The ESG Update Episode 19: Growing Out of Climate Change
Who doesn’t love trees (...and persimmon flavored bourbon)? In this week’s episode of The ESG Update, we welcome David Miller, CEO & co-founder of Iroquois Valley Farmland REIT as we dig deep into regenerative agriculture practices and the potential investment opportunities to support sustainable farming.
Transcript
This transcript has been edited for clarity.
Dan Carreno, Change Finance:
Welcome, to The ESG update presented by Change Finance. I'm Dan Carreno.
Brittany Damico, Change Finance:
And I'm Brittany Damico.
Dan Carreno, Change Finance:
We manage the business development efforts at Change Finance. We are an ETF provider dedicated to environmental, social and governance investing. Our mission is to help investors align their portfolios with their values without sacrificing returns. Brittany, what is going on up there in Seattle?
Brittany Damico, Change Finance:
We have so much sun and it was a great weekend. I went to the beach. I went to a waterfall. It was 80 degrees. So great times up here.
Dan Carreno, Change Finance:
Are you sure you're in Seattle or are you lost?
Brittany Damico, Change Finance:
It was amazing. It's been the best weather.
Dan Carreno, Change Finance:
That's fantastic. Good to hear. Well, this week we are going to be talking about something near and dear to my heart, which is food. Specifically, we want to talk about sustainable food systems and regenerative agriculture, and to help us understand the topic, we are being joined by David Miller. He's the co-founder and CEO of Iroquois Valley Farmland, Real Estate Investment Trust. Dave, how are you?
David Miller, Iroquois Valley Farmland REIT:
Not bad. It's snowing outside here. So, I wish I was in Seattle.
Dan Carreno, Change Finance:
I think it's snowing here in Colorado too. So apparently, we're in the wrong parts of the country. Dave, I want to start off by getting your perspective on an article here from GreenBiz. Before we dive into that, I want to recognize that not everybody that's listening is maybe familiar with the concept of regenerative agriculture. So, could I ask you to provide us with a framework and a definition for what that really means?
David Miller, Iroquois Valley Farmland REIT:
That’s a good question. It means a lot of things to different people. When we started our company here at Iroquois Valley Farms, that was not a term even out there. Now, this was 15 years ago. So, this tells you how much things have advanced. Regenerative agriculture incorporates livestock as opposed to just being a grain farmer. You're also processing, or accelerating I should say, the soil restoration by using livestock and really increasing biodiversity of plants from farm practices. I would term it as beyond organic. If I characterize our company, I now say regenerative and organic. There’s not a certification program that's highly developed for regenerative agriculture. It's not as developed as the organic certification, but I think it will be.
Dan Carreno, Change Finance:
That's a really good segue into the article that I wanted to get your insights on, which is from GreenBiz, it's titled, “For for food companies, shifting to regenerative ag practices is complicated”, and they are talking about a number of large multinational organizations that have made commitments to regenerative agriculture. But then talking about the challenges that are involved in quantifying this and providing transparency to investors. Apparently going out into the fields and trying to get a good sense of what carbon sequestration and soil really looks like and what's happening and how effective the methods are, is pretty complicated. Especially for a monster company with a supply chain that spans the entire planet. How do you go to all these different farms out there and try to gather this data so that you can create the proper reporting for investors? So, my question for you, Dave, is, what do you think about the kind of the reporting that's involved in this regenerative ag space and, and how should investors think about this if you're looking at a very large food company, like a General Mills or even a Walmart?
David Miller, Iroquois Valley Farmland REIT:
Well, there's a lot of negatives, right? Meaning don't do this, don't do that. Don't do no harm, for example, do no harm with toxic chemicals, with pesticides, herbicides, and fungicides. They all have detrimental impacts on pollinators and your health. I'm not a health scientist, but given the choice, I would rather eat food that's not full of pesticides. In terms of carbon, and building up more carbon, there's more measurements there than I could get into, and you wouldn't want me to answer that question. I can tell you that we’ve been an enabler. We enable farmers to grow their businesses by purchasing the land and giving them a long-term land security so they can make the types of investments they need for more healthy soils, and they can grow their business. That’s where our biggest impact is. We’re the regenerative finance company that's devoted to the public health. Our co-founder is a medical doctor. We also wanted to enable the investors to have something real and healthy to invest in. When I bought my farm, all I could think of is, ‘Why aren't more people trying to create more healthy farms and more nutritious foods?’ There's an awful lot of opportunity there and we're just scratching the surface. I went to a sustainable ag conference and I was so excited that there was even such a thing. We're optimistic that the investment world will continue to allocate more capital into this space.
Brittany Damico, Change Finance:
Definitely. I found really fascinating the concept of just ‘do less’ with the soil in order to keep it as healthy as possible. I know you also touched a little bit on what Iroquois Valley does, but if we could start a higher level, can you just give a little bit more information of what Iroquois Valley is and what you guys do?
David Miller, Iroquois Valley Farmland REIT:
We provide leases where the farmer would come to us with a particular property that they're interested in owning or expanding into. This assumes they don't have the capital themselves, perhaps to buy it. We would buy it and lease it to them on a long-term lease. I've been doing this all my life, except now with farmland. That's a lot more fun. We added on mortgages a little over five years ago because our farmers were unable to get operating capital. And so often in order for them to grow their business, they had to use the equity in their family farm, and they would have to refinance. And the refinance terms were usually not that attractive. We stepped in and mostly started doing mortgages that would be cashed out, refinance the existing and cash out money to buy the next farm or to provide operations for what they're doing. Mortgages leases, and now lines of credit. That's critical capital. That's been harder and harder to get in the markets. Now we're starting to do equity investments in our businesses because often debt is not the solution. More debt is often not what these farmers really need to have. As a company we’re unique, there's nobody like us out there. We work with financial advisors all over the place as well. That's why we're so diversified in terms of equity investments because of this fabulous group of financial advisors that can continue to grow with us.
Dan Carreno, Change Finance:
That was a question that I had for you. Going on to the website, I noticed that there is a financial advisor network that you work with. Could you tell us more about that? How would a financial advisory firm go about becoming part of the network if they want to?
David Miller, Iroquois Valley Farmland REIT:
They find us. We used to go to conferences a lot more, so I expect that will happen again. Now it's more online. A financial advisor that is running an ESG or SRI portfolio and wants to build diversity, I think should be looking at us. There's only two ways that you can reverse climate change, right? It's farms and forests, because that's what pulls the carbon back into the soil. When we first started, it was originally all about toxic chemicals, AKA, Rachel Carson's book, Silent Spring, and it was all about how we're destroying our health by consuming and breathing toxic chemicals. That's not number one anymore. I would say climate change has now replaced that.
Brittany Damico, Change Finance:
I have one more follow-up question from the article earlier. Would you say that it is easier for small to mid-sized farms to utilize regenerative agriculture practices and have them grow than it is to have a larger existing, organic farm convert to regenerative practices? Do you think it's easier to grow into it?
David Miller, Iroquois Valley Farmland REIT:
That's a good question. I would have to say that it's easier to do it small and then just continue. When we have farmers who come to us with a couple of hundred acres that they're going to transition, that's a big challenge. Part of the problem is whether you're putting an awful lot of eggs in one basket when you're going to give up your cash flow and then start to build a higher yield year by year, which is what you're doing by switching to regenerative. It just doesn't happen overnight. It takes a while.
Brittany Damico, Change Finance:
Great. Thank you, Dave. One last question. If listeners would like to learn more information about Iroquois Valley, where should they go?
David Miller, Iroquois Valley Farmland REIT:
So, our website is pretty current, IroquoisValley.com. That’s the best place to get a ton of information.
Dan Carreno, Change Finance:
Well, let's start wrapping it up there. Dave, we really appreciate your comments and your insights. Before we wrap, just wanted to take a minute to sit around the campfire. (Howl) We'll start with you, Brittany. The next time that you're having a drink around the campfire with friends and family, maybe it's a, an IPA, maybe a whiskey actually. What, what would you be drinking?
Brittany Damico, Change Finance:
Oh, maybe a whiskey or I really love sours.
Dan Carreno, Change Finance:
When you're drinking that sour, sitting around the campfire what are you going to be chatting about?
Brittany Damico, Change Finance:
I recently attended the GreenWave conference, which is a conference that has quite a few sustainable leaders come and share insights and inspiration. One of the speakers was from the California Green Business Network, and they had talked about an app that they had recently created that’s called Shop Green. It allows you to look up companies that are utilizing sustainable practices near you, which I found quite beneficial since I just moved to Bellevue and I don't know where anything is near me. It helps you support businesses that are creating the green economy by conserving water, energy and curbing waste. I recommend if you guys don't have it already to download Shop Green and check it out.
Dan Carreno, Change Finance:
Awesome. Thank you. Dave, when you’re sitting around one of the trees you planted recently, and you've got a campfire going, what are you going to be chatting about with friends and family?
David Miller, Iroquois Valley Farmland REIT:
Oh, there's so many things, but you know, one particular fun item is to try to envision a new tasty food product that we can be growing. At our farm, we have a 400-acre agroforestry development south of Chicago. We're envisioning things like persimmon flavor bourbon, or a gelato that would have pecans in it from pecan trees that were growing. We want to do more than just grow this food. We want it to taste great. Maybe we'll have a gelato machine with ice cream and bourbon and stuff. We're having fun envisioning what some of these tasty foods will become.
Dan Carreno, Change Finance:
Dave, you're looking forward in life. I'm going to take a second and look backward and just all this conversation about trees and planting and agroforestry is getting me thinking about my days, growing up, back in Pennsylvania. It's a pretty heavily wooded state. For most of my youth, I worked as an arborist apprentice which meant that I was one of those guys running up into the crown of big trees, about 80 feet off the ground with a chainsaw. My mom always said that I was a barber for trees. I would just get in there and kind of clean them out and make sure that they were healthy. I look back on it now, and that was some of the best work that I ever did in my life. It was fun. It was exhausting. I slept well every night. This conversation is just really making me miss that work and being surrounded by these beautiful trees back in Pennsylvania. Thanks so much for your feedback and for those listening. If anybody wants to find any of the articles or resources that we discussed during the podcast, you can always go to our website, which is www.change-finance.com. Under the podcast library, you'll find a transcript of the podcast and links will be provided within that transcript. And of course, if you have questions or feedback for us, you can always get in touch with us through the website. Thank you again to those that are listening, and we will be back with another episode of The ESG Update.