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Private Capital Invests in “Regenerative Organic” Agriculture

Private Capital Invests in “Regenerative Organic” Agriculture

There is a nascent capital investment effort in the transition to certified organic agriculture beginning to take hold across the U.S., something advocates say is critically needed to meet the current and escalating existential health threats, biodiversity decline, and climate emergency. Mad Agriculture has received early commitments from the Rockefeller Foundation, Builders Vision, and nearly a dozen other investors to contribute to the $50 million Perennial Fund II (PFII), with the express purpose of advancing the growth of “regenerative organic” agriculture.

Forbes is reporting that PFII’s primary objective is to jumpstart the organic land transition given that this slice of U.S. agriculture makes up less than one percent of total farmland in the country relative to the European Union’s nearly 10 percent of total farmland. “We commend the work of Mad Agriculture in harnessing the spirit of organic agriculture and mobilizing the private sector to invest in farmers who engage in regenerative organic agricultural practices,” said Max Sano, organic program advocate at Beyond Pesticides.

In Rockefeller Foundation’s press release announcing their early commitment, Mad Capital co-founder Brandon Welch spoke on their vision: “We are aiming to build a bridge between two distant worlds that need one another to transition our food system – Wall Street and organic farmers…Providing farmers with access to capital gives humanity a shot at producing an abundance of healthy food while being ecologically accountable to our working lands and those that steward them.”

Mad Agriculture is an agricultural finance nonprofit with the specific goal of investing in the regenerative organic farmland transition in the United States. Their name is inspired by “Mad Farmer” poems from twentieth-century rural agricultural advocate and writer Wendell Berry, who warned the nation of the economic, health, and environmental consequences of farmland destruction. Mad Agriculture has four main initiatives: Mad Capital, Mad Lands, Mad Markets, and Mad Revolution.

While Mad Capital is their investment fundraising arm, Mad Lands engages in business planning support for existing regenerative organic farmers providing services including impact assessments and stewardship consultancies to ensure that they are leading with ecologically beneficial practices. Meanwhile Mad Revolution provides educational resources and Mad Markets is their newest initiative with more information to be released soon. Currently the organization supports 79,115 acres in 14 different states.

While their land portfolio is small relative to corporate commitments of millions in acreage to regenerative agriculture (not certified organic) from corporations such as General Mills, Walmart, Unilever, Mad Capital shares Beyond Pesticides’ commitment to keeping organic strong in its theory of change, “The organic agriculture movement and certification (mainly for cropping systems) and holistic management (for livestock systems) provides a baseline of commitment to regeneration.” Mad Capital has the goal of transitioning five million acres to regenerative organic agriculture by 2032, which aligns with Beyond Pesticides’ mission to eliminate toxic petrochemical pesticide and fertilizer use from the food system by that same date.

Mad Capital is not the only player in the game. Another firm to watch is Iroquois Valley Farmland REIT, a B-corporation and real estate investment trust working in 19 states with over 60 farmers across 30,000 acres of land. “The Company is committed to scaling organic agriculture in the U.S. by getting more organic farmers on the land, funded by socially responsible investors,” according to their website. Essentially, this real estate investment trust allows investors to share the financial risk that organic farmers would otherwise take on their own by investing a minimum $10,700 over a five-year investment period, with payments available to said investors in the form of dividends at the end of their investment cycle. See here for more details on the structure of this real estate investment trust.

In their latest Public Benefit Report, Iroquois Valley identified goals for various categories including “Environment: Where We Work,” “Customers: Our Farmers,” “Community: Our Investors,” “Workers: Our Staff,” and “Governance: Our Board” on page 11. They acquired a loan from the USDA Natural Resource Conservation Service (NRCS) to expand their soil health survey capacity to better equip their member farmers. Additionally, they added “19 new entity investors and 79 new trust accounts” into their portfolio in 2022 with the goal to continue this trajectory in 2023.

It is important to note that just 55 percent of their total portfolio is certified organic as of 2022, yet 59 percent of the total production mix is devoted to cover crops –demonstrating their interest in elevating soil health as a fixture of their investment strategy even though they are not yet at 100 percent organic. Additionally, there appears to be a prioritization toward uplifting younger and more diverse groups of farmers in their portfolio. For example, in 78 percent of their clients, women are in leadership roles and a combined 71 percent of the farm owners are Generation Z and Millennial.

“Regenerative farming without organic principles as a baseline can contribute to corporate greenwashing and misleading the public on sustainable agriculture,” said Mr. Sano. Regenerative and no-till farmers can, and often do, continue to rely on petrochemical fertilizers and pesticides, including glyphosate-based herbicide products that impose adverse health impacts, such as non-Hodgkin’s lymphoma, on farmers, farmworkers, frontline communities, and the broader public.

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Photo Credit: gettyimage-jamesbrey

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