtake agreement, and then you have a contract that is essentially receivable and then you can take that to a bank and get the financing up front.
Speaker 1:The middle strata is typically acai for us, so a palm tree that is partially shade tolerant, but not as shade tolerant as the understory species, and occupies a space, a niche in the system that is not occupied by another type of tree. And then our high strata is timber species or woody species A 3D goggle set next to the food where you can see the farm. You can visit the farm where it was grown at and say, okay, this is coffee from a regenerative agroforestry farm, a conventional farm, people will make the decision on their own if they can just be there and see.
Speaker 2:This is the Investing in Regenerative Agriculture and Food podcast, where we learn more on how to put money to work to regenerate soil, people, local communities and ecosystems, while making an appropriate and fair return. Welcome to another episode. Today we're talking about large-scale reforestation and conservation through agroforestry, meeting the growing demand of climate-positive food ingredients and noble hardwood and carving credits. Welcome, philippe.
Speaker 1:Well, thank you very much. It's an honor to be here, my favorite podcast.
Speaker 2:Thank you so much. I mean that's a good way to start this one and there's a lot to unpack and not only in your, your title or let's say, the subtitle on the website and, of course, the documents and I went through to to prep. But let's start with the personal question. You, you know it's coming because you've listened to to this podcast and we've had the honor to do our listener and actually prime I won't say target because it sounds wrong, but like an ideal case in the sense of people that have experience elsewhere, in this case in finance, and bring that to the regeneration space and then hopefully use us and other resources to speed up their knowledge and to get to know a space through the pioneers and the practitioners we like to put in. Let's say, invite on our couch and put on the spotlight and through that, hopefully speed up your, your own um development and see, okay, where are their pocket, where are things that need to be built and how, and then at some point, hopefully, you come here and talk about that.
Speaker 2:It's a nice circle and I have to say. But start with a personal question um, how come you spend most of your waking hours and on no-go hardwood, which I'm definitely going to ask more questions about Agroforestry in Brazil. That's quite a specific piece of the regeneration path. How did you stumble upon regeneration and ended up spending so much time on it?
Speaker 1:Thank you for the question. So essentially since a young age I've had an interest in impact investingold. I studied sort of impact investing in microfinance in college, at Cornell, which led me to spend time abroad, in Spain and in Chile. And then, you know, once I was in Latin America I visited Brazil and fell in love with the continent and Brazil specifically, and, you know, fast forward from there. I wound up working at Goldman Sachs in investment management in New York, getting advice from people saying like hey, don't go necessarily directly into impact, learn some things and then you'll be able to have higher leverage to be able to do what you want to do long term.
Speaker 2:Such a good point and such a dangerous one, because there's just a book that came out in the Netherlands about, like the Bermuda Triangle of talent, that people say that and go to McKinsey or go to Goldman or go to whatever sector you're in, and then you for two years and or three maybe, and then you have this experience and then you can do um so much more good to the world. The problem is most people get stuck. Yeah, and and the golden cage and and the lifestyle and the money and they're very good at keeping you there. Yeah, and let's say, the impact of the average person in in all of those companies not picking on one is pretty low, um, and somehow you stepped out like, how did you get? How did you escape from the golden cage?
Speaker 1:well it was. It was a process. I think for me that the risk was low because I've always been someone that really wanted to, to be my own path and really do my own thing, and so I was was becoming very, very interested in getting down to Latin America and being on the ground and making an impact down here and was able, after a couple of years, to learn Portuguese during my free time living in New York and came down to Brazil to work for a private equity fund and there I was able to gain operating experience. And Brazil started off at the fund level but then went inside of two different portfolio companies that we controlled to help manage those businesses and create value, which was a really, really interesting experience. And then from there I sort of got the ability to get into what I would consider the impact space.
Speaker 1:So, tendentially, the second portfolio company from the private equity fund the first was a renewable energy company, the second one was actually a fashion brand and I got contacted by one of my friends from Cornell University who's an investor said hey, I just met these people from Dallas, texas. They're creating a startup to really empower the influencer economy and it's a new career. Women have creative missions and they need a digital infrastructure to help them build out that career and focus on doing what they love and be able to quit their day jobs and just live that, live their life and spur, you know, true female entrepreneurship. And we need some. They need somebody to basically open to run this in latin america, and so I went up, you know, flew up to dallas, got to know the founders amber and max are incredible people and then decided to launch this business in Latin America. While it being very successful, the company's now worth $2 million.
Speaker 1:We were running $40 million in sales in Brazil, thousands of female entrepreneurs but I felt that there was more impact to be had. There was more impact to be had and, looking at the climate crisis every day, I was ready to, after seven years of running that business, ready to really dedicate my entire life to fighting the climate crisis. A couple of different influences there. My wife was already acutely aware of this vegetarian. One of my best friends was creating a film, a documentary called Feeding Tomorrow, which, if you haven't seen it yet, I highly recommend it, and I was really thinking about the opportunities that are related to this intersection of climate and land use and food.
Speaker 2:Why was that? Because the step from renewable energy influencers, female entrepreneurship. There's a gap to the food space and the ag space, but Feeding Tomorrow, obviously as a documentary, helps. Do you remember what not the click was, but what the insight was like? Okay, food and ag is a sector that desperately needs change and will change if we like it or not.
Speaker 1:Yeah, I think it was a number of people that influenced me, but I would say definitely my wife and my friend, oliver, were the ones that were there. I think the moment was, you know, oliver's the son of, actually a relatively famous chef. He was about to open a restaurant that was actually going to be a burger restaurant, reckoning and awakening of like what was going on in his life. And then, like the next time I saw him, he was a vegetarian and um, and and so it was very, very just interesting time. I I hadn't, was very uneducated on the subject at the time like, okay, what do you mean? Climate and food? And then we went down this, this rabbit hole and once you've seen it, you, you can't unsee it. And so, yeah, and so very much learning about regenerative agriculture, sustainable all practices. It can remove vast amounts of carbon. Why don't we just put a trillion dollars into that? Right now, everyone makes money and we solve climate change. You know, next year it's done.
Speaker 2:And, of course, then it turned out to be so easy. Now we're at 10 trillion, yeah.
Speaker 1:Exactly. And now, yeah, exactly, and so the it's the after story people.
Speaker 2:We don't ask the one billion or just ask what did you do with 10 trillion? When we do a series, like in 20 years, what did you do with that barrier? How did we get to a trillion? Anyway, but when did you see the financial potential? Because for many it's not I'm not saying not there, but it's always a tricky.
Speaker 2:I sort of see two streams the people that are really showing and seeing that there is an interesting risk-adjusted financial return and things like we could put trillions to work in this, not tomorrow, but like over time, definitely grow there. How do we make this bankable? Institutional investors etc. And and region that has to sort of fit into the current financial world and probably could in a certain context or in a certain flavor. And then there are people that we have to completely change the current financial system to fit regen or regeneration in its deepest core and and we probably need both and we have both on the show. But you're clearly saying I see financial returns. When did that where? Where did you see that? Or when did you like oh, this actually makes a lot of financial sense.
Speaker 1:Yeah.
Speaker 1:So there's actually plenty of scientific studies and even some books that have studied agroforestry systems, where they're looking at the costs and they're looking at the upside and putting it into like a financial model and saying, okay, this is the payback, this is the upfront cost, this is the IRR, et cetera, and I always found it to be quite attractive, especially considering it's inflation adjusted, you know, and non-correlated to other asset classes.
Speaker 1:Specifically agroforestry, specifically agroforestry was what I was looking at, and in pretty much all of the studies they didn't have the carbon credit component to it, which made me think, okay, now we're in a world where a low carbon product for insetting or a carbon credit for offsetting is being valued. So these returns which were, I guess they were acceptable but not attractive compared to others, you know, straight down the middle type of investments that are a lot less risky and a lot more liquid. But once you're adding the carbon credit piece to it, then all of a sudden you had a change, a new piece of information that agriforestry didn't have for the past 10,000 years and all of a sudden it can be a new moment for agroforestry and I think that all clicked once we started to see the carbon market pick up again, probably in 2020, essentially and how did your experience in renewable energy helped with that?
Speaker 2:Because basically, trees are a lot of solar panels picking up and doing a lot of things within that. Electricity obviously Actually also electricity. But there are a lot of ex-renewable energy people or still renewable energy people I see coming into the I can food space and they see a lot of similarities to maybe 10, 15 years ago, depending on the context in the country, etc. Where you were in terms of subsidies, in terms of our purchase agreements in this case off-takes, like a lot of things click into place, different sector, but very this became bankable basically in the last few decades. What did your experience in Brazil, running RP, deeply involved in this real energy company, teach you or help you shape the anniversary space?
Speaker 1:Yeah, a hugely relevant experience. I would say that the first and most important is a really around the financial structure of how you would structure a business like that. So the way that creators land is structured there's like very similar to a lot of renewable energy companies, which is also not so different from real estate or traditional energy probably, which is there can't invent too many things at the same time.
Speaker 2:Exactly.
Speaker 1:There's like a holding company, let's say, and then you can have project finance for specific projects, whether it's a wind farm or a solar farm or an agroforestry farm, and the type of investors that are at the two different let's call it legal entities are quite different profiles, right.
Speaker 1:So you might have a holding company that's venture or early private equity backed, that wants really asset efficient or low assets, capital efficient, highly scalable and sort of high risk, high return returns, whereas project finance big institutional investors, very long sales cycle in terms of getting deals done, but huge amounts of capital that accept lower returns and lower risk. And so I think that this is probably one of the most important learnings. The other thing is really just understanding the different types of financial structures that can be associated with agroforestry or renewable energy in general. You can list mature vehicles once they're sort of de-risk and cashflow producing. You have earlier stage projects that are a different profile of investor, and in Brazil the capital markets are quite sophisticated and deep, very much like the United States, probably a little bit less obviously, but it's interesting the way that you can structure deals and make things happen and unlock capital in a way that the investors are in the appropriate place and getting the return and the risk that they're looking for.
Speaker 2:Yeah, I think it's a deeply neglected I was going to say missing the stupid. It's a neglected piece of the puzzle of how to structure these type of projects and not even structure one. But how do you structure number one, number two, number three? What's the path like behind me? I don't know if you're watching this video, but there's stairs behind me which is very inappropriate.
Speaker 2:But this is not a linear path. Like, the first project is going to be too small to pay for the cost, but it's going to make a lot of sense, and the second project is going to be bigger, and then you eventually get to the 100 million, the 500 million, et cetera, et. But you have to already think in 10, 20 steps. And that's for many, I think, entrepreneurs and also agroforestry developers or developers in general. Unless you come from that space, it's not a natural feeling, because your investors in the first vehicle and the second vehicle are going to want to know who's going to be investor number six and number five. Do you have them lined up? Because then we can just keep going and the whole company makes a lot of sense.
Speaker 2:What's the road to bank utility Bank was a vague term, but like, what's the road to getting project after project in the ground going, and how do you unlock that? And that's something we don't talk about very often when we talk about get more trees in the ground, productive trees, restore water cycles and all of that. What was your first attempt like? When you said, okay, after running the influencer company for an end, you think it as a negative term. We're trying to influence. We're an influencer in a much smaller level and for seven years.
Speaker 2:what was your first like step into the world of agroforestry and finance?
Speaker 1:Yeah, I mean. So finance, you know, started back a long time ago, but agroforestry really came on strong in 2020 at the beginning of COVID, as many stories began right, so I became. You started baking and planting trees Minus the bakings, but the tree planting became on fast and hard. So essentially, I realized that this was a tremendous opportunity for my life, a tremendous opportunity for making an impact. That's positive, doing what I really wanted to do, being the best version of myself, and just went down the path of studying everything I absolutely could on agroforestry, including searching keyword agroforestry and podcast apps and listening to your podcast and some of your guests and reading scientific papers, reading books, got a textbook which I think was a university course on agroforestry, read through the whole thing to them, and so I knew from the very beginning I needed, um, a co-founder that would be an operational co-founder, because my background is in sort of the finance and platform building, uh, which we'll get into for for agrofarmers who's going to believe that you know how to plant trees at scale?
Speaker 1:yeah, exactly no it's not even that it's like. You need complementary field, uh skill sets in order to run like a large and complex business, and so, yeah, I made a list of a hundred different agroforestry projects on an Excel spreadsheet. Where they are Brazil is.
Speaker 2:I think people, I've never been first of all, and I should, I know, but it is the Silicon Valley, the Mecca, the hot spot of agro forestry at scale, super deep, centropic to large scale, onto arable, like there's machinery history 10 000 years, as you mentioned before, all the way to now 40 years of air and scratch, etc. Etc. It is you were at the right place at the right time absolutely, absolutely.
Speaker 1:And it was luck in a lot of ways, because when I learned about agroforestry, I tried to say, like, where would the best place to do this be? And it just so happened to be the country I'd been learning how to run, you know, businesses in for a long time now. And so, very, very lucky, right place, right time. And, yeah, I got to know a bunch of these projects. I visited them, I took courses and and at the very top of my list was was gilberto and, uh, dana and louisa velar, who wound up being my, my co-founders, who have been doing this for for quite a long time. And uh, yeah, we, we decided to go into business together, really scale this, and happy to tell story or the details, whatever you want to get yes, please.
Speaker 2:Now how do? You because you, you visit these of the 100, maybe end up visiting 50. I don't know.
Speaker 2:I'm just a random number yeah, and and then how do you because I think many people from outside the space you want to start something is like how do I find a co-founder that that has that deep, let's say, sector knowledge or deep practitioner knowledge that can really complement and remember? How do you find it? But how do you convince someone that you're serious? Because we also see a lot of people, let's say, quote unquote the tourists in the space that have seen violence and have seen two documentaries and think they, they know how to do our um regen ag at scale and try to raise a lot of money. Um, how, I mean, you read all the papers, which helps you read all the books and everything that that's on Agroforestry. Let me just convince your co-founder that you were serious and you were the real deal.
Speaker 1:Yeah, so first I'll start by saying how I found the co-founders and then how, eventually, abel was able to convince them to start the company If any convincing was needed Exactly, which it actually wasn't, which was great.
Speaker 1:So the first thing I did is I set up an Instagram account dedicated to agroforestry, called it Courageous Land, and started following different agroforestry projects, with the intention of letting the algorithm do the work that it does, which was suggesting all sorts of agroforestry projects and regenerative projects across Brazil and the world. So, in a very short period of time, I was following, I think, all of the agroforestry accounts that could be followed.
Speaker 2:So, whenever somebody new popped up. Everyone was like, oh, we have to give this to Ophelic, because this is what he wants Exactly.
Speaker 1:Well, people that follow this account also follow this account, and it just so happened to be a lot of agroforestry. So from there I was able to put on a spreadsheet all of the projects that I could find in the Americas really, and see what they're planting, where they were, their size, whatever information I can gather. And then I made a short list of potential players to visit, people to visit, farms to visit, projects to visit, etc. And Gilberto and Luisa were at the top of the list. They were doing a combination of sort of commodity crops, specialty crops and timber at a nice scale, and so I visited them. Well, first of all, I reached out to them, sort of cold reach out, say Hi, I'm Phil, I'm really interested in scaling agroforestry. Here's a little bit about my background. I'm really interested in what you guys are doing and potentially working with you, either having you as a consultant or potentially beyond that. And was very lucky because they responded and said, sure, come and visit. And was very lucky because they responded and said, sure, come and visit. And it was good timing because I was able to visit them at a time when they were in Bahia, but they were already splitting their time between Bahia and the northeast of Brazil on the Atlantic coast, and the other half of their time was in the state of Portima in the Amazon.
Speaker 1:And anyway, I went up to Bahia, I got to talking to them and we hit it off immediately. They were already working on the early stages of a 10,000 hectare plan, which was the biggest I've ever heard of for agroforestry, and so our idea of scale and ambition matched each other. Their skill set was very much running farms, operations, managing the people, the processes and the plants, and my skill set was very much in helping them. Let's get the financing for this in place and let's sell the production to the buyers and let's create technology to make this scalable and eventually help other people do agroforestry through partnerships with Courageous Land. And it was a very good match and very good complementary skill sets and alignment in the mission, and so we decided to go into business together almost immediately.
Speaker 1:I will say that I think, in terms of advice to other people looking to find co-founders, the understanding, the end goal and a very long-term vision of what their potential co-founder wants is really important early on, because I've seen cases where Somebody's doing something at a 20-acre scale and they have the skill sets to really scale it, but they don't want to. That's not their personality. They know it's going to involve a lot of stress and a lot of work and they just don't want to do it, which is fine, which is fine exactly.
Speaker 2:Don't feel pressured to do, even though for the sector of all of us, it would be great if you have the skill set to do it at that scale.
Speaker 1:Yeah, let's's not burnout as well. Yeah, exactly so. So really just aligning on what is what's your dream for 10 years from now, and if that matches with your dream, then it's a pretty good start and and so that 10,000 actors was that already bought?
Speaker 2:like where you said my involvement or my, my interest is in the offtake, in the financing. Like what was that? What was the stage you got involved, basically, where you started working on that together.
Speaker 1:Yeah. So they had received, before I met them, a RFP, a request for proposal from Fundo Valley, which is a nonprofit in Brazil that is probably the most important financier of agroforestry projects in the country, and they had a goal of really helping people dream bigger and think bigger. And they got some initial seed funding for this type of project, and so they were already. They already had to submit a proposal that was accepted, for what a 10,000 hectare roadmap could look like, with some initial grant funding up front and then eventually becoming more self-sustaining from a financial perspective, and so that project wound up merging essentially with Courageous Land, and that was the genesis of Courageous Land. So we were already born with a project in Bahia, the project in the Amazon, essentially.
Speaker 2:And so now we're talking April or almost May, actually end of April 2025. What is Courageous Land. Now, if you had to not to give the elevator pitch, it's always such a usual one. But let's say you're at a dinner table and somebody on your left or right asks what do you do in between plates? What's the between servings? What's the normal go-to explanation you share?
Speaker 1:We'll start with the missions.
Speaker 1:Our mission is to help reverse climate change, but do so in a way that creates health and abundance and abundance is a great word for what we're trying to do for all of life on Earth, and we have to remember that life on Earth involves not only biodiversity but also humanity.
Speaker 1:And so we're really trying to solve climate change, create health, create abundance as we do this. There's multiple ways to solve climate change create health, create abundance as we do this. There's multiple ways to solve climate change, but there's not multiple ways to solve climate change while also creating abundance, health, et cetera. And so we do this through large-scale agroforestry systems that are optimized for production, which therefore gives you financial returns, and carbon removal, which helps you reverse climate change. It also has the co-benefits of creating income for local communities, helping create habitat for biodiversity, restore the water cycle and guarantee water availability, food security, et cetera, et cetera. So how we do it is essentially reforesting degraded lands. So areas that used to be forest a long time ago at some point they were chopped or burned down are currently typically a degraded pasture with no trees and very little production.
Speaker 1:So very low, a few cows here and there, yeah, a few cows here and there, so not being used well from a financial standpoint nor an ecological standpoint.
Speaker 2:And we can Underperforming ecosystems. I think the savory hub in the Nordics would call that something.
Speaker 1:Exactly so. It's not good financially and it's not good ecologically, and so what we can do is we can plant a biodiverse set of trees that will produce fruits, nuts, timber, carbon credits and increase the income on that something that is absolutely degraded to something that gets close to the native forest, but not all the way, of course, because we're planting things that need to be able to produce and there's a certain amount of sunlight that's needed for fruit species.
Speaker 2:And isn't it ever a tension, like the carbon piece, with, let's say, what the production side wants? So when you look at the agro part of agroforestry and the carbon part of carbon credits, is there attention there? Is there a nice sweet spot where both are, let's say, very happy in terms of the amount of carbon credits you can generate and the amount of production you can get out of a system?
Speaker 1:That's a wonderful question and the answer is yes, there is absolutely a trade-off If you have full maximum carbon, so every forest landscape has what's called a carrying capacity, which is the maximum amount of carbon that you can store in the biomass. It's like a mature forest and the Amazon has X tons of carrying capacity in the biomass.
Speaker 2:Which is a model I'm imagining, not an actual measurement, or it's an actual measurement, including soil and the whole thing?
Speaker 1:Well, you have the carrying capacity of the above-ground biomass, the below-ground biomass and the soil, so you have carrying capacity of each of the carbon pools and then you have a total carrying capacity which, beyond that, is impossible to stock more carbon, because it's what the land and the weather supports, basically.
Speaker 2:But is that based on a model or is it based on reality, in a sense like could it come in nature?
Speaker 1:Yeah, yeah yeah, you can find this on the internet. The carrying capacity of XYZ biome is there. So if you hit the carrying capacity, your production of fruits or food in general will be low because there's not enough sunlight getting through to the understory. You can produce fruit that the overstory or the emerging strata is getting enough sunlight, things like brazil nuts, etc. But below that would be relatively limited production and then you start to, let's say, have more light and you get more production but less carbon. So there's there's a trade-off. That and carbon.
Speaker 1:Another way to think about is also wood. So you have this trade-off between timber production and fruit production or food production. We my co-founder, joe Barzato, specifically has spent his life to finding this like optimal point of carbon sequestration, biodiversity and production and the right way to model it. So the way that we do agroforestry is multi-strata agroforestry, where the lower strata is typically coffee or cocoa or, in some cases, lime, so something that is shade tolerant. Then we have a middle strata, which is typically a palm tree, probably produces better quality under shade right, absolutely, and there's a quality market.
Speaker 2:We've learned that with Fernando and so and there's a quality market for coffee already established. You don't need nutrient density research et cetera. You hit the specialty market with enough of your percentage of your coffee and your returns are very different or your margins are very different than if you go into a commodity space that's coffee, cacao, I think it's the same line, I don't know, but they thrive under shade and you get access to different quality markets and thus very different prices.
Speaker 1:Absolutely. And the good thing is you also don't depend on let's call it the premium market. You could also just sell the coffee in the commodity market or the coffee in the commodity market there's always a buyer. There's always a buyer, exactly. So that's our lower strata.
Speaker 1:The middle strata is typically acai for us, or a variation of acai, so so palm tree that is partially shade tolerant, but not as shade tolerant as the understory species, and occupies a space, a niche in the system that is not occupied by another type of tree, and that our high strata is timber species or woody species.
Speaker 1:And the way to do the species, in order to optimize wood production and also carbon sequestration, is to have a mixed stand with multiple kinds of timber species that grow at different rates, so that way you can have a steady supply of timber over time, that you will never do a clear cut where you have to start over your back to the grass, so that you started with, but you'll selectively harvest one or two species per hectare or a couple of trees per hectare starting year 20 on. So some species will be ready for harvest in year 18, other ones in year 22, other ones in year 25, other ones in year 40, all the way up to year 50. And so you can have a staggered approach for your harvesting. Timber creates a little bit more light for the fruit trees, and then you replant and so you have continuous cover forestry. Once it's a forest, it's always a forest.
Speaker 2:Such a good bridge to the interview with Paul McMahon about, I think, the week before this In Ireland and not in Brazil, ireland, the UK, poland, I think a number of European countries. But very similar, very intelligent way of doing forestry is the continuous side and a very interesting way in terms of planning out cash flow and not being dependent on, hopefully, high prices in year 20. And actually they are not high prices and we have to wait a number of years. This seems a much more intelligent way to build a model as well.
Speaker 1:Absolutely, and what's interesting is that we talked about the carrying capacity. When you do timber in that way, you can actually sequester far more carbon than the carrying capacity over time. Why? Because you'll selectively harvest timber that's specific for long-lived wood products.
Speaker 1:You have video here, but like this, like your wall like my wall right here exactly, so you can remove some carbon from the area and put it into a wood product which could last for generations, like construction, fine furniture etc. Freeing up space on the on the area and planting more trees in in perpetuity, so you can constantly be sequestering carbon there. And then you move some of that carbon into constructions and furniture without ever stopping, so you can go past the carrying capacity in terms of carbon sequestration per hectare.
Speaker 2:Yeah, and that's what I was trying to get. Like what dictates the carrying capacity? We've seen that in past years, for instance, that a lot of the let's say research. Until now the models seem very conservative in terms of what's possible. There we see some farmers pushing it way beyond. And what's the depth you measure and how long is, and how stable is the carbon? Of course the carbon in your wood is pretty stable until you burn it or it rots. Like what determines the, the creation of of these credits? And are there ways to prove, like to push the system even further and say, actually, actually we can go beyond this and actually we can also show what's happening, the soil, etc. Etc. Because a full-grown forest doesn't store so much in the soil I think mostly in the biomass. But there might be ways to push the system in a third, of course in this way to remove some of the carbon and keep it in a carbon cycle, but somewhere else in that beautiful wall or a piece of furniture.
Speaker 1:Yeah, absolutely, and I think agroforestry, given that it's a polyculture, you're planting multiple species there's a lot of opportunities to optimize carbon sequestration, whether it's through pruning that can then be converted into biochar or things like this. There's plenty of options for going beyond the traditional carrying capacity of the land.
Speaker 2:And what makes Brazil so unique, like the system you described, is very specific, with a number of species which I think not limits it but means it. It grows well in a certain context, yep, and. And what makes brazil so unique for, for this type of microforestry in general?
Speaker 1:yeah, I mean, I think, just the most. One of the most obvious ones, to start with, is that, given the weather and the year-long growing conditions, you can sequester at least twice as much carbon per per hect per acre per year versus, let's call it, northern colder climate. So that's one thing. The variety of the species is also a big differential, and so I think, just given the natural abundance and the number of tree species that are here versus in northern climates, I think the difference is like More options. Yeah, there's a lot more options, and so the systems tend to be a lot more complex, a lot more biodiverse native species.
Speaker 1:And then one of the other factors, which is just an amazing thing for the world actually, and for our platform, is the interest of the people in the theme of agroforestry. It was actually the theme of one of the most recent soap operas that's watched by millions of people on the main TV station here. Agroforestry was in the soap opera, so it's something that has really taken hold. People are quite interested in it, and I have not seen this level of interest in other countries.
Speaker 2:Shout out to the writers for creating the storylines in one of the most popular soap operas, telenovelas in Brazil, with storylines about forestry and abundance and complexity and with all the drama that you can imagine with it. If you're interested, google I think you can find some scenes etc. Which is very interesting to see how we reach I'm saying the larger we people outside the bubble and I know the writers have been criticized quite strongly by friends etc. On why would you work with such a popular media, etc. Until parents and mothers mostly mothers of friends started to quote certain agroforestry lines and suddenly you reach a whole I think it's reached around a million people, make a whole different group of people and and it's, it's a thing.
Speaker 2:Agroforestry is a is is a thing and creates a whole group of talent it creates. Does it also create interest from investors? Because what seems seem to be missing and seems to be missing and they started to be resolved to a certain extent is that how do you put the puzzle pieces like we talked before with the stairs like how do you put the puzzle pieces together of making this bankable, investable and for not just a few people that happen to have a portfolio, believe in this, but actually institutions that, yeah, pension funds and the likes. Like when you started going around say, okay, we're going to do 10 000 actors and way more, and what is was the appetite you mentioned is actually quite well developed in Brazil. What was the appetite from the investor side of things in the financial sector to get behind this?
Speaker 1:Yeah. So, first of all, I think that it does help. When you have the word agroforestry going more mainstream, I think people become curious about it. They've heard it before. It becomes less foreign, and so maybe the early adopter investors would be sort of angel investors that are. They know it, they have somebody doing it, they've seen it before and then eventually it works its way towards let's call it the institutional investors. In terms of investor interest, there is absolutely investor interest in agroforestry. I think that there are some key players that are increasingly involved in agroforestry projects, all the way from institutional investors and asset managers to corporates that are doing offtake agreements or investing up front in agroforestry projects. There are now venture-backed companies like ours that are in agroforestry, and so the interest is increasing, and I think that this is just the beginning, uh, of of of the level of interest. I think that something that can scale, it should scale, it needs to scale, and so there should be increasing amounts of capital going into the industry.
Speaker 2:as it becomes more mature, cash will become more predictable, etc how different is it now versus five years ago, like when you started 2020,? What's the biggest changes you've seen, apart from more maturity, like concretely on the ground in terms of these kind of projects and, of course, courageous Lands in terms of the growth and scale of the company?
Speaker 1:Yeah, I think that there's a few things.
Speaker 1:One is that as you transition from idea phase into implementation phase and have things to show, and technology and track record and all that, it becomes a different type of conversation.
Speaker 1:So that's one of the things that happens. So the industry has matured, we've matured, and there's less let's call it ideas and more action. The second thing is that investors, like mentioned previously, have started to hear more about agri-farm. So in the initial days more than half of the conversation with any type of investor was really just explaining what it was, just education, and that's fine at the beginning. But now I expect, and others expect, somebody to show up with some level of education before the call, or they probably already heard something, heard something and of course we're going to go into the details and explain things etc. But it's uh, it's a you're already, you know two steps further at least in the, in the process, where they understand what it is and now they're able to evaluate sort of the investment opportunity instead of just being stuck on trying to wrap their head around what agroforestry is trees and how important are archiving credits.
Speaker 2:Is that? It's that missing not missing link, but missing piece that fundamentally changes agroforestry for the first time in 10,000 years. Basically, just to give a bit of more color to that. What do you mean when you say that?
Speaker 1:It's an absolute game changer. I think that it's something that is an internalization of a positive externality and it's something that makes it is the difference between a project being sufficiently financially attractive or not, basically. And so what we've seen is that agroforestry can produce the way that we do it Now. There's plenty of ways to do agroforestry that have less carbon that we do it now. There's plenty of ways to do agroforestry that have less carbon sequestration. We try to optimize carbon sequestration. You're we.
Speaker 1:We use it as a funding source actually, instead of a revenue source.
Speaker 1:So what can happen is you can either have a corporate that wants the future carbon credits, invest up front into the project, and then they will be the partner in the project and they will have the future carbon credits used to offset their emissions. Or you can have a player that wants to pay for the carbon upon delivery and offtake agreement, and then you have a contract that is essentially a receivable, and then you can take that to a bank and get the financing upfront. So what that means is that you're able to unlock financing for the project that wasn't there before. So the actual amount of money and second, for the co-investors, because it doesn't unlock all of the capital needs. Maybe you're talking about a quarter or a third, but it makes it more attractive for the other three quarters or two thirds investors because they have a co-investor that's helping provide more economic benefits for the project to helping the project be bigger, having more cash flows, etc more economic benefits for the project, to helping the project be bigger, having more cash flows, etc.
Speaker 2:And and you have seen corporates show up to to get pieces on their books, even though, like in in terms of disclosure, in terms of messy markets, that okay, let's say we, we all see the headlines on on certain, uh, voluntary credits, like what, what do you make of that? When, let's say, investors of the ad sounds amazing. But what if it just goes away? Or what if it's just a temporary thing? And now the world wakes up to tariffs, etc. And this is the first thing that is going to be taken off the to-do list, let's say. And then suddenly it's not there.
Speaker 1:Yeah, so I mean, luckily there are still plenty of corporates that are buying carbon credits. They're increasing their demand. We have, at least for us internally we've had conversations with the biggest carbon buyers in the world and their demand far, far, far outpaces our ability to supply them. So we're not constrained in terms of demand for carbon credits, we're constrained in terms of the ability to scale even faster to help satisfy the voracious demand of certain large players. So I think that for sure there's companies pulling back and for sure it'll be a bumpy ride in the carbon markets.
Speaker 1:And that's one of the advantages of agroforestry is that the majority of the revenue still does come from the agricultural piece of it. It's the icing on the cake. It helps the carbon is the icing on the cake. It helps it become more attractive. But you have other ways of of navigating a dip, let's say, than you would if you're a pure carbon player. Um, and so I think that the message is like just to sort of understand who are the players that want the. They want the carbon. And then you know, get to a place, which is not easy. Right when you're starting up it was very difficult a lot of outbound reach and now to get to a place where there's more inbound demand. So I don't have to try to convince someone to buy carbon credits.
Speaker 2:They'll let me know if they're interested and it'll be pretty straightforward from the beginning. And do you remember? Of course you do, but like your first big carbon credit, like an important carbon credit deal, that happened like how you must, or maybe the first even depends on how big the first was, like a fundamental one. And can you walk us through the process? What happened there? If you want to name names, name names. If you don't want to name names, definitely don't name names. But just as a um, because it's such an important piece that then unlocks, as you mentioned, a lot of our funding, potentially the funding directly or through, basically a purchase agreement or an offtake of carbon credits. You can go to a bank, if the bank understands what you do, and hopefully finance a big chunk of it. How did that first one happen?
Speaker 1:I'll talk about one that's actually not announced yet. It'll be announced at some point this year. So essentially, we have been working in two key regions in Brazil the Amazon biome and the Atlantic biome, and the Amazon is obviously how different are the systems?
Speaker 2:I'm going to ask a very technical question. I'm going to interrupt, which is.
Speaker 1:Relatively.
Speaker 2:Similar. Do you grow at the same levels? Did you just mention the coffee?
Speaker 1:Yeah, Well, it depends. So we always do the three layers, the three stratums, and in the state of Bahia in the Atlantic, it's a very similar climate to the Amazon climate, so we are able to do pretty much the same things, with some adaptation of native timber species for each biome. And the acai in Horaima is different from the acai in the Atlantic it's called Jusada. In the Atlantic it's a different variation.
Speaker 2:Right, there was a rainforest there as well.
Speaker 1:Yeah, exactly, not so here Exactly, but also in the Atlantic biome, just like the Amazon biome. It was quite big, but it's even more diverse in terms of the type of climate. So the Sao Paulo and Rio de Janeiro are in the a bit colder in the winter, et cetera. So there we have, yeah, just a different variation, but always sort of focused on the key main crops. And so, for example, in the Southeast we'll plant Arabica coffee and in the Northeast, in the Amazon, we'll plant Robusta coffee, which is, yeah, We'll go back to the final day.
Speaker 2:You're working on this one. But if you had to only optimize for carbon, how? Only optimized for carbon? How different would the system look like? Would it be more complex with more layers? Would it be more directional? What would be different? Or is it actually? We are at an optimum where carbon and production make sense? But what would you tweak if, let's say, carbon prices were the main source?
Speaker 1:I don't think that we would tweak too much, because what's interesting is that in our models is that of the timber species, and the soil has a vast amount of carbon stored in those carbon pools. But also the fruit trees themselves, which are shade tolerant, allow for another layer of carbon sequestration to be happening in the understory that if you were doing pure silviculture you might not even have that understory. And so I think we're close to optimize. I guess the only place that we could go would be towards more pure reforestation, essentially, which is something that eventually is not agroforestry, which is not our focus, because we want to really transition the way food is grown into a new way.
Speaker 2:Let's go back. Sorry to the carbon ones you're working on for this year.
Speaker 1:Yeah, exactly, so mean it's. It's absolutely massive uh project we're talking about, you know, 60 million dollar project uh, in the amazon, which is one six or six, six, zero yeah wow yeah, so it's a very one.
Speaker 1:Six is not a lot, but this is yeah, exactly, and, and so, yeah, it's's been an amazing journey, from the pilot, which started three years ago, to engaging investors, which started about two years ago, to now being able to really do something on a scale that is very rare for agroforestry, and to have the impact that we want to have on the ground, not only from a carbon sequestration standpoint and ecological, but also from a social impact standpoint.
Speaker 1:And so there we're, working with local communities, venezuelan refugees and really helping transition the local economy from deforestation and cattle ranching and illegal mining into agroforestry, and we have multiple people on our team that used to work doing things that were illegal, because it was the only job they had and they needed to provide for their family, and now they're doing the exact opposite they're planting trees, they're doing agroforestry, provide for their family, and now they're doing the exact opposite they're planting trees, they're doing agroforestry, and you know we built out an incredible carbon team internally that can help take care of the documentation. We have great partners, which we'll be able to announce later, that are also experienced with carbon and investments in these types of projects, and, yeah, it's just excited to get it off the ground. It's a grouped carbon project, meaning that there'll be multiple farms under the same umbrella and it's an ARR project, meaning it sits under the category of reforestation, essentially.
Speaker 2:And how important. You mentioned technology and platform a couple of times. What has changed there, let's say, in the last five years, or, of course, 10,000 years as well? And we now have AI and we had AI for a while, but the thing now is in the public eye as well. There's a massive technology boom which seems we were talking about it with Antonio Nobler. One of the researchers on the Flying Rivers, et cetera, was very bullish on AI. It went down well and we've been having a few conversations left and right on the role of technology and DTAC and what that currently means. Interestingly enough, a number of your buyers are also deep into the technology world because they have the margins and it makes a very big commitment, especially Microsoft and some others, in terms of carbon. How important, what's the role of technology in agroforestry? Scale up and what is possible now? If you have to tell an investor, it's always the question okay, why now and not yesterday? Why should I not wait two years? What's the current role of technology and where do you see it going in agroforestry?
Speaker 1:Yeah, absolutely. I mean, technology makes a huge difference in increasing the scalability and attractiveness of agroforestry. So the previous company that I was involved with prior to Creators Land was really helping create the platform and the digital tools and the technology and the software to drive a new industry, a new career, essentially, and we see that agroforestry is very much needing this, and so we launched our agroforestry intelligence platform at the end of last year, in near climate week in September, and we've already got now over 450 farms on the waiting list wanting to do agroforestry with us, have access to the software that we built, etc. And so they're representing something like 150,000 hectares across Brazil. And so what we noticed early on is that, you know, we started off with two farms right, we had the one in Bahia and the one in Horaimath and we realized that, essentially, the front office and the back office of both farms could be run by the same group of people in a very efficient way, especially as we think, okay, now we're going to have three, four, five, up to 100 farms, like what is needed to be developed in order to streamline agroforestry, needed to be developed in order to streamline agroforestry, and we came up with four main bottlenecks that agroforestry has in terms of main key challenges the planning of the agroforestry system, so how you know what trees to plant, what the cash flows will look like, what the carbon will look like if each tree is getting enough sunlight and shade.
Speaker 1:The second is the financing of it. So how do you get the capital needed to do the agroforestry project? The third is the management of a very complex system right, much more complex than a monoculture. How do you know that you didn't forget to do something? That's important when you're taking care of a coffee tree, an acai tree, six different types of timber species, bananas, et cetera? And then the last piece is getting everything to market. It's selling the crops and the carbon. So it's already difficult as a farmer to sell one thing. Imagine if you have to try to sell five things plus carbon credits. So what we did is we created this agroforestry intelligence platform that really makes available to the public now planning tools, access to capital for agroforestry management, software and expertise in field, so technical assistance and then access to the market, and we've seen tremendous demand for this essentially, and so it's really, really interesting the way that you can automate and increase the speed of getting agroforestry projects to market.
Speaker 2:Essentially, and what is possible now. That wasn't possible a year or two years ago, like in terms of technology, or is it relatively nothing straightforward or low tech, but they're getting from, like we've seen in certain grazing software, not to to reduce that at all, but going from paper planning if you do rotational plant grazing to a software type of phones, and going basically from paper and excel to online software already makes a huge difference. You take picture of the past year. It might tell you certain things, but it's not super automated that you can connect it to your virtual fencing and it can run itself and like in agroforestry. How big of a step is it and and how much is possible now? That was wasn't possible maybe a few years ago. And then, of course, let's tell where is it going or where do you see it going in the next years.
Speaker 1:Yeah, so essentially the first product, the software product that we launched, it's called a diagnostic Essentially any piece of land, starting in Brazil you just need to upload the shape file or draw it on the map and then, within 25 seconds, we have a report with everything that you really need to know about that piece of land and its potential for agroforestry. So it shows the total number of hectares eligible for carbon credits, the species that would be the best species to plant there, altitude maps, rainfall patterns, the expected weather now and in 2040, biodiversity numbers, soil type, irrigation potential, like everything you can possibly imagine. So this report we give for free to anyone in Brazil, starting in Brazil, rolling it out after that, but and it's something that you get for free in 30 seconds, essentially, what it used to take was probably in dollars, maybe five to $10,000, and two months for some expert to come produce the exact same report. So this is a perfect example.
Speaker 2:Because it's as accurate as that expert. This is something you can take to your practitioner and your tree nursery and say, okay, ordering these trees and let's go, let's finance it, let's go.
Speaker 1:So I would say, kitsch, it's the famous 80-20 rule, maybe it's fine. And to do this girl, so I would say any catch, it's the famous 8020 rule, maybe it's, maybe it's nine, maybe it's 9010 in this rule where you, before actually starting the project, you would still want a expert to come visit the land or if you know land yourself, and you can be there. But this is perfect for prospecting new areas, understanding if somebody wants to do a partnership with you, what you're, what you're working with, without having to go visit there it's. It basically took a report creation that was manual, and collecting multiple data points about a given region or a given piece of land and making it automated and immediate, and also adding data points that were not available previously.
Speaker 2:And is that always the first product? And then, what have you been adding on top of that?
Speaker 1:Yep. So coming up next is essentially well, we already have it internally and soon we'll make it available to others. So starts with the, the, the diagnostic, which is a form of planning. We now have a planning software which helps you model different agroforestry systems and understand the cash flows, the management practices that are needed, the labor needs, the carbon expectations, etc. The next piece of that is the financing piece. So we have a waiting list of farms that are wanting financing to do agroforestry systems and we've been able to provide capital to some of those farms and assume it will be taking more and more off of the waiting list and providing capital through the platform.
Speaker 1:The next piece is management software, so essentially at any given moment, knowing exactly what has been done until that point and the next steps on the agroforestry farm. So what are the next steps to take care of the coffee plants? What are the next steps to take care of the acai trees? What are the expected volumes? That way the commercial team has this ready to go. They have a dashboard, what needs to be sold, when, and then the last piece is obviously plugging into the market. So all of this is built out in. Let's call it either an advanced or a beta form, depending on the functionality, and all of it will be totally done pretty soon and available for everyone, which we're excited about.
Speaker 2:And so then on the ground, we often hear our first three is more labor intensive, which is not necessarily a bad thing if we can pay labor. Well, how do you deal with that? Or what's your view? And are there, of course, also technology solutions there, maybe more low tech, but often not a complaint. People are like, yeah, but what about automation? What about the machinery and all of that? It only works in Brazil because labor is cheap and blah, blah blah, which I don't think is the case. But what do you do when investors throw the labor, let's say the labor card to you?
Speaker 1:Yeah, I mean absolutely. Labor is a necessary piece of this and I think that, like you said, it's a good thing for the most part, as long as you are paying correctly and training people. So I think that there's a few things that need to happen as you think about this trade-off between labor and technological investments. The first one is independent of the quantity of labor and the fact that we can mechanize more over time and use robotics more over time. The labor that's there, I think, needs to have a clear career path. When I started at any company, you get a training on your first day. They help you set up a retirement account, they show you the different paths. You get to meet people that are the vice president or the managing director, et cetera, like why does this not exist when you start on Niagara Forestry Farm or any farm? And so really creating paths to wealth accumulation and having a clear vision that anyone working on these projects will participate in the upside which we have the policy for and also have a path towards being a manager or director, et cetera. So I think that's the first piece of it.
Speaker 1:The second piece of it is in order to attract that talent and have the right type of talent.
Speaker 1:There needs to be a lot of specific education and unfortunately, for now, we've taken it on as our responsibility to train these people internally.
Speaker 1:There's not many people that are out there in the market or graduating from universities that are ready to go and operate or manage agroforestry farms, and so, instead of having more lateral hires, why don't we have more great young talent and build up that talent pool internally, so that way we have somebody who maybe is only 25 years old, but actually far more qualified than somebody who's 32, that were done a different type of agriculture project and has no experience with agroforestry.
Speaker 1:And then, in terms of the machining and the robotics, we're absolutely paying attention to and in touch with a lot of the players that are developing these types of machining robotics. For now, we're able to use existing machines and they work, for the most part, fine, and so I don't believe that agroforestry needs to go through some machinery revolution in order to work. I think we need action on the ground, and the tools that we have now are sufficient. That being said, I think over time, things will become increasingly scalable, using AI and robotics and the intersection of AI robotics plugged into our software in order to execute some of the tasks that need to be executed that are either dangerous or a little bit repetitive. Let's say, yeah.
Speaker 2:I think we can only imagine what five or 10 years looks like in terms of robotics and AI. As we see the last few years and the last few months and just in the last few days, it seems a constant speed up, and agriculture, or agriculture and agroforestry, seems perfect for the repetitive, dangerous climbing trees or I don't know. You want flying drones with with massive chainsaws, but we're definitely going to see pruning drones, I think, anytime soon, and you already see some harvesting ones, and you see some observer, of course, observing the great cameras. It's, it's uh, almost uh, standard now. And and so what would you tell?
Speaker 2:If we do this in front, I like to say in front of a like audience in the theater in sao paulo, in the financial heart of uh, of brazil, we have a room full of of smart investors interested in agroforestry. Of course, we had a great meal before. A lot of amazing footage, and still remember some footage of fernando rosa standing in a tropic agroforestry farm, like amazing pictures, things like that. So videos and and what would be your main? Not advice we don't give investment advice but your main and see, do you want to plant in your mind so the next day when they're in the office or whatever they. They do their business, maybe remotely and but they they remember, because from evenings like that we remember. We get very enthusiastic, but we don't do that much usually. What would be the seed you would like to plant in their mind that they actually preferably take action with People that manage their own wealth or other people's wealth?
Speaker 1:Yeah, I think that the big takeaway is that we do not need necessarily any changes in regulation, any changes in consumer taste, any changes in machinery. We have a solution that is ready to be scaled, and it's something that I think is an empowering thought, because a lot of people say, ok, well, maybe if we wait a little bit further, then we'll have some change, or we need to lobby the government to subsidize us. No, I think that there is a sufficient opportunity today and I think that there's big first mover advantages in terms of building a track record and also experience and learning things the hard way and some things the easy way. And so, yeah, get your boots dirty, get out your shovel and start planting trees.
Speaker 2:I think there's no better time than right now, when, in doubt, plant more trees, yes, but it also gives a sort of like if you know this, you cannot unsee it. As you said before, you cannot unknow it. It also brings that uncomfortable feeling that, yeah, you have to get going now. This is the moment to know. We know what we know, we know the direction. It's pretty clear, it makes a lot of sense. Yes, there are risks, but it's not a ringy to wait for magic technology to come up or to show up with very relatively basic tools which only get better over time. It's already possible and it's definitely needed. I can see the double keys there. Or it sounds too good to be true. They were like yeah, but if it's so easy or it's not so easy and it's so logical, why are not others, etc. Etc, etc, etc. Doing doing more? And how important is in your mix of trees, etc.
Speaker 2:The offtake side of things Like, a lot of these markets are very established. Is there need for more? Like, is there some offtake? The carbon credit offtake, I completely understand, but like other offtakes, do they help you, just as we saw on solar? Like power purchase agreements at an industrial scale? Like is there any offtake that would make your life easier?
Speaker 1:So you get differing opinions. You don't need the offtake, depending on the investor. So certain investors let's call it a traditional bank or a development bank they may say, oh, you're going to plant coffee, Great, Do you have an offtake agreement? And you can get an offtake agreement for coffee or cocoa or one of these commodities. But the buyer will lock in a price that's relatively low commodity price. And you might talk to other investors that are maybe more experienced with coffee and cocoa and they say, oh, Please don't dig the offtake.
Speaker 1:Yeah, don't dig the offtake. Every single coffee bean finds the market. There's no reason to have an offtake. You will sell your coffee, and so I think the answer around the offtake is it kind of depends on the crop. I think if you're talking about large commodities, especially ones that can store well over time, that you don't have a very short window to sell. That, I think you, then I don't think they're necessary. I think for other crops, depending on the investor that will back you, they may ask for very strong evidence that you will have a commercially viable outlet for the crops yeah, because you don't want to lock in a low price.
Speaker 2:Obviously, with the current boom, that would be, uh, that would be sad. And to flip the question, what would you do? I know you thought about it. And if you'd be in charge of a billion dollars in this case? Um, not looking for exact dollar amounts, not looking for investment advice, obviously, but what would you prioritize? What would be the biggest buckets, let's say, of your investment strategy, if? Obviously, but what would you prioritize? What would be the biggest bucket, let's say, of your investment strategy, if you had to put a significant amount of money to work, and I'm assuming in agroforestry, that?
Speaker 1:could be something else as well. Yes, I think the opportunity is really in these projects that can simultaneously sequester carbon and have revenue sources from carbon credits and production. So I think agroforestry is the first one that comes to mind. Regenerative agriculture generally, but also aquaculture, can do the same. You can restore marine ecosystems, sequester carbon and produce regenerative food, but with a twist.
Speaker 1:I think that, with all of these types of opportunities, I would look for what's called platformed or scalable approaches, where you have velocity building. Of these types of opportunities, I would look for let's call it, platformed or scalable approaches, where you have velocity building and you can bring in players from multiple sides in order to scale this. So, for example, you know, with that, with agroforestry, we have the opportunity to bring in land owners, certified professionals that are helping service those farms technology, off-take agreements, financing, sort of all in one place and really unlock the agroforestry economy, the agroforestry ecosystem. Who are the players doing that for aquaculture, for example, or regenerative agriculture in general? I think that there's an opportunity there to really scale things in a way that has what's traditionally known as platform scale, to really move the needle, and so that's what I'd be looking at right now.
Speaker 2:And in the scene of agroforestry, of course, in sort of the best place to be. In that sense, you go for short to conferences, et cetera. Where are you contrarian? Where do you think different or what do you believe to be true, as we like to call this question? Ask this question that's inspired by Joel Kemp what do you believe to be true in this case, about region agroforestry, that others don't? Maybe nothing, but I can imagine there might be some other thoughts.
Speaker 1:Yeah, I think just coming back to the point I mentioned earlier is that at a lot of these conferences, people are talking about how we need to change policy. We need to change, we need to invent machines that don't exist yet, and all that. I think I'm contrarian there, because those things will help but they're not necessary, and I think that we have what we need to go forward. I think that there is not more need for talk. I think there's a lot of need for action and using the resources that we have in order to do the best we can with what we have right now.
Speaker 2:In terms of that, what's limiting the scale or the growth, let's say, of agroforestry in Brazil? Is it access to land? Is it legislation? To a certain extent, talent, tree nurseries, what's limiting you? Or capital, what's limiting you most in terms of doing the two 10, 20, 100x that you would love to do?
Speaker 1:Great question, so I'll answer it in two ways. I think what's limiting agroforestry as a whole in Brazil? I think that there are some management techniques specifically related to syntropic that are very difficult to scale, like climbing trees to prune and stuff like that. We don't do that. We have definitive spacing of our tree species. We produce biomass from cover crops instead of from climbing eucalyptus trees. Those types of things are inherently, by definition, difficult to scale, and so I think creating a methodology and a way of doing agroforestry business that is scalable is something that is important to us and, I think, is important to the world, and I think that there's no right or wrong way to do agroforestry, but there are ways that are more let's call it scalable, let's say, in terms of limitations on our side.
Speaker 1:I think that, ultimately, the execution capacity of people that are very, very good in the field, that want to be living in rural areas, doing agroforestry for long periods of time, is something that is increasingly important in order to scale this right, like right now, it's not an issue, but you can think as you get bigger and bigger, you'll need more and more people. I think it's also a tremendous opportunity, like the amount of fun that the people have on our farms is great, like I love being on the farm as much as possible, because people are enjoying themselves, they're out in nature, they're fit, they're intellectually stimulated. It's extremely heady, intellectual stuff, scientifically based, like everything we're doing, and so it really is a fantastic lifestyle. But you need to have more and more people like that and Otherwise it's very lonely if you're the only one.
Speaker 2:Yeah, exactly. Or a thousand mile radius, or a bin limit, and we see the same in region. Yeah, like in the farming, like the Arab or, let's say, during the Northern hemisphere farming. I asked oh no, I heard it in a podcast. Somebody asked me what would change your life as a region farmer in, of course, the countryside, and he said if four or five other people would be around me, that would fundamentally change my quality of life. They are working on this Absolutely, because the countryside is empty in many places Empty. A few people left, mostly retired, mostly relatively monoculture people in that sense Not mostly relatively monoculture people, in that sense Not think that, but a lot of people left, like the entrepreneurs have left, unfortunately, and so new energy can be lonely unless we come with a group, and of course, that brings challenges as well. So, yeah, you need to be willing to want that and build community basically from scratch.
Speaker 1:Absolutely, and I think that's part of what we're building with. The platform is really this network of agroforestry farms, people that are not only landowners but also that want to participate as consultants in the projects, people that want to participate as operators and executors of the project. And so get in contact, please, clcreaturescom, if you guys want to, if anyone wants to talk about what this means in terms of building this community, this network for agroforestry, because it is a a critical piece of it and it can be a lot of fun, I think, and that's what we're doing.
Speaker 2:And as a final question, if you had a magic wand that you could change one thing overnight? So we take away the fund, but you have a magic power. Don't ask for more, don't change it, don't be Aladin. But if you had one, one wish a day or one time, the magic power to change something overnight, what would it be?
Speaker 1:so I think that there's, I guess, two points here. The first is, very simply, does it all the time? Very simply, uh, it's not so simple, I guess, internalizing the, the externalities, both the positive and the negative externalities, into the price of food. So when you get a conventional piece of food that's monoculture, associated with deforestation, the price in the supermarket is cheap, but it's it only, it's artificially it's. It's not really actually cheap. If you look at the health consequences, the environmental consequences, you start to add those prices back in versus the regenerative or agroforestry product which has so many benefits to it and looks on paper to be more expensive but is saving the government health care costs and and and many other things.
Speaker 1:I think that the the other piece of maybe to make it more practical, of how you can show people the externalities of uh, of what their, what their choice is, is if you could have, in an ideal scenario, like a 3D goggle set next to the food where you can see the farm. You can visit the farm where it was grown at and say, okay, this is coffee from a regenerative agroforestry farm and this is coffee from a monoculture, conventional farm. People will make the decision on their own if they can just be there and see they're intuitively. You know what is better Smell, sense, hear Exactly. And if not 3D goggles, then at least a photo or a QR code on things where you can just start to see what the farms look like, where each of the things are coming from, and you can make a choice based on that.
Speaker 2:That would be a fascinating quest to hear and listen and, of course, smell would be nice, but let's say, to bring Somebody else mentioned it, of course.
Speaker 2:Now I'm blanking on where like if you could see behind the shelf what is behind that product, or behind that coffee bean, or behind the brazil nut, or behind the grain and behind, etc. Etc. And just have that, that comparison, a lot more people would probably not mind a slight increase in cost, at least to people that can afford. Of course there's a huge discussion on accessibility and affordability and not saying ever, but what I'm saying is that there are many, many, many, many people with the income that should know better, first of all, and should definitely purchase better, and that's a big group that, yes, just added dollars on, let's say, the more regenerative supply webs that we're not capturing now because somehow we're not attractive enough or not interesting enough or somehow we're not. There's no click, and this could be a strong click literally in your face, because the difference is so stark, of course, coming from a monoculture coffee plantation or walking around virtually in the supermarket shelf, a supermarket aisle on one of your farms, I think it's just a question of time.
Speaker 1:I think technology is getting better and better in an accelerated way, and to be able to have full traceability and visibility into where things are coming from is just a question of time.
Speaker 2:Yeah, fascinating, and I think it's a great moment actually to wrap up and I want to thank you so much for, of course, listening to the podcast and for sort of not coming full circle that makes it sound very dramatic but definitely diving headfirst into the space and heartfirst as well, and building something very fundamental and courageous pun intended and coming back on here to talk about it and share and hopefully, yeah, can share more in due time on the big projects, project and projects you're working on. And, yeah, I think Brazil, I'm saying, has an endless opportunity for agroforestry, pretty limitless in terms of space and in terms of land that can be reforested and be re-agroforested, which is not a word. But thank you so much for coming on here and sharing about your journey.
Speaker 1:Thank you so much for all the work that you do and for being an inspiration to many of us.
Speaker 2:Appreciate it discussed. Check out our website investinginregenerativeagriculturecom slash posts. If you liked this episode, why not share it with a friend and get in touch with us on social media, our website or via the Spotify app, and tell us what you liked most and give us a rating on Apple Podcast or Spotify or your podcast player. That really really helps us. Thanks again and see you next time.
