For long-time industry veteran Robyn O’Brien, something wasn’t sitting right.
On one hand, the picture was rosier than ever. Organic food companies were selling for hundreds of millions of dollars, and private equity and venture capital funds were throwing endless amounts of cash at young organic brands.
On the other hand, life on America’s farms was telling a vastly different story.
The U.S. agriculture industry was more than $426 billion in debt, and in the last five years, 2,789 Wisconsin dairy farms have gone out of business. With the USDA estimating 2019 median farm income to be -$1,383, the majority of farmers are forced to earn off-farm income to feed their families and keep their farms from going under.
The former Wall Street research analyst understood the gravity of the situation.
“If we are not solving systemic issues in the supply chain, we are toast. There is no organic industry. But you can’t fix a broken food system with a broken financial system. The problem needs to be addressed at its source — with capital,” said O’Brien.
After many months of conversations with her eventual co-founders, Don Shaffer and David Haynes, both of whom have deep experience in social impact investing, they launched rePlant Capital.
rePlant Capital is a new type of financial services firm that partners with farmers, ranchers, large food companies and technical assistance providers to facilitate more resilient agricultural practices at scale. Not only does it help finance farmers who want to transition to organic and those who seek to implement more regenerative practices, but where it differs from many other financial institutions is that it treats the farmer truly as a partner in the process and ensures that its loans result in a positive impact on the environment.
Just the other day, rePlant announced that 40% of its $50M initial fund will be dedicated to farmer partners of Danone North America.
For rePlant, the partnership with Danone makes sense for several reasons. On a practical level, making loans to Danone’s farmers means there is a long-term, stable buyer for the farms’ products, which makes the loans more creditworthy. Equally as important, Danone and rePlant share similar values and intentions.
Danone North America, the largest B-corporation in the world, understands that its future depends on the health of the planet and its supply chain. Along with committing $6M to soil health initiatives, the company has made a strategic decision to ensure the viability of its farmers.
“40% of our supply chain is in a cost-plus model, something that we started in 2011. By focusing on people, planet and profit, we want to lead the way in showing what a big food company can create and how far it can go,” said Tina Owens, Senior Director of Food & Agriculture Impact at Danone North America.
As rePlant and Danone are demonstrating, prioritizing the environment and the health of farmers is the only way of doing business if we want to ensure the long-term viability of our industry. And if we are serious about making regenerative agriculture a priority, regenerative financial vehicles, such as rePlant, must be part of the equation.
Most importantly, organic farmers need to be seen by all industry stakeholders as valued partners — rather than just dispensible suppliers.
Max Goldberg, FounderCollaborate // Contact
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