Ethical Markets focuses on transition management’s top priority: ending externalities
Ethical Markets Media welcomes Earth Day 2016 with a stunning new total for its Green Transition Scoreboard® (GTS). As of Q4 2015, the GTS totals $7.13 TRILLION cumulative in non-government investments and commitments tracked since 2007 in the global green transition now underway. The 2016 report, “Ending Externalities: Full-Spectrum Accounting Clarifies Transition Management“, focuses on the top priority: ending “externalities” which the IMF estimates at $5.3 trillion annually worldwide. Companies tracked since 2007 by the GTS are those avoiding negative externalities and focusing on transition management to low-carbon economies agreed by 195 member countries of the United Nations’ Sustainable Development Goals (SDGs) and the COP21 climate agreements in Paris in 2015.
Each GTS sector covers substantial capital investment in areas which Ethical Market’s president and founder Hazel Henderson’s years of research as a science advisor and which the Ethical Markets Advisory Board expertise indicate are strongly contributing to the growing green economy. The GTS tracks Renewable Energy, Energy Efficiency, Life Systems, Green Construction and Corporate Green R&D, representing broad areas of investment in green technologies. Life Systems gained a new category: Fintech for sustainability, including peer-to-peer lending and crowdfunding, in addition to other sub-sectors tracking the system-wide interconnections among information and digitization, water, food, education and health.
“The upward trend in investments since 2007 aligns with our recommendation to invest at least 10% of institutional portfolios directly in companies driving the global Green Transition,” says Henderson. Updating strategic asset allocation models serves both as opportunities and as risk mitigation. Excluding government investments to the extent possible, the $7.13 trillion in private investments and commitments as of 2015 puts private investors on track to reach $10 trillion in green sector investments by 2020.
Ethical Markets strictly defines ‘green’ by omitting technologies such as nuclear, clean coal and most biofuels while carefully assessing rapidly advancing technologies such as nanotech and IoT (Internet of Things). Sources of financial data are screened by rigorous social, environment and ethical auditing standards.
Renewable Energy – Growing strongly as fossil fuel becomes less appealing in light of cost parity of renewables, limiting carbon emissions and driving evolution to sustainable societies.
Energy Efficiency – Widespread ripple effects positively impact jobs creation, manufacturing and other metrics tracked by traditional GDP and integral to transition management, quality of life metrics reported in Life Systems.
Life Systems – Encompasses broad areas systemically linked, including water, remediation, waste and recycling, green infrastructure and info-structure, education, community investing and the myriad of digitization opportunities and obstacles, investments often overlooked as too small, such as the Fintech 100, 2015.
Green Construction – This sector ranges from “low-tech” passive solar buildings to “high-tech” flow 3D printing. For consistency, we omit labor, thus undercounting a form of capital which intrinsically increases the value of green construction.
Corporate Green R&D – Powered by the automotive industry, this sector is also heavily weighted in favor of energy generation, conservation and distribution with a precipitous decline in fossil fuels P&E.
Ethical Markets Media (USA and Brazil), Certified B Corporation, is a micro-multinational social enterprise with the mission of reforming markets and metrics while helping accelerate and track the transition to the green economy worldwide with the Green Transition Scoreboard®, Ethical Biomimicry Finance®, Transforming Finance TV Series and research and daily news at www.ethicalmarkets.com
Impact investing reputation brings record sales years
For the first time in its 21-year history, Praxis Mutual Funds® reached $1 billion in assets under management on March 30, 2016. This achievement marks a significant step in cementing its reputation in the social investment industry as a fund family that offers both positive impact and strong financial performance.
“Praxis’ long-standing commitments to economic inclusion through community development investing, proactive investment in green and positive impact bonds, transformative corporate engagement and the integration of values-based screening places us at the forefront of many impact investing trends,” said Mark Regier, Praxis Mutual Funds Director of Sales and Everence® Vice President of Stewardship Investing. “Developed from an Anabaptist faith perspective, the fund family has grown to appeal to faith-based and socially conscious investors of many persuasions.”
This milestone caps record sales in 2014 and 2015, and first-quarter sales put the funds on pace for an even better year in 2016. These figures demonstrate the growing appreciation for investments that make a difference.
“Praxis’ success today has been built on the solid foundations laid by leaders and staff over the years,” said Chad Horning, President of Praxis Mutual Funds and Everence Chief Investment Officer. “Their vision for impact investing was critical in getting us to this milestone and will be important to our growth long into the future.”
In recent years, there has been a substantial increase in Praxis sales from investors coming through platforms such as Merrill Lynch, Ameriprise, Envoy Financial, LPL Financial and First Affirmative, recognizing the importance of investments that make a difference.
“Crossing the $1 billion threshold represents a coming-of-age event for a mutual fund family,” said Benjamin Bailey, Senior Fixed Income Manager, Praxis Mutual Funds. “We are grateful for the trust our shareholders have placed in us – to not only provide for their financial future, but to actively represent their drive for positive change in our world.”
The Fund’s stewardship investing strategy could cause the fund to sell or avoid securities that may subsequently perform well, and the application of social screens may cause the fund to lag the performance of its index.
You should consider the fund’s investment objectives, risks, charges and expenses carefully before you invest. The fund’s prospectus and summary prospectus contain this and other information. Call (800) 977-2947 or visit www.praxismutualfunds.com for a prospectus, which you should read carefully before you invest. Praxis Mutual Funds are advised by Everence Capital Management and distributed through BHIL Distributors Inc., member FINRA/SIPC. Investment products offered are not FDIC insured, may lose value, and have no bank guarantee.
When Shelton Capital Management launched the Fund, Garvin Jabusch, Chief Investment Officer of Green Alpha Advisors (sub-advisor to the Fund) penned the paper, Redefining Sustainable and Responsible Investing, to define the unique next economy investment philosophy by which the Fund seeks to deliver shareholder value earned in the critical and necessary process of balancing the world economy and Earth’s environment.
Green Alpha Advisors investment philosophy and methodology has remained the same, but the world has changed, so Garvin has updated Redefining Sustainable and Responsible Investing to better reflect the landscape of 2016.
For more information about the Shelton Green Alpha Fund, please call 800-955-9988 or request updated information from Suzanne Taylor at Shelton Capital Management at- firstname.lastname@example.org
by Claire Mesesan, communications manager at Iroquois Valley Farms
“Women are leading the way in sustainable and organic agriculture,” according to Lindsay Lusher Shute, Executive Director of National Young Farmers Coalition – and why shouldn’t they be? Young Farmer Land Access Program Director for Iroquois Valley Farms and former Executive Director of Practical Farmers of Iowa (PFI), Teresa Opheim, shares that in her work at PFI, “almost half of the young farmers are women – they are bringing their commitment, skills, and a new vibrancy to agriculture in Iowa and all over the country.” Sustainable, organic farming creates meaningful work that allows people to live out their values. Organic agriculture allows people to participate in a local, healthy economy while restoring the land. While women are certainly well represented within the small-scale organic community, there are fewer stories of women involved in mid-scale organic agriculture.
Enter Iroquois Valley Farms – a farmland finance company dedicated to providing land access to mid-size organic family farmers. Iroquois Valley Farms currently owns 30 farms in eight states (holding over 4,000 acres) and leases to 70 percent millennial farmer tenants. The company relies on impact investors to provide capital for land access opportunities; in turn, Iroquois Valley farmers rely on the company to be reactive to their needs and support them, especially during the transition to organic years. Now offering farmland financing in addition to leasing, Iroquois Valley Farms is a triple bottom line company connecting investors to local and organic food producers. Here are a few stories of some of the women in Iroquois Valley’s farm families sharing how they participate in the organic movement.
Raya Carr grew up in a farming family in central Illinois; her father, Harry Carr, runs Mint Creek Farm, a diversified organic pastured livestock operation. Her brother, Jonathon, is the farm production manager and accountant, and she is the sales manager (which incorporates their popular community supported agriculture program – CSA). As sales manager, Raya works to directly market Mint Creek’s products through Chicago area farmers markets, CSA deliveries, and through the farm’s website. In fact, Raya is supported by a team of three women who ensure that Mint Creek Farm’s sales, marketing, and distribution run smoothly. “I am proud to be a part of the organic movement because counter-acting unhealthy, destructive farming methods is what it’s all about. On top of that, the organic movement is about keeping our community, ecosystems, and natural resources healthy.” As the millennial face of Mint Creek Farm at market, Raya connects with and builds their customer base. Mint Creek’s CSA program provides essential revenue and working capital for the entire operation.
Iroquois Valley Farms completed its first refinancing project in February with Mint Creek Farm. While organic products may seem readily available, support for organic farmers is harder to come by. Truly prioritizing sustainable, organic agriculture would require the financial industry and policy to change; currently conventional agriculture is still subsidized by both the government and banks. Meanwhile, demand for organic agriculture is only increasing, leaving farmers with few options. “I cannot stress enough how important Iroquois Valley Farms’ involvement, guidance, and financing support has to been to our family farm. Financing can be very hard to get for the farmers focused on organic, holistic, diversified farming methods. It is incomprehensible to those that are conventionally minded and come from mono-culture corn and beans farming backgrounds.” Raya and her family’s vision for their farm relies on growing their business to meet the growing demand of their customers. Raya sees Mint Creek Farm growing alongside an improved local ecosystem and active community.
2016 marks the first Western purchase in the Company’s nine-year history – a parcel in northern Montana for the owners and operators of Vilicus Farms. Anna Jones-Crabtree, one half of the business, “is motivated to create a more sustainable way to inhabit this one planet, given the realities of climate change.” As true land stewards and conservationists, Anna and her husband Doug, believe that “organic and sustainable agriculture represents a way to spur other helpful outcomes for [the] world – to grow community and collaboration, to participate in and grow local economies, to restore natural systems, and do well for the earth and thus ourselves.”
A civil and environmental engineer by trade, Anna entered organic agriculture when she was forty and brought her sustainable systems approach to the field. She and Doug are first generation farmers and are understandably passionate about helping other beginning farmers. Accordingly, they run an apprenticeship program on Vilicus Farms, which is committed to modeling agricultural land stewardship at a scale that matters, and to developing a community of like-minded farmers who share their vision. With their focus on land stewardship and conservation, Anna and Doug recognize that organic agriculture is not the end-all and be-all; there must be innovation in sustainability to really consider the farm as an integrated system within the greater environment. This translates to the way they lay out crop strips to minimize wind erosion and their extensive planting for pollinators. In the future, they want to expand their apprentice program to include other mentors and work to become net positive in their energy use at the farm headquarters.
Indiana is home to the Ambrioles – the family that holds the most amount of property with Iroquois Valley Farms. In addition to their diversified row crop operation, the Ambrioles have created a lifestyle around sustainability. Catie Ambriole homesteads, each year growing a garden that provides fruits and vegetables throughout the year (and even raising goats for milk and cheese), while her husband Andy focuses on the grain operation. Catie’s emphasis on creating a diverse, self-sustaining system through homesteading prioritizes soil health on a small scale, while Andy works to produce healthy food through cash crop farming on a larger scale. The need for healthy soil in both operations is essential. Both Catie and Andy come from farming families and participated in 4H while in high school. Catie is proud to be able to show her daughters how organic farming “preserves the soil better and will create healthier ground for them in the future.” By using organic methods, they can grow more with less. Catie believes that although they are the minority (all of their neighbors farm conventionally), organics are catching on – “hopefully, people are seeing that healthier soils are leading to healthier foods.”
As a triple bottom line company, Iroquois Valley Farms prioritizes not only financial returns, but social and environmental impacts as well. In truth, a healthy environmental movement must support the people working to achieve healthier food systems and ecosystems. Sustainable, organic agriculture creates a path to a brighter future – for farmer innovators, for inspired consumers, for healthier and more active pollinators and insects – and most importantly, for the land itself. The women interviewed for this piece all recognized and spoke to the power of organic agriculture to heal and create more inclusive opportunities to do better – not just in business, but for the world and for ourselves.
About Iroqouis Valley Farms Iroquois Valley Farms has a private debt and equity offering open to accredited investors until June 30, 2016. To learn more about making an impact investment with us, please visit our website at www.iroquoisvalleyfarms.com . Supporting organic family farmers since 2007.
Article by Claire Mesesan, communications manager at Iroquois Valley Farms. Claire completed her bachelor’s degrees in Philosophy and French from Loyola University Chicago in 2014. Within philosophy, Claire gravitated toward the fields of environmental and agricultural ethics. After graduation, Claire spent a year in Madison, WI working as an AmeriCorps Farm-to-School educator. She joined Iroquois Valley Farms as Communications Manager in 2015, where her work contributes to creating a more sustainable, just, and empowering food system. Claire resides in Chicago where she spends her free time creating urban garden spaces and art.
Largest dollar gain ever for booming organic sector even with supply challenges, says OTA survey
The booming U.S. organic industry posted new records in 2015, with total organic product sales hitting a new benchmark of $43.3 billion, up a robust 11 percent from the previous year’s record level and far outstripping the overall food market’s growth rate of 3 percent, according to the Organic Trade Association’s 2016 Organic Industry Survey.
The industry saw its largest annual dollar gain ever in 2015, adding $4.2 billion in sales, up from the $3.9 billion in new sales recorded in 2014. Of the $43.3 billion in total organic sales, $39.7 billion were organic food sales, up 11 percent from the previous year, and non-food organic products accounted for $3.6 billion, up 13 percent. Nearly 5 percent of all food sold in the U.S. is organic.
2015 was a year of significant growth for the industry despite the continued struggle to meet the seemingly unquenchable consumer demand for organic. Supply issues persisted to dominate the industry, as organic production in the U.S. lagged behind consumption. In response, the organic industry came together in creative and proactive ways to address the supply challenge, to improve and develop infrastructure, and to advocate for policy to advance the sector.
“The industry joined in collaborative ways to invest in infrastructure and education, and individual companies invested in their own supply chains to ensure a dependable stream of organic products for the consumer. Despite all the challenges, the organic industry saw its largest dollar growth ever. Organic will continue to be the most meaningful farm-to-fork — and fiber — system,” said OTA’s CEO and Executive Director Laura Batcha.
Produce the Gateway to Organic
Organic produce retained its longstanding spot as the largest of all the organic categories with sales of $14.4 billion, up 10.6 percent. Produce has always been and continues to be a gateway to organic. It’s easy for shoppers to make the connection between agricultural practices used in the field and the fresh fruit or vegetables they bite into. Almost 13 percent of the produce sold in this country is now organic.
The demand for fresh organic was most evident in the continued growth of “fresh juices and drinks,” which saw explosive growth of 33.5 percent in 2015, making it the fastest-growing of all the organic subcategories. The fastest-growing of the eight major organic categories was condiments, which crossed the $1 billion mark in sales for the first time in 2015, on 18.5 percent growth.
Dairy, the second biggest organic food category, accounted for $6.0 billion in sales, an increase of over 10 percent. Dairy accounts for 15 percent of total organic food sales.
“Farm fresh foods—produce and dairy—are driving the market. Together, they account for more than half of total organic food sales,” Batcha observed. “The organic market looks like a healthy plate.”
That said, Americans still like to snack, and more and more of us are snacking organically. Also seeing a big growth in sales in 2014 – and more than triple the level of just 10 years ago — was the organic snack food category, with sales of $2.3 billion, up almost 14 percent from 2014.
Consumers are not just eating organic, they are incorporating more into their total lifestyle. Organic non-food products continue to gain in popularity. Even though non-food products account for just 8.2% of overall organic sales, the almost 13 percent growth rate in the sales of organic non-food products outpaces the growth rate in organic food, as well as the overall growth of comparable products, primarily conventional, which inched up by a mere 2.8%. Growth in the non-food category was led by organic fiber, followed closely by organic supplements.
More accessible, but challenges persist in supply chain
Increased consumer demand for organic products in 2015 could also be attributed to greater access to these products from mainstream retailers. As supermarkets, big box stores, membership warehouse clubs, and other outlets continued to up their organic offerings, organic options have become more available than ever before.
The growth in the organic market, however, did not come without continued challenges to the supply chain. Dairy and grains were two areas where growth could have been even more robust in 2015 if greater supply had been available. There is an industry-wide understanding of the need to build a secure supply chain that can support demand. This goes hand-in-hand with securing more organic acreage, developing programs to help farmers transition to organic, and encouraging new farmers to farm organically.
Some companies are dealing with these supply issues individually. Meanwhile, others are working together to address this concern. One example is the U.S. Organic Grain Collaborative, whose members include Annie’s, Stonyfield, Organic Valley, Clif Bar, Nature’s Path and Grain Millers, among others. On the fiber side, 2015 saw the creation of OTA’s Organic Fiber Council, which includes members from across the organic fiber industry, and whose focus is to increase the awareness of the benefits of organic fibers and to encourage more organic cotton acreage in the U.S.
Despite strategic challenges, OTA’s Batcha is confident about the industry’s future prospects. “Organic is a bright spot in agriculture and the economy of America. Our success will continue to be built on a solid foundation of stakeholder engagement, transparency and meaningful organic standards that consumers trust in.”
OTA’s 2016 Organic Industry Survey was conducted and produced on behalf of OTA by Nutrition Business Journal (NBJ). The survey was conducted from January 7, 2016, through March 25, 2016. More than 200 companies responded to the survey.
The Organic Trade Association (OTA) is the membership-based business association for organic agriculture and products in North America. OTA is the leading voice for the organic trade in the United States, representing over 8,500 organic businesses across 50 states. Its members include growers, shippers, processors, certifiers, farmers’ associations, distributors, importers, exporters, consultants, retailers and others. OTA’s Board of Directors is democratically elected by its members. OTA’s mission is to promote and protect ORGANIC with a unifying voice that serves and engages its diverse members from farm to marketplace. For more information at- www.ota.com
by Harn Soper, founder of Sustainable Farm Partners
In order to understand how we arrived at today’s food system and the opportunity to expand into organics, some history is in order.
Prior to World War II the food economy in the US was typified by organic market gardens and small grocery stores that carried fewer than 500 items. Self-sufficiency was a necessity as the economic grip of the Great Depression remained. The food supply was local and the average farm size was 157 acres.
World War II changed everything, laying the foundation for today’s industrial food economy. With the need to feed millions of soldiers, packaged food production went into high gear. K-rations, a soldier’s staple, were the precursor to post WWII packaged foods. We went from K-rations to TV dinners.
And the manufacture of ammonium nitrate used in making bombs was redirected into making the synthetic fertilizers widely used today throughout our chemical-based system of agriculture.
With today’s food production and global distribution infrastructure in place, the average grocery store now carries over 42,000 items and the average size of an Iowa farm is 441 acres.
In 1971, President Richard Nixon appointed Earl Butz as Secretary of Agriculture with the explicit goal to lower the cost of food. With government support, his solution was to industrialize American farms, calling farmers to either “Get big or get out”.
But bigger farms meant fewer family farms. Their loss contributed to the decline of rural economies, causing businesses to close and beginning the ghettoization of rural America.
Then, in 1995, genetically modified (GM) corn was introduced. Through genetic modification, the herbicide, Bacillus Thuringiensis (BT) was inserted into every cell of a corn plant enabling the plant to kill the pests that fed on it. This was followed by more GM traits that made the plant resistant to the herbicide Glyphosate, marketed under the name Roundup. Glyphosate would kill weeds but not the desired GM treated plant. Glyphosate is now the predominant weed killer used by the world’s agriculture.
Today there are four major crop categories that are genetically modified to resist glyphosate: corn, soybeans, canola and cotton. Glyphosate is also used by many wheat farmers to kill their wheat crop early before harvest.
In 1990 Congress passed the Organic Foods Production Act that legally defined what constituted organic farming practices. In 2000 the USDA promulgated regulations establishing the National Organic Program. When followed, a food could display the USDA Certified Organic seal.
Organic sales have grown from $1 billion in 1990 to over $40 billion today.
The debate is raging about the safety of Glyphosate (Roundup) and GM foods in general. Research has been mounting about how GM crops and associated farming practices have sickened our soil and contributed to climate change. A new understanding is emerging about how poor soil health impacts both our health and our wealth.
Organic farming is the only farming practice regulated by law, prohibiting the use of synthetic herbicides, pesticides, fertilizers and genetically modified seeds. Organic farming succeeds by working with nature to restore healthy soil and re-establish the symbiotic relationship between plants, soil, water and sunlight. To put the organic seal on a crop, a farmer is held to the strict letter of the law and re-certified annually.
Organic food is now mainstreaming with ever-increasing demand from key demographic segments lead by both moms and millennials. Using 2014 US data, America imported eight times the quantity of organics that it exported (mainly grains). US demand for organic products far exceeds the supply, creating a clear opportunity to invest in organic farming.
Sustainable living is key to our future. The three covenants of Sustainability must benefit People, our Planet and be Profitable:
People – The double-digit growth in demand for organic food is driven by consumer interest in healthier and more nutritious food. To quote Hypocrites, the Hippocratic oath every doctor takes, “Let food be thy medicine and medicine be thy food”. Growing healthy organic food supports human health in many ways.
Planet – At a time when there is a need to be proactive in reversing climate change it is understood that human behavior does have an impact … both ways. Agriculture and climate change are interrelated processes. Farming is a direct contributor to climate change and is directly impacted by the adverse weather it produces. Organic farming practices promote carbon capture in soil. Research conducted by SFP board advisor, David Johnson (PhD soil biologist at UNM), while working on a Sandia Lab’s Mars Curiosity rover’s carbon-measuring equipment, reported “The rate of biomass production we are currently observing in this system has the capability to capture enough CO2 emissions on less than 11 percent of world cropland.” As reported in Kristin Ohlson’s book “The Soil Will Save Us,” this means that if only 11 percent of the world’s cropland improved its community of soil organisms as much as Johnson did in his organic test plots, the amount of carbon sequestered in the soil would offset all our current emissions of carbon dioxide.
Profit – Profitability is the third covenant to sustainability. If a process takes more than it gives in return it isn’t sustainable. The difference in the profitability of conventional GM farming versus organic farming is clear. For example, in 2014 when my family’s farms last grew organic corn, we received $12/bushel compared to the Iowa average for conventional GM corn at $3.50/bushel; and our yields were comparable to Iowa’s conventional corn yields. In 2015, our organic oats sold for $7/bushel versus conventional oats selling for $2.85, while our crop broke yield records.
Laying the Foundation for Sustainable Farm Partners
Beginning in 2010 in NW Iowa, my family farms began the transition of our first farm from conventional GM corn & soybeans to organic corn & oats. The financial impact was dramatic. This chart summarizes the results over an eight-year period before, during and after as we transitioned. Our net operating income averaged an increase of 290%.
At the same time our input costs fell by as much as 40% without the need for expensive patented seed or synthetic inputs.
The overall asset appreciation of our farmland outperformed the Dow Jones Industrial Average (DJIA). From 1994 to 2014 the DJIA grew 464% from 3,834 to 17,823. Iowa farmland value grew 586% from an average $1,356/acre to $7,943/acre.
Sustainable Farm Partners, LLP Invests in Iowa Farmland – Our focus is on large-scale production of organic grains. Our organic farming model has been developed over the past decade from experience on our own farms. And our organic farm teams are geographically spread out across Iowa where there is the best farmland available.
Where We Farm Matters – Our farmland focus is where the best soil can be found and where there is adequate precipitation for farming (28” to 32”) per year. Irrigation is generally not a sustainable water source and its use should be minimized. This precipitation map from NOAA clarifies the best locations for North American agriculture.
How We Farm Matters – Our organic crop rotation achieves multiple benefits in mitigating weeds, better nutrient management and natural pest control. No-till planting and residue left in place from the previous harvest returns nutrients and covers soil to mitigate erosion.
What We Farm Matters – Our focus on organic grains goes hand-in-hand with crop rotation. We plant corn then alternate with a hay crop of oats, alfalfa and clover. These crops command high market prices and support each other’s nutrient needs.
The innovation in organic farming is in applying the power of nature.
Our Organic Production Team – Our relationship with our organic farm team is critical, working together on a crop share basis. Our operators, farming across the state of Iowa, provide the labor, equipment and fuel and we provide the ground and share in expenses. Everyone has skin in the game and is aligned for success.
Exit – Our ten-year horizon on the investment forecasts double-digit returns. Unique to our program, we offer right of first refusal to our organic operators to purchase the farms at market prices. This builds a knowledgeable buyer into the exit while enabling our farm partners to increase their farm equity.
Easements – Sustainable Farm Partners is also pursuing a program to put each farm into a “Regenerative Farming Easement.” Unique to our efforts, this easement is structured in parallel with organic standards but not tied to organic standards that may change over time. Through some USDA Agricultural programs it is possible to receive direct payments for these easements. There is also an opportunity to receive tax credits for our investors. SFP is breaking new ground in pursuing our Regenerative Farming Easement program and we will provide updates as we move forward.
We’ve only scratched the surface of organic farming and markets. For details on investing with Sustainable Farm Partners, contact:
Article by Harn Soper, founder of Sustainable Farm Partners, LLP (SFP) (www.SustainableFarmPartners.com) investing in farmland with hands-on management, converting conventional farmland to scalable organic row crops. His family farms in Iowa are the genesis for SFP. Harn also serves on the board of the Organic Farming Research Foundation (www.ofrf.org) and as an industry advisor to the Non-GMO Working Group under the auspices of Green America (www.greenamerica.org).
by Kenneth Lander, chief sustainability officer and co-founder Thrive Farmers
When you talk with coffee farmers about sustainability in Central America, the conversation always turns to money.
It’s noble to talk about using more sustainable agricultural practices, treating workers better, reforestation and investing in the future business opportunities of a farm. But if you are a coffee farmer coming in for lunch, the first thing you see through your kitchen window are the people you love sitting around the table enjoying a cup of coffee and waiting to share a meal with you. If you can’t support them with the income of the family farm, then you probably need to find something else to do to make sure that the kitchen table has food, and the people around it are taken care of first.
After sitting around countless coffee farmers’ kitchen tables, Thrive Farmers is transforming the coffee industry. Inevitably, the economic realities of coffee farming surfaced in these conversations and we had trouble finding resolution. We found that unless you help the farmer solve these economic hurdles, other changes you wish to see in their communities or in the environment are neither feasible nor sustainable.
The greatest enemy of a coffee farmer, even more than global warming, fungus or drought, is the volatile commodities market in which he or she doesn’t know what the price of a crop will be from one day to the next. Pair that with an ever-increasing cost of production and all the other normal risks a farmer faces, and you have a valid excuse for farmers, and more importantly their children, to leave coffee farming in search of an easier and more stable means to put food on the kitchen table.
So, how does Thrive Farmers offer coffee farmers something different?
We’ve all watched coffee prices tick upward in grocery stores and coffee shops in recent years. It’s clear that consumers want great coffee, and are willing to pay for it. The demand is actually growing year over year, even resisting economic downturns in the marketplace.
In its most simple explanation, Thrive Farmers shares with farmers the revenue generated from consumers. This price is consistent and predictable, and it is higher than that which global coffee traders set on any given day in the New York commodities market.
We also know that demand for a socially sustainable coffee option is growing for both corporations and everyday consumers. Through Thrive Farmers, consumers not only receive farmer-direct coffee, they also have the ability to support coffee farmers directly with each purchase.
Companies can have a lasting impact on coffee farming communities around the world by purposefully choosing to purchase basic items, like coffee, through a more transparent model. This integrates Corporate Social Responsibility (CSR) into necessary spending. By simply directing budgeted dollars to a product that has a more tangible and traceable impact, companies can bring a CSR commitment and message to employees at the most basic level.
Once farmers can wake up without the concern of an unpredictable income, they can begin to think proactively about all aspects of their work, including sustainability.
Proactive investment usually begins with a focus on the health and education of their families. Once basic needs like food and education are stable farmers can adjust priorities toward investing in their farms, which for the first time make sense as a business. With a properly functioning business, thoughts and resources pour into the actual quality of the product. The farmers’ kitchen-table conversations shift toward satisfying the coffee drinkers on the other side of the ocean. They genuinely want that coffee to taste better every day! This has an exponential effect economically because better quality coffee results in a better price and higher value to the consumer marketplace.
Establishing the positive cycle of predictable, stable and higher prices also allows farmers to invest more in their business operations. When farmers see that consumers value best social and environmental practices, they are more willing to invest in and protect their human and environmental resources. We have seen farmers turn their attentions toward their workers, their neighbors, their community and their environment, results of a firm economic foundation.
Enrique Ferrufino, the next-generation leader of one of our farming families in Nicaragua, is not a smallholder farmer. However, his family farms are surrounded by smallholder farmers who benefit from their family operations.
Because of scale, the Ferrufino’s have access to markets, and with Thrive Farmers, even better access and more stable and predictable pricing. The Ferrufino’s have seen a direct connection between good economics of coffee, the quality of the cup and the social and environmental impact that a good coffee business can have not only for themselves, but also for their neighbors who benefit from the family efforts.
Environmentally, the Ferrufinos principally focus on soil conservation in the land they use to produce coffee. They see value in teaching those practices to their neighbors. It helps the quality of the coffee and the environment at the same time.
The farm is also exploring energy renovation projects such as bio-digestion and hydroelectricity while conducting reforestation projects in many areas. These projects help the common environment with their neighbors and create a culture of sustainability in the area.
Admittedly, it is hard work to maintain sustainable practices year after year, while striving to produce more and better quality coffee. Enrique has a hands-on approach to achieve these goals. He employs assistants to supervise and support the neighboring farmers in their commitment to sustainability throughout the cultivation process, and in daily life as members of the same community.
The Ferrufino story drives home a fundamental point about sustainable agriculture. Until the conversation around the kitchen table moves beyond the question of money, survival and meeting the basic needs, there can be no true sustainability in agriculture. Unless and until the next generation around that table decides to stay and raise their families on heirloom farms, there is no true sustainability in agriculture.
Integrating sustainability into your business begins one step at a time. THRIVE Farmers provides an opportunity to bring sustainability into the daily practices of your business and around your kitchen table with something as simple as a cup of coffee. We want to empower coffee drinkers to make sure that farmers wake up each morning with the incentive to grow that next cup of coffee for you. That satisfaction is sweet.
Article by Kenneth Lander, Chief Sustainability Office and Co-Founder of THRIVE Farmers (www.thrivefarmers.com). As a retired trial lawyer from Georgia, Ken has extensive experience in advocating client’s interests on long-term projects as well as in complicated litigation in both the private and public sectors. After 14 years of the practice of law, Ken decided to move with the entire family to a coffee farm in Costa Rica. With the transition from trial lawyer to coffee farmer, Ken quickly began to understand the injustices that farmers face in the current value chain of coffee.
With the combination of Ken’s never failing passion for advocacy and his new found vocation as a coffee farmer, Ken decided to make the case for the coffee farmer and to reveal the truth about your morning cup. THRIVE Farmers is the direct result of Ken starting the San Rafael Sustainable Coffee Initiative in mid-2010 with other farmers in his coffee-growing community. The SRSCI became the initial local platform and test case for the farmer in San Rafael. THRIVE Farmers was the natural next leap to take the case of the coffee farmer to the entire world.
As Chief Sustainability Officer of THRIVE Farmers, Ken seeks to find, advocate and project the voice of the farmer and to tell the world that a new day has come in the world of coffee. His passion to stand and advocate on behalf of his fellow coffee farmers has found its place in THRIVE Farmers.
Prior to law and farming, Ken was a marketing director with Feld Entertainment, Inc. working in public relations and marketing for Ringling Brothers and Barnum & Bailey Circus and Walt Disney’s World on Ice.
There is no coincidence in life, only Providence. A past experience in public relations, the practice of law, the passion for advocacy, and now coffee farming all are being brought to bear in Ken’s life to make THRIVE Farmers the connection between the coffee farmer and the lover of coffee.
By Suzan Erem, president of the Sustainable Iowa Land Trust
When Slow Money founder Woody Tasch asked me in June 2014 why the Sustainable Iowa Land Trust (SILT) hadn’t applied to the entrepreneur’s showcase yet, I used my best deadpan voice.
“Because we’re not entrepreneurs, Woody. We’re a nonprofit.”
I soon learned that we can and must bridge that gap. That was the day SILT rocked the house with our story and 800 Slow Money supporters voted to give us an interest-free loan in the “Beetcoin” campaign.
“We want to invest in SILT!” people said as they patted me on the back.
“The money’s going to come…soon, you’ll see!”
But it didn’t. And it couldn’t. These folks weren’t interested in giving their money away, so how could they invest in our 501c3 nonprofit? In this massive land transfer race, could impact investors provide the tailwind we need to protect Iowa land to grow healthy food?
My husband, Paul, and I retired back to Iowa in 2010. We were acquainting ourselves with 80 acres we’d bought years before, learning how to restore prairie and improve neglected timber. But when we looked beyond our little slice of heaven, we saw that feed corn and soybeans blanketed the countryside and “hog barns” now housed up to 13,000 porkers at a time.
Soon no one would remember growing up among family farms, helping each other out, watching their community evolve and grow. My husband and I don’t have those kinds of roots, but we witness the benefits of them every day in the small towns that are still hanging on. I often envy them.
We joined Worldwide Opportunities on Organic Farms (WWOOF) and Practical Farmers of Iowa. We hosted dozens of aspiring farmers every summer. Almost every one of them was talented, hardworking and smart. And not one of them would ever own land. Their chances of finding a retiring farmer who’d pass on his land affordably to them was just that – random chance. Even Iowa farm kids were expected to buy out their non-farming siblings at market rates.
Inspired, we decided to purchase some land to preserve and we’d get a second bite of the apple by putting a beginning sustainable food farmer on it. Iowa grows ethanol, feed and corn syrup, but imports 90 percent of its food, so this kind of farming is uncommon here. We found a guy who wanted to grow fruit, nuts and livestock in a way that mimicked nature. We bought him a farm he’ll buy from us for the same price when he can pull together $1 million of credit. Still, four years into it, $31,000 each year goes just to interest on 65 acres’ worth of debt, an annual income well beyond most beginning farmers.
He wanted this land because it was close to a university town, but that meant it’s slated for development. So we planned to put a conservation easement on it while we still owned it, to keep our “young farmer” from cashing out in 30 years. This was our legacy after all. We didn’t want 30,000 fruit trees, and fertile land that had nurtured happy animals getting paved over for one person’s very sweet retirement. Protection meant the next farmer wouldn’t need the sheer luck our guy had struck finding us. Random chance would drop out of the equation. The easement would reduce the cost and require food production. Anyone willing and able to farm it could. Permanent protection takes land speculation off the table. This and the mortgage interest puzzle were the strings we started to pull.
Coming Across a Crisis
I knew one quick call to Iowa’s biggest land trust and we’d be done. “Hello? I’d like to talk to someone about permanently protecting a farm….Yes, we want it to stay in farming, but, well…it’s not your normal … Yes, as a farm. We’ll donate the easement…But it’s like a giant orchard ….You don’t? But…well…OK. Do you know anyone who does?”
I called every conservation and farm group in the country I could find. No one would protect the land and the food-producing perennials on it. We couldn’t find any basic market streams of money flowing into family-scale farmland ventures. No one would finance our loan, for example, when we admitted it was for food. Not corn and bean? They’d hang up. Zooming out, we saw the farm to fork movement growing exponentially, but no one cared what happened when a retiring market farmer sold his land to developers, forcing the next farmer to travel that much farther to her market. No one appreciated that this local food movement they loved starts with land, ends with waste and needs access to capital to survive. If we didn’t wake up soon, the local food movement would become just another fad, and everyone would wonder why their farmers market had shriveled up.
That began two years of conversations with farm and food advocates, planners, legislators, academics, environmentalists, young farmers, businesspeople, lawyers, and developers. We explored LLCs, LLPs, LLLPs, family trusts, bank trusts and restrictive covenants. We concluded that a nonprofit land trust was the only way to create a permanent, structural solution to serious structural problems – land speculation’s devastating effects on Iowa’s healthy food supply, environment and opportunities for young people and mortgage interest that sucks those farmers dry from Day 1. The Sustainable Iowa Land Trust was born, and there we were, the belle of the ball at the Slow Money National Gathering.
The Investor Puzzle
Leaving the Slow Money gathering, Paul and I now imagined new possibilities. The clock’s ticking. An estimated $150 billion of Iowa land is going to change hands in the next 20 years, leading the trend of the 60 percent of all farmers retiring by 2020. But Iowa has one billionaire and a handful of millionaires and we didn’t know any of them. We couldn’t protect all the land we needed to with the little money we had. We needed to get innovative fast.
Two years into it, my education had just begun. The gathering introduced me to a veritable business brain trust. From E.F. Schumacher, I learned about nonprofit, wholly owned title holding companies. (This model also allows us to spin off Community Land Trusts later.) RSF Social Finance taught me about interrelated c3s, c2s and for-profits. Sustainable Farm Partners warned me about Iowa’s anti-corporate farming law limiting land ownership by private investors. Iroquois Valley Partners and others said not to underestimate the challenge of matching farmers with farms. Talking to Villicus while driving Iowa’s backroads, we came upon the idea of a related for-profit farm management company. That was it!
During our first year, the solution evolved as SILT accumulated experience – 40 landowners are now discussing donating more than 4,000 acres of land or easements to grow healthy food. Another 3,000 acres of organic corn are in the queue. We’ve already acquired two farms and matched one with next generation farmers. We’re building a solid, statewide organization that’s turning heads with a model Iowans have never seen. But altruism only goes so far, and landowners have questions. Where will their rent come from if they cancel the lease with their corn farmer? What else could their land grow? Who will help them? They hesitate for good reason. We needed to reduce their risk and monetize their benefits. SILT is in the perfect position to do so.
Our Ground Game
This year, we plan to launch SILT Farm Management, designed to:
• manage farm income and outflows,
• promote SILT farms nationally to sustainable food farmers,
• partner with private contractors to provide landowner services on SILT-eased land,
• purchase, protect and sell land to sustainable food farmers. With enough resources we could strategically target purchases that help build SILT farm communities.
• build a trademarked SILT farm brand of products with royalties,
• help build cooperative enterprises,
• offer private-sector solutions to Iowa’s water quality challenge.
Why invest in SILT Farm Management?
• We’ve identified a market. Scores of Iowans already have already volunteered to reduce the value of their land just to make fresh, natural food a permanent part of the landscape, yet foundations and governments have not caught up or caught on.
• Profitable models exist. Farm management is a successful industry, so why not a company dedicated solely to SILT properties?
• SILT marries conservation with food farming to produce opportunity. Impact investors know the power of patient capital in both. When we secure land for this kind of farming, we create a permanent solution that provides multiple community benefit returns on investment (CBROI)
• increases the supply of fresh food, improving public health,
• improves water and soil quality through diverse, job-creating, food producing buffers,
• offers a community-based alternative to our current agribusiness model, right in the belly of the industrial ag beast
• supports generations of food farmers locked out by land prices,
• rebuilds rural communities,
• builds a system from the ground up that grows tomatoes instead of Twinkies,
• creates a replicable model.
Ground-truthing: How much, for how long, for what Return on Investment (ROI) or (CBROI)?
Start-up capital will allow us to hire a small staff and provide overhead for 5 years: a land specialist with real estate license, a marketer and an administrative assistant, bringing legal in house as soon as feasible. It’s economies of scale: The sooner our footprint grows, the faster we access steadily increasing consulting, marketing and land transaction revenue streams with a visibility byproduct that aids our 501c3. By year seven we expect to service enough farmland to turn a profit and begin repaying investors ending in year 15. By year 16, profits begin supporting the 501c3. Meanwhile, our 501c3 will continue educating the public and receiving land and easement donations. We must generate enthusiasm to seed our endowment. “In perpetuity” is a long time, but it’s the promise we make. This plan brings investors and philanthropists together to fulfill that promise.SILT leadership includes farming, nonprofit, real estate and legal expertise, but we lack the business, finance and Slow Money investor minds that can help us create the best model to accomplish this work. Contact us at email@example.com or (319) 480-4241 and let’s talk about how we can put healthy food farming back into the landscape of the best soils in the world – Iowa.
Article by Suzan Erem, president of the Sustainable Iowa Land Trust (http://silt.org), a writer and beginning orchardist. She and her husband Paul Durrenberger founded the first Slow Money investment club in Iowa. They live in eastern Iowa with their 2 dogs and 7 guineas where they are transforming their land into an edible savanna for a future farmer.
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