Can Soil Health Loans Save Agriculture? A new fund of $ 250 million wants to find out.


AU.S. soil health is in dire straits and a new investment fund, rePlant Capital, has been formed to help address the crisis of capitalism by tying agricultural loan interest rates to improved carbon storage and water in the soil in order to save farmers from the disaster impacts of climate change.

A third of the country’s topsoil has eroded over the past 50 years, in a 2015 United Nations warning that predicts land degradation will be one of the main threats to human health in the world. over the next few decades. Farmers seek to regenerate the soil after decades of overuse of chemical fertilizers and herbicides, but the transition to less harsh farming practices is costly, and nature cannot solve the problem according to human timeline, requiring 500 years or more to create an inch of fresh topsoil under natural conditions.

Based in Boulder, Colorado and Oakland, replant Deploy $ 250 million to farmers transitioning to regenerative or organic practices, of which approximately $ 200 million will be spent on loans based on soil health measurements. The remainder will finance equity investments in farms with maximum debt. Most of the fund’s investors are women.

“When speaking of soil health, we immediately speak of water conservation. You immediately talk about water filtration and I would say those measures are as important as carbon, ”says rePlant co-founder Robyn O’Brien, explaining how years of fertilizer and herbicide use have stripped nutrient soils and made them less efficient at absorbing water. . “We are deploying technologies and services that will accelerate this change. “

O’Brien, who was appointed to the Forbes Impact 50, a list of top impact investors in the United States, co-founded rePlant after years spent in hedge funds and advising companies in the health food industry. She joined Don Shaffer, the former CEO of RSF Social Finance, which deployed $ 250 million in senior loans to more than 200 impact companies in a decade, and David Haynes, former CEO of one of the first impact venture capital fund. .

They launched rePlant earlier this year after realizing they were fed up with traditional financing options for farmers and were ready to get creative in the face of the ever-present threat of climate change. The opportunity for RePlant is enormous: $ 426 billion in US farm debt and over 900 million cultivable acres.

“Tying loans to improved soil health was the holy grail for us at RSF,” Shaffer says. “We never really got there. Here we have a chance to support farmers economically, as they step out of the hamster wheel of pursuit of yield and can focus on profitability.

Starting from scratch allowed them to build a platform that could reimagine decades of often discriminatory loans to predominantly white farmers, while working with conglomerates like Danone North America from the start.

RePlant’s first loan in January 2020 went to Kansas-based McCarty Family Farms, a fourth-generation dairy that has worked with Danone for nearly a decade, looking to reduce its water use. The loan has been used to install moisture probes on cropland around the farm where water may be scarce but cows often graze, and is part of a $ 20 million pool that will go to the all of Danone’s partners.

RePlant also works with independents like White Oak Pastures, a legendary grass-fed beef and pasture-raised pig farm in southwest Georgia, which in 2019 released the results of a scientific study that reported found that holistic farm management practices increased organic matter in soils. from 1% to 5% in 25 years. After the launch of White Oak sales jumped during the pandemic, owner Will Harris approached rePlant because he needed to build the cold store on his six-generation farm, at a cost of $ 2 million.

“The debt load is huge for a lot of these farmers,” says Haynes, who heads the equity investment side of rePlant. “How to get them to become more profitable and not focus on performance, within the supply chain limits of these large multinationals, that has not yet been done.”

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