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
94 Robin Saluoks and Kristjan Luha, building the biggest farmers union in the world, already covering 1m hectares on 1500 farmers
How do we get thousands of farmers and millions of hectares to transition towards applying more regenerative practises? This is the primary question answered today by Robin Saluoks and Kristjan Luha, co- founders of eAgronom. eAgronom is a platform that enables farmers to manage and oversee their entire farm, employees, and fields. It was built by farmers for farmers. Its primary aim is to help farmers learn how they can run a more profitable farm and have more time to spend with their family.
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Building trust, creating value and giving really great advice. That is what todays episode is about, a farm manager software company started by the son of very profitable organic farmer in Estonia is working to reconnect humans with nature, they started by helping grain farmers to become more profitable and getting them slowly of high input extractive way of farming towards more regenerative practices.
More about this episode on: https://investinginregenerativeagriculture.com/2020/10/27/robin-saluoks-kristjan-luha/.
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Welcome to another episode of Investing in Regenerative Agriculture. Investing as if the planet mattered. Podcast show where I 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. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land, grow our food and what we eat. And it's time that we as investors big and small and consumers start paying much more attention to the dirt slash soil underneath our feet In March last year, we launched our membership community to make it easy for fans to support our work. And so many of you have joined as a member. We've launched different types of benefits, exclusive content, Q&A webinars with former guests, Ask Me Anything sessions, plus so much more to come in the future. For more information on the different tiers, benefits, and how to become a member, check gumroad.com slash investingbridgeandegg or find the link below. Thank you. Welcome to another episode of Investing in Regenerative Agriculture and Food. Today with Robin Sallowoaks and Christian Luha, founders of eAgronom, enabling grain farmers to focus on farming. eAgronom was built by farmers for farmers, and they know how much farmers love to spend time on the fields instead of filling out notebooks and Excel tables. And their tagline is, learn how you can run a more profitable farm and have more time with your family. I think there's a lot to unpack there, but I'm first of all, very, very happy to welcome Robin and Christian on the podcast. Welcome Robin and Christian.
SPEAKER_00:Hello. Nice to be here. Thanks.
SPEAKER_02:Same here. Hi, Koen. To start with a personal question, you both have a very different background stories. I would love to hear both. How did you end up focusing on the profitability of grain farmers?
SPEAKER_00:Yeah, maybe I'll go first. Well, first of all, I think it's important to know that I'm coming from the farming family. So my father has 1,400 hectare organic grain farm in South Estonia.
SPEAKER_02:I think it's quite essential to know that. I mean, that sets the tone for the whole conversation and probably the whole company.
SPEAKER_00:Yeah, exactly. Exactly. So I'm coming from the farming family, but I went to study computer science at the university. And over there, I met with Stenver, the third founder of eAgronom. And how we see the world is that for hundreds of thousands of years, there has been synergy between nature and mankind, but we are lost a bit. And unfortunately, the same is true for farmers. And when we researched farming together with Stenver, then we saw that there are different challenges over there, especially in two of them that we noted down. One is that the humus level, so the organic carbon level in the soil is declining. And that's not really sustainable. And then the other one, we saw my father and he had really profitable and stable business. But when we looked most farmers, then they had really volatile business. That was crazy for us because we knew that it's possible to farm in a different way. And that was something that we wanted to change as well. And we saw actually that many farmers, they really like nature and they would love to work more together with nature in synergy. But the main challenge is that their focus is on the next loan payment instead of building long-term partnerships. So yeah, that's basically how I ended up building eArtena. So coming from the farming family and then I got into computer science and at one point put those two words together.
SPEAKER_02:But before we go to Christian, one quick question on that. Did you go and study computer science really within your mind to build something for farmers or you went to study and you sort of came back how interesting the issues at home were or did challenges and opportunities.
SPEAKER_00:I never imagined myself as being a developer. Whatever industry you go into, computers are going to play and are actually already playing a really big role over there. Farming was obviously one of the sectors I imagined myself. The other one was investing in stock market. Again, coming from my father's background, farmers have quite a lot of time during the winter, he as well. And then he's using this time to invest in the different companies. And that was the second interest that I had.
SPEAKER_02:Luckily for us, you chose farming.
SPEAKER_00:Yeah, yeah.
SPEAKER_02:And Christian, what about you?
SPEAKER_01:Well, on the surface, you might ask, like, what has sports business? I came from Nike. I worked for 20 years with a global sports brand. And farming having in common, and that's not much. But what inspires me is working with companies that are mission-based and are trying to change the world in some way and really make things better and move the nation. That's what inspired me to join eAgronom. In this company, we have a great opportunity to make an impact on the world. And eAgronom's vision is very ambitious about the future. So I think together we can solve something that hasn't been done before, but it needs to be solved. And that's what brought me here.
SPEAKER_02:And so let's hear a bit about the vision. And obviously, we're going to what eAgronom is now. I mean, you're not a startup straight out of the gate. You have been operating for quite a while. But what's the vision? Let's Start at the top and then we slowly go down all the way down to the soil. What's the vision and what are you building?
SPEAKER_00:Yeah,
SPEAKER_02:I
SPEAKER_00:already touched this a bit, but the purpose of E-Argonom is to rebuild the synergy between mankind and the nature. And we think that the best way of doing it is by helping grain farmers or farmers in general building sustainable, profitable and stable businesses.
SPEAKER_02:It's already quite specific. I mean, you went for farmers. Connecting people to nature could be anything. build a national park and do services there, but you went for farmers, grain farmers and profitable business. I mean, it's quite specific, but please go on and how specific you want to get after.
SPEAKER_00:Yeah, exactly. So we really wanted to set some KPIs or some really, we can say, okay, now we achieved this goal. And we thought, all right, what do we have to achieve to really make the difference? And we set two goals. Number one, we have to build a digital farm manager and it has to be so good that farmers who use it and farmers who follow our advice would get profit guarantee for us because only then it can become mainstream and number two we set the goal that Farmers who follow regenerative practices, so farmers who take CO2 from air and turn this into soil, should get extra money for doing this. To push them more towards those regenerative practices, even though we believe that anyways, even without extra money, it makes sense in the long term for a farmer to follow those practices. It helps in
SPEAKER_02:the short term if there's an extra incentive.
SPEAKER_00:Yeah, exactly. It
SPEAKER_02:would move them
SPEAKER_00:towards this.
SPEAKER_02:And so this farm manager, when did you start building it and where is it now? because it's quite big.
SPEAKER_00:Yeah, we started in 2016. And in general, you can imagine that DRM is doing everything that the real farm manager is doing. And if you think about real farm managers, then they are driving around, speaking with people, looking fields, so collecting data. We are doing the same thing, but a bit differently. So we have integrations with satellite sensors, some other softwares, and some information is added by farmers as well. So we collect data, then we analyze the data, And then we give suggestions to farmers based on the data. And then we help with people management as well. But when we started in 2016, as a small company, if you start, then you can't do obviously everything. And then we thought also, okay, what are the biggest challenges that we are facing? Number one, getting the good quality data to give suggestions. And number two, building a trust with farmers. So at first, to farmers, we positioned ourselves as farm management tool or farm management software. And then I think a year ago, then we started actually giving advice on top of the data.
SPEAKER_02:And how many farmers are you working with? Where are they predominantly located? And how many hectares does that represent? Just to have an idea where you stand now, it's October 2020. More or less, how many people are you working with and how many hectares?
SPEAKER_01:Yeah, I can jump in here. We have today close to 1500 farmers that use the Agronom platform. That is across seven countries now. Most of our business, as we also started from Estonia, expanded out from here, is in Estonia, in Latvia, Lithuania, Poland, and then a little bit in Czech and Romania as well. So these European countries. And now more recently, we've expanded into Australia and we have the first users now with whom we're working closely to get feedback and understand what we need to add or change in our software for that market. But overall, those farmers manage about 1 million hectares of grain land. Wow.
SPEAKER_02:That's a lot.
SPEAKER_00:Yeah, that's a lot. You could basically feed 10 million people forever with this land. Wow.
SPEAKER_02:If it's run with regenerative practices, because otherwise, obviously, that number goes down over years. Yeah, exactly. That's true. Well, for us, this is just the beginning. We're still small. Absolutely. And just why did you focus on grain farmers? Is that your background of your family, Robin, or what was the decision there to focus on this specific annual crop?
SPEAKER_00:Well, in the end, our goal is to direct all farming toward sustainable practices, but But we thought grain farming as being a good place to start because of two reasons. Number one, our know-how is over there. So this is where we have proven and we understand this and we know how to make farms regenerative and profitable. But then the second side was that if you, at least for us, and maybe because we are experts in this industry, seem to be most similar in different parts of the world. So if you manage a grain farm in Estonia or in Poland or in Australia, and is related in the similar size in terms of employees, then it's managed quite similarly. That's very
SPEAKER_02:interesting. So let's say an Australian grain farmer could have, if language was an issue, an easy discussion with an Estonian grain farmer and an Italian grain farmer and a grain farmer in, let's say, France, if they would manage more or less the same size farm, they would really understand each other.
SPEAKER_00:They would understand some of the challenges. Obviously, what's different is climate. So you have different amount of warm days and different temperature and different moisture levels, rain levels and so on. And then actually because of the climate, and the soil is different as well. And because of this, decisions are different. But the inputs that are gathered are quite same. So both farmers would need similar data to make the decision.
SPEAKER_02:And that data, you mentioned that, that you focused at the beginning on that piece of how to get the good data from the farms, partly from satellites, partly from the farmers itself. Was it a big challenge? And if so, how did you overcome that? Because as everybody knows, knows, I think in software, if you bet data in means bad decisions coming out. Like it's really important that that input is great, just as in farming. How difficult was that to go from Excel sheets and notebooks, as you wrote on your website, to make sure this is digitalized, this is searchable. And then at some point that we'll get to that, you can actually help and you can actually suggest, you can actually suggest things to the farmer, but first you need that data. How tricky was that?
SPEAKER_01:Yeah, I think the data is the main challenge that if our site point is a place where most farmers enter data by themselves manually into the tool, the program.
SPEAKER_02:And what kind of data should we imagine? I'm a grain farmer in Estonia. I haven't been on board yet, but I want to. What do I need to imagine that I should do?
SPEAKER_01:Well, yeah, the software really serves the whole circle of the season that farmers live through, you know, starting really with the basics, getting all of their fields into the software. What happened on those fields in the past? What was sown and harvested in previous seasons. That's the field history that can be entered retroactively. But then you start planning ahead and you look at your crop rotation, which crops on which fields you will plant. And that's one area where we already can bring a lot of extra value for the farmers helping to make these decisions with the help of machine algorithms. Especially in Europe, farmers have a lot of fields. Sometimes average size farmer may be 100, 200 fields. And then Then if you rotate, for example, five crops and you need to think a few years ahead, that's a tough problem to solve.
SPEAKER_02:Which is ideal for computers.
SPEAKER_01:Yeah, it is. It is. But I just recently read somewhere that farming and hunting are the two least digitalized industries in the world, like 23rd and 24th place. So the starting point is almost like a green field, you know, not a lot of good data, but farming is getting digitalized at the rapid pace by many startups new companies, as well as the big players already in the farming industry. So everyone's bringing more digital tools from machine integrations, the tractors, the harvesters combined, tracking what they do and where they are exactly, to soil sensors, to weather sensors, to satellite data. So there's more and more data that is becoming available, but platforms like ours are the opportunity to integrate it all and then make sense of it.
SPEAKER_02:Yeah, there's so much to unpack there. Let's first go to the competitor side of things or the amount of decks I've seen of that actually that not necessarily the hunting part, but that farming is the least digitalized industry in the world and we're coming to digitalize it, et cetera, et cetera. I've seen many. And the truth is usually it doesn't happen because I think because the founders or the team doesn't have a deep rooted connection to farming, which maybe makes you different. But what do you see as your main differentiator compared to say the hundreds or maybe even thousands of startups they're not all straight competitors or the big companies but to your main competitors what do you see as your main differentiator
SPEAKER_00:yeah and i agree with you in this sense that it's the differentiator or competitive advantage is coming from how we understand the farming and i tried to answer the question in the same way so basically how we understand the farming and there are many things that we try to follow first of all we think that to be a global player you have to localize and that's That seems really counterintuitive, but we believe that if you don't localize for local government rules and et cetera, then you will be outcompeted by the players who will. So that's number one. Number two, different types of farming need slightly different tools. So you have to have slightly different tool for grain farming and vegetable farming. And if there are someone who are making general tools, then again, we can outcompete these guys. And number three, our ambition is not to build precision farming tools, but help farmers with general management advice. And we believe that precision farming, so in other words, executing one single task as well as possible, will be done and is already actually done by machinery companies. They have the best place to do this. They are closest to the data and they're closest to the execution. So over there, we want to work together with them. So that's not the area where we want to run into.
SPEAKER_02:You want to be the
SPEAKER_00:operating system of the farm. Yeah, exactly. Help farmers with high management decision what crops to grow, what fertilizers to use, and so on, still be the main source of knowledge for farmer, but not go into precise execution, but it work with partners over there. Another thing, many tools are focusing on data collection and presenting, and that's important, but we believe that that's not enough because, well, first of all, many farmers, since farming is so complicated, lack the knowledge to make those decisions based on the data. And then secondly, as actually Christian also explained, already a bit if there is so much information then human mind just has the limitations and with computers you can analyze so instead of just collecting the data we also have to give advice to farmers so that's another differentiator with many of those companies and then also the business model that's clear for everyone that your customer acquisition model has to be sustainable but at the same time and this is what makes it challenging it has to be sustainable but also farmers would need personal approach so you have to meet farmers maybe in a real life maybe with online video call but you have to personally explain them that your product is the best otherwise you will be outcompeted by the companies who will do this and even if your price is slightly higher then that's fine if you go personally to farmers and explain and that helps farmers to get more clarity about how your product is better than other companies so basically there are those many many areas that people And that's how you got 1,500 paying farmers to be your customers and growing fast. You did a perfect bridge
SPEAKER_02:to the decision-making process. making part that I want to focus on now. The rotation you mentioned, because I remember you showed a demo when we prepared for this call a while back, and you mentioned something like it's very easy for farmers, as you mentioned, they may have 100 fields and they are rotating five different crops. The amount of opportunities and possibilities is almost endless. And then, like Christian mentioned, machine learning and computers are very, software are very capable of making suggestions there. And I remember you mentioned something like it's very easy for farmers to to rotate themselves into problems like four or five years down the line or six or even two. Can you explain a bit that for people that are listening that are not grain farmers or not annual farmers, what issues you have there and why the solution you're providing, even if it sounds for the normal audience that's not a farmer, quite simple, but it's actually revolutionary and saves a farmer a lot of trouble, a lot of money and probably actually makes a farmer a lot of money.
SPEAKER_00:Yeah, I think Kristen maybe can go more into details with the solution, but I think I would compare it this with maybe even running like if you skip one day of running or even week of running then your physical appearance wouldn't change much but if you do the same thing for a long period of time then you're gonna have like lower level of energy or you're not so fit anymore physically and same with farmers they can't see if they make a decision then the impact over there is not right away there but with computers we can model it so that We can see basically five years into the future and make sure that it's good for the day, but it's also good after five years. But Kristin, maybe we can go into more details about what kind of challenges we are facing over there.
SPEAKER_01:Well, and it's a disclaimer that my farming experience is something like six months old, but... But you're
SPEAKER_02:a very advanced runner, so that maybe helps.
SPEAKER_01:Yeah, but what I can say about it is that, let's say, so then you have many fields and they usually spread out very often. often not concentrated around where your machines are, your location is, especially in Europe. And so, you know, you may be renting half of your fields and you've been opportunistic looking for better deals. So they're all over the place. And then you have all these crops. So what we see very often with farmers that haven't used our tools yet is that they are more or less able to think one year ahead. And then when they look at actually where they sow those different crops, it's all over the place. And then the complications that arrive are, one is logistical, obviously. So then, you know, it could take you much more time or many more hours to drive slowly, you know, from one field to another to do a critical task, which may be impacted by weather, you know, and especially when you're harvesting, you may even lose part of the harvest because you're still on the way to harvest that crop with that machine. And so that's one thing that can be optimized.
SPEAKER_02:So basically clustering crops that are similar or the same. is obviously makes a lot of sense. But if you're doing complex rotations with five or even more crops that might make sense this year, but you also want to think a few years down the line and your harvester isn't that fast and will drive quite slowly and very expensive and hourly wise. So you can lose your crop if you're actually still on the way to harvesting. But if you would have clustered those fields together, you would actually maybe have harvested everything.
SPEAKER_01:Exactly. And then not all crops are cash crops. So they're not there to in your rotation to make money, but to put more nutrients back into the soil. And then there's regulations, especially in EU, what you can plant on the same field in successive years, not to breach any rules or get penalties. And then some crops are more profitable than others. So if you put all these inputs together, how do you still make money? How do you keep the soils healthy at the same time? And how do you co-locate as well as possible all your crops? Then it gets really complicated.
SPEAKER_02:And then from a soil perspective, therefore, sure optimize i mean you're taking knowledge from agronomy obviously like it makes sense to sow a certain grain crop after a certain other cover crop etc etc but maybe a certain crop doesn't go after another one or actually does actually compete or certain pests are much more known to come after that so you want to make sure that your rotation you don't rotate yourself into trouble four five six seven years down the line even if there's no eu regulation which there obviously is but also simply from an agronomy perspective there are certain things you shouldn't, and there are certain things you should do. But over a hundred fields with, I don't know how many crops and variables, our brains, however advanced we are, are simply not able to optimize that, I
SPEAKER_01:think. Yeah, and that's where we have some amazing agronomists, part of the team here with many years of experience around the world, actually, and their knowledge is irreplaceable. So that is also basically coded into the solution. What is a good agronomic practice?
SPEAKER_02:And are farmers following that? Because they for sure The farmers I know can be very stubborn for very good reasons, and they know that field should be something. And how is that interaction with technology that suddenly tells you it's better to do this type of grain, not this year, but next year or in two years? How are they following your advice and suggestions?
SPEAKER_01:Yeah, I think we're not really just leaving it, you know, sending them a solution online and expect them to do something with that. This crop rotation planning is part of a broader set of services that we offer, and we call it, e-ergonomic consulting or agribusiness consulting that looks at their business holistically from inputs, costs, efficiency of operations, and then corporatization as well, and agronomic decisions that they make. So it's just one part of the total service that we offer, the overall service that we offer. And then obviously it has to be trust-based and relationship-based. We're not there from day one with anybody. But then as we work together, then there's trust and it makes sense for them to follow our advice of course they can still make changes that they like and tweaks here and there just to make sure they feel comfortable with it as well.
SPEAKER_02:And where do you see this go from because a lot of farmers you work with let's say haven't applied a lot of regenerative practices yet I mean you work definitely with a number of organic farmers but also a lot of conventional farmers where do you see this go in terms of nudging more regenerative practices?
SPEAKER_00:The good thing is that we have like a wind from the back and that we this, from some sense, government regulations.
SPEAKER_02:Which means farmers have to change if they want certain subsidies, if they don't want to get certain fees. There's a very strong push, especially in the EU, to change farming practices.
SPEAKER_00:Yeah, exactly. And maybe I even used two negative words, like government regulations. I like how my father puts it. He says that everything will work out very well if all things are priced with the right price tag. Because if you don't use regional rates practices that the price tag, it's not maybe so invisible right now, but the long-term price tag of those same crops are actually higher. If everything is going to be priced by their actual long-term value to the society, then I think everything will work out very well. And putting this together and then this good wind from the back end, then we basically help farmers give them guidelines to sail in this wind to the right direction.
SPEAKER_02:And what's the role of carbon in payments there let's unpack that a bit you've been working on that you are thinking and planning and doing certain things there what can you tell me about the carbon part of the business as it's super hot at the moment everybody's talking about it you see announcements i think every day everybody seems getting extremely excited which is always a it's we're in that curve in that moment of extreme overhype i think and then we go down a bit and then the real work starts after but what is your thinking there as you're so rooted in profitable farming really focused on the farmer What do you see there?
SPEAKER_00:Yeah. So again, they are using the same metaphor. It's like extra wind to the right direction for farmers. And that will help us to fulfill our company vision as well, helping farmers to work together and build partnerships with the nature. We started in 2016 and basically from day one inside the acronym, there were formulas that were showing the farmers their humus balance.
SPEAKER_02:How did you get that or it's the day time.
SPEAKER_00:Yeah exactly depending on what tasks and crops farmers were growing we used local Estonian life science university model that they were testing they were doing soil samples every year and we had this and we showed the farmers if their humus balance is growing or it's going down and 40% of humus is organic carbon and organic carbon is you can well this translate I think if you multiply this with 3.6 or something then it is CO2 so you If you have positive humus balance, this means that with photosynthesis, plants are taking CO2 from there and then turning it later, bacterias are turning it into the soil. And if you use right practices, then it's possible to grow the humus balance and still have a profitable farm. So that's basically that we had inside the acronym already in the beginning. And at first, it was just a context to farmers, what kind of long-term results their practices are doing. Now, this wind our goal is to take a really big step further and do a pilot project where we sell 20 to 30 thousand tons of carbon credits to big businesses who want to offset their footprint and why they really like this kind of carbon offsetting is that they can do it with local farmers whether if they are in Estonia they can do it with Estonian farmers if their business is in Poland they can do it with Polish farmers so the money goes to local farmers and it helps you not only the co2 capture but also the soil quality is going up and the biodiversity is going up so this is basically the project that we want to do this year now are you selling
SPEAKER_02:that for the farmers or are you offering like a marketplace where you connect them to these companies with that i mean it's a pilot but how do you envision this into
SPEAKER_01:yeah our aim is to channel all of that extra resource or funding directly to the farmers farmer that is doing these practices why we got into this topic i guess you know that was maybe four years ago for robin and stenver already when they looked at hey this whole carbon topic like where does it circulate and then if you look then over 90 percent of the carbon is in the oceans but then the next biggest carbon sink is soils globally then it's air and then there's plants and there's more in the soil twice more in the soil than in the atmosphere or in the plants so It must be an opportunity through the lens of agriculture.
SPEAKER_02:And a lot of it is lost in the last decade specifically, the last 12,000 years, obviously, as well, since we invented the plow. A lot of that went up in the air.
SPEAKER_01:Yeah, there's been a lot of soil loss and organic carbon loss. And so we believe it makes sense for the farmer to do these practices, regardless of that extra payment, to grow the humus balance and soil quality and organic matter in their soils every year. But if they would get extra compensation for it, it would be an extra incentive for them to do it. And they should be paid because we're basically asking them to do something that is good for the planet and obviously good for society and ultimately for ourselves as well. And we think we have a position where we can play a role here because we work closely with farmers, with thousands of farmers, and we have the data on what happens in their farms and in the ground. We can track this and we can partner with universities or other third parties to measure it accurately and reliably so that there's trust between what the farmer is doing and the company that is looking to offset their own emissions.
SPEAKER_02:And would the software then start suggesting me as a farmer, like, hey, you're in this carbon program. If you rotate X, Y, Z, it actually, your humus goes faster and you could make X, Y, Z. Is that something you're thinking of?
SPEAKER_01:Yeah, we want to let's say, bundle it together with the advice. Like what then should the farmer do exactly to grow the humus balance in their soils? And if they sign up for this, then what are the practices to adopt? And, you know, those are the same ones everybody's talking about and applying when it comes to regenerative farming from crop rotation to cover crops and under crops and obviously no tilling.
SPEAKER_02:How complex do you want to go? How complex do you see that going in terms of integration of animals, integration of trees at some point? Is that something that's on your horizon? Which is very different, obviously, for grain farmers. If you start integrating trees, it's quite a significant shift in your business. Is that something you're thinking of or working on? I see Robin smiling.
SPEAKER_01:Well, we're very open-minded about where it could take us. And today, we're still helping farmers to take the first steps away from the pure conventional towards more regenerative. And agroforestry, I think...
SPEAKER_02:Is not one of the first steps. No, it's further.
SPEAKER_01:Yeah, but it must play a role eventually in this because it has such a large impact. So there's a lot more sophistication that we believe becomes normal over time. So that many farmers do it and it's understandable and it doesn't feel too complex anymore.
SPEAKER_02:Do you have an idea of price yet per tons? Because you mentioned 20,000 20,000 tons. Is that something you are already thinking of, you want to share, if not absolutely fine, obviously this is a pilot, but is that something you have thought about?
SPEAKER_01:We just need to talk to the companies that are interested in participating and what they think is fair value and what still makes sense for the farmer as well. And we all know that this whole carbon trading is a very muddy waters and you can offset your easy jet flight for a few cents per ton and that does not make any sense. So there's a lot of greenwashing going on and also the what you call validation costs are very high and certification costs are very high. So how do we do it in a way that minimizes the administrative burden on this whole process and channels most of the value directly from the buyer to the farmer? And we think we can do it at least in some scale, reasonable scale with large local companies that trust us, trust the third party that will be involved and trust the farmers. and then more of the value will flow all the way to the farmer.
SPEAKER_02:Yeah, we've had a number of discussions on the podcast actually on that. I remember, and I know Impact Ag Partners, Bert Glover, who's actually active in Australia, is working on the Australian model. We've had Jeroen Klompe of Soy Heroes, who is building a farmer-first marketplace for actually ecosystem services. So they go a step further than carbon only, but also sell biodiversity and water storage. They see that as a stronger basket and package. And just a disclaimer, I'm an advisor there. And we had Nori on the podcast, which obviously in the US is using common model and selling and I compensated my carbon removal of last year of my flights which obviously this year is a bit less but last year I compensated my removal through them and they are active as well so there's a lot happening the questions you mentioned are everywhere it seems the same but I'm interested is there a reason you focus on carbon only and not biodiversity and water like Solar Heroes does for instance?
SPEAKER_00:Yes I think over here if we think about biodiversity then you saw carbon as a really clear thing to measure. And in most cases, the same practices that helps to quench carbon are actually boosting the biodiversity as well. Believe that this is going to be their end anyways. About water, then that's probably where our European markets and Australia is different. So carbon project, this is something that we are starting over here in European Union. And water is not that big issue over here so most farmers anyways don't use grain farmers at least don't use irrigation systems in markets where we are present in european union while as in australia it's obviously a big question how to grow crops with less water usage because as i have heard and the rivers are getting to dry over there and that's a big problem
SPEAKER_02:yeah sure and let's shift gears a bit it's a question i love to ask it's a long question i will introduce it first but In terms of, because you've been working in the space, you have a lot of experience in the space, Robin, and I know Kristen, you've been diving deep into the space over the last six months. In terms of, I'm using a framework called the ITN framework. So importance, tractability, and neglectedness. So importance, what's the scale of the problem? And if that problem would be solved, how much better will the world be? I think in this case, you're reconnecting humans to nature. The world will be a lot better in many, many circumstances. Tractability, like how solvable is it? I think you're showing that as well. And neglectiveness, I think it's something many people don't focus on, rightfully so, because it's sort of in the word. But how under focus is that area? And if you had to rate or almost talk through your work at eAgronom in terms of importance, tractability and neglectiveness, how would you rate that work? Or how would you describe that? Why you're focusing so much on this specific part?
SPEAKER_01:Sure. Yeah, we didn't think on this beforehand. But for me, and I've learned a lot from Robin, obviously, because he's His journey started with and from the problem, how to manage their own family farm in a more sustainable and profitable way. But what Robin also learned was that his father is actually not an average farmer. The average profit per hectare that his father is making is two or three times higher than what he saw an average farmer is in the neighborhood or in the
SPEAKER_02:area. And he's a stock trader in the winter, so that's definitely not average.
SPEAKER_01:As well, exactly. That's where the profit comes from. No, I wouldn't know. No, no, no. Let's not
SPEAKER_02:suggest that.
SPEAKER_01:But yeah, generally, there's a large difference between, let's say, the top 5% in terms of successful farmers.
SPEAKER_02:So you saw it's possible.
SPEAKER_01:Yeah.
SPEAKER_02:The possibility, the gap and exploring that, obviously, like why and how, because the land is more or less the same. So then it must be the management.
SPEAKER_01:Yeah, yeah. So if the gap is so large, how can we lift all the boats? How can we get more farmers to be more successful on average? And then the other thing that we realized that the difference doesn't necessarily come from doing more things, using more inputs or finding even better lands or not even perhaps timing of the tasks or what is being sown and planted. But the main difference comes from reduced costs. like optimizing the inputs and using less chemicals, less fertilizers. Doing less. Yeah, doing less and doing it more smartly. And that's where we think, and I know we're going to the solvability as well now, but that's where technology can help. It can help with reducing the margin of safety a farmer needs to apply when they do tasks because they want to protect the outcome, protect the harvest and protect their crops and secure a positive outcome. So they are doing... activities to get to that point and then if you can reduce this margin of error a little bit and technology allows you to do it then you will use less inputs that means massive reduction in ecological footprint
SPEAKER_02:so that's why it's so important and i think i if i remember correctly from the prequel we did and the demo which is is a few months ago so i don't remember perfectly avoiding a few mistakes like a few catastrophic mistakes which could be rotating yourself into issues or losing your harvest partly because you're still in your harvester on your way to a field because you didn't bundle them correctly or optimize like avoiding a few mistakes really helps your bottom line like it's not just your amazing year where you had the best yield ever but it's also those years where you avoid it going under is that is do i remember that correctly is it something you see from the data getting making sure farmers don't make a few very fundamental mistakes that could ruin and actually lose you fun.
SPEAKER_01:Yes, and it's both doing fewer mistakes, but also doing fewer activities, like spraying a little bit less or leaving one run out on their fields, putting some extra layer of chemicals to protect the crop or help it grow faster. So that's where I think there's overusage, basically.
SPEAKER_02:There's a lot of space still in the system, basically, that you can reduce. We had that same conversation actually with Soil Capital that mentioned that the first thing they do when they come in as consultants in Belgium in France and Argentina, et cetera, is optimize the chemical package because there's so much extra in it that obviously sold by the chemical companies or by the input companies because they want to sell more and it's a business model. But there's a lot of margin already there and that margin creates space for the farmer to think, to invest, to rotate more, to buy other things or to do things differently. There's a lot of overuse. It's what you're seeing as well.
SPEAKER_01:Yeah, I think, Robin, you can quote what you've seen happen over the last 10 or 20 years with profits of large input resellers versus profits of the farmers.
SPEAKER_00:That's a bit crazy for me as well. But if you look basically, farmers and their profits haven't really changed. Farmers have become bigger because they have to be more efficient to actually manage. But the profits of resellers and chemical companies and everybody went up. Now saying this, chemicals really saved the world. maybe like 100 years ago or actually a bit less. And they helped us to feed this really big population and so on. But if we want to continue feeding the growing population, then we have to now get to know how to use them properly.
SPEAKER_02:And to shift gears a bit, because I think that this is fascinating in terms of neglect of this, obviously, the focus on that profitability piece and giving farmers space and time to think actually a few years ahead, especially if you're in annual crops switch Switching a bit to the investor side of things, imagine there's a theater full of impact investors or investors listening that are looking for impact, deep, net positive impact, and obviously also a fair return. Without giving investment advice, what would you tell them when they say, I'm fascinated, I've seen the Kiss the Grand movie, I've visited farms, but now I want to get active. What would you tell them to look out for? What questions to ask when they're basically getting their feet dirty? That's a good question.
SPEAKER_01:Yeah, I would start from looking at at agriculture generally and seeing that, hey, it's, as I said before, one of the least digitalized industries in the world, yet there is a lot of activity now happening. Even still, most farmers that join eAgronom today, they are not using any software at all, even today. Most of them come from pen, paper, and very often they use Excel, but no software at all. So it's a green field and ripe for investments. I would look for players and platforms that are in a position to shift the incentives in the industry. Because right now, we don't really have that. That's why farming is stuck for so long in a conventional cycle and is a burden to the planet in such a way. And then platforms like ours, again, not giving investment advice, but I think that's where we're trying to move to is to give that quality advice and bring that world-class knowledge to the farmer at scale so they all have access to making good decisions and making less mistakes.
SPEAKER_02:And what about you, Robin? Let's say you're in charge tomorrow morning of a$1 billion investment fund and you have complete freedom to invest it. What would you do? Where would you put it to work?
SPEAKER_00:Yeah, that's a good question. And like, even it doesn't matter what's the money. It's in this terms, it's difficult decision because if you are not experts in farming or experts in the industry, even for farmers, there is so much different advice coming. Some advice coming from a reseller, some knowledge coming from chemical companies, and then some knowledge coming from like companies like ER. So it's really hard to navigate in this world. And there might be be some company who says that they have a magic mix that if you put biofertilizer yeah exactly you put that to the field and well you have a good crops and you have growing humus balance and basically all good for nature and in some cases it might be so but in some cases it might not be so I think number one thing either become expert yourself or try to understand who are the experts and then number two back what they are doing because they are different ways to approach this we believe that the core of revolution in farming should be focused on becoming the main source of knowledge for farmers because if you are the main source of knowledge then you can start making other changes as well so I personally would invest money into projects that try to be the main source of knowledge for farmers but then again there are some other companies as well who start from the different and just for example a crediting site or building a marketplace and
SPEAKER_02:et cetera. Find out more on investinginregenerativeagriculture.com slash course. Speaking about a marketplace, are you helping your farmers at all on the selling of the grains or the cash crops?
SPEAKER_00:Yeah, not today, but that's part of our business plan for sure. But again, our goal is to, at first, become the main source of knowledge for farmers. And we are already for many farmers. Then the next step from there is carbon crediting that will direct farmers more to our regenerative practices and would tie them even more with our knowledge. Then the next step is financing for farmers because, well, we wouldn't want to compete with banks, but we would like to partner up with banks because they have the cheapest money, but we have the best knowledge about our customers. Which is a good combination. Exactly. So we can make sure that cheap money will get to the right farmers and maybe we can even lower the risk a bit. And once we are the main source of knowledge for farmers and we are the main source of finance for farmers, we think this is then the best time to uniting the person power and in some sense building the biggest farming union in the world that would make sure that these farmers will first of all get lowest prices for the inputs and then secondly highest prices for the good quality production grain or whatever it is that they're producing
SPEAKER_02:I like it building the biggest farming union in the world it's a good goal
SPEAKER_00:yeah but we think it should be a process and I think we are well we have raised 4.3 million euros so far so we have had quite a limited amount of resources and always well we would have wanted to have even more resources but at the same time this limited amount of resources made sure that we really had to think our business plan very clearly and make sure that we don't do big mistakes but at the same time we make bold decisions that move us forward
SPEAKER_02:and focus on delivering value to in this case your 1500 or 1500 paying customers which obviously is not a small feat for a four-year-old company. A question to both. You can see who wants to answer it or both, actually. If you could change one thing in agriculture tomorrow morning, so we take away your fund, sorry, Robin, but you have a magic wand, so you have one magic power that you can use once. Let's see who wants to answer it or both. What would you change in the agriculture industry and how would that be? We'll understand how that would be important.
SPEAKER_01:Two things come to mind. One is I would shift incentives overnight. Well, shifting something over night it doesn't make a lot of sense but it needs to be a transition but putting as Robin said about his father that putting the price tag to the right places that carbon costs something carbon footprint
SPEAKER_02:true cost accounting the full price yeah
SPEAKER_01:yeah carbon footprint has a cost and then farmers should be building soil that can be measured so those practices should be incentivized in EU there are many processes to help farmers and incentivize them to move to certain directions, that could be one that should be in place. And the other one would be changing the educational system for farming. Especially in Europe, there's going to be a generation shift ahead of us. An average age of a farmer is over 50 probably.
SPEAKER_02:56, yeah. Depends on the countries, but it's late 50s, early 60s in some cases.
SPEAKER_01:Yeah, I think the next generation would need to be taught differently. Regen practices should be starting from the school so it becomes something that they understand from the early days when they become farmers. It's not something they need to learn about when they've already farmed for 20 years.
SPEAKER_02:Yeah, you have to unlearn a lot of things, which makes it so difficult. What about you, Robin? What would you change?
SPEAKER_00:Well, both of the things that Christian said are for sure very important, especially the education side, because if the education of farmers change, then I'm sure regulations will just follow. Maybe the closest blocker would be that if there would be good quality data, about every farmer in one cloud with really easy to use API about what tasks these farmers were doing, how much fertilizers, what fertilizers they added over there and the financial information and so on. So having the good quality data. But actually this is both of the things that Kristen said and I said are actually the two blockers companies like E-Arkham are facing. So one is Farmers Trust. So we have to educate them to believe into those practices and secondly having the good quality data but at the same time well life shouldn't be easy so i think it's still doable and we are moving toward the direction that we have the good quality data and also we are building a relationship with farmers so basically many farmers they start using e-agronom management software at first and maybe buy to apply for government grants or whatever. And then it's like a pipeline where we educate them and then they will buy the consulting service. And well, basically that's how we contribute ourselves into the education system.
SPEAKER_02:Absolutely. You're educating many farmers. I want to be conscious of your time and thank you so much. I don't think it's the last time we have you on here, but I want to thank you for a very good, deep introduction into the company, into your backgrounds. And of us thank you for sharing your journey so far and also your plans for the near and the long-term future
SPEAKER_00:thanks a lot and thank you as well for sharing the message of regenerative practices and to the world
SPEAKER_01:yeah thank you it was great talking to you
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