[00:00:00] Speaker A: Foreign.
[00:00:07] Speaker B: Hello and welcome to Activating Sustainability Ren Thesis Podcast. I'm your host, Chris Peterson. I'm excited for today's episode as we explore the world of regenerative agriculture and how Rabobank, Roots and Anthesis came together to develop a new project called reterra. I'm pleased to be joined by three individuals at the heart of the effort. Roberto Strumpf, who leads the Carbon Bank Brazil for Rabobank, Pablo Francisco Borelli, CEO of Roots, and John Lepper is managing director of Anthesis Netherlands. Welcome to the podcast.
[00:00:39] Speaker C: Thank you, Chris.
[00:00:40] Speaker A: Thank you for having me, Chris. Pleasure.
[00:00:43] Speaker D: Great pleasure to be here with you again, Chris.
[00:00:46] Speaker B: This is such an exciting project and really fascinating. So I'd be curious, maybe just start at the beginning. Where did this start from?
Where was the inception point? And I know from previous conversations it sounded like, Roberto, it was some of the things you were seeing from your clients within Rabobank and the farming community.
[00:01:05] Speaker A: Starting from the beginning. I think it all started from the realization in Rabobank that we have a huge challenge ahead in this century, which is to bind food security, environmental protection, and also a realization that Rabobank can play a very important role as a bank that works in the food and agri sector around the world.
So from that, Rabobank decided to establish a land use strategy where one of the main pillars is to reduce or reach zero degraded land in our portfolio. So this is something that has been driving strategy in the bank for a few years and one of the reasons why the bank came up with Carbon bank, which is the program to help our clients navigate in this new carbon market.
So from that we started looking for potential partners in the sector and happily enough, came up with Anthesis and Roots to help us bring the knowledge, the support to work closely with our main clients in Brazil. I'm speaking from Carbon Bank Brazil. The program landed about two years ago. This was my responsibility to bring this initiative and the region here is a priority for the bank, for I believe, obvious reasons, is one of the main agricultural producers and also a huge region in terms of natural capital.
So that's, I think, in a nutshell, the beginning of all.
[00:02:46] Speaker B: Fantastic. Yeah. And there's a number of pieces I'm keen to come back to within that. I know, Pablo, this wasn't the first project that ROOTS has done around regenerative agriculture or supporting farmers. So I'm curious, how did you end up getting involved in Reederra?
[00:03:01] Speaker C: So it all started like 20 years ago. We pioneered the introduction of regenerative grazing in South America, this was my father.
So we've been working for many years in how to help farmers in this transition, how to make decisions in a different way, trying to mimic nature and to gain productivity at the same time that you can restore and regenerate an ecosystem. That was a long learning process. And we ended up developing carbon programs to scale all these processes and to bring new incentives for farmers to change in that work. We started working with Anthesis three years ago in another program called sara, where we are getting farmers from Paraguay, Argentina and Chile into this transition and generating carbon credits. And after that, we started working on this Retera project in Brazil. But what is our mission and purpose here is to make a change among farmers to make regenerative agriculture mainstream in Latin America, and very focused on the farmer process and what they need to understand and how they need to work in order to start making things differently. And another big component is the monitoring of all this. How do you monitor if a farm is actually regenerating and if it's actually capturing carbon? And that's an elemental process for all this, not only for carbon credits, but to understand what's happening at the farm level and decisions are being on the right direction. So this is what we are bringing to the table. And I'm very enthusiastic of bringing Brazil and the opportunity, because agricultural lands is massive and there's a lot of work to do.
[00:04:32] Speaker B: Fantastic. And maybe, John, do you want to talk a little bit about why anthesis and how we all became involved?
[00:04:38] Speaker D: We're working on the great transitions of the world. How do we sort of move away from an old economic model to a newer economic model? And one of the things, of course, is are we able to change the food systems of the world? And what can we also do to increase soil health? Because again, there's much degraded land around the world, and what can we do? And that, from an enthesia perspective, is the lens which we also look at opportunities and projects if you want to have a transition. One thing that we understand very well is change is not easy to bring about change, you need to get things moving, but also you need to incentivize people over a much longer period of time. You can't do it by yourself, so you need to work in partnerships with many groups. And that's something that we do well and organize, particularly in Retera. Our role, if we make it small, it's around putting the money into the mechanism to enable the change. And we do that through carbon finance. The role that Anthesis plays is to get projects registered and actually through the global registries, get carbon credits issued and sold. That's the part. But much more importantly, and carbon is the bit that the world has put a value to from a carbon credit perspective. So financial value too. But if you look at this project, it also hits on regenerating farmland. It actually supports farmers with changing their levels of income to also support them in the, in the transition. But what it also does is for this project to be successful, you need to be thinking multiple decades. So this is not a fast change. This is a change that also has a long lasting impact. And that's the bit that we do. And when Rabobank said, hey Gor, we've got an idea, Ruth said we can do something, we came in and joined it with the finance part to make it all happen.
[00:06:29] Speaker B: Fantastic.
[00:06:30] Speaker D: Yeah.
[00:06:30] Speaker B: And clearly the overlap of the vision that you all have and the ambition that I'm hearing that kind of really changing the way farmers operate across Latin America is a really inspirational piece. And hearing the contribution around the zero degraded land in your portfolio within Pablo bank is just so inspiring. So I'm curious, maybe taking it to the next level of Reterra itself. Pablo, do you want to walk us through what is it and how does it contribute to those goals and visions?
[00:07:00] Speaker C: The project, it's aiming to bring improvements to the management of the farmers to regenerate land. At first glance, we are working with very sophisticated farmers. The Rabobine client. So many of the typical region act practices, they were already being done like no till, like in many places this can be additional to a carbon program. So here the first thing was, okay, what can we improve to this management to actually be able to increase the carbon stocks and to improve the soil health. So we ended in the integration of livestock and crop systems in an improved way that is traditionally done. It's bringing cattle back to the land and to improve the health of that land and to generate carbon credits out of that. So this is the main change in the management that we are promoting and also working on the just grazing lands in the improvements of the rotations that the farmers are doing. So this brings two big benefits for the farmer. One is of course participating in a carbon market and with the carbon credits. But the other one is they can decrease the amount of inputs that they need to produce the crops. So that's another benefit that is bringing and it's creating a much more resilient system because it depends less from inputs. So it makes a really big change in their business as it is also an important piece of the program.
[00:08:16] Speaker B: It's fantastic. And maybe, Roberto, just thinking about your comment about really trying to move the farmers and the resiliency of agriculture. We would love to hear from you. How does this fit into your vision and practice?
[00:08:31] Speaker A: The vision, as I mentioned, is to produce as much as possible per hectare. This is important because population in the world, we're going to reach about 10 billion maybe in the mid century. Yes, we have been feeding this increase in population with increase in productivity with the green revolution from last century. However, in the cost of a lot of chemical inputs and a lot of land as well, Especially in a place like Brazil where deforestation is an issue.
So the vision of the bank is we want to produce more per land with less inputs, less chemical inputs. As Pablo said, learning with the lessons from nature, which is to regen the natural fertility of the soil. So there are many benefits from that, just financial, social and biological benefits. And as a huge co benefit of the program, reduce the pressure to open new land. And this is key to rabobanking. This is the vision because by doing so we will tackle the other big pillar of land use strategy, which is to reach net zero deforestation. It's a huge ambition from the Bank. It's something that we are very looking for and working in. So it's one program with so many potential benefits to us, to our clients. And I guess this is why we are so excited about it. With the first step. Still few clients already engaged, but we are looking to make it very big. Kayla, very fast.
[00:10:04] Speaker B: I picked up quickly, you all have very large ambitions for this and I understand where that's coming from, which is really exciting because I think that's what we need to drive the level of change we need. John, you know, often when we hear about kind of cattle and livestock in Brazil from a carbon perspective, that's got a very negative view. How does reter show up in terms of climate impact and reducing impacts around that?
[00:10:27] Speaker D: Is cattle good or bad? It has a certain lens in life and also very much depends on which region you are. Again, I'm from the Netherlands and if you then think about cows and cattle on a very high intense basis, that is somewhat at odds with a sustainable sort of regenerating world that we want. There's many other places where there's a very healthy interaction between cattle and agricultural management because you need cattle and what they process in order to actually aid the regeneration of the soil. Doing it without cattle is actually more difficult, if not possible in some extent. But it's always a question of how much and how far. The fun thing is, if you start to see cattle in a model of former sort of herds of wild animals and how they actually support an ecosystem and partially also what roots is mirroring, then all of a sudden the interaction between animals and nature can be very positive. Where the big question is coming into is how much cattle can you sustain? And when you take it over a certain level. And that is also why it's so important to bring agricultural produce and cattle management in sync with one another at that moment in time. It's also not necessarily competing with, like Roberto says, with keeping the Amazon there because you need more land to feed more cattle, because then it becomes a highly inefficient system from a natural perspective. But if you have them in a more symbiotic way, you can actually have many positive benefits coming from that. And so that's how we look at it. One of the things that regen ag programs do and need to do, you also need to look at the natural habitat in which it exists.
Because not every intervention will work in exactly the same way where you are. And that's also what we find exciting to make it work for Mozilla. There have been times where people ask me, but John, what is different to what you do, to what other people do? And the bit that really stands out for me is we are outcome driven. And that sounds quite odd because a lot of the regen ag activities are do this, do that, and then it shall be better. But we're really looking at making it better. And one analogy I have for myself is if you need to perform as an athlete, you. You can either perform well because you are fit or because you're taking painkillers at a time or high sugar intake or whatever else that allows you to act at your peak performance, but doesn't mean you're fit. It just means you can perform for a specific moment in time, but you're using too many of your resources and you can only do it for a relatively short time. And that's actually what a lot of agricultural systems are doing. They're just depleting soil health too quickly. But if you want to get fit as an outcome, you really need to rethink. It's not around how do I optimize the performance of the day now? How do I optimize performance capability over a longer period of time? And that's the fundamental shift. You know, getting fit is something else than doing well on a given day. And that's really what we're trying to do with these programs.
[00:13:35] Speaker B: That's a great transition, John. I'd love to hear from you all. How does that work in practice? What is different around this? And although it sounds like this has been a generational effort that you've been pursuing through your family and curious, what drives that kind of shift in practice?
[00:13:50] Speaker C: Basically we work, as I said before, at the decision making level of the farmers or the farm operators. And it has to do with mimicking nature in a sense of planning the grazing events to give enough time to those plants to recover from every grazing event. So normally what you find is either continuous grazing so the animals are for too long in the same paddocks, so they eat the plants too much, they are not allowed to recover after the grazing event or many times they move too fast. It's like very fast rotational systems that they also do not allow the plants to completely recover. So one of the elemental things is working with the farmers in a planning procedure in how to do those movements in order to allow the grasslands to completely recover. And on the crop side is working in this integration with the animals and bringing perennial pastures in the middle of the seasons and to try to keep those perennial with the grazing as long as possible to increase the amount of organic matter of that cropland. In that way, as we recover the health of the land, we can decrease the amount of inputs used for crops. So those two are the biggest elements in this program. But I think what's most interesting is it's not a prescribed recipe, it's working with how they are making decisions. And that's permanent, a permanent change. And again, very important is the monitoring, as John said, the outcome based. So every year we're going to check, we have different indicators how we are doing with soil erosion, how we're doing with infiltration. So we're going to look all this and we say, okay, what we are planning with this farm is working or we need to change things. And that's a continuous learning process. It never ends. The interesting element, we are bringing change and an evolution, a constant evolution of how we make decisions to have the farm all the time improving.
[00:15:37] Speaker B: That's great. And Roberto, I feel like you maybe this is wrong, but seem to be living in two worlds of living within Rabobank and kind of that banking culture as well as trying to think about this kind of really long term investment approach to how do we support farmers moving forward. So curious as you think about those needs and making that choice of reterra being the appropriate path to really go and pursue what kind of Drove that. And what do you see as unique about this approach versus some of the others that I imagine you evaluated or considered?
[00:16:10] Speaker A: The fit and the complementaries I see with the work of anthesis and roots are huge. Because I feel like the main responsibility of Rebel bank in this puzzle is to deal with two main pieces, very important ones, which is the human factor and the finance factor. The human factor is leveraging the long term relationship we had with the farmers to try to make them understand and work with them to customize this new productive systems coming from Roots technical crew and how this can be fit into the reality of these farms that are very sophisticated, very big and convince them that this is the best path forward. It's not something simple. I believe this is something that have been taking a good proportion of my time in these last few months. And the second piece, as I mentioned, is the finance. So this is a project where there is a lot of investment upfront, in time, in boots, on the ground, traveling around with the farmers, planning, implementing the practices to have the returns. For the farmer, the returns will come in 1, 2 years.
For Hetera, it depends on the carbon credits, which takes maybe five years to be really liquid and coming as revenues to the group. So I believe Rabobank plays an important role in closing this financial gap, helping finance our partners and also our clients.
Regarding our clients, we do have very specific financial products that we are offering that has a green component, that has a transition component, and where the bank is happy to give discounts. To be able to do this transition that we feel like is fundamental for the world, for our clients and for the bank, the resilience of our clients is the resiliency of the bank at the end.
So it's just a matter of having a bigger, longer term vision to the finance system, which is something that I think is lacking. And I'm happy to say that I feel like harbor bank has this.
[00:18:33] Speaker D: I had to smile a little bit when Roberto said it because one of the challenges that we've had is an institution like the Raumebank. Are they really capable of making decisions on a program that has a duration of 40 years? Because that's what a carbon program is and does. And I think. And that's a compliment to the Rabobank and the Rabobank leadership because as a minimum, they've convinced Pablo and myself that we're in it for the long haul. So well done. But I think from a corporate perspective, you start to see that the planning horizons on these transitions really also start to come in at Board levels and a willingness to enter into this and that is no longer on a procurement basis. Are we able to get everything down in contracts to the ultimate detail? But much more like this is a partnership and we know we don't know everything on this duration, but we're all committed to make it work. And that's a very big compliment because that is to some extent financial institutions are often seen as wanting to de risk. And I think while still this is actually de risking from a long term transitional perspective, making sure that their farmers as clients are healthy, but at the same time within their business model, this is much, much longer term thinking than a lot of other decisions that are being made. So I find this also very encouraging to see an institution like the Rabobank taking this step. This is really a huge leap forward and a big compliment to them.
[00:19:59] Speaker B: Absolutely. And maybe just building off of that. Pablo had mentioned about the monitoring piece and building that credibility over the long term. And I'm curious, John Ryan, kind of how do you see that credibility being built up in terms of faith and capital behind the kind of long term benefits that we're anticipating?
[00:20:19] Speaker D: There's a couple of big things. What's building some credibility is this is the third program that anthesis is involved in. The first we actually started in South Africa, regenerative agricultural process that actually has already issued credits and we've also been able to get to have finance flow back to farmers. And we're now into the second issuance cycle of that program and we're very close to reaching issuance on Sarah, which is our second program, Reed Terra being our third. And that's also building credibility as a party in this space that we're not only all about talk, but we're actually about doing it. And it's quite innovative because there's only 13 programs worldwide that have achieved a formal status out of which two anthesis is involved in and only five have achieved issuance, of which anthesis is one. So that's one way of achieving credibility. Second is that carbon sequestration in soils, we need to reduce emissions very quickly. We need to take CO2 out of the air and somehow store it for a longer period of time. And we need to have transitions because people still need to eat live and, and the economy also needs to run. This is not in competition with anything else. Yeah. So this actually provides food to a growing population whilst also regenerating soil whilst also sequestering carbon for a longer period of time. So when you think about in the sweet spot of the transitions that we need to have and some of the pressures that are coming.
This also is in the long term trend that is required and you start to see it come into legislation. For example, Europe has just passed new legislation in which soil carbon credits or so carbon sequestration is a big portion of the future. You see it in other places as well. Capturing carbon will become critical. And that also gives long term credibility that we're on the right track with these types of interventions. So we believe by bringing short term credibility, we can actually do this thing to farmers and give money into the mix to make those transition happen. And also with the long term transitions and also where you see the world trending, we believe we've got credibility on that. And with the three parties in the podcast today, it's not because we've just come new to this. The Rabobank has been banking for a fair while in the agricultural sector. Roots has been doing this for 20 plus years. So they know what they talk about. And also Enthesis has been in the carbon markets for more than 20 years. So these are not newbies, gold diggers. This is actually a many centuries worth of experience coming together to make it happen. So that's hopefully slightly longer answer maybe than you were looking for. But this is why we believe we've got credibility in this.
[00:22:57] Speaker B: Absolutely. Yeah. No, and I think the detail is important. Right. Because I think that's always the challenge. So I recognize we're coming up on time and I thought maybe what we could do is I would love to hear how is it impacting the various stakeholders and maybe Pablo, having you speak to some of the experience with the farmers or a farmer that has really jumped out for you.
Roberto would love to hear kind of how that engagement went internally within Rabobank and kind of what clicked within that. And then John would love to hear from a client perspective, how are they viewing this as the credit they are looking to buy as opposed to necessarily kind of just a cheapest commodity credit they can grab within that. But maybe. Pablo, do you want to start us off?
[00:23:39] Speaker C: Yeah. The good thing about this project is the farmers are doing the first pilot to see what happens. So it's not that they're putting all their land into the management shift. We are testing and we have to prove that this is better. So they are having a look. They are not all in. They are. Okay, show me that this works. So this is the stage we are in. We are signing the first contracts now. We have to show that this works. So engaging with the operational teams to make sure that the implementation is well done, that we are monitoring correctly, that we adjust if we need to adjust. But we are creating the first success cases that we will build all the program on top. We are working with the early adopters, the ones that are like okay, I think there's something interesting here and they're stepping in. So we have to take care of these farmers and make sure that this, that they can see results in the short term. And very happy to see these kind of farmers engaged. They're very large farmers, so the opportunity is massive because they manage a lot of land. This is a little bit what we are seeing at the farm level.
[00:24:38] Speaker A: I'm going to talk again about the human factor because I always think it's one of the biggest challenges. I'm very optimistic. I believe that in Brazil and the world is understanding finally that agriculture can be a solution. Now talking internally, as John said, Rabobank is a 126 years old company and 36 years in Brazil. And this carbon journey arrived about two years ago.
So it's very new. But we are having a lot of interest coming from our relationship managers in the branches that has these sometimes 10 to 15 years relationship with farmers and had never heard about carbon in the soil becoming a financial asset. Right. We are starting this education process or positive contamination internally.
And actually next year what we're going to do is to do a Roadshow in our 17 branches in Brazil, bringing this content and exploring how to couple the carbon credit with the financial products we have for years now and make this one package. And what the return we are having from the senior leadership is very positive and opening doors internally in the company for us to do this process. And finally our farmers or our clients, many of them have family business for generation doing the same thing, doing very well, however sometimes depleting the biggest asset they have, which is the natural fertility on the ground. And we have now seven clients engaged, very willing to continue with us in this 40 years journey and many others knocking on our doors as the message starts to build.
So again, just a message of positively and optimist about the future of Hetera.
[00:26:41] Speaker D: From a client's perspective. Awful lot of sectors are dependent on the agri, food, agricultural sectors for their own business models.
And whenever we talk about how do you take accountability for your remaining emissions, you see a desire to do it in or close to their supply chains.
And so that's a sector that is very willing and interested to do so. And you'll be surprised where all of the produce is going when you Talk about milk or cattle. It goes in many, many ways and directions. And that's sort of where we get a real good response from clients. And particularly. And that's an important element. They recognize that farmers are often at the chains and they're really on the ground. And some people then call it Scope three, which doesn't really sound very exciting. But as a farmer, at the end of it, working with animals on land, and these programs really address at that level. And so we're away from policy, we're away from big things, we're away from technicals, back into land, people and animals. And I think that gives a closeness to what we're trying to achieve. That is really exciting. And that's also the story we're promoting. And I would encourage people if this is exciting to you. There's lots of materials out there, videos out there on farmers talking what it did for them. And that is also the bit that every day excites me. We're talking about real on the ground change, boots on the ground. I've been out on the field for a number of times. It's really exciting to see. And that's also what clients feel. They feel they are investing in the transition. That's just great to see.
[00:28:12] Speaker B: Fantastic. Maybe just one last question we'd love to hear from each of you.
40 years from now, what do you hope to see coming out of. What is it you all have initiated here with Retaro?
[00:28:23] Speaker C: Yeah, I see Retera as a vehicle to make a significant change in the Brazilian agriculture sector. So I would like 40 years from now that what we are proposing is the new norm, like common practice, and also improving what we are doing now. Like, there's a lot of things that we can also bring as next levels for Reitera, we are discussing trees. There's a lot of stuff that can happen in those biomes to regenerate. So we are just starting. So I think we have a huge opportunity. You're really driving real change at a large scale in Brazil.
[00:28:55] Speaker B: Fantastic. Roberto.
[00:28:57] Speaker A: There has been a major role in disconnecting food security and food productivity from land conversion in Brazil. This is one thing. And the second thing is numbers vary a little bit, but it's safe to say that we have now in Brazil about 90 million hectares of degraded land. And my vision for 40 years from now is that we can have a completely different scenario where every hectare of this is restored and producing food and having biodiversity in the soil that gives also a lot of resiliency to our farmers. Because in 40 years we will be facing more climate change than now. Unfortunately, part of the problem will happen so we will have more productivity and also more resiliency in the field. Yeah, that's my vision.
[00:29:51] Speaker B: Fantastic. John, those are hard to follow up, but I will put you on the spot.
[00:29:56] Speaker D: I'm showing my age and I never know what's a good analogy. But Hannibal always said at the end of each episode I love it when a plan comes together. Because in all honesty, how this is going to work we don't know. But in 40 years time I really hope to be able to say that. And it is possible to regenerate land, increase production, get some money for doing the right things and passing it on to the next generation. Better than we got it.
[00:30:22] Speaker A: Wow.
[00:30:23] Speaker D: If I can have four ends in one sentence. I really love this plan to have come together. That's what I hope to say in 40 years time.
[00:30:30] Speaker B: Amazing. Well, thank you all so much for sharing insights and your perspectives and the stories. Really appreciate it and thank you all for listening. Please be sure to check out the resources linked in the show notes and on the anthesis
[email protected] thanks again and take care.
