“Of 400 farms in our county, only five are organic,” says Matt Fitzgerald of Fitzgerald Organics in Hutchinson, Minnesota. His 2,500-acre family farm is patchwork across 40 miles of land the family owns and leases, and grows organic corn, soy, wheat and specialty crops such as beans and peas.

Getting funding to transition to regenerative organic practices can be a challenge for farms of all sizes, but it’s a necessity if we want to have abundant harvests for generations to come.

Fitzgerald says that while the farm mainly works with a community bank, the lenders don’t understand its operations to accurately assess risk of organic and regenerative farming operations. Plus, Fitzgerald explains that the typical bank is looking to lend only a 12- to 18-month credit. This can put regenerative farmers in a bind as it takes multiple years to transition land or reach profitability with new processes.

There is never a silver bullet solution to any environmental issue. Regenerative agriculture in practice looks different depending on the unique situation of the farm, and so does the funding for it.

Recently, Fitzgerald Organics acquired 140 acres of farmland, and needed financing to transition the plots to organic, as well as implement cover crops and plant pollinator strips. In the first year, the farm grew yellow peas as a transition crop and had a hail event that wasn’t covered by crop insurance in Minnesota. Then it grew winter wheat in the second year, which isn’t as profitable as other crop types.

“Historically, when we’ve transitioned farms, we’ve just eaten those losses annually,” says Fitzgerald. But the farm developed a partnership with Mad Agriculture, which helps farmers get access to the resources and knowledge they need to implement regenerative practices. One of four branches of the MAD! ecosystem is Mad Capital, a private investment firm that finances regenerative farmers.

Fitzgerald emphasized that Mad Capital’s model of lending multi-year credit with the choice of interest-only or revenue-based repayment relieved pressure and enabled him to keep going despite challenges.

“All we do is work with organic farmers. We understand the risk. We understand the challenges and the types of capital it takes to facilitate [a regenerative] transition,” says Brandon Welch, co-founder and CEO of Mad Capital. “We know on the other side of that, there’s a positive return.”

To date, Mad Capital has supplied more than 30 farmers across 15 states growing on more than 79,000 acres with $25 million in loans for operating expenses, new equipment https://www.shellermachine.com/multi-crop-thresher-machine , real estate and expansion and regenerative transition expenses.

“We really listen to the needs of the land and the farmer in a way that most companies just don’t,” says Philip Taylor, co-founder and executive director of Mad Agriculture.

He highlights that they seek to accelerate the process for farmers who already care about sustainability. “Somewhere between 10 million and 20 million acres is, we believe, possibly a tipping point where regenerative organic ag could become inevitable,” says Taylor.

And they’re ready to fund more farmers. Mad Capital recently announced a $50-million investment round for its Perennial Fund II, with investor commitments from the likes of the Rockefeller Foundation, Builders Vision, Lacebark Investments and nearly a dozen others.

But not every farm is the right candidate for a loan. Luckily, more avenues for funding exist.

“Food and even fashion companies who source from agriculture have realized that, to meet their environmental and social commitments, they need to work with their farmers,” says Lauren Dunteman, senior associate of Regenerative Supply at Terra Genesis, a consultancy helping brands source from regenerative agriculture.

Sourcing can significantly impact sustainability outcomes for brands. But for this approach to work, there must be transparency, says Dunteman. “Farmers don’t always know where their crops go, and brands don’t know what farms their crops come from.” That issue prompts brands to fund regenerative practices either directly or indirectly.

If a brand can’t trace ingredients to the farm level, it may pick any farm or group of farmers and fund their regenerative practices. But if it knows its farmers and can directly invest in regenerative practices, it has options, such as:

Paying upfront for farmers to adopt regenerative practices
Agreeing to purchase at a premium once producers have aligned with intended regenerative practices or outcomes
Signing multi-year contracts to give farmers income stability needed to invest in new initiatives and de-risk transition years
Including producers from the beginning and honoring traditional knowledge is key to the success of initiatives like this.