Podcast Short: BioCoat Gold and the Future of Risk-Sharing in Ag

Hi friends, this is John. Welcome back to the Regenerative Agriculture Podcast. Today, I want to have a conversation about farm economics and relationships between farmers and vendors, and some of the work that we are doing with BioCoat Golden Pinion to address some of these challenges. We live in interesting times. We see that particularly here in North America, but also around the world. Many growers, depending on the crops they're growing and the situation they're in, many growers are in a very difficult economic context. And I've always been fascinated by trying to understand how did we get to this spot? How did we arrive at this place? And there are many different contributing factors. I've been speaking about this topic quite a bit this winter at conferences when I've been asked to talk about farm economics. Conversation with myself and Michael McNeil. Actually, I think we might have ended up sharing it here on the podcast. I try to understand how did we get to where we are? And there are many different contributing factors. There's a combination of reasons for why we've arrived at this spot of farmers being so heavily extracted from and to some degree not being in control of their own destiny as long as they choose to continue with the status quo of production practices and, and crops that are common. And I found it interesting when I— going, going back in history, you look at some of the historical data, and just— this is some very broad brushstrokes because there's lots of variation depending on where you are in North America and the crops that you're producing, and, and there's a lot of context— but very broadly, through the late 1940s, '50s, '60s, into even into the early 1970s, it was possible for many farmers to pay for a farm in 5 to 7 years. My grandfather served during the Second World War as a conscientious objector in the CPS camps, and he came home from the war, got married, purchased a farm, and he paid for that farm in 4 years. And I've heard many stories like that of farmers in that era paying for farms in a 4 to 10 year timeframe. And you look back on that era and you ask what happened and how do we get from that place to the place that we are today? Well, the answer is many things happened, and it's beyond the scope of what I want to get into. This could perhaps be a separate conversation at some point of, of all the various contributing factors that contributed to ranging all the way from cheap food policy to monopolization of energy and inputs and on and on the list goes. There's, there's a regulatory growth of regulatory factors. There's a number of contributing factors. But I find this intriguing, the question, the challenge that I would ask people to think about. There's this question that Peter Thiel asks when presented with a business plan or business proposal. When we put together these long-range plans or long-range visions of, let's say you have a 10-year plan, how would you accomplish your 10-year goal in 6 months? And the reason for asking the question in that way is because it forces a change of thinking. You cannot achieve a 10-year goal in 6 months by doing the same thing faster or by doing the same thing better. It requires doing something different. And the question that I've been challenging growers to think about: if you had to pay for your farm in 4 years, how will you do it? And because I know, I personally know many farmers who are producing revenue and profitability capable of paying for a farm in 4 years, smaller scale, not on a scale of thousands of acres. But there's— I just recently had an exchange with a customer of ours who is growing in North Carolina on 3 acres and generating a net revenue, a net profit after paying themselves of $180,000 on 3 acres. Well, that happens to be quite a bit more than many growers who are farming thousands of acres that we know and that we work with. And so there is— I think we have to, we have to start asking this question from a very fresh perspective and recognizing that if profitability is the objective, then the farming of the future might look very different from the farming of today. And I would suggest not just that it might, but that it needs to. Anyway, as a part of all this, one of the significant factors that has also changed is the nature of business relationships that farmers engage with. And I, of course, have the unique context of having grown up in an Amish community and having had the opportunity to observe business interactions in a group where community still actually meant something and relationships weren't optimized for optimal extraction amongst the members of the community. One of the pieces that I've described occasionally is that regeneration, when you look at regeneration from its most fundamental foundational aspects, the, the verb of regeneration implies that you are regenerating something from a degraded state to a more optimal state. So what do those two states look like? What does a degraded state look like, and what does a more optimized state of relationships look like? And I would suggest that degraded relationships are relationships that are competitive, that are extractive, that are self-serving, where each party to the relationship tries their very best to the, to the means of their ability and their power and their influence to optimize that relationship for their own benefit. So when you have this self-serving, extractive relationship, this competitive relationship, this zero-sum game, you have inherently, in the words that I've already used, you have inherent selfishness, you have competitiveness, and you have the destruction of community. When that happens, you have the destruction of relationships. So that is a degraded state of relationships. And this can be relationships between soil microbes, between soil microbes and plants, between landscape, ecosystems, and livestock. Many, many different trophic levels that we can look at relationships, and including in this case, what I'm referring to particularly is relationships between growers and the human community or the organizational community that they are surrounded by. There are vendors that they're purchasing from and the people that they are supplying, the people who are buying their product from them. So, when you think about regenerating relationships from a degraded state, what does an optimized state look like? And when we look at biological systems and optimal ecosystem function, healthy relationships are relationships that are collaborative. They are symbiotic. They are serving the community rather than just serving self. And You can continue this thought process and you can come up with many other adjectives or descriptions of what a regenerated relationship state might look like and does look like in biological systems. How do we create those types of relationships between our organizations and between us in a business context? This is something that I've thought about of how do we build this into our architecture and into our very DNA as a company at Advancing Eco-Agriculture. We want to be a company that not just does regeneration, but a company that is inherently regenerative in the way that it interacts with employees, with customers, with vendors, and in the business landscape. So what does that look like exactly? This was one of the inspirations for the community fundraising round that we launched a couple of years ago because I wanted there to be an opportunity and a pathway for our customers and the growers that we were working with and our fans and supporters to engage with the company in and be a part of the overall company success so that there is this true symbiosis and this collaboration where everyone wins. And I've continued to think about how we might expand this more broadly. And particularly in the current business environment, this is something that I've been thinking about for years. But how do we as a company, how do we participate in the risk that a grower takes on when starting to use advancing eco-agriculture products or starting to use our consulting services. How do we participate in the risk? And then ultimately, what a relationship should really look like is, can we participate in the risk of growing a crop to the depth that it also is justifiable from the grower's perspective where you have true collaboration that you also then participate in the reward, you participate in the upside? When your consulting actually produces results. But there is an analysis there that needs to happen depending on the specific context of what is appropriate risk participation from the grower's perspective and the company's perspective. This has been— this is an interesting conversation, something interesting to think about. But the fruition, what has come to We've had many priorities as a company over the years, and just, we have made many exciting advancements here in the last couple of years with our investments in CropTix and in-field sensors and FieldLark and internal technology that we have been developing, where, and also some of the emerging product technology with Pinion that I want to chat a bit about. But So there are many exciting developments and things that are happening within the space. But one of the things that has just recently come to the top of the list that we've been— that we're now able to launch and to talk about is how we as a company are able to participate in the risk with the grower in one particular product. And my aspiration is to eventually broaden this. And it's, it's complicated, it's nuanced, of course, but figuring out how can we participate in the risk with a grower in implementing a full program, a full system change of changing from one type of nutrition management system to a different type of nutrition management system. And it's challenging to model that out and put that together well, just because there is so much nuance. And so there's so many different details that You almost have to put something together on a case-by-case basis. But what has emerged out of this is the opportunity for us to participate in the risk and essentially remove all the risk for growers using BioCoat Gold. A couple of weeks ago, we announced a partnership with Growers Edge. Growers Edge is partnering with us in the administration and and the underwriting process of putting together a performance warranty for BioCoat Gold. So with, with BioCoat Gold, we now have— for those of you not familiar with BioCoat Gold, BioCoat Gold is a microbial inoculant seed treatment that combines mycorrhizal fungi. It also includes various bacterial inoculants that have a symbiotic relationship with mycorrhizal fungi as well as with plants directly. And it also includes a number of different biostimulants to just stimulate overall plant development and microbial development as well. We now have about a decade of experience with BioCoat Gold, and it is a very consistent performer. It's been such a consistent performer in all these different types of environments and ecosystems we put it to. We can put it into very dryland environments, very stressed environments from high sodium levels or phosphorus levels. There's all kinds of different environmental contexts that BioCoat Gold has been challenged with, and it has been such a consistent performer, which is a bit of an outlier and unusual in the microbial inoculant space, that we have the confidence to put together a performance warranty behind it. And so, um, there is of course some fine print in how it needs to be used, how it needs to be applied properly, having appropriate checks and controls so that we can verify that the product did or did not perform. But the short version is that in, in conjunction with Grower's Edge, we've released this performance warranty for BioCoat Gold where we commit to an ROI performance that it will at the very least it will break even, or you get 100% refund. So it's— and it is these, these types of programs, you can find the information, our team will include links to this program in the show notes. You can also find them on social media, you can find the show notes on YouTube, you can also find them on the Regenerative Agriculture Podcast website. If you're unfamiliar, uncertain where to find those, you can also search for the information, find it on Advancing Ecoagriculture's website. But this is, this is actually something that I'm very excited about because it, it is the first time we've been able to put something together that removes all risk for the grower. This is somewhat of a no-lose scenario. Either it performs or you get a refund. It's quite straightforward. And the, the vision that I would have is for us to figure out how can we do more of that? How can we do that with more products, or how can we do that with an entire system? So for all of— and of course, for us as a company at Advancing Eco-Agriculture, there is a minimum threshold from an administrative perspective and from an underwriting perspective that needs to be met in order to make putting something like this together. So the, the question and the invitation that I would have for all of you listening, if you have a crop scenario and you've been listening to the podcast, you've been working with AEA in some capacity, if you think that you might be a possible fit for, for us to collaborate and develop this type of risk management scenario on a broader basis outside of just BioCoat Gold, I would invite you to reach out to us. Let's start having a conversation because I'm very interested. We'll have to pilot this. We'll have to kind of figure it out as we go along. And we have to, of course, manage risk on our side as well as you do as a grower. But let's, let's work together and figure it out together if that is something that makes sense for you. And if it doesn't make sense, then that's, that's perfectly appropriate as well. But I think it is, it is figuring out how we develop these things together and how we truly collaborate and how we share risk, that is a foundational aspect of how we have regenerated relationships and collaborative and symbiotic relationships between input companies, um, and between growers so that input companies, I think there's a shared sentiment quite broadly and quite widely that input companies generally are very extractive of farmers. The prices of many inputs do not correspond with the cost of production. They do not correspond. They mostly correspond with the perceived, or I shouldn't say the perceived, but the calculated ability to pay. And that's the reality that ranges all the way from, from the cost of harvest equipment to the cost of fertilizers to the cost of seeds to the cost of fungicides, insecticides, and so forth. And so this is, this is something that's, that's quite important to me that I want us to continue developing as a company. So this is something you're interested in at a substantial scale, please reach out to us and let's have that conversation. For now, I want to wish you all a great growing season. May this year be a very profitable year. And please check out the warranty programs for BioCoat Gold. If you have an application for pinion that you want to test out on scale, please contact us. Let's have a conversation about how we can collaborate on the risk in that if that is appropriate. And more broadly than that, if you want to also have us participate in the risk for an entire program, an entire system on scale, please reach out to us and let's have that conversation as well. So thank you all for being here. Thank you for all the work that you do. I really appreciate all of you as listeners and the amazing changes that you are creating on your operations and in the world generally. And We always welcome your feedback and your input on how we can improve as a company and how we can provide greater value. So thanks for all that you do, and let's talk again soon.

The team at AEA and I are dedicated to bringing this show to you because we believe that knowledge and information is the foundation of successful regenerative systems. At AEA, we believe that growing better quality food and making more money from your crops is possible. And since 2006, we've worked with leading professional growers to help them do just that. At AEA, we don't guess. We test. We analyze. And we provide recommendations based on scientific data, knowledge, and experience. We've developed products that are uniquely positioned to help growers make more money with regenerative agriculture. If you are a professional grower who believes in testing instead of guessing, someone who believes in a better, more regenerative way to grow, Visit advancingecoag.com and contact us to see if AEA is right for you.