A new model for expanding regenerative organic agriculture in America

Date:09-09-2024

By Esha Chhabra

Less than 2% of US farmland is organic. Yet, organic food sales are steadily climbing. And now the conversation has shifted from just being organic to regenerative organic. Can crops help renew soils, sequester carbon, and support biodiversity as well?

As more and more money is going into this research, one organization has put itself at the center of regenerative organic farming in the US: Mad Agriculture, a non-profit hoping to improve the ecosystem for American farmers who want to transition to regenerative organic farming.

Minneapolis-based Mad Markets, a division of Mad Agriculture and for-profit entity registered as a public benefit organization, has an even more specific goal. They want to become the ″go-to source of regenerative organic ingredients″ for a range of clients — CPG brands, wholesale buyers, and distributors. The aim is to build that ″missing middle″ of regenerative supply chains, such as the processing units and infrastructure linking growers and buyers, explains Alex Heilman, CEO of Mad Markets.

″Mad Markets, at the end of the day, is an ingredients platform and really what we've been doing is utilizing private capital to acquire certified organic processing facilities to enable food systems change. And I know that sounds really heavy, but in order to actually drive change and drive it through contracting mechanisms, you actually need to own both sides of those relationships,″ he argues.

This week, they’re announcing the acquisition of Timeless Seeds, a Montana-based company started by four farmers to get organic lentils, grains, and other crops processed and distributed into the market. Mad Markets hopes that Timeless can be a blueprint for what is to come.

″The acquisition of Timeless is a major opportunity for us to strengthen our work connecting farms, brands, processors, distributors, retailers, and institutional sourcing partners. Our goal is to grow Timeless’ sales fourfold over the coming years,″ says Heilman.

David Oien, cofounder and former CEO of Timeless Seeds, started the company, alongside three other farmers in 1987 to support the area’s farmers by establishing a processing facility for these soil-building crops, he says, and developing market opportunities.

Phil Taylor, founder of Mad Agriculture, says that Timeless is the ideal example to start with. ″They've driven the rise of organic through places like Montana in the middle of the country. They're important lighthouses, I like to think of them as, in rural communities, not only economically for the well-being of those places, but also being a signal for farmers about where they can move their agricultural systems. As we started building this thesis around possibly buying one of these facilities as a starting point to create this bigger company, Timeless was just kind of top of the list. What David and the founders have built there has all the characteristics of a company that we would love to steward into the next generation. They've got incredible grower network with a ton of loyalty.″

The funding for this deal is coming from a variety of supporters — all fixated on impact and regenerative agriculture. Firms include Terra Regenerative Capital, a public benefit investment company, and Builders Vision, an impact platform, which is anchoring the investment in Timeless Seeds. Together with Blueberry Capital and twenty-four other mission-aligned investors, Mad Markets plans to launch an acquisition strategy for infrastructure across the country, starting with this purchase.

Kristen Moree, Senior Investment Associate of Builders Vision reiterates that ″access to markets and infrastructure are often bottlenecks that limit the growth of regenerative agriculture supply chains.″ Thus, they were keen to work with Mad Markets and Timeless on kickstarting this initiative.

On the climate front, Timeless specializes in lentils, pulses, and beans that are known for not only helping renew soils but have a lower footprint to produce overall. Thus, helping these farmers increase output and broaden their reach has not just financial implications for rural communities but can really support broader environmental goals of the regenerative movement, says Taylor.

Add to that, Heilman says, is that buyers are more interested in learning about the origin stories of these crops. Unlike the dairy and meat industry, where the farmers story is celebrate, and known, traceability for chickpeas or lentils hasn’t been the norm. But now, that is shifting, and with companies like Timeless, Mad Markets can help tell the stories of the farmers as well: "There's deeper interest in both understanding who the farmer is, but also where the food is actually coming from and being able to trace it back from a sustainability tracking mechanism, but also just understanding like labor practices and equitable contracting. So the industry really has not been structured to do so. And now there's a push for it.″

For those farmers who are not yet regenerative organic certified, or even organic, Timeless helps them get on that path, Taylor explains. ″It's a long and hard transition to go from a conventional situation to being organic certified. And while that's our orientation, we're not going to box people out and exclude them because they need that way to sort of migrate from system to system.″

Plus, with assured buyers and increased demand, farmers will know that they have a customer waiting for their product, which should help ease some of the concerns about the transition. And the regenerative movement needs more farmers to get on board.

Economies of scale have historically helped drive down costs and prices, and make products more readily available. While ROC (Regenerative Organic Certified) may still be in its early days, the organic movement is gaining traction, Taylor notes: ″One of the big areas where we're seeing a lot of this work is in places like Costco, where organic is a huge piece of their growth strategy. And the way you do that is by coming down the cost curve, growing things in bulk and trading at more competitive rates that can be passed along to the consumer.″

Heilman agrees: ″We are very early in the adoption curve, which always means that prices tend to be higher as we actually work to build this out to create more efficiencies within it. And the other larger kind of price driver that will help to bring some of these prices down is that as these facilities, like Timeless, for example, ges to higher capacity level, the cost allocations within that start to diminish the overall end user cost.

That would be the ideal: making healthier foods more affordable for more Americans. In the process, it could entice more farmers to participate. In fact, Taylor shares that some of the limitations they’ve heard from farmers, thus far, has been about the lack of the demand. ″We’ve heard there hasn't been enough potential sale opportunities to increase their acres and so they all have been very excited by us starting to share our mission and vision that's really around expanding acreage through market signals and actual demand.″

Mad Markets, alongside Timeless, hopes to link all the parties involved so that it’s an easy solution for larger buyers, not just mission-driven ones, to integrate these ingredients into their products or offering.

″What we’re essentially going after is can we stand up an ingredients company that gets around this kind of direct trade thing and allows procurement staff at these companies to have a go to place to source a wide range of ingredients without having to do all that heavy lifting by themselves,″ Heilman says.

That’s possible by focusing on the less glamorous bits in the middle, says Elizabeth Candelario, Chief Strategy Officer of Mad Agriculture: ″Historically, the money has flowed towards the sexy startup CPGs and also farms. But I always have this image in my mind of these two really heavy barbells with a piece of spaghetti connecting them, and how much longer can money just flow to the two ends and not focus on the middle?″

It’s time for that to change. ″We have to start paying attention to infrastructure, and if we don't redesign it, we're not going to get to where we want to go in regenerative agriculture and food.″