USAID Convenes Industry Brainstorm on Regenerative Agriculture
May 21, 2021 (BANGKOK) – The United States Agency for International Development (USAID) Green Invest Asia and the Global Impact Investing Network (GIIN) convened a virtual meeting on May 19 with global agriculture and finance experts to discuss regenerative agriculture, which has attracted growing interest as a climate investment opportunity given consumer trends, growing demand for agriculture commodities worldwide, and limited cultivable land.
The planet’s agricultural land has become so depleted that the United Nations predicts there are only about 60 growing seasons left until the world’s soil can no longer grow crops. Regenerative farming aims to restore degraded soil, capture more carbon dioxide, and reverse climate change impacts while improving the ecosystem to make it more sustainable. Practices include minimizing soil disturbance from tilling and chemical inputs, increasing biodiversity, and covering the soil.
“The climate-clock is ticking…sustaining a broken system won’t help. We need to regenerate first,” said Mathieu Chaumont, Director of Sustainability, Sourcing and Supply Chain at the U.S. organic coconut water company, Harmless Harvest, which sources from Thailand. The company’s pilot regenerative coconut agriculture project that trains farmers in Thailand found that land under regenerative management has near 60 percent more organic soil matter than a reference plot under traditional management.
Agriculture accounts for some 30 percent of global greenhouse gas emissions, yet only accounts for less than 10 percent of impact investment – finance tied to environmental and social impacts. “Investors in our network believe climate risks are investment risks. As climate change projections grow ever more dire, farming practices like growing cover crops, planting multiple types of crops together, rotating crops, and reducing tilling are even more urgently needed,” said Brad Arsenault, Environment Officer for USAID in Asia.
“Now’s a really exciting time to be investing in innovative early-stage food and agriculture companies because of the convergence of powerful enabling technologies, and consumer-driven market pull providing an opportunity to make impactful investments that increase agricultural productivity while regenerating soils, reducing and sequestering GHG [greenhouse gas emissions] while minimizing environmental impact,” said Roger Wyse, a plant scientist and event panelist who is managing partner of Spruce Capital Partners. The U.S. venture management company with $320 million of assets under management invests globally in technologies with broad applications in food and agriculture.
For Daniel Baertschi, the food and agriculture lead with the Swiss-headquartered sustainability consulting company, Quantis, investment trends in regenerative agriculture include soil monitoring tools; new technologies (drones for precision spraying, robots for weed control, animal health monitoring); soil microbial treatments and non-chemical pest control, and; data management (blockchain for supply chain transparency).
Patti Chu, Co-head of Impact Investment at the Singapore-based Silverstrand Capital said the company focuses on “nature-based solutions”, including regenerative agriculture. The company’s indicators include numbers of hectares of improved land use, farmer’s income improvements, and reduced GHGs, among others. Southeast Asia’s agriculture is dominated by smallholder producers who cultivate on plots of land no bigger than half a hectare, which is too small-scale for investors. Chu said that Silverstrand is looking at investment opportunities that can aggregate farming communities together, and provides transition capital in addition to technical assistance and finance. “There aren’t many ready, investible, scalable businesses,” she said.
Other challenges investors and businesses face undertaking regenerative farming include a lack of transition capital, or bridge loans, before new crops can be harvested; challenge of finding buyers for secondary crops; convincing farmers to reject the predominant system of chemical farming in Asia; finding additional land to diversify crops; and accurately measuring investment impacts. GIIN shared its measurement platform, IRIS+, and recent research it released on measuring impact performance in agriculture. Core metric sets are available publicly based on theme or Sustainable Development Goal.
USAID Green Invest Asia partners with agriculture and forestry companies throughout Southeast Asia to help lower their greenhouse gas emissions through carbon footprint measurements, business analyses, technical support, capital matchmaking and investment-readiness support. The project also supports investors, including commercial banks, to evaluate risks and opportunities of climate-related finance, including through remote due diligence.
Both investors Chu and Wyse have investment horizons of about a decade though “that does not necessarily mean that we expect all of our investments to have such a long harvesting period,” said Chu.
“Becoming soil-smart is a journey, rather than a trend,” said Christy Owen, head of USAID Green Invest Asia. “Despite its challenges, regenerative agriculture has become an investment imperative. It’s also a multi-billion dollar investment opportunity.”
Event recording and presentation available at www.greeninvestasia.com/events.