S1:E1 - Maggie Monast: The Financial Pushes & Pulls for Stakeholders Across the Value Chain

We kick off the podcast with a fantastic overview of the interlocking pieces of the puzzle of financing soil health transition.

We delve into how farmers, lenders, insurers, and companies across the ag value chain are adjusting to regenerative practices, and the systemic challenges they face in transitioning to climate-smart practices.

Our Guest

Maggie Monast is the Senior Director of Climate-Smart Agriculture at the Environmental Defense Fund (EDF).

With over thirteen years at EDF, Maggie has been at the forefront of soil health economics, offering a unique view across the value chain. She’s worked closely with producers, lenders, large corporations, insurers, and policymakers.

The common thread throughout her work has been finding sustainable solutions on farms that are also economically viable.

Summary

Maggie shares insights on the financial complexities of regenerative practices, highlighting the detailed nature of farm budgets and practices like no-till, nitrogen efficiency, and cover crops – and their compound effects.

She discusses the role of data, policy, and economic incentives in supporting farmers and emphasizes the need for collaboration between forward-thinking farmers, lenders, and companies to foster widespread adoption.

Patrick and Maggie also explore how lenders and insurers can better align financial products with regenerative practices, and how supply chains are gradually integrating sustainability into procurement processes.

Notable Quotes 

• [01:47] …that honestly surprised me, because this group of farmers, they're business savvy, and they're very committed conservationists. They've been doing this stuff for a long time. So if they still had questions about how some of these practices were affecting their bottom line, that told me that there was a much bigger issue there.
  
  
• [~23:21] I always say regenerative agriculture can be profitable that doesn't mean it *is* going to be. It depends on a lot of things and that's why we have to get the financial incentives and support right to make sure that farmers can make that transition successfully and maintain it over the long term.

• [~26:01] If you want to know somebody who cares more about farm profitability than maximizing yields, that's a lender. If you want to know somebody who cares about the long-term value of land assets, also a lender. If you want to meet somebody who cares about the risk of their overall lending portfolio, also a lender. But I think they had not quite connected the dots between, for example, portfolio risk and climate risk, or land value and soil health, or profitability and nitrogen efficiency.

• [~40:47] And, you know, crop insurance is backward looking in its model. What I would love to see is some more kind of forward thinking about what are these climate risks that are accelerating and how can crop insurance work symbiotically either through the crop insurance program itself or with other programs to help farmers take adaptation actions to actually reduce that underlying risk.

• [~51:16]  it's a thing now, you know, over half of the top 100 food and beverage companies have net zero targets. And so while I can't say that, you know, everything has been figured out and they've all totally nailed it, you know, in the last 10 years, the movement and the investment is undeniable.
  
  
• [1:02:23] we are in a moment for regenerative ag or climate smart ag in terms of the investment, both public and private, that is going into this space in the US. You know, we've got massive federal investments, more private investment than we've seen before, and we have to figure out how to turn that moment into actual change. So I would say now is the time for everybody that we've talked about during this podcast to get out there and try something. It might not work, that's okay. But it's really important that we figure out what is going to meet farmer needs in financing the transition and how those pieces

Links for Resources Mentioned in the Episode 

• EDF’s Agriculture Finance Resources Hub
• Soil Health Nexus hub: a collection of case studies, reports, and other research-based materials that have examined the profitability of conservation practices on farms within the North Central Region of the U.S.
• AGree’s Conservation and Crop Insurance Research Pilot which found a 24% reduction of prevent-plant claims from producers implementing cover crops and no-till/reduced-till 
• Making Regenerative Agriculture Profitable for US Farmers - a study from BCG that projected a 70%-120% increase in profitability from soil health practices on Midwestern wheat farms in the U.S.
• Farmer’s Business Network’s Regenerative Operating Line
• LandCore's risk model
• The AgFinance Sustainability Coalition (including Akiptan and the Federation of Southern Cooperatives)
• Managing Climate Change Risks at Agricultural Finance Institutions, EDF & Deloitte’s first global survey of ag finance institutions on climate risks and opportunities
• Field to Market climate-smart innovative finance initiative, funded by a grant from the USDA Partnerships for Climate Smart Commodities
• Evaluating Greenhouse Gas Emissions and Climate Mitigation Goals of the Global Food and Beverage Sector, an academic overview of food and beverage supply chain sustainability goals, surveying the disclosure and emission goals of the top 100 global food and beverage companies

Chapter: Introduction (00:00:14)

Chapter: On-farm soil health economics  (00:00:45)

Chapter: Lending and soil health (00:23:39)

Chapter: Crop insurance (00:38:12)

Chapter: Crop insurance & Federal Policy Regulations (00:41:53)

Chapter: Commodity markets, decarbonizing supply chains and insetting (00:49:46)

Chapter: Disjointed corporate supply chain programs (00:52:25)

Chapter: wrap-up & next steps (01:02:04)