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
391 Julia Kasper - Rewetting peatlands is the biggest climate opportunity to cut CO2
Meet Julia Kasper, cofounder and CEO of Zukunftmoor, a company rewetting drained peatlands and growing sphagnum moss to transform how we think about agriculture. Their powerful approach reduces greenhouse gas emissions and makes climate-friendly farming possible in peatland regions.
Peatlands, peatlands, peatlands: the biggest climate opportunity in agriculture isn’t cover crops or even silvopasture, but rewetting the humble peatlands. They cover only 3% of the global land surface, yet hold immense amounts of CO2. And when they’re drained- as many are- they release it, not just once, but year after year after year. Like a bathtub with the plug out and the shower still on.
These lands, at least in Europe, are often farmed and not very profitable. But before these farmers risk their livelihoods, we need concrete alternatives to transition. That’s what Julia works on: how to grow something that can replace current agricultural methods on peatlands while rewetting them. And it seems they’ve found a big part of the puzzle: rewetting peatlands and growing sphagnum moss. Currently, when you buy a plant in a shop or when plants are grown in greenhouses, the growing medium contains a lot of extracted peat, which comes with huge emissions and will soon be illegal in Europe. Sphagnum moss can replace this 1-to-1.
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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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Peatlands, peatlands, peatlands. Repeat after me, the biggest climate opportunity in agriculture isn't cover crops or even silvo pasture, but rewetting the humble peatlands. They cover only 3% of the global land surface, but hold immense amounts of CO2. And when they are drained, and many are, they release it. Not just in one shot, but year after year after year. Like a bathtub with the plug-out and the shower fully on. These lands, at least in Europe, are often farmed and not very profitably. But before these farmers are risking their livelihoods, we need concrete alternatives to transition. That's what the guest of today works on. How to grow something that can replace the current agriculture methods on the peatlands while re-wetting them. And it seems like they have found a big part of the puzzle. Re-wetting peatlands and growing sphagnum moss. Currently, when you buy a plant in a shop or when the plants are growing in greenhouses, the growing medium often contains a lot of extracted peat, which comes with huge emissions and is soon illegal in Europe. Spagnum moss can replace this one-to-one. It's still early days, but the signs are promising. We talk about how to rewet peatlands. How do you seed hint with drones and by hand? How do you harvest and much more? How do you create enough investor interest to actually build a company in a new market by solving the classic chicken and egg problem? There's no demand until you create enough supply, but without concrete demand, you can't raise the money to grow this supply. Enjoy. This episode is made possible by our investment syndicate, Generation Re, where we invest together in early stage regenerative food and agriculture businesses. Like this one. Find out more on gen-read. 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 peatlands. We're talking with Zukunft More. They re-wet drained peatlands and cultivate Spangum Moss. That's how they reduce greenhouse gas emissions, enable climate-friendly growing media and agriculture in peatland regions. Welcome, Julia.
SPEAKER_02:Hi, Kuhn. Thank you.
SPEAKER_00:It's such a pleasure to have you here. We are, of course, investors with our syndicate generation Re, and I think it's one of the first times we ever talk about peatlands, which is definitely not on purpose, but it's something that is neglected in climate, in agriculture for sure. It's many big regions, and in emissions, it's just such a massive one. I still remember seeing your deck. I think it came from Ecosia, Paul shared it at some point, and it was like, this is a massive neglected climate opportunity, and a very interesting growing opportunity, actually, for a growing medium, etc. We'll get into all of that. But first of all, we always like to start with a personal question. How did you end up in this field, specifically on peatland rewetting and growing moss? Of all the other career paths you could have chosen, they're probably easier ones. What happened? How do you spend most of your waking hours on drained peatlands?
SPEAKER_02:Yeah, thank you for that question. And there are two stories coming together. One is my personal journey, and of course the journey of my co-founders. So let's start with them. There was Nico and Florian who initially said, let's do something really good about decarbonization. And they got in touch with the researchers from the Christwald Meyer Center, who are like worldwide renowned for their peatland research, asking about okay, can we do something good for peatland rewetting? Because they read about the impact of peatlands. And then the researcher said, Well, yes, of course, you can rewet one or two hectares, but if you really want to create impact, then let's start an agricultural business case and business model around it. And that was the moment more or less where Zukunft Moore was born. And then our co-founder team gathered and got together, and this was more or less through an accident through our networks because back then I just finished another episode of my working life, so to say. I also founded a startup before and grew it for the yeah, eight years or something. Ended up in the little family business my family holds, thinking about whether I succeed should succeed my parents in leading the company, and finally I decided not to do, although I really loved it and also loved to work with my siblings in the management team. And then I took a year off and decided okay, I want to go back into startup early stage, jumping into the mud with both feet. So my background is coming from business, and as I did my first company as a solopreneur, so to say, so I founded it on my own without a team. One big learning was never again found a company. Never again, just with one founder. So I was asking my network for co-founders, also had my own ideas, and finally came up with meeting my co-founders from Zukunft More, and here I am today because it was a great match when we meet, like almost three years ago now, and got to know each other.
SPEAKER_00:And it's just a fascinating jump from I don't know, reading Project Drawdown or research in general on the potential of peatland and the huge emissions that are currently because the current model is draining. We've done it in many regions. I think Germany is a big one, and some others are as well. And the peat, the peatland or the peat is sold to like plant medium, right? It's sold into plants when you buy it in a in in in one of the plant shops. Usually there's something like that in it. And then you read the emissions of that are just staggering. But of course, going from that, like realizing oh, we should do something, like I don't know, methane coming from oil spells is also something you think, oh my god, we should do something. But then going from that to let's there's a company potential here or venture potential here to actually scale it and not just raise a bit of money for crowdfunding, buy one or two hectares, do a lot of good for that because it's a lot of emissions, but then it stops there. How did that shift? Of course, it's partly your co-founders, but how did that shift? Oh, there's a a business opportunity, or let's look for a business opportunity here. How did that happen? Or how did that shift from oh, this is a nice thing to do on the side, and let's, I don't know, get rid of a lot of my emissions of this year for with one or two hectares. Now, how do we do hundreds or even thousands?
SPEAKER_02:Yeah, I think that's the moment where we all started to dig deeper into the peatland's magic, so to say.
SPEAKER_00:And nice metaphor, nice metaphor digging, yeah.
SPEAKER_02:Because then you quickly see and understand that at least for Germany, all of the drained peatlands are almost used for agriculture. And if you don't change the way of agricultural methodology on the peatlands, then you wouldn't reach anything at scale. And that's why we also quickly understood that you do need an agricultural solution for it because otherwise it's so to say just restoration, renaturation, which is important, of course, but it will never lead to a real peatland transformation because there's no incentive for farmers to change and no like real, let's say, marketable proven method to change. That's why we said okay, we're like enthusiastic about it, we have a business attitude in it, and we want to prove the change of the peatlands, and that's why we started it, and that's why we also saw the societal shift in it when talking about the peatlands.
SPEAKER_00:And just for people to because this is an audio medium, you are in the peatlands now, to walk people through what are the current agriculture practices, what how does it look like? How should what should people imagine? We'll put some photos, obviously, and we'll put your website up as well. You have a beautiful drone videos of just for people to understand. But bring us there, like visually. What should people imagine? If you go, you went on a bike ride this morning. What did you see and what did you smell?
SPEAKER_02:What did you it was just fantastic, and it's so idyllic in the peatlands, although they are all drained, but it's mainly grassland or maize cultivation you have on the fields, and you you wouldn't like really recognize that it's on drained land. But this morning there was a sunrise, and all the grains are currently stopping over in October, so it was really wonderful from the noise and also from the birds coming over. So it's quite idyllic. But then you see all the canals beside every field, and then you realize okay, these fields are drained like massively, sometimes two meters below the surface. So there's a constant leakage of CO2 coming from this drainage systems that we have, and it won't stop. So there's a constant emission of these CO2.
SPEAKER_00:It's not just like you cut the forest once, which is horrible. And the soil, of course, the carbon of the forest might go into products or might get burned or might, etcetera, might rot away, and then the soil the carbon from the soil gets exposed as well and will go away. But after a few years, it reaches a plateau, very low plateau. You're saying in this case it's a c it's like a butt up with the tap open and the plug out, and it just keeps going. Like it's not gonna stop for ever probably.
SPEAKER_02:Exactly.
SPEAKER_00:So it's like a so it's one of the easiest ways, if you can find the plug, to literally to stop, because this is a continuum. If we like it or not, if we transition all of our energy system tomorrow, this will continue to emit significantly.
SPEAKER_02:Exactly. So you say there's one centimeter of soil that's that's oxidized every year, and for example, on our plots that we are currently re-wetting, we have four meters of soil, so the next 400 years there will be like the quiet leakage of CO2, like laying on a four meters bad air mattress constantly emitting.
SPEAKER_00:Wow, and numbers-wise, how much per hectare, more or less, like what are we talking about per year in terms of yeah, in terms of damage in terms of CO2 or terms of emissions in general? Because there are other other emissions going up as well, right?
SPEAKER_02:Yeah, exactly. But if you just look at, for example, a grassland, it's more than 40 tons of CO2 emitting on an annual state, and that constantly for the next 400 years. So it's like really massive, and then you understand that the peatlins are they only cover 3% of the Earth's surface, but they store twice the time of the carbon compared to all forests together. So there's it's massive.
SPEAKER_00:It's massive. Okay, I think we under we underlined that, and there is the opportunity to the re-wetting. So, what does re-wetting mean in this case? You bring obviously water back or you stop the water going away? Like what how does it look in practice on one of the fields that you have purchased?
SPEAKER_02:Yeah, you talked about the plug earlier, so more or less we're bringing back the plug. So in reality, that means we remove the drainages, and with removing the drainages alone in raised box, the water stays within the soil again. And then, of course, we build polders, and inside the polders there's also little canals that distribute the water again, because we want the water to be just too s just on surface level, more or less. And that's how easy as it sounds, but still there's some construction work behind it to remove all the drainages that had been there for ages.
SPEAKER_00:Because they're basically canals really meant to drain as fast as possible the water over there.
SPEAKER_02:Yeah, and also plugs inside the peatland that are used for draining the land. Which was uh looking at the heritage, a very clever step to do and to undertake. But uh for now we know better, and that's why we really see the great potential of changing this.
SPEAKER_00:And so you talked about we need to find an agricultural solution to this because just buying, and still it's a lot, buying a few hectares and rewetting it, it's great. But we need solutions for the farmers that are farming the these grasslands now, these mice currently because I don't think they're it's not the easiest land to farm. I don't think it's the most profitable farming model at the moment. Not saying that's easy to replace, but at least you have a low bar to reach. But you need to find a solution for these farm farmers now and farm owners because it's not that you're gonna buy all of it, obviously, and rewed it. So, what's what you're thinking in doing in providing an alternative for the current peatland owners and farmers?
SPEAKER_02:Yeah. As you just said, farmers that are working on the drain uh peatland, for example, in Grassland, they completely understood that this is not a model for their children in the future. But still they do not have the key to be turned how they can change. So their current approach is either to stop farming and rent out the land to someone else, or change the land, which is quite complic complicated. So they are very curious about understanding the spacnomos cultivation process from our side, and that's for us like a perfect scenery because they do have the awareness that they do need to change, but they do not really know how, and of course, are not the risk takers as we can be as a startup to start something new.
SPEAKER_00:Because if you have cows to be fed and a family and a mortgage and children going to school and university, then you just say, Okay, let's put 50% of my land at risk.
SPEAKER_02:No, you won't say that. That's why you are curious about learning and seeing how others do it, and if you understand that it's working, then you can change, and that's the sweet spot for us because we also see ourselves as farmers. So we are establishing our own farm. We currently have 80 hectares under management. We only have 13 hectares re-wetted so far, which is by the way, the world's largest Bakno Moss farm already.
SPEAKER_00:15 hectares are at this year, and when which says more about the world than about you, probably, but still unfortunately.
SPEAKER_02:Unfortunately for the world, but luckily for us to have this title already with a small farm. But we want to establish our own farm to really prove the marketability of it. And as a second step, we see ourselves as enablers because then we do have, so to say, the playbook for farmers, we know how to finance the construction of rewetting, we know where we get the seedling material from, have a shared machinery. So that's our big goal we aim at.
SPEAKER_00:And because Spagnum Moss, you landed on, let's say, as a crop that makes sense to farm in a re-wetted, re-wetted peatland. What was the let's say, what was the journey searching for that? Is there a lot of research into that? I don't think there are other farms doing it at scale at all. You're already the biggest. So, how did you find this specific moss? And how did you find because you started with we need an agriculture solution? How did you end it up on this one?
SPEAKER_02:Yes, so I think the main reason was our business attitude more or less, because we said we need to have something that we can start with where we can establish the value chain quite easy. Because there's still a lot of risk in our business model. So let's see that we really have a market. And I think that's a very important step for every startup and for everyone who starts something new that you really do have a market need there, and that you do not need to create your market. And for us, we people listen to that sentence again.
SPEAKER_00:Just do minus 15 seconds or 30 seconds of your player and re-listen to this a few times.
SPEAKER_02:So with SPACNOMOS, we found out that there's a like deep need for it because currently the soil industry that is producing the substrates and soil not only for our plants and our homes but also for the vegetables that are grown in greenhouses, for example. So these substrates currently contain two-thirds of peat, which is extracted, extracted from the peatlands. But in Germany, there are no new approval approvals for peat extraction. So this industry is massively under pressure because it does need an alternative for the peat. They are currently importing the peat, for example, from the Baltic states, but the harvest era was also quite bad this year, so there's a huge global shortage of peat. And when looking at the peat substitutes, the crop that we cultivate, this is the only material in the world, as far as we know, that can replace the peat in our soils one-on-one. Of course, there are other alternatives like wood fiber or cocoa fiber, which also have the cocoa fiber, for example, a bad issues. Let's say issue that was very friendly.
SPEAKER_00:Understatement. I'm sometimes diplomatic on cocoa filters.
SPEAKER_02:Thank you for giving me this hand because otherwise it would have ended up in another sentence.
SPEAKER_00:Let's say you don't want it in yours, and it comes from circumstances and has emissions connected to it that you really don't want to do.
SPEAKER_02:Exactly. And that's why the soil industry really has a need for a peat substitute coming from this region, and this is where our SPACNO moss comes into place, and we see that the soil industry is also quite closely looking at us and asking when we do our first harvest to have the first tests and also the first soils containing the SPACNOM MOS.
SPEAKER_00:And so, how do you go about then to validate this market demand or like how do you make sure that it's real? Like an industry that's looking at it is, of course, one thing, but industry that actually buys at scale for a price that makes sense. And of course, you don't have the scale, and the price probably is interesting the first few years as well because you're small. Like, how do you manage that process to still feel confident now that you get to the market? Like, I I think some of the seaweed producers in the Netherlands are produced a lot of seaweed and then the market wasn't really there. Like, how do you make sure you prevent that you have a freezer full of spacno moss or whatever? How do you store it? And actually, like how do you who do that then? Of course, they are not gonna buy it if it's not there. Like, how do you do that in terms of this sort of new market?
SPEAKER_02:Yeah, so for for our SPACNO moss, there are more than one use case, but like the most prominent use case is to have it inside our soils and substrates, and we established close contacts to the soil industry, especially in Germany, but also on a Europe-wide level. And when we started to establish these ties, connecting with the companies, we almost everywhere ended up in sea level having the idea been pitched and presented, which for us came as a surprise because back then it was more or less like a PowerPoint concept. And then we got all the LOIs from the industry stating yes, we want to purchase once you have the material ready, and yes, we do need it at a specific yield and volume, which is still a challenge for us because we're currently starting the production.
SPEAKER_00:It's a good like LOI just for people, it's a letter of intent. And I remember when we looked at it as an investment opportunity. For us, that's very important, of course, as investors. Like you see some serious companies, of course, not contracts, but very serious, almost commitments of okay, when you reach this price point and when you reach this quantity, and then it's a question of can the startup get there and can you grow? But at least you are pretty confident there's a market instead of yeah, yeah, but when we grow and then we'll go to the farmer's market and hope we sell it. No, that's a very different approach. And I think it's important we've learned that in the renewable energy space and other places, like purchase agreements and off-take agreements are very important because it can kickstart finance and it can kickstart a lot of other things to go backwards and actually do the thing.
SPEAKER_02:Yeah, exactly. And also for us, this was a quite important indication when we made the final decision. Let's start spagnomass cultivation and not any other crop we looked at.
SPEAKER_00:So exactly because other what are other things you looked at? Uh out of curiosity. Well I remember Paul saying, I'm so happy they're not doing water buffals in mozzarella because that's the standard apparently in Peatland where we're thinking let's put some which I mean fine, but probably not that scalable.
SPEAKER_02:Exactly. And Paul is my co-founder who's the farmer in our team, and he he said, Oh, we looked at the water buffalo like the last 2,000 years, and now it's a cow. So why starting with the buffalo? So, of course, we also looked at the economics of that, and there's also other crops that are interesting and that also show some use cases, but still, like from the value chain perspective, you do need some new machinery production methods, and then you do need the market. So, there are more steps at the current state you would need to undertake, which I'm happy about that. There's a lot of research done to that, and also some like NGO initiatives caring about that, which is important, and I also see the potential for that. But like the clearest picture from our side was really the SPAC NOMOS.
SPEAKER_00:And just again, for us to visually understand how do you grow SPACNOMOS at scale? What's the like how do you plant? How do you harvest? How long does it take? Just to give people an understanding, how big does it get? How does it look like? I will again we'll put the website in pictures, but just to to walk us through it.
SPEAKER_02:Yeah, so I think the first important fact is this that SPACNOMOS is a natural occurring monoculture. So it's the complete opposite of what we are usually learned. Like monoculture is like the depletion of soil and killing diversity, but when it comes to peatland, it's completely the opposite. So for us, it's bringing back a natural species to where it had been grown the last 2,000 years. So what we do is we first remove the decreated topsoil from the last decades of our agriculture. This is a heritage we have to cope with, and it's there, and it's there for a reason.
SPEAKER_00:So what do you do with it? You dig it away.
SPEAKER_02:We build polders out of it. Um so there's still usage of it. So we are using the topsoil for building the little polders, so there's still some usage of it, but after removing the topsoil, we're almost having the white peat surface on it. And then we can build little little canals inside the polders for the water to be distributed, and then we distribute seedling spark sparkno moss on it. And this sparkno moss is then growing, and the most important ingredient is of course water, in best cases rainwater, which was quite a challenge in this spring. But then the sparkno moss grows together like a carpet, and has this best feature of water retention and holding the water back, and then it's growing with just water and some sunlight.
SPEAKER_00:And you're spreading it, I saw it by hand and with a drone, and you're trying all kinds of methods. Can you get in it with heavy quote-unquote machinery, or is that very tricky because of the soil and the water and the compaction?
SPEAKER_02:No, you better avoid going in the peatlands with heavy machinery because we made these examples last year already. That's why we needed to purchase a transport drone. And also for myself, I was stuck in the peatlands once, like when we had the seedling action. Although I had not only snow boots, but like these skier-like snow shoes on my feet, and I was stuck, and I knew that oh shit, these are four meters of peat below my feet, and I'm sinking and sinking. And it really got me like a lot of respect for nature and for the peatlands again. And finally, of course, I came out, but it took me almost an hour. So you better not use heavy machinery, as I'm already more or less too heavy to walk in wet peatlands.
SPEAKER_00:So that's to be invented or to be figured out how to, because nobody does that at scale, probably, to how to seed these or how to even spread it when planted.
SPEAKER_02:Yeah, now we found a methodology, like that's always the learning curve you have to go when you start something new. And now we found the methodology of distributing big packs with the seedling material with a drone. And also today we have 10 students at our plot distributing from these big packs onto the fields, and yeah, that's done by hand, and again, these skiers on your boots, and then afterwards we fill the polders with water again. So that's what we learned last time.
SPEAKER_00:And then how fast, how long do they grow? When do you harvest? And how do you harvest as well? Do you need to remove the water? Like, how does it work? Because are you going with a boat? What's the strange thing?
SPEAKER_02:Oh, Hoovercraft. Let's see. No. Uh the that would be interesting. So come blows everything away. Coming from the first question, when do we harvest? So, from research, we know that there's an almost three-year establishment phase, and after that, the spacno moss carpet is growing fast, is growing better and faster. So we're gonna take or we leave the spacno moss the first year just for growing and closing the carpet and caring about the water distribution on the plot. And after that, we start harvesting with a little groomer, so to say, and also probably in combination with a drone. So there's prototype machinery ready, but of course just interesting how drones are suddenly in agriculture.
SPEAKER_00:I think not suddenly, I know they've been using it for spraying, etc., but the electric ones, the bigger ones for seeding, and now I heard here an example for applying foliage sprays for olives, etc. It suddenly it started popping up everywhere. It became good enough to use.
SPEAKER_02:Yeah, exactly. So for the peatlands, it's perfect, there is no pressure on the soil, and you can do the most out of the air. So that's quite interesting to use, but still for having the harvest, you do need the crew that's at the size coming of a small car, and it can drive on the peatlands, and you do not need to remove the water beforehand because there's such a low pressure on the soil for harvesting the spagno mass.
SPEAKER_00:And so that's machinery that already exists basically that helps you to avoid completely figuring out how to do harvesting from scratch.
SPEAKER_02:Exactly. So Germany is a land of engineers, and there had been some special machinery companies already doing some prototyping in the last three years. And last month we had a little test on our pilot plot using the machinery, and of course, there's still a pathway of further developing. I said Germany, the land of engineers, so they find some path how they can improve, which is perfect for us, and we're doing it jointly now because we're yeah, more or less the first, like really applying their technology on our field.
SPEAKER_00:Interesting, interesting. And then do you need to dry? Like, how do you process like for in this case that the soil industry? I still love it when you say that. There's of course a soil industry which are farmers, and there's a soil industry that actually sells soil with plants in it. And how would they need it? Like when it comes off the land, how would they need it in what kind of form, shape, etc., to go into their pots?
SPEAKER_02:Yeah, so we try the material first so that the spaknom moss stops growing by itself because we don't want to have it as a plant itself, but as growing media.
SPEAKER_00:So as that would be an interesting twist, like suddenly the industry is selling spaknomoss to everyone for your own house. Yeah.
SPEAKER_02:Very nice. So this is the next process step we do after harvest, and then we're gonna transport it to our customers.
SPEAKER_00:And then does it need to be because I don't know what size it would like, does it need to be powder or fibers? Like, how does it need to be?
SPEAKER_02:They further processes for the specific soil and the requirements for the specific soil.
SPEAKER_00:Interesting, interesting. And so from year one you start harvesting, which you also said like it takes a few years before it really starts growing. And is it a perennial in the sense you can keep harvesting or you have to replant every time?
SPEAKER_02:No, in our harvesting model, we wait for the first three years and then we plan to have an annual harvest on the Sparknum MOS carpet because we only extract a few strings from the Sparknum so it can grow together again, and that's why we see the best methodology for the cultivation in an annual harvest and just is extracting parts of the carpet.
SPEAKER_00:Which of course makes a lot of sense from an operational perspective and how to do this strategically.
SPEAKER_02:Exactly, but more or less it's also Paul's territory as a farmer to really understand and see how he how's doing the cultivation cycles, but at least that's what we learned from research and that's how we plan to undertake it in the future.
SPEAKER_00:And then a piece on on establishing a company, of course, but also fundraising. Like how difficult was it to, or not difficult maybe, to get investors on board for something that for sure it's the first time they see a deck with peatlands on it. Probably maybe for I'm pretty sure that it's not something they think about very often. Maybe if they read drawdown and they were like, oh, it would be nice if somebody does something with, but it's new to many. Like, how did you go about that process to to get investors? On board in something relatively new and relatively not completely figured out, which they're used to in a sense, but of course it's not a mobility startup or something like that.
SPEAKER_02:Yeah, true. We had not been on the most important buzzwords these days with the Patland.
SPEAKER_00:Did you pay you put AI somewhere?
SPEAKER_02:Not yet. On purpose. You have a drone, so you get technology. Well, there was a huge range of potential investors from specifically looking for peatland startups and others who haven't heard of the impact of Pitlands. So that was also quite interesting in how you approach and how you address the topic and the business model when we started off. So luckily we are a team of five co-founders. So I already talked about Paul, our farmer, but also there's Lucas who had been climate activist all his life, and Nico and Floren who initiated the project. So we had a huge network that we can approach. And as always, in the early days, you do have like family, friends, and fans, we called them the Patland fans. Ah, not the fools. No, the Pitland fans.
SPEAKER_00:And that's I'm laughing, but you need the ones that just we had one in our, I'm not gonna shout her out, but we had one in the syndicate that says this is so important, we need to do this. And I will put a significant so we reach the minimum at least, and if we reach that, I will double it. And you need those fans. You need those fans and say, This is I'll be waiting for something in Petlands and let's make it happen. Of course, looking at the team and doing due diligence, I'm not taking it away, but being okay, this has to move, let's go, and that helps fundamentally.
SPEAKER_02:Yeah, exactly. And that was quite important for us, like to really start working, identifying the first field and also the area where we want to start off. Um, and of course, as we now transfer the concept that we had on PowerPoint and based on all the research now into reality and having something that really changes uh the how we get how potential investors uh perceive uh what we are doing.
SPEAKER_00:Because you can bring them somewhere, you can get you bring them where you are now, you can have a bike ride if you want. Like it's something real, stuff is growing, there's machinery, there's a drone.
SPEAKER_02:Exactly, to really show that it's working and that we had been able to transform grassland into peatland within less than one year is really important to understand and to see. So there's at the moment quite positive perception on what we do and how we want to grow the company.
SPEAKER_00:And in terms of like non-Sugnumos revenue, the carbon side of things, the credits, how it was quite important, I think, in the original plan as well. And of course, the markets are interesting, let's say the least, like there's avoidance, there's storage, there's stories that that the carbon market isn't going anywhere, and there are people that are selling really interesting credits and getting money to the land. Where do you fall in this spectrum? Like, how how has the journey been on the credit side of things?
SPEAKER_02:Yeah. Before talking about credits, I really want to underline like the Sparkno-Moss case is the backbone of our business model. That's why we do it, that's our motivation, why we are building this model. And of course, as we are making this huge impact carbon-wise and on the biodiversity and water retention level, we also have this credits impact as a mean of refinancing also for the initial investment. We use it as parts of refinancing for the initial rewetting, and that's why we see huge support from the voluntary carbon market to support climate projects like ours, because otherwise it's landed finance for us. We are, of course, making something that has been proven by research, so there's this proof of concept, but still the proof of market, this is what we are doing, so there's still some risk in it, which we cover by transferring it into reality. That's why we do need this kind of blended finance coming from the equity side from investors, but also through parts of the carbon credits, and we perceive the market currently as a real shift towards high-quality credits, and that's where we are located because we are like really fixed in the German groundbooks. So after we wetter, there's no way that anyone actively drains this peatland again. So there's a high level of security. You have a German project, your sustainability team can come over and visit. So it's something where we really see a shift in quality and levels of security that we can show with our project.
SPEAKER_00:And even in the current political times, etc., you're seeing companies seriously engaging and also buying and coming over, etc., and in this market.
SPEAKER_02:Exactly. So we get quite positive signals. Nevertheless, I think it's currently, and that's good for the market. It's not one about the ones who are doing the greenwashing thing, because it's about the companies that really take it serious and want to undertake climate action. And of course, these are the partners we are searching for and striving at, and that's really cool to see and to understand, and also get these tailwinds from financing the carbon credits and also our projects.
SPEAKER_00:And then beyond now you're building a farm yourself, like what at what point do you envision maybe already that this becomes an agriculture solution for other farmers, for neighboring farms, for the ones that are interested and curious, and not gonna risk the farm on 50% tomorrow, but maybe five or ten. Like, when do you envision you're gonna work with with other landowners around you or in the in the in the near in the neighborhood, let's say?
SPEAKER_02:Yeah. So we want to have our playbook ready, let's say starting from 27 onwards for enabling other farmers. Because by then I think we collected so many learnings and planned the first harvest, so then we are like really able to know which steps other farmers might need to undertake. And with this, we can of course also scale the market better than just by enlarging our own farm.
SPEAKER_00:So 27 you'll be ready. And now are they already knocking on the door? Are people already trying to figure out okay, can I start something? Can I how do I get in before I know there's risky because not everything is figured out? The playbook is not ready, but how do I like are there eager farmers knocking on your door? Yes. So that's really cool. And then how do you tell them? They tell them, No, no, wait until the two years, two years. That's in the eternity.
SPEAKER_02:Sometimes they are they are also knocking our doors because they say, Can I sell my land to you? Because then I can see what you're doing on it. And sometimes they are just silently at the weekends coming there with their families, walking on our farm and witnessing what we are doing, and also from the agricultural groups they are visiting, coming over, having a guided tour on our field, and are curious about. But as we are still, for example, learning how to do all the approval stuff with the authorities on changing the cultivation methods on the land and so on, I think there's still a way to go until we have a proven pathway that they can follow then.
SPEAKER_00:How difficult is that as an entrepreneur to not be able to serve them or not feel confident enough to even though they're knocking on the door?
SPEAKER_02:For us, it's the first one. Let's I don't want to call myself a pioneer, but when it comes, for example, to the approvals the authorities have to give, it's definitely like to run up pills, more or less. And also for the authorities, it's so unclear on where they need to put their stamp at and what they need to approve, and that's why they ask for a lot of expert opinions along the way, which is quite annoying as an entrepreneur, because for us it's so crystal clear what they need to do.
SPEAKER_00:And they keep sending another expert and another report and another.
SPEAKER_02:Because I think there need to be a lot of walls turned down until we can really start like the whole peatland transformation.
SPEAKER_00:And of course that's because you don't want to put them in that position that they would get a wall in front of them at some point and they thought. Yeah, you don't want to raise any expectations yet, because it's just not clear like what you need exactly.
SPEAKER_02:Well, and there's also still some political regulation to be changed, and we're of course we are also pushing on that, but as to say a farmer around the corner to push for other legislation, regulation, uh I don't see it. You do need this team of five people plus to also push on that dimension.
SPEAKER_00:Yeah, absolutely. And what would you say? We always like to ask this question. Let's say that we do this live somewhere in Berlin or in Frankfurt or like I say, a financial hub, and we're in front of an audience with a lot of investors, and they might be managing their own money or other people's wealth, pension funds, etc. We have a nice evening, of course, some nice food, uh, a lot of pictures, some drone imagery, and then but what should they remember the next day? What should be one seed you want to plant in their mind? Because people forget evenings like that, and we want them to be at their laptop, to be at their desk the next day and do something or at least remember something. What would be a seed you want to plant in the minds of interesting and smart investors?
SPEAKER_02:For me as an entrepreneur, it's important to have the investors really understand what we are doing impact-wise, and that this is our big motivation, and that we want to change something. And change sometimes needs time. So really investing on a patient path is important for a project like ours, I would say.
SPEAKER_00:And what would you do if you would be on the other side of the table? So you had a significant. We usually like to say, what would you do with a billion euros in this case to put to work? It would be, of course, we're not giving investment advice, I'm not asking what exactly you would do, but I'm asking what would your focus be? What would your biggest buckets be if you have not a limited resources, but a significant sum, and it's still nothing at the same time. Like it's a lot of money. I don't think it should be concentrated in the hand of someone. But still, let's say it happens tomorrow morning. You wake up and Julia has nine zeros on the bank account. What would you do?
SPEAKER_02:Zero are my hands. So first, I really look would look from an infrastructure and business model perspective. So investing into cases where you, of course, firsthand have impact, and this impact results in returns. So that would be something I would really see a layer in it. So, as I said earlier on, like in our business model, like to have markets ready so that we can transform something. And of course, a second level would be to really de-risk early adopters or pioneers with blended finance models or what have you. So having the potential of really changing something, de-risking projects that do not that cannot apply like usual financing means or funds would be something I would be really happy to go forward with.
SPEAKER_00:And in terms of the the first bucket you mentioned, do you have any ideas apart from your case obviously, but any ones that come to mind where I would love to be able to put money in the transition of XYZ or in in agriculture or even beyond? Anything that come to mind, like it's that's really a shame not more investors flow into X.
SPEAKER_01:Oh, I don't have a profound idea on that. It's the peatland, sorry. Absolutely fine.
SPEAKER_00:The Pitlins, fair enough. It's the reason you're in that space. So then there's so much to do there, the few hectares you're working on. And it's for currently only Germany, there are many other places with peatlands, and yeah, you would need a whole cohort of companies tackling this around the world to to figure out how to re-wet and grow stuff on it, whatever that might be, exactly, or whatever business model fits in that context. And it might be water buffals in some places, and or maybe not. And we'd love to ask this question that John Kempf likes to ask what do you believe to be true about regenerative agriculture and in this case regeneration as well, that others don't. So when you go to RFSI, where we were, or you go to events, let's say, where are you a bit contrarian in this regeneration movement?
SPEAKER_02:Again, this agricultural thing is more or less Paul's territory as a farmer in our team. But of course, I really love the mindset shift that's been starting also years ago when it comes about agriculture, to really not just do better farming, but really changing something coming from the impact and seeing real returns and results on it. So when looking at the peatlands again, I would claim that the natural monoculture of Sparknomoss is something others would like usually see in other in another light. So it's not about soil depletion or biodiversity kill, it's the other way around, and that's what's very special to build the floor on where we want to stand on to have this monoculture of spacnomas on our feet, yeah, below our feet.
SPEAKER_00:Yeah, it's always interesting to hear the word monoculture and regeneration in one sentence. And and that's why you're very deliberate and the ticket natural monoculture, and people are like, okay, but it still creates like confusion in my head. For sure, you had to have to you had to explain you had to explain that quite a few times in meetings, etc. This is okay.
SPEAKER_02:This is not a this is not a yeah, it sounds completely counterintuitive from what we learned when talking about regen egg.
SPEAKER_00:But there are species there where are there is that like a that this is uh a rabbit hole, but do you know of other places or other contexts where a natural monoculture thrives, let's say, or is it also that it's the first, is it a pioneer plant and then others take over? What's the natural succession in a peatland?
SPEAKER_02:It's a spacnomos. So when you look below how the peatlands grow in the last 1000 years, you find sphagnomos in in this soil in the peat. The peat is like the next level of the spacnomos, it's built from the roots of the spacnomos. That's why it's like the most prominent species there.
SPEAKER_00:Interesting. And a question we'd like to ask: what if you had a magic wand and you could change one thing overnight? What would that be?
SPEAKER_02:That is really like on a political level because we hear almost all parties in Germany and also on Europe level that they want to have the peatlands re-wettered, but what we see in reality is that the regulation, like on the ground level and on the small level, is not changed yet, and that's really a huge barrier each farmer cannot overcome alone. So we really need also new regulation on peatland re-wetting and not only having incentive for having the peatland in a drained state. So there are still use subsidies for having the land in a drained state, and that's completely insane, so to say, because we don't get any incentive for having it re-wetted yet. So then also it needs to be like a huge shift in that.
SPEAKER_00:So, really, there's currently a negative subsidy basically, or a positive one for whoever keeps it drained, which is the state we absolutely don't want for peatlands. Exactly. And which makes it even more difficult for farmers or landowners to change because part of their business model is based on subsidies to keep it like that.
SPEAKER_02:Exactly, and that's completely insane looking at the societal perspective, because it's negative in all dimensions.
SPEAKER_00:And is there any lobby or any what's keeping it in that like who's benefiting from the current state in a way to what's blocking it from changing there, or is it just not priority at all?
SPEAKER_02:All parties say that it is priority to change peatlands and how you work on peatlands, but then we find out that it's not really doing anything and just having a peat ban for the soil industry and not really working the agricultural methods. And I totally see the the point also from a lobby point of view that you do say, well, we do first need some to have some incentives to re-wet who is covering the initial costs, and so on. And there's nothing installed from the political side to really change that, and we only see money flowing into network events and education, which is important, of course, but really doing something is like the next level, and that's where we want to get.
SPEAKER_00:So if you had a magic wand, you would make sure that at least the blockage in terms of subsidy schemes and terms of regulation would disappear. At least that, and then maybe be in favor of, but at least the negative ones. At least create a level playing field.
SPEAKER_01:Have a level playing field, exactly.
SPEAKER_00:Which is what all entrepreneurs always like to say. But it's uh it's not yeah, it's such a deep conversation in agriculture subsidies as well, because we've created this whole system, specifically in Europe, around keeping a system like cropping up a system that doesn't really work anymore, and you could argue has never worked, but anyway, like at least the last we see the effects now, and then it's like okay, how do you uh take it away? But how do you not take away livelihood from farmers? How do you transition that as well uh without getting farmer riots and complaints and things like that, which then scare the politicians even more, and then they don't do anything. What's the transition there? It's super difficult. There's a of course lobby needed, but also you can't expect from a startup to to do that, but you are because it's fundamental for your business to to have that change.
SPEAKER_02:Exactly. Yes, so let's push for that.
SPEAKER_00:Absolutely. And I think it's a good moment to wrap up as well. I want to thank you so much for of course the work you do, not easy at all, in many different uh aspects, from the growing something relatively new to harvesting to figuring out the drones, and of course regulation, which is the least fun probably of all, but absolutely fundamental for the transition of many hundreds and probably thousands of hectares of peatland that needs to move fast. I remember from I think it was your deck, unless we do something with the peatlands, Germany's never gonna get their climate goal. There's just no way. So that urgency is there, but it's just it hasn't landed at the right offices yet. And thank you for coming on here in a busy season to to share your journey.
SPEAKER_02:Thank you, Kuhn. What's my pleasure?
SPEAKER_00:Thank you for listening all the way to the end. For show notes and links at this cast, check out our website, investinginregenerativeagriculture.com slash posts. If you like 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 like the most. And give us a rating on Apple Podcasts or Spotify or your podcast player. That really, really helps us. Thanks again, and see you next time.
