The power of regenerative agriculture: Interview with Renée Vassilos, Director of Agriculture Innovation at The Nature Conservancy

I had the pleasure of interviewing Renée Vassilos, Director of Agriculture Innovation at The Nature Conservancy, an expert on agriculture economics and regenerative farming. Renee has worked around the world and is a thought leader on how agriculture is going to survive the challenges of climate change, labor shortages and an evolving agricultural ecosystem. Read this fascinating interview to learn more about food imports, precision agriculture, autonomous farm operations and soil health.

JGR: Tell me about your background? How did you end up working in Agriculture?

I grew up in Chicago so I was a city kid. I was accepted at the University of Illinois in Champaign Urbana, a major agriculture land grant university, and decided to study economics. I ended up in the Applied Economics program in the College of Agriculture since it made more sense to me to study an application of economics. I ending up loving agriculture, especially since it is global industry and it has turned into an incredible career.

JGR: Tell me about your career path. I know you’ve worked in different sectors of the agriculture ecosystem.

After working overseas for an organization in Amsterdam called East west Parliamentary Practice Project, I did my Master’s in agricultural economics at the University of California at Davis. UC Davis focuses on specialty crops vs. the Midwest’s focus on commodity row crops so it was great to learn more about this sector of the agriculture industry and to be immersed in California based agriculture.

After my master’s, I continued to have the international bug and got an opportunity to join the US Department of Agriculture at the Embassy in Beijing as an agricultural specialist. After less than a year I decided that government work was not for me. China was booming in 2008 with double digit economic growth and John Deere literally came knocking at the embassy door because the CEO was coming for a visit. After supporting this visit, I was fortunate to be offered a full-time role with John Deere in China initially working on product development for the Chinese market. The business was in hyper growth. I was the 250th employee in late 2008. By the time I left in 2013, there were over 2000 employees.

JGR: What were some of your takeaways from your decade at John Deere? How did it shape your career direction?

I worked for five years in China on product development strategy, and then five years in the US in sales and marketing. I learned a lot about product development, marketing and strategy. It was incredibly valuable to learn about business in a highly functioning well respected market leading company. I left in 2017 because I wanted to move the needle on sustainability. It was clear to me that the early stage technology ecosystem was where innovative solutions were being designed to solve challenges that were preventing a large scale shift towards more sustainable agriculture production systems.

JGR: Tell me more about Regenerative Agriculture.

Regenerative agriculture is focused on practices that work in harmony with nature to reduce agriculture’s impact on climate change. There is a focus on rebuilding soil health through which there is a tremendous opportunity to improve biodiversity, water quality, and resiliency for farm operations. Examples of regenerative practices include producing crops with minimal or no tillage, cover cropping, agroforestry, precise nutrient management and irrigation, and adaptive grazing Food. companies, governments, and leading scientists recognize that regenerative agriculture practices can shift our food system from one that depletes our resources to one that delivers enduring net-positive benefits for people, climate, and nature. In 2022, for instance, the U.S. Department of Agriculture announced $3.1 billion in funding for climate-smart agriculture projects to spur the creation of new commodity markets that further incentivize the adoption of regenerative practices.

JGR: Who is driving this? The customer? The government?

There are several drivers. Climate change is causing increasing volatility in weather which leads to increased volatility for farm operations. Weeds and pests are becoming resilient to herbicides and pesticides. In different countries there are varying levels of regulatory pressure putting pressure on how farm operations manage inputs (fertilizer, pesticides, herbicides). Financial stakeholder pressure exists for food companies to improve the emissions from their supply chain (scope 3 emissions). Combined these drivers are creating pressure to reimagine how farming is done.

Headwinds preventing more rapid change include the high risk found in farming that push farm operations to opt for risk management over long term maximization. Long feedback cycles insulate farm operations from the negatives and positives from their agronomic decisions. In addition, in the US, incentive programs shield farm operations from responding according to market signals around supply and demand. They are operating in a distorted business environment.

JGR: Just to be clear, who are the most powerful financial stakeholders?

Farming today is a high working capital business. Significant annual operating loans are required for most farm operations so, farm lenders are critical financial stakeholders. Significant farm lending institutions include Rabobank, Wells Fargo, and Farm Credit Services. The input companies that serve farm operations are critical financial stakeholders these include input companies such as Syngenta, now owned by ChemChina; Bayer which acquired Monsanto in 2018; John Deere and Case New Holland as well as other equipment suppliers. Other critical stakeholders include those supporting post-harvest aggregation of what is grown on farms and distributed across the globe (or across the state) such as Cargill, ADM, Bunge, and Louis Dreyfus Company. Many of these companies are publicly traded and are likely in your 401k or investment portfolio so, I would argue all of us are powerful financial stakeholders.

JGR: I love that you approach impact from an economic standpoint. How does this come into play in your current role as Director of Agricultural Innovation at The Nature Conservancy. What does your job entail?

I manage a pool of venture capital that we have been investing in early-stage agricultural technology companies with a focus on soil health building goals and the necessary large-scale shift towards regenerative production systems. Our investment thesis is focused on identifying solutions that have the promise to scale one or a multitude of the practices our scientific research has demonstrated are successful in rebuilding soil health — for example, acres under cover crop, acres under minimal tillage, increased rotation, and input optimization.

Q: Are there any companies in your portfolio that are making an impact already?

Most of the companies in which we have invested are still at early stage of product development, low volume sales. On the autonomous tractor side, we have a portfolio company called SwarmFarm out of Australia. The farm owner-operator founders of SwarmFarm were motivated by the challenge they had to implement a cost-effective precision input system on their large-scale row crop farm system. Equipment solutions from the established equipment manufactures were not sufficient. A cost-effective precision system is necessary because Australia is facing severe herbicide resistance and regulatory pressure (limited be there) to reduce on farm fertilizer use. SwarmFarm is running autonomous tractor systems with sprayers to cost effectively implement a precision application system. If they’re able to scale commercially, this would be an incredible win for conservation.

JGR: The suppliers realize they need to transition from being chemical companies to biology companies. Are you investing in biotech?

The Nature Conservancy believes that there’s absolutely a role for biotech solution to play. It doesn’t make sense for us to pick winners in this vertical. Instead, we have invested in companies like Pattern Ag, which is a soil microbiome analysis company that will eventually build out the infrastructure to support the large-scale testing of biological solutions. Testing is critical If we want to scale the adoption of biologicals.

We also have a portfolio company that has been working on an alternative to synthetic nitrogen called Kula Bio. There’s resounding agronomic and economic evidence to support the idea that you should minimize the fall application of fertilizer, but we continue to see it happen at quite extraordinary levels despite this evidence. One of the challenges for that is logistics. Fertilizer is delivered and available at the lowest cost in the fall which causes some producers to hedge their bets and do applications when it’s available and when it’s at its lowest cost. Kula Bio has been working to get production costs so low that farmers would be able to set up bio reactors on farm, disrupting this logistics challenge and producing a compelling alternative solution.

JGR: What role does agrifinance play in all of this? What are you funding there?

We have an interesting FinTech company in the portfolio, Growers Edge. Growers Edge have developed warranties as a way to de risk the adoption of new technologies on farm. Let’s say a company comes out with a new seed that they want folks to use, and they have a whole suite of products that will support the production of this new variety of seed. Growers Edge developed a warranty to help reduce the risk for farm operations to actually try out this new technology. We saw the opportunity to work with Growers Edge to develop a warranty to de risk the adoption of cover crops. The idea being to address the perceived financial risk farm operations take on when they introduce a new practice like cover cropping. We also co-developed one that we’re piloting this year in the Chesapeake Bay region to de-risk the adoption of nutrient management practices. The warranties are supported through crop insurance data.

JGR: So now you’ve got me thinking about insurance. Living in California, I am seeing the impact of fire, flooding and all aspects of climate change on our crops, How are these events going to impact the ability to get insurance?

Crop insurance is subsidized by the government, so as taxpayers we subsidize crop insurance. This is also true for fire and flood insurance. I’ll share a link to a great article in The Economist that explains how we as taxpayers subsidize insurance.

This crop insurance mainly supports the production of corn and soybeans which are food, feed and biofuel (corn ethanol and soy diesel) crops. The conventional production methods for these crops that often includes intensive tillage, excess nutrient application, poor water management and runoff are detrimental to the environment including soil health and our fresh water systems. And, like subsidized fire and flood insurance, crop insurance doesn’t provide much incentive to use practices that protect or build future productivity. Risk is addressed on a yearly basis, and doesn’t take into account long term impacts of practices.

JGR: Let’s talk about another challenge, labor shortages. How will AI and Robotics play a role?

First let’s talk about the why behind the need for robotics and AI. As we look at the scientific research around how we build resilient agricultural production systems it has become clear that what is required is going to introduce complexity. The introduction of cover crops, the re-introduction of trees (agroforestry) to share two examples- add cost and complexity to farm systems. This complexity in addition to the growing labor constraints require the development of tools that make it cost effective or in the most ideal world: the profitable choice to implement these practices on farm. For this to be true, we need new tools that make use of the most promising technologies which includes robotics and AI.

We need tools that require less labor and bring intelligence to farm operations to drive this shift towards regenerative production system. Personally and apart from TNC, I advise a company called Agtonomy which is building the solution to support a large-scale shift towards autonomy with farm equipment. This equipment agnostic approach is critical to supporting the acceleration of on farm transformation.

JGR: Will the amount of imported food go up?

The production and supply chain distribution volatility brought on my climate change is resulting in stakeholders beginning to implement strategies to relocalize food sources to mitigate the risk.

JGR: Fascinating. Can you paint a future for me 10 years out in US agriculture?

Love this question! In large scale Midwest row crops as well as specialty crops, we will see the continued shift towards autonomy as well as greater adoption of precision agriculture. It will be similar to what we are seeing in the precision healthcare space where care is being optimized and personalized. In ag, we’ll see deployment momentum as the ROI on the technology enables profitable deployment.

We’ll also see a very interesting new economy. The whole ecosystem will evolve to support this shift and new technologies, from how farm equipment is managed, to the role of the equipment and input suppliers. There may be entirely new support ecosystems.

At The Nature Conservancy we are working hard to ensure this incredible shift is not just great for building resilient farm ecosystem but also better for the environment. We are excited about the role this new agriculture ecosystem will play in mitigating climate change and reverting and halting biodiversity loss.

JGR: What about vertical farms?

They will play a role. However, the current economics around vertical farms are tough. I think there’s a misunderstanding of the kind of the volumes that can be produced in a vertical system versus what is being produced in soil ag now. Also, vertical farms, which have primarily been built in urban centers are solving for the wrong problem. In the United States we do not have a transportation problem (delivering to urban centers). We have the logistics infrastructure and an incredible cold chain to move product across a state or region. I think we will see a shift towards vertical farms being established in more rural areas using renewable energy. We can deliver produce in 3 days vs 7 days, and it will still be fresh. I think we might see more significant scaling of greenhouse systems. In the United States, we haven’t even scratched the surface of taking advantage of greenhouse technology developed in the Netherlands.

Thank you so much! I learned a lot today.

Well, as you can tell, I could talk about this for for hours.

Note: Nothing in this article constitutes investment advice, nor is anything here intended to be understood as an endorsement of any of the mentioned companies, products or services.

Note: Some people may not know the role that The Nature Conservancy is taking in funding and deploying innovation in regenerative farming. Here’s their mission:

Provide Mainstream solutions that connect people and nature. Support the shift from production systems that are extractive and degrading to systems that are restorative and rebuild natural capital.

Protect Focus on the most effective conservation pathways and global priorities to ensure we protect the right 30% of the planet, effectively, durably and equitably.

Tackle Climate Change Tackle the climate emergency equitably by accelerating renewable energy transition, using nature to catalyze natural climate solutions, and building resilient communities.

The Nature Conservancy Ag Innovation team on site at the U.S. National Tallgrass Prairie Park, a critical biodiverse ecosystem and the largest left in the world. In a unique arrangement, The National Park Service and The Nature Conservancy jointly manage the park. Kayla Sainato, Ag Inno Strategy Manager, on the left and Renée Vassilos, Director of Agriculture Innovation, on the right.

Bison wearing a Vence collar for a virtual herd management pilot at Silver Mountain Ranch in Colorado, 2022. Vence was one of TNC’s early investments. The regenerative ranching team at The Nature Conservancy believes that we will not be able to scale regenerative grazing land management without a virtual herd management solution. Vence was acquired by Merck in 2022.

JGR: What are some interesting articles you’ve seen lately?

The Bizarre but also beneficial methods that make biodynamic wine, Financial Times

Love this because it speaks to regenerative agriculture with use case that many can appreciate- wine!!

Fishing for the Future The Nature Conservancy

Love this because it speaks to the business case for building regenerative food production systems. Walmart recognized that it needed to change how it was sourcing its tuna supply. It needed to consider not just how the fishing was being done but also how the community that it relies on to deliver their supply is faring. Part of this significant shift is changing procurement time horizons to 10 years.

Guardian Agriculture nets $20m I Series A to expand precision crop protection drone technology, AgFunder News

Robert Mondavi Changed Wine. His Grandson Aims to Change Farming. NY Times

Building Soil Health Through Innovation, The Nature Conservancy

Parts of America are Becoming Uninsurable The Economist