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Supply Chain
€30M & $50M Funds, Biodiversity Metrics Drive Continued Growth of Regenerative Ag

A €30M portfolio in Europe and a $50M fund in the US put much-needed capital behind cultivating regenerative-ag value chains, while a partnership with NatureMetrics supports Unilever's work to make farming its ingredients climate resilient.

European food-innovation coalition launches €30M portfolio to scale regenerative ag

Image credit: EIT Food

A coalition of European food-innovation organizations has launched a Regenerative Innovation Portfolio, which aims to foster regenerative agriculture's potential in Europe by proving concepts and scaling existing initiatives through new partnerships across agrifood value chains.

EIT Food – a division of the European Institute of Innovation and Technology (EIT), and the world’s largest food innovation community – will deploy €15 million to support the Portfolio, to be matched against funding from its network of corporate partners.

The Regenerative Innovation Portfolio, established as a Food Innovation Hub Europe initiative, has been developed through a collaboration between EIT Food and Foodvalley — the Netherlands’ primary agrifood think tank. The Portfolio takes a landscape-level approach, going beyond individual farms to consider collaborative approaches that span multiple sectors, working at a larger scale.

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“It is crucial that we establish a future-fit food system for all; a transition that can only be achieved by prioritising systemic, regenerative approaches to agriculture — in a way that keeps farmers front and center and fosters collaboration between all stakeholders in the food chain,” says EIT Food CEO Richard Zaltzman. “By matching funding from partners that invest in landscape-level collaborations in the Regenerative Innovation Portfolio, EIT Food aims to enable a significant commitment to the regenerative transition within Europe.”

To date, the Regenerative Innovation Portfolio has already identified five potential priority landscapes throughout Europe where multiple stakeholders – including regional governments, investors and retailers – have mutual interests and complementary sourcing needs. Within these landscapes, the Portfolio aims to foster greater collaboration across sectors and value chains to help farmers make the transition to regenerative agriculture.

EIT Food will match corporate-partner contributions of €5 million per year for three years, building up to a potential total investment of €30 million. Additionally, some activities in the Portfolio may be designed to generate a return, which will be re-invested in the Portfolio. All funding will be used to launch and support Portfolio landscape initiatives, ecosystem development and inter-landscape learning in a community, as well as actively support initiative participants with applications for external funding, including government subsidies, public and private grants, and VC and angel investments.

“We have already seen significant efforts and initiatives from farmers and cooperatives in the shift to regenerative agriculture. The Regenerative Innovation Portfolio will be crucial in helping to practically scale and expand these approaches,” says Foodvalley CEO Marjolein Brasz. “By creating a collaborative community, the Regenerative Innovation Portfolio will generate and share learnings and experiences between landscapes which will help to foster more successful partnerships and innovation in the future and get all stakeholders in the landscape transition to play their role.”

Companies that are involved in the Portfolio stand to derive several benefits from the Portfolio's collaborative, landscape-based approach. In practice, farmers do not supply to a single stakeholder but supply a range of commodities to numerous stakeholders — making close collaboration between customers essential to allow for production of a broad range of regenerative crops and products at scale. To this aim, the Portfolio brings stakeholders throughout the supply chain together and fosters new types of innovative, cross-value-chain sourcing models. Furthermore, by sharing costs, knowledge and experiences, the Portfolio will allow companies to benefit from complementary capabilities and resources.

Investors launch $50M fund to scale regenerative-organic ag in US

Image credit: Mad Capital

Not to be outdone, US-based Mad Capital today launched the Perennial Fund II (PFII) to provide US farmers with tailored loans that help them transition to regenerative-organic farmland while also increasing farmer profits. PFII, which is targeting $50 million, has received early commitments from 17 investors — including Builders Vision, Lacebark Investments, Matthew Zell Family Foundation, The Rockefeller Foundation, the Schmidt Family Foundation, Zarpet Family Foundation and Zellis Family Foundation.

Building on the success of Mad Capital’s portfolio of funds supporting regenerative-organic agriculture, the PFII aims to bring Mad Capital’s total financing to over 150,000 acres of farmland and partnerships with more than 50 farming families.

“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,” said Brandon Welch, co-founder and CEO at Mad Capital. “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.”

Regenerative-organic farmers reverse this damage done by conventional, extractive agriculture practices by working with nature, not against it — creating economically and ecologically resilient food systems. PFII — Mad Capital’s second private credit fund — will provide regenerative-organic farmers in the US with tailored loans to cover the full array of capital needs so they can transition to organic, invest in soil health, develop new markets, and diversify their enterprise.

"Mad Capital is playing an integral role in the transition to regenerative organic agriculture. Through their innovative and holistic approach, they are providing capital to farmers who have been overlooked and underserved by traditional capital markets, while their broader platform also offers technical assistance, market access, and a sense of community," said Sara Balawajder, Director of Investments at Builder’s Vision. "We're excited about Perennial Fund II and its potential to de-risk this space and open up capital market access more widely to farmers looking to transition their practices."

PFII will utilize an innovative blended structure with a first-loss pool to bolster the underlying performance of this quickly emerging sub-asset class within ag lending. It’s designed to generate impact forward and uncorrelated current yield within the core fixed-income allocation of a portfolio. Early indications from Mad Capital’s Perennial Fund I portfolio show that this risk is further reduced within the niche of regenerative-organic farmers due to the substantial increase in on-farm revenue from organic premiums.

Only 1 percent of farmland in the United States is certified organic, compared to almost 10 percent in the EU. Lack of access to capital is a primary barrier to wider adoption, as traditional financing institutions lack the understanding and financial products to support regenerative-organic farmers. Transition finance such as Mad Capital’s is one of the keys to keeping pace with the surge in consumer demand for regenerative organic food and fiber.

“This is a bold reimagination of financing in nature’s image, empowering farmers to create farm ecosystems that are good for the Earth and good for humanity,” said Mad Capital co-founder Phil Taylor.

Launched in 2019, Mad Capital has been actively lending to regenerative organic farmers for five years. As of February 2024, Mad Capital has deployed over $25 million to 30 farmers, which has helped transition over 10,500 acres of land to organic and grow their total portfolio acres by 26 percent per year, up to 79,115 acres. The PFII brings Mad Capital closer to its ultimate goal of financing 5,000,000 acres of regenerative organic farmland by the end of 2032.

Unilever testing ‘eDNA’ to determine regenerative-farming best practices across its supply chain

Image credit: Unilever

Meanwhile, CPG giant Unilever has partnered with UK-based nature intelligence company NatureMetrics to support the delivery and measurement of its new regenerative-agriculture projects — which aim to improve soil health, water quality and overall biodiversity across Unilever's global supply chain; as well as enhance crop yield and enable local communities to protect their livelihoods and environment. Unilever uses around 4 million hectares of land around the world to grow ingredients for its products.

NatureMetrics — which supports companies in leveraging biodiversity data for understanding, reporting and managing their impacts on nature — will deploy its world-leading environmental DNA (eDNA) sampling technology in four critical locations across Unilever’s supply chain. Changes in bacterial and fungal diversity in the soil will be measured, as well as the diversity of above-ground invertebrate species. The data produced, combined with other biodiversity metrics, will provide clear insights to demonstrate the positive impact of regenerative-farming practices implemented in Unilever’s supply chain.

Tom Ludwig, Head of Onshore Industries at NatureMetrics, said: “The beauty of the data we capture using our technology is that it’s a common language multiple stakeholders across a supply chain can use. It will not only support Unilever’s regenerative-agriculture program at a high level but also empower its suppliers, implementation partners and farmers with critical information at farm level. Only by bringing every stakeholder along on the journey can meaningful impact be delivered, and we’re proud to be at the heart of that with this partnership.”

Critical biodiversity data at the farm level

Unilever launched its Regenerative Agriculture Principles in 2021 and its regenerative-agriculture program with suppliers in 2022, to stop and reverse overall decline in soil health and biodiversity and make farming truly climate resilient.

Since then, Unilever has set up several projects designed to implement regenerative-agriculture practices and protect and conserve natural ecosystems, addressing the challenges and unique needs of different crops and landscapes, and engaging and supporting the farmers and smallholders that are vital to the maintenance of these environments to deliver meaningful impact at a farm level.

Its work with NatureMetrics is one of several partnerships to help projects measure specialist metrics and determine their impact.

NatureMetrics has already begun to establish baseline data across thousands of hectares in the target areas of Argentina, Canada, Europe, and the UK — where Unilever recently launched regenerative-farming projects for both mint and mustard. The company will support Unilever and its implementation partners across a five-year period to collect the best possible data, interpret the data, and determine which practices should be scaled to deliver the most impact longer term.