In this episode, Guy Van Syckle connects with the CEO of Mad Capital Brandon Welch who is proving that financing regenerative agriculture can scale—and it can do so profitably. Brandon reviews the significant challenges posed by current agricultural practices and how Mad Capital is helping farmers and ranchers build a more sustainable food system through innovative financing. He shares insights on farmers economic incentives, the steps involved in transitioning farming practices, and his company's growing impact as a leading investor in regenerative agriculture. Most importantly he shares the stories of how farmers economic outlooks are being improved through these investments.
In this episode, Guy Van Syckle connects with the CEO of Mad Capital Brandon Welch who is proving that financing regenerative agriculture can scale—and it can do so profitably. Brandon reviews the significant challenges posed by current agricultural practices and how Mad Capital is helping farmers and ranchers build a more sustainable food system through innovative financing. He shares insights on farmers economic incentives, the steps involved in transitioning farming practices, and his company's growing impact as a leading investor in regenerative agriculture. Most importantly he shares the stories of how farmers economic outlooks are being improved through these investments.
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Episode recorded November 12, 2025
Chad: I am Chad Reed.
Hilary: I'm Hilary Langer.
Gil: I'm Gil Jenkins.
Guy: I'm Guy Van Syckle.
Brandon: If you look at the adoption of regenerative practices on farm. In most cases, they produce more consistent yield, reduce the expense base, so reduce their nitrogen needs, maybe reduce water usage, and ultimately that filters into the bottom line and can produce net income or EBITDA more consistently.
Guy: In this episode, I connect with the CEO of Mad Capital Brandon Welch who is proving that financing regenerative agriculture can scale—and it can do so profitably. Brandon reviews the significant challenges posed by current agricultural practices and how MadCapital is helping farmers and ranchers build a more sustainable food system through innovative financing. He shares insights on farmers economic incentives, the steps involved in transitioning farming practices, and his company’s growing impact as aleading investor in regenerative agriculture. Most importantly he shares the stories of how farmers economic outlooks are being improved through these investments.
Guy: Brandon, thank you so much for joining us today, and to kick it off, would love it if you could just set the stage for what you're working on at Mad Capital. You know, what's the fundamental problem in our food and agricultural system that you decided to build a company around and what's exciting you going forward?
Brandon: Awesome. Thanks for having me, guy. I really appreciate it.
Yeah, so mad capital we're trying to do is enable farmers and ranchers to transition to regenerative organic agriculture. And the reason that we're trying to do that is because the current system, the current food system, is really focused on large scale monocultures and commodity based crops that are largely fed to to feed to ethanol.
And come at a great cost of destroying our top soil, releasing emissions into the atmosphere. Desiccating wildlife and biodiversity polluting our waterways, and most of it's not even being fed to people. So what Mad Capital's mission is, is to help empower farmers and ranchers with the right type of financing so that they can actually have the monetary resources, the financial resources to go buy the right types of equipment, purchase land, or have the working capital that they need.
To effectively navigate a transition because it takes time and it takes a new set of management practices to make that transition. And oftentimes the local bank or many of the larger institutions. Like a farm credit isn't quite willing to saddle up during that transition because these farmers are still pretty rare.
Less than 1% of all land in the United States is certified organic, and we estimate probably about two to 3% of all ranches are grass fed, grass finished and being managed with AMP or high density grazing. So these farms and ranchers that. Are really embodying the type of agriculture that we wanna support are still these rare, bright lights and oftentimes many financial institutions haven't interacted with them prior.
So that's the type of agriculture we're trying to support, and we're doing so through different funding vehicles that we're raising and then lending to those farmers and ranchers that align with the mission and type of food system that we're trying to, to create.
Guy: Right. Really stepping in there with the forms of capital that can help implement solutions, help farmers scale.
And when you say one to 2% of the system is that one to 2% of the system is implementing organic?
Brandon: Regenerative practices or how do the numbers shake out today in terms of the landscape of more sustainable ag solutions? Yes. It depends on which data set you're looking at and how you wanna slice and dice it.
But if you look at some of the US government reported data around total acres in the us there's roughly 1.2. Billion acres that are being managed on a yearly basis. 400 million of that is row crops plant-based production, and then the balance, 800 million acres is a mix of dedicated pasture and then national forest land BLM, and raising through.
Different forest land. So our big focus and where we started our business was really around organic row crop producers. Mm-hmm. Mm-hmm. Um, so these are mostly farmers in the Midwest growing corn, soybeans, oats, wheat, alfalfa, things of that nature. If you look at those acres, of those 400 million acres, we estimate there's about 7 million.
ISH acres that are certified organic currently, plus or minus one or 2 million. Once we have the updated survey, which I believe comes out next year, we'll be able to have a more accurate number. But that number of acres that have been certified organic have been growing at roughly. If you take a cage over the last 20 years at about 5% year over year, and if you look at the dynamics that are creating the incentive for farmers to transition from a.
Pure financial point of view, the consumer demand side has been growing at about eight to 10% year over year. So last year about $70 billion in organic products were purchased from consumers. Largely that was based on imports. We import. About 50% of our organic corn and soybeans because we don't produce enough domestically.
And you can get different pricing arbitrage by buying from international sources. And then we can't grow all organic products. We're not growing organic mangoes or coconuts in the us right? So some of that is a hundred percent imported, but that differential between. Growing demand from consumers and underlying supply of farmland not keeping up is what generates that premium for producers to sell into a market where they can roughly achieve about a hundred percent premium over conventional prices.
Guy: So we're talking an extra dollar if you're. Strawberries are selling for a dollar wholesale. You might get to for the organic strawberries.
Brandon: Yeah, exactly. I mean, if you were to look at corn today of conventional sitting around three 50 or $4 a bushel, we have growers right now that we're financing that are getting prices anywhere from seven 50 a bushel to at the high end, $11 a bushel for organic corn.
So you're talking. Twice the value, and oftentimes these farmers only have to give up yield of about 18 to 20% compared to conventional GMO crops. So they sacrifice 20% of their yield, but then they can double their price with roughly the same expenses. All that goes right to their bottom line, and their operating margins can really explode to the upside.
Guy: And that's helpful, grounding it in the economics of what's motivating farmers to do this outside of obviously the environmental impacts is huge. Can you walk us through what is actually going on at the farm level, what you're helping to accelerate in terms of practices that allow farmers not only to achieve that organic stamp, but larger, more significant impacts that go well beyond the organic certification?
Brandon: Yeah. So at the farm level, there's a few different ways that. We interact with the individual operator. And just to take you back a little in terms of how we actually got here, we started a nonprofit called Mad Agriculture back in 2018. And really the mission of the nonprofit was to provide a holistic solution to farmers and ranchers that were.
Running up against challenges on their transitional journey. And the three main challenges we wanted to help solve were access to finance. So that's why we formed Mad Capital Access to Technical Assistance and basically providing the knowledge and advice that it takes to incorporate these new management practices.
So we call that Farm and Business Planning. And then the third component was access to markets because there needs to be an incentive and a pull to ultimately create that premium and allow for offtake and reward for the adoption of certain practices and certifications. Mm-hmm. So how that ultimately looks today is we have three different organizations that are independent but work together pretty harmoniously, where we can show up on a farm and a ranch and.
Provide access to new organic lentil markets. We can provide strategic advice on where they should buy their cover crop seed and how they can incorporate it. And we can also provide the financing, the working capital, real estate infrastructure, equipment, debt that it takes to actually enable all of those practices.
So back to your question around. How we're actually interacting with the farmer. Mad Capital has an explicit focus around financing, and we do that in a way that I'd say is a little more granular and. Take some more forensic approach than what you're gonna find from many of the larger financial actors who scorecard many of these transactions.
For us, we're really, we're, we're digging in, we're looking at five years minimum, sometimes more of historical financials, and we like to ultimately break down the components of how that farm performs conventionally transitionally. Organically and really get to the base unit economics so we can understand what yield looks like per crop, depending on the crop.
They're growing the field, they're growing it in the state of their transition, whether it's conventional, transitional, organic, and when we have those numbers and we have our arms around that, as long as we're working with a high quality operator, someone who's entrepreneurial, they're open-minded. They are taking strategic risk, they're growing responsibly.
You can see all of these personality characteristics ultimately get filtered out in the numbers. The numbers tell a story. We can then use those numbers to build a projected financial model, and we can tie that in with their game plan. So oftentimes when a farmer comes to us, it's because they have a growth opportunity that's a little larger than what a traditional financial institutions comfortable with, but we can get comfortable with it because it's oriented around organic transition to organic row crop farming or a transition to regenerative grazing. And if we're working with an operator who already has all of their numbers buttoned up, they're savvy, they're motivated, they have strong markets, we can underwrite that risk because the way we think about it is.
Many of these farms, if they're reliably producing yield on a thousand acres, if they have another thousand acre lease that comes up as an opportunity, it's simply a copy and paste of a system they're already working and just doing it on larger scale, it'll actually optimize some of the fixed expenses.
'cause you can spread some of your costs around. Maybe administration or accounting over a larger land base. That's too much growth for many of these more community banks to be comfortable with, especially in a space where if one to 2% of the operators are certified organic, it's just really unusual and they're not familiar with what the transition looks like.
Guy: And how are you finding these? Farmers that are looking to take on a little bit more risk, but to innovate and be a leader in the field. How do you go out and connect with folks and find those potential partners?
Brandon: Yeah. Fortunately, there's enough opportunity in the space to where we have not. Put many resources into marketing and sales.
Levi Miller, who's our relationship manager, who grew up on a fifth generation farm and lives in Sioux Falls, South Dakota. He goes out and visits many different farming operations across the Midwest. We, we worked with him to purchase what's called Our Love Mobile about a year and a half ago. It's the loan origination vehicle.
It's basically a 30, 30 foot love it clip with like mad plastered on the side. And yeah, he's got three grills and he'll show up and. Help host field days and grill it up for 20 or 30 people, you know, good ribeyes and a couple of beers, and we end up building relationships. That goes so far in the last week, I've probably got.
Nine inbound opportunities, many of which are under writeable and are looking pretty good at the early stage. So we're in a fortunate position where our farmer growth, lead gen is all organic and word of mouth coupled with some strategic in field opportunities, and I think that's the best way to grow.
We have happy customers that we're helping make successful. They tell their neighbors, they tell their friends, and ultimately it filters back to us.
Guy: Right. That growth, really leaning
on word of mouth and scalability through community connections makes a ton of sense. And along those lines, what's resonating for the farmers?
Obviously we talked about the economics and the additional premium that one can secure by being able to sell in organic markets. Is that the prime driver? Is there other things that are top of mind as people are considering transitioning?
Brandon: Yeah. The biggest driver for many farmers to transition to organic, at least if you look at.
The organic side of the equation, not regenerative, is largely based around some form of health crisis that they experienced in their life. I believe it was the Organic Trade Association that came out with this maybe four or five years ago. They ran a survey on the motivations of organic farmers and why they transition, and something on the order of 40 or 50% had made a decision because they themselves, or a close family member or friend had gone through a health crisis that they then attributed to toxic chemical exposure by either being in field, being too close to pouring the cans of glyphosate and filling up the sprayer or just consuming water in their town. That has PFAS levels that are at extreme levels. And so that's typically the motivator for many, some.
It has been pure financials. Others, they want to create just a truly sustainable legacy and build a. Very viable, vibrant, resilient farming system because higher organic matter ultimately drives more consistent yields and in the face of a changing climate, as we see changing weather patterns with various droughts or heavy rainfall or heat stress really starting to percolate through the Midwest and especially the upper mountain west, it creates a more resilient farm for the next generation if they're thinking out.
They have the ability to think out 50 to a hundred years.
Guy: Yeah.
Can we pull on that thread a little bit on the resilience that you're helping farmers secure in terms of longevity of their farm for their family and going in the future in the face of climatic events?
Brandon: Sure. If you look at the data that we've seen generally in the reason that this is kind of complicated from a risk analysis point of view is that if you look at the adoption of regenerative practices on farm.
In most cases, they produce more consistent yield, reduce the expense base, so reduce their nitrogen needs, maybe reduce water usage, and ultimately that filters into the bottom line and can produce net income or EBITDA more consistently. But if you look at the data on an individual farm, it's very hard to predict if.
Farmer John, were to start cover cropping next year what the specific outcome is going to be. So there's a variety of firms that are trying to collect this data and build models so that they can more reliably predict if Farmer John in the middle of Iowa starts cover cropping on his 500 acres. What the specific cost savings would be and what the.
Potential yield changes would be on that farm. So for us, we generally know, and all of the data points in the direction that if our whole portfolio is adopting regenerative practices, they're cover cropping, reducing tillage, having diverse rotation and working with nature versus against it. They can harness essentially more net primary production, collect more sunlight, convert that into more carbohydrates and more yield.
And do so in a way that reduces some of the volatility they might experience if they were just using a monoculture single cropping system. We know that generally, and we've started to see that filter out through the portfolio, but we do not have enough data to say what regenerative practice on farm A results in a certain outcome.
So I'm hopeful that. That'll come. But
Guy: yeah, building the data center there, and certainly if there's some folks who are starting to understand at a high level what that practice around cover cropping and some of the practices you mentioned there are doing more long term, but on the regenerative horse, organic, can you just break down between those two terms and how you think about them?
Brandon: So organic is a certification. When I refer to organic, I'm talking about. USDA certified organic program managed by the NOP. What that essentially means is. Organic refers to the things that farmers are often not doing. They're not using GMO crops, they're not using synthetics, and they are using non GMO crops and natural inputs such as compost or manure.
And there's also a soil health plan that's incorporated in the organic certification. So many organic farmers are also using. Regenerative practices. When I say regenerative, what I mean by that is it's not a certification. It's more of a way that a farmer can manage their land base that is more in tune with the natural principles of that specific landscape.
So oftentimes, the litmus test and what we think about. Is, if we were to think about the land 5,000 years prior to agriculture being introduced, what would the land be? Would it be a forest? Would it be a prairie? Would it be a bog? And if a farmer is able to replicate some of those principles that they would've found historically, oftentimes they're able to create a more productive, resilient farming system.
So organic is a cert. Regenerative is a way of management. We like to see them incorporated because you can farm for organic strawberries and use black tarps to keep weed suppressed instead of glyphosate, but the soil's basically dead and it's almost a hydroponic system that's sitting in dead dirt.
Right? But if you were to have a strawberry field that's then incorporating regenerative management where they're may be using cover crops to suppress weeds, or there's robotics out removing weeds, that's where you can actually harness both the improvements in yield resilience that regenerative brings and the upside premium that organic brings. So when I'm referring to it in Mad Capital, what we specifically focus on, the farmers transitioning to organic. So when I say a farmer, like a plant-based producer, corn, soybeans, oats, wheat, alfalfa, and grazers. So cattle ranchers that are transitioning to regenerative grass fed grass finished grazing that emulates how bison used to move across the
Guy: Got it. Super helpful distinction there. And once folks are bought in, they're saying, all right, Brandon, I want to lean in. I want to do this. What does that process look like? You've got your advisory team that's thinking about the best solutions at the site, and then you make some recommendations.
There's some time period, and then we see that uptake. So maybe just walk us through the timeline of engaging a farmer,
Brandon: the organic transition process takes three years, and that is what's articulated in the National Organic Program, so the day a farmer says, I'm gonna stop using synthetics and GMO seeds operate organically, it takes 36 months to then hit that organic certification to then be able to sell that crop into the value added market.
There's a point of stress during those three years, because non GMO crops grow less yield than GMO crops on average, right? So they have to take a yield hit of 20%. And they can't sell it as certified organic. They're selling it into conventional markets. So you're taking a business that already has pretty tight margins and putting them in a position where they're running roughly like a negative 20 to 30% EBITDA margin for three years.
Oftentimes though, many of the best operators, they aren't whole hog transitioning the farm from zero to a hundred percent organic in year one. They'll do a piecemeal, we are not advocates and. Generally don't support farmers going whole hog and transitioning the whole farm because there's a lot to learn, uh, around certification, around the adoption of new practices.
They have to set up new markets, and that's why many of the operators we're supporting and working with have 50% of their acres at least already certified. So they've got that blueprint and then they can replicate that and scale it. So when a farmer wants to make the transition and comes to us, oftentimes we're trying to understand.
Their capabilities. As an individual entrepreneur and operator, we need to understand that they have the capability to be dynamic and adaptable and be able to handle the scale of these additional acres. I'm not a farmer. Our team are not farmers. We are trying to empower the best farmers who know exactly how to navigate their specific transition so we can underwrite that in the numbers and start to infer their operational capability on how quickly they respond to diligence requests the organization of their financials. How rigorous is their plan? Do they stand up long contracts and do they only grow crops they have contracted? What does their insurance program look like? There's numerous different indicators we can use to start to suss out is this a top quartile farmer or is this an average farmer or a sub average farmer?
Because at the end of the day, our advice could be helpful, our connections could be helpful, but we need to empower. The best quality operators that are out there.
Guy: Yeah. That's super interesting. I mean, my mind just jumps to, you're building data room with Farmer John in Iowa. What does that process look like?
How crept are they to provide you all of these documents and plans and maybe a PowerPoint or Excel file mixed in there somewhere? It seems like something they're not doing in their day to day necessarily.
Brandon: A PowerPoint would be nice. We've seen everything from that one PowerPoint. Down to getting cell phone pictures of a balance sheet on a napkin.
Oftentimes the folks that we're working with, they're using QuickBooks or they have some form of an accountant or maybe part-time on staff accountant that's able to put together their financials. And we usually see an Excel projection as well that's mixed in there. So for our collection process, we're collecting anywhere from, on average, 70 to 80 data elements of the farm, from yields to insurance, and collecting a PH balance sheets, tax returns, projected p and l, organic system plan appraisals, et cetera.
There's quite a slew of data, so it starts with a screening process where. We're just trying to suss out, is there a deal here trying to get, mm-hmm. Back of the envelope, loan to value. Look at high level cash flow. What was their EBITDA margin over the last three years legally? Is the legal entity sound?
Do they have any, you know, outstanding legal issues that are active pulling credit score, what's their FICO historically propensity to pay? So just trying to articulate, is there a deal here? And then once we move through that screening process, and that's pretty lightweight for the farmer. It really only takes 30 minutes from the application to submitting documentation.
We're then pulling them into the full underwriting process, which can take anywhere from at its shortest, two weeks at its longest. I mean, we've had some deals drag out for months. It's really the hard part for us is the timing of the year. So if a farmer is reaching out to us in September and they're about to go into full harvest mode, we might.
Only hear from them once every two weeks 'cause they're just running hard. Right. And busy. Right. But if we catch them in the middle of the summer, they tend to be pretty proactive or right about now leading up to Thanksgiving. mid-November to March tends to be our busiest season. They tend to be sending information on a daily basis as we're requesting it, and there's just different factors, as I'm sure you've seen from the complexity of a deal and ask and size and what they're trying to do with their operation to how organized that operator is.
A deal can run from two weeks to. Four or five months, they've probably been prepped to a certain extent. 'cause I would assume a lot of them have USDA loans in place. And then you're providing an incremental capital that allows to fund the cover crop planting or certain practices on site. Yeah, the majority of what we do are operating loans.
So about 60 to 70% of our loans are for working capital. Working capital is for seeds, diesel, cash, rent, paying for labor equipment, repairs, composts, it's all of the cash flow that a farmer needs as they are preparing for next season, securing their rents and leases, planting, managing the crop, and ultimately bringing that crop to harvest because annual row crop farmers, which is the bulk of what we finance, have really lumpy cash flow.
They're basically spending money for 11 months outta the year to then have a harvest and have inventory to then sell. And that inventory could be sold within a few week time period to over the next six to seven months, depending on if it's contracted, the timing, the pricing of how that market looks. So that's the majority of what we're focused on are these working capital loans and.
Oftentimes the farmers that are coming into our portfolio, they already have an outstanding lender that they've been working with historically, and we will refinance or recap the outstanding balance on that operating note, clear out the collateral positions so that we can. Ensure that any previous filings have been resolved so that we can come in with a clean blanket lien, UCC filing, which is in first position against all their non-real estate assets.
And that's a very traditional way of operating in this space. And it just gives us a pretty high degree of assurance in terms of our borrowing base that we're lending against and just a clean slate to operate so that we don't have any other lenders that are in the mix. We do have a couple of Intercreditor agreements in place, and we're open to those types of arrangements, but oftentimes many of these banks don't want us coming in and starting to wedge our way into a relationship.
Right, right. They get pretty fussy about it, so we'll usually just take them out and take over the whole relationship.
Guy: Got it. It's clearly been successful to. Just saw the announcement on the second fund, 78 million. So congratulations there. Thank you. What are you seeing as the market demand? Who's coming in?
Who's looking to invest in these funds on the other side of it? Where's that capital coming from in terms of people that are trying to break into regenerative E?
Brandon: So we raised our first fund in 2021 was a $10 million pilot. We then just closed fund two for 78 million. With 111 LPs, so quite a few investors.
Wow. And now we're starting to cook up what Fund three will look like, and we'll have more to share on that starting early next year. And from the beginning, one of our early investors in Fund one gave us this framework to think about around raising on mission. Raising on momentum and then raising on performance.
So Fund one was really raised on mission, it was raised on an idea. Mm-hmm. It was raised on the story of how we were gonna change the food system. It was raised on the assumption that we're gonna test the underlying assumptions. Is there actually a market here? Is there product market fit from both of our customers, being farmers and ranchers and capital markets, investors, foundations, family offices, individuals fund two.
We started cracking into this zone, this hybrid zone between getting some institutions involved, many more family offices and family offices that started recognizing the ability of this strategy to scale. Since we now have. Five years of track record, but also some philanthropic mission oriented investors.
So Funds two is really a hodgepodge between a whole slew of different investors with different intentions and different kind of priorities in terms of what they wanna support, but ultimately, as a firm. We wanna scale into a multi-billion dollar institution, and in order to do that, we can only get so far on goodwill and trying to do good work in the world.
So we've always had the intention from when we had $0 under management. To really being able to raise purely based on performance. And performance is based on on time loan payment and track record, right? And our ability to originate and scale into quality credits as we expand a UM. So we've been very focused on that.
Particular KPI on time payment performance, and credit quality because that'll ultimately be the defining factor of our company as we now move from a hundred million in assets under management to a billion dollars in assets under management. So I would love if. We can start getting involved with some of these RIA platforms, some larger family offices that can look at a fact sheet and just make a decision based on the historical numbers and the yield and their net returns that we're projecting.
Guy: I didn't really accelerate capital in by making it a simpler process for everyone involved and bringing folks that aren't just mission aligned, but have very strict frameworks on what they need from a metrics perspective.
Brandon: Exactly. I would love someone to look at it without seeing it as just an agriculture fund that delivers uncorrelated low vol yield, and they just see it as a nice slice in terms of their senior credit portfolio that's in their broader income bucket.
And that's what we're rowing towards and that's what we're building. But I think the reality of it is to get from the next. A hundred million in assets to call it two 50 to 300 million in assets. There's gonna be investors with the intention of both and right where they look at it as we're doing good in the world, we're helping build a better food system, and it's delivering a reasonable return because we don't have the track record to go and issue a bond or.
They'll raise a $500 million slice from a Blackstone or someone of the sorts, and we wanna build towards that, but we're also very practical about what it takes to get there. Of course.
Guy: And I don't want to glaze over the environmental impact that you all are having. Do you have a couple favorite metrics when you think about carbon impact, water impact, reduced fertilizer runoff, anything like that that you think really resonates with folks?
Brandon: So if you take the portfolio right now, we're financing. Roughly 37 different operations. Each of those operations is managing anywhere from 10 to even 40 fields. We're in 18 states on 163,000 acres of farmland total. To track the individual environmental metrics across, call it 500 different parcels, it would be incredibly expensive.
A lot. Yeah. And, and challenging. So we've been tracking and watching the different M RV tech across carbon biodiversity and water, but for our purposes. It's still pretty expensive. I've been tracking that and we're actually in conversations with a couple of investors who maybe are willing to actually fund that on the side to start tracking those portfolio metrics.
But the core KPIs we really talk about more broadly is. Around acreage. So we're financing today farms that are operating on farmers and ranchers on 163,000 acres of land, and they are transitioning about 33,000 acres of land from conventional to certified organic. So that's where we really focus on.
It's just pure acreage impact. This is how many acres we're financing, this is how many are actively. Transitioning in as a form of additionality that, you know, likely wouldn't have happened without our intervention. And I wanna build towards being able to talk about carbon water biodiversity,
Guy: but at least at a high level, you can say across those acres, they're no longer using traditional fertilizer and that type of thing.
Right.
Brandon: Oh yeah. Yeah. Certainly if you look at the high level information across organic management, we could start to infer carbon biodiversity, water numbers. I just don't have specifics that I can report. 'cause they could be right or wrong by 50% plus or minus. It's hard to say.
Guy: In many ways, it's much more about the transition there and building out practices more broadly and the metrics certainly will follow.
Alright, so I'm gonna push you a little bit. You said a billion a UM. How do we get this to 10 billion a UM, a hundred billion in terms of at least the number of farms transitioning and scaling more broadly, what are some of the bottlenecks? What are some of the things you're excited about that can really push this forward?
Brandon: If you look at the market today, we estimate it's about a 30 to $35 billion tam. If we were to be financing all of the debt of the organic farmers in the United States and regenerative ranchers, total market in the US don't have the number globally, but call it roughly a hundred billion. We can continue to grow and chip away and kinda wedge our way into the market.
Let's scale from a hundred million to a billion, to 2 billion to 5 billion, but. The ultimate signal that dictates where this market goes is consumer demand, because consumers need to be purchasing more organic food in order to then move down the chain and incentivize the creation of CPGs to incentivize processors and ingredients companies to then ultimately purchase from farmers and ranchers.
So we need to see more people. Buying organic products. Right now, about six to 7% of all grocery sales are certified organic, but we need to grow that to 10, 20, 50% because without that end pull, none of this work happens. The farmer is ultimately paid by the consumer at Whole Foods oftentimes. So that's what we need to see grow.
There could be some potential policy changes. I believe about 40% of all corn that we grow is used for ethanol. That's not being consumed by people. Mm-hmm. The other 50% is for feed. So CAFOs beef could be replaced with grass fed, grass finished, holistically managed beef. We need more consumers to be willing to pay for this type of food,
Guy: and then when you're looking at any of those policies, anything on the broader trend side of things, maybe at the state level, any initiatives that you're seeing that are helping to motivate this product?
Brandon: I don't track the, the policy side too closely. Okay. I do think that there are some manipulations that are happening in the market from bad policy.
So the risk management agency, the RMA, they cover about 50% of the cost of insurance for farmers and ranchers. Those insurance policies do not incentivize the adoption of regenerative practices. So regardless of underlying risk, whether a farmer is cover cropping or not, both. But those farmers would pay the same to have their corn crop covered.
So I'm more of an advocate of, let's get out of the way and let the free market figure it out. That's what New Zealand did in the eighties. They removed all subsidies from agriculture and it was a little bit of a bloodbath for a bit with high bankruptcies, land falling 30 to 40%. But after the fact, over the course of about a 10 year period, they moved from growing Ag GDP by about 2% year over year to about 6% year over year.
Wow. So they tripled output. That comes at a, a high cost in the short term, of course, but in the long run, we end up seeing the more resilient practices, the more resilient farms end up being successful. And I think that there's a lot of grandiose. Sentimental ties to the American farmer growing food for people.
But these are also businesses, and these businesses should be held accountable to certain degrees. So I am more of a fan of policy stepping back and actually letting these farmers compete head to head instead of having manipulative policies that create incentives that don't move us in the right direction.
So I think much of the policy interacting today is actually holding back the adoption of regenerative practices.
Guy: Super interesting. So what is something Brandon, you are particularly proud of?
Brandon: On the Mad Capital side, I'm proud of the team that we've been able to build. You know, we have a small team, six people currently hiring, a couple others, but I, I do feel a great sense of pride in the people that we've been able to bring around the table and that have been able to, frankly.
Gutted out for the last three years. You know, it has not been easy to get where we are. There's been a lot of hiccups along the way and the core team we have now joined when we had 10 million in assets. And that step up in magnitude from 10 million to a hundred million has been more than a journey. And yeah, I'm very proud of every individual that we have here that has been able to just saddle up and dig in and, and get through the other side.
So we've been. Definitely in a, a moment of reflection and celebration over the last couple months since closing fund two. And it feels like there's just a little bit of a newfound energy culturally in the office and at the company as we have cracked through. Almost like exited the.
Guy: Yeah, a hundred million.
That's big time, man. And it's all about the team you get to work with and that shared energy. So I love to hear it. Yeah. And since you're out interacting with folks that, frankly us in DC and SF and New York and a lot of the hubs that a lot of our listeners come out of, what's something you think we could learn from the farmers you work with and the way that they carry on, the way that they live their lives and the hard work that they do?
Brandon: I would say patience. This is something I'm. Learning as well. Many of these farmers and ranchers that we work with, they only have one shot a year. If you're gonna plant Yeah. Crop in the Midwest, you've maybe got 40 seasons, 40 shots, 40 crops, and that's your career. And every decision they make at the beginning of the year in terms of planning and then what they ultimately put in the ground, the feedback cycle is 12 months.
And they can only pivot and interact on a much slower timeframe than folks in the tech world or in finance. We can make decisions every month, every week, every day, every hour. We can kinda have these micro pivots. A farmer only gets one shot a year. So I look at that and I'm also trying to learn from the wisdom of the people we work with.
To be a little more patient. Good things can take time.
Guy: Absolutely, and then bring it home. We look out to our listener base. What's something that we can do to help scale regenerative practices more broadly?
Brandon: It's pretty simple. Buy organic food and try to buy local regenerative, grass fed beef, pork, chicken, just.
Keep that top of mind as you're an eater. I mean, we're all eaters. We're all consumers. Try to buy local, try to buy organic and just create that end market demand. That's what we need to ultimately change the system. 'cause if we all made the decision tomorrow that we're not buying any conventional food, we're only buying organic, well, all of our farms would be forced to change overnight.
So it is within our power to help create that signal.
Guy: Very good and end up beating, uh, healthier and tastier food in the process as well, so, oh yeah.
Brandon: I mean, let's not forget that. I, it is absolutely, definitely a higher quality product.
Guy: Alright, Brandon, we'll call it there. I appreciate you so, so much for offering up your time and grateful for your good work
Brandon: Awesome. Thanks guy.
Guy: If you enjoyed this week's podcast, please leave us a rating and review on Apple and Spotify. It really helps us reach more listeners. You can also let us know what you thought via Twitter at Climate pai pod, or email us at climate positive@hasi.com. I'm Guy Van Syckle and this is Climate Positive.