The Rockefeller Foundation is among the investors to back a new fund, which aims to help U.S. farmers transition to regenerative organic agriculture methods.
Perennial Fund II has been launched by the Colorado-based finance firm Mad Capital and will provide regenerative organic farmers 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.
Regenerative organic agriculture focusses on regenerating soil health and the full-farm eco-system.
Mad Capital is targeting $50 million for the fund and has already received early commitments from a number of investors, including Builders Vision, the Rockefeller Foundation and the Schmidt Family Foundation.
The co-founder and chief executive of Mad Capital, Brandon Welch said in an interview regenerative organic farming is about moving to a way of growing food that “works with nature, not against it”.
Welch told me the concept also puts a strong emphasis on carbon sequestration, as well as restoring wildlife and biodiversity.
“We have focused on working with regenerative organic farmers, because they have the power to solve a significant portion of the climate issues that we are all facing,” he added.
But he added only 1% of farmland in the U.S. is actually certified as organic, compared to almost 10% in the EU.
Welch said he has been speaking to farmers for several years about the biggest hurdles and barriers that were stopping them from transitioning to regenerative organic methods.
He added two of the biggest issues are getting hold of the right agronomic knowledge, along with access to markets who will pay a premium for organic products.
And he said the final hurdle is access to capital.
“Over the last few years, we’ve been developing funding vehicles in order to provide long-term financing to farmers that are regenerative organic, or are transitioning to regenerative organic,” Welch explained.
“The goal of this new fund is to support the next group of leading regenerative organic farmers on their journey and simultaneously be able to build the economic case that this emerging asset class is worthy of broader capital markets.”
As of last month (February), 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% per year, up to 79,115 acres.
Perennial Fund II brings Mad Capital closer to its ultimate goal of financing 5 million acres of regenerative organic farmland by the end of 2032.
The Rockefeller Foundation’s director of innovative finance, Sunit Shah said in an email access to appropriate finance is a key barrier in the adoption or expansion of regenerative practices.
“Mad Capital is filling a gap in the market for flexible loans structured around transition journeys that will allow farmers to do more, faster,” added Shah.
“The team is motivated to see the platform scale, is focused on creating and sustaining impact, and is unique in their ability to connect with farmers.”
Shah said the Mad Capital team understands that change needs to start happening as soon as possible, and they have developed a fund strategy that attempts to start helping move towards regenerative.
