Transcription

• Speaker #0

  So can we transition every piece of land to regenerative agriculture? To put it provocatively, I think we don't have a choice. It's really the best way to farm as well. In the face of climate stress, extreme weather events, the degradation of our soils, there is starting to be no other way than to farm regeneratively. The costs of doing nothing are much greater than the costs of changing.

• Speaker #1

  Welcome back to the Deep Seat Podcast as... we continue our journey through the Rewind series. If you don't know what that is yet, and maybe you're joining us for the first time, it's a mini series where I revisit some of my favorite passages from some of my favorite conversations on the deep seed this year. It's such a nice way for me to listen back to these conversations and to bring back to the surface, well, some of the amazing wisdom shared on the podcast in the last 10 months. Today, I'm revisiting my conversation with Chuck de Lidekerk from Sol Capital. I'm not going to say too much in the intro, just that maybe I'm a little bit biased on this one because Sol Capital is the official partner of the Deep Seed podcast and because they've been helping me since day one. But I genuinely really like what they're doing and I have immense respect for Chuck. And yeah, I think if you listen to the next 20 minutes, you'll understand why. So let's go. Could you start by giving us your definition of regenerative agriculture?

• Speaker #0

  So regenerative agriculture, probably the best way to describe it is to contrast it with extractive agriculture. Maybe I can tell you a story about this, which is actually the story of agriculture. About 12,000 years ago we invented agriculture as a species and since that moment We've been slowly degrading the fertility of our planet. If you look at the places where agriculture was born, like Mesopotamia or Mexico or China, these areas have gradually turned to desert. And that's because agriculture is an artificial activity. What we mean by regenerative agriculture is the set of practices that are going to restore the natural fertility of these ecosystems. And the reason it's a very important notion is because historically it's the first time that we are coming to terms with the fact that, yes, we have been degrading our soils for a long time. We've been accelerating that degradation for a while as well, especially more recently since the industrial revolution. since the mechanization and the arrival of industrial chemistry in agriculture. But this is a trend that's been going on for a long time. But this realization that we can actually reverse that and build fertility in our soils, precisely at a moment where the environment is under such stress, is actually huge news. And it deserves to be considered as... probably a very, very important turning point in the history of mankind.

• Speaker #1

  You spent a number of years managing farmland in different places around the world and trying to transition these pieces of land to regenerative agriculture and trying to prove that this could be more profitable than conventional. So what were the results of those years? Did you manage to do that? Did you prove the model?

• Speaker #0

  Yes, yes, that's a very important point. When we arrived, well, really on most of the farming operations where we had a management or an advisory mandate, really we saw year on year profitability and resilience go up. I'd like to say productivity, and I'll explain this. Well, the best way to do it is to give you a story again. When we were managing the grape production of a client in South Africa, we were faced with a drought in 2017, a very, very tough drought for the Western Cape in South Africa. The city of Cape Town was at risk of not having any drinking water. And... They were calculating the days before Cape Town would run out of drinking water, calling it, you know, Day 100, which was 100 days before. the city would ran out then day 95 and day 90 and we arrived at like day 90 and 90 days without 90 days is like before you run out of water completely water days zero city is like a huge state of emergency and and they had already you know way before that they had um made irrigation for agriculture illegal because they were keeping the water for the people and so You can imagine no rain plus no irrigation plus super heat stress as well created the perfect conditions for the vines to just not grow anything or actually die. And a lot of farmers in that region didn't harvest a crop. Just about every farmer lost money that year. And quite a few farmers actually saw their vines die and had to rip out their production tools, the vines themselves. And that year, because of the regenerative operations that we were implementing, we were one of the rare, if not the only farm to turn a positive operating profit there. And for us, that was a huge discovery moment where we realized, okay, in periods of climate stress, we will be more productive than... extractive farms, if I were to call it that way. In normal years, we should be as productive. So we'll never be less productive in a regenerative system. We'll always be at least as productive. That's, I think, the important thing. So to answer your question, did we see profitability go up? Yeah, we saw resilience go up. I think we also saw the farmers'interests in their job change. And that was one of the key learnings, which is the toughest thing to change in a regenerative system is the mindset of a farmer. And that's not because the farmer doesn't want to do something different. I think the farmer spends their, you know, they spend their time thinking about what they can do differently. But, you know, they think about this day in, day out. And so when you, as someone who doesn't know their context, even if you're a farmer from another country, or even if you're a farmer from a few miles away and you tell a farmer to do something differently, the first thing they're going to think is, well, maybe it works elsewhere, but this is my system and I know my system really, really well. So, you know, I've been optimizing my own system with what I know, you know, why would I change? And so really what we understood is the toughest thing to change, if we want to change agriculture, is what happens between the two ears of the farmers.

• Speaker #1

  It's quite clear that you have a lot of respect for farmers and you're trying really hard not to say anything negative about them. And you're telling me that they know their land better than anyone else and they know their system better than anyone else. At the same time, you're telling me that when you took over management of farms in different places and implemented a different kind of system mindset using regenerative principles, you got better results. So what does. tells me is that well we do need farming to evolve we do need a lot of farmers to adapt their system to make changes to improve the way they farm so that it can be healthier for the environment it can be more resilient and even more profitable for themselves so in a way you you do have to somehow find a way to tell farmers that they need to change something. So, I mean, how do you propose to do that?

• Speaker #0

  Well, first of all, with a lot of humility, we spent quite some time trying to understand why farmers would change and why farmers wouldn't change. And the three reasons that we found was lack of technical knowledge to do some new stuff. And again, we can look at examples. A farmer will probably be afraid to establish a cover crop if he hasn't done it before because of potentially weed infestation or pest infestation problems. You know, you're going to bring in pests in your system that you didn't previously have. How are you going to deal with those? The second... The second reason why farmers don't change is the fear of an economic loss. They believe that their system is optimized as it is, and it's a series of compromise, but these are the best compromise they can land on to achieve the profitability they have. And then the last one is a lack of a clear economic incentive. And this is the most powerful one I find. The reason is, yeah.

• Speaker #1

  Yeah, because the fear is not going to change. So you need some kind of motivation somewhere to make them get over this fear and try something new. Or you need some kind of protection also in case something happens, right? Sorry, Lynn.

• Speaker #0

  Yeah, yeah, exactly. That's exactly the point. Take the story of organic agriculture. You know, at some point people were decided that, you know, Too much chemistry in the system was probably bad for you from a health perspective, maybe from an environmental perspective, but I think that organic emerged because of concerns for human health. And so some farmers decided to stop with chemistry in agriculture, especially synthetic inputs, especially synthetic nitrogen. But synthetic nitrogen is what will boost your yields most. And so by going from a conventional system to an organic system, the first thing the farmer is going to see is a drop in his productivity. And what we've observed is that there's been a growing number of farmers adopting organic agriculture. They knew that there was going to be less productivity. And if you're going to take less productivity, that means that you really need to see that there's a premium and their price is going to go up, up, up, up, up more than your productivity is going to drop. And the reason that's a nice story is because it tells you that if you can, you know, create a financial incentive for the farmer, well, the farmer will find a way. You know, these guys and girls, they're entrepreneurs. And so we don't need to be completely holding their hand at every point of the journey. If we can create an incentive that says, okay, this makes sense and this opens the door for me to start learning new things again and to start taking charge of my own business, then... they'll do it. So, you know, how do we get farmers to change? We certainly don't tell them what to do. We tell them what results we're looking for. And the results we'll be looking for are, you know, all of the benefits that come from regenerative agriculture. Sure, we'll look at carbon. But let's look at biodiversity as well. Let's look at, you know, how farming will impact the water system. How farming will impact the quantity of pesticides that the farmers will be applying. Let's look at farmer livelihoods. Let's look at soil health generally. Let's look at, you know, all of these metrics. that we can actually point to to say yes the land is actually regenerating and a society on that land and people on that land are actually thriving better than they were previously. Those are the metrics that we're after.

• Speaker #1

  And so talking about incentivizing farmers to make those changes, especially financial incentives, as far as I understand this is the heart of what you're trying to do here with soil capital. So maybe you could tell us a little bit more about what soil capital does today.

• Speaker #0

  Today, Soil Capital runs a regenerative agriculture and climate action program where we help the food system to scale regenerative agriculture.

• Speaker #1

  And how do you do that? How do you scale regenerative agriculture?

• Speaker #0

  Well, by putting the farmer at the center of the equation and making sure that whatever we propose works for the farmers. Because... You know, I said food system, and I mean that it's the food system is not just the farmers, it's also the companies that will be working in the ag and food industry. So anywhere from tractor manufacturers to food brands to industrial processors to cooperatives working with farmers, all of these companies are part of the system. The retailers, the supermarkets, they're part of the system as well. And you and I as consumers are part of the system as well. So that's who we're changing the system for. And everyone has a role to play in there. That's really important. And everyone has an interest in it succeeding. So let me talk about the role first. Everybody's role, I think, is to make this achievable and interesting for the farmer so that it can happen at scale. That's the first role. And we help everybody in the system make it interesting for the farmer. I'll explain that now and then I'll explain why everyone has an interest in doing it. If I forget, remind me. The way we do it is we enable farmers to come in to a regenerative agriculture and climate program, our program, and we will measure their practices every year. in a way that's actually interesting and fun for them. We don't want to burden the farmers with too much admin. So basically, for about two hours, three hours a year, the farmers will sit down with some agronomists in our team. We have around 25 agronomists working in the team today. And they're going to collect information about the farmers'soils and about the farmers'farming practices. into our systems. And we will feed that data into a model that will help us understand if the farmer is storing carbon or emitting carbon at the level of his whole farm, his or her whole farm. We will be also assessing you know, what type of impact these practices might have on other metrics that I mentioned earlier. And then we'll understand, you know, the farmer's carbon impact as a proxy, an imperfect proxy, but a good proxy nonetheless, about the farmer's regenerative practices. And then we'll certify that. And by certifying the farmer's carbon performance, on any given year for any given crop, we can help the farmer send regenerative crops into the food system and get paid to send regenerative crops into the food system.

• Speaker #1

  So if I understand this right, it's about using carbon as a lever to generate more income for farmers who improve soil health, but through regenerative practices. And to me, it sounds a lot like the concept of carbon credits, which we hear a lot about, but I know this is not quite what you're doing here. So maybe you could explain the difference.

• Speaker #0

  You know, we at Soil Capital have chosen not to go into carbon credits. Because there's something that's more interesting for the food and ag supply chain, is that the food and ag companies, they don't need to buy carbon credits. They can buy their own crop and make it regenerative. And that will actually decrease... Their own carbon footprint. Because if you look at the carbon footprint of a food product, what's interesting is usually I think it's 70% to 80%, sometimes much more. We were speaking with a client yesterday who has 98% of their emissions comes from the farm. And this is a food brand. 98% of their emissions comes from the farm. So if you want to change... the carbon impact of your food, the best way to do it is through agriculture. And the best way to do that is by incentivizing the farmer. So that's one of the reasons why we have an interest in helping the farmers and supporting the farmers. But the other reason I think is even more dramatic. It's food security. You know, we're entering a world where climate stress is going to cause more and more crop failures, harvest failures. You know, we are entering into a world with record temperatures, with extreme patterns of rainfall and drought. And if we don't very quickly identify the farmers that are the regenerative farmers and scale these groups of farmers in the areas that are at risk, there are going to be real supply problems.

• Speaker #1

  Do you think that we could transition every piece of land used for agriculture today? to regenerative agriculture? And if so, how long would that take? How far away from achieving that are we?

• Speaker #0

  So can we transition every piece of land to regenerative agriculture? To put it provocatively, I think we don't have a choice. And I think it's really the best way to farm as well. We don't have a choice because in the face of climate stress, extreme weather events, the degradation of our soils, there is starting to be no other way than to farm regeneratively. This is how you're going to preserve the value of your farm. This is how you're going to produce a healthy and abundant crop in a living system that's going to be valued by society, that's going to earn you extra income as a farmer. And that's going to reconnect you to society and the soil in the right way. The reason I say this is, you know, for a while, I think it's less the case now, but for a while, farmers have been regarded as people that have been destroying the planet. It's a lonely position to be in when you're a farmer, to be destroying the planet. First of all, it's already pretty lonely to be a farmer because generally your neighbors are far away from you. Financially, it's complicated to be a farmer because your margins are tight and your debts are usually huge. And if people think that you're destroying the planet and poisoning your food, then it becomes even tougher. And I think that, you know, regenerative agriculture kind of flips the switch on all of those issues. So that's why it's the right way to farm. And then, you know, something I often say is the cost of doing nothing are much greater than the cost of changing.

• Speaker #1

  The key element from this conversation I want to highlight is that farmers should be at the center of the equation and that the key to the regenerative transition is making sure that we make it attractive and accessible for farmers. They should not be taking all of the risks while getting none of the rewards. And that's kind of what Sol Capital is trying to do here by financially rewarding farmers for their regenerative practices using carbon as a lever. Anyways, thank you so much for listening. And don't forget to follow The Deep Seat on your favorite streaming platform. And if you've done that already and you would like to go one small extra step, you can leave me a five-star review. It really makes a huge difference for me and for the podcast. And it helps me reach more and more people each week with these really important stories and these important conversations. So thank you so much and see you soon.