The US capital fund rePlant Capital is providing lower interest loans to farm managers to facilitate the adoption of practices that support soil organic matter, and soil health generally.
In a recent Forbes article, the three founders of the rePlant fund talked about their careers in impact investment and how the aspiration to link soil health to loans formed over time. Fundamentally, the farm undertakes to deliver improvements in soil health as well as repaying the loan. It is hoped that the lower interest loans support the farm manager to focus on profit instead of just yield and assuming profit will follow when the circumstances are right.
The fund offers broader support than just the loan. There is guidance and examples of relevance. The fund hopes to refocus agriculture onto sustainability and soil health so that the farm gets out of the current cycle and mindset and into the experience of a system that is good for the soil, good for the farm and has an overall positive effect in the regional and national environment.
“By talking about soil health, you’re immediately talking about water conservation. You’re immediately talking about water filtration and I would argue those metrics are as important as carbon,” rePlant cofounder Robyn O’Brien said in the Forbes article, explaining how years of fertilizer and herbicide use have stripped soils of nutrients and made them less effective at absorbing water. “We are deploying technologies and services that will accelerate this change.”
Over the ten year life of the $250M Soil Fund, the team hope to allocate:
80% of the funds as loans to the most capable farmers transitioning to regenerative and organic practices
the remaining 20% as equity investments in the most innovative entrepreneurs looking to disrupt and redesign the extractive U.S. food system
Its a worthy concept: the lendor can have higher confidence in the borrower if there is evidence of commitment to soil health, because the borrower is putting a deliberate focus on regular attention to one of the core assets on the farm. The borrower gets the benefit of lower interest rates while building the resilience of the soil and as a consequence, of the enterprise.
To extend what Robyn O’Brien said, more soil moisture retained in the root zone reduces demand for irrigation water. Many catchments are overallocated or at least stretched in some seasons. The extra available water sustains plant growth, putting more resilience into the production system.
It also provides more optimal conditions for soil biology. Among other things, they enhance soil structure so that surface erosion is reduced. In addition they support more aeration and root channels, further enhancing productivity. They reduce losses of nutrients. Both nitrogen and phosphorus leaching from agricultural activity can have serious impacts on water quality downstream. There are some 500 dead zones in water bodies around the world, where the cumulative effect of many small leaching events upstream has had severe consequences.
But in what may seem now like a familiar pattern, soil organic matter can retain nutrients, particularly in light soils, buffering big applications and making the nutrients available over time. This prevents the crop from suffering from the dramatic changes in the root zone, and fosters more productivity as a result.
The extent of uptake by farm managers remains to be seen. Farming to produce a crop on the surface and more soil organic matter within the soil may have too much uncertainty for some. We are just developing the tools to enable farm managers to understand the constraints on soil health on their land, and to observe the progress (or otherwise) as they trial new techniques.
For others, this is a step down the path that they want to follow, knowing that it has a better than average chance of working out for them.