Digging Into Our Partnership With Leading Harvest
Back in January, FarmTogether was proud to announce the launch of its partnership with Leading Harvest, an innovative new certification aimed at driving production agriculture toward sustainable practices at a large scale across the US. FarmTogether has enrolled 100% of its acres in Leading Harvest’s certification program, enabling investors to positively impact the planet and future communities while earning strong returns.
With Earth Day coming up on Thursday, April 22 and Leading Harvest itself celebrating its 1-year anniversary, we thought we’d take some time to dive into their program and standard more deeply and showcase why we feel it will be so transformative.
Leading Harvest’s Origin Story
Before it was launched on Earth Day last year, Leading Harvest’s standard and program had been the subject of an intensive collaboration of various key players in production agriculture, farmland asset management and sustainability. Among them were some of the largest institutional investors in farmland - Westchester/Nuveen, UBS Farmland Investments, Cottonwood Ag Management, PGIM Agricultural Investments, and Hancock Natural Resources Group - who remain Leading Harvest Partners to this day.
The collaboration was facilitated by a sustainability-focused non-profit, The Conservation Fund, and Kenny Fahey - one of the collaboration’s leaders - is now Leading Harvest’s executive director. FarmTogether hosted a Q&A with Mr. Fahey around the time of the launch of our partnership, in which he was able to shed some light on how the program came together and the void it fills in the farmland asset management space.
The fact that the creation of Leading Harvest’s standard had such keen involvement from big players in institutional farmland investing is noteworthy - those firms all acknowledge that the industry needed a credible yet flexible standard that could cover a vast range of agricultural acreage in order to drive US agriculture toward sustainability.
And their investment of time in the collaboration to create the standard has paid off big: In just a year, Leading Harvest has added over 1 million acres to its program. The program user community continues to expand as farmland managers of various types and sizes enroll new acreage.
Outcomes-Based Approach Makes Leading Harvest’s Standard Flexible And Scalable
What makes Leading Harvest’s standard and program structure stand out from the rest of the “Eco-Labeling” landscape is that it is an entirely outcome-based framework. The standard stipulates a total of 71 sustainability indicators, across 13 sustainability principles, that managers must conform to in order to become certified. However, the standard does not prescribe exactly how managers should conform to these principles. In other words, the standard sets the definition of sustainability in all its dimensions, but allows program participants to adjust their management practices in unique ways while still conforming to the standard.
This is hugely beneficial for the program to ultimately gain the scale of coverage it aspires to reach. As we in the farmland investing business know, no two properties are the same - all crops, regions, soil types, and farm management styles have their own nuances, and some actions are more appropriate to those nuances than others. For example, irrigation and soil management practices that would promote sustainability in permanent crops in California might be wholly inappropriate for farms in the corn belt. A standard that specifically requires farms to deploy drip irrigation may not be helpful in driving sustainability in the Great Plains.
By design, Leading Harvest’s standard is intended to achieve as wide a coverage of US farmland as possible, such that the national agricultural industry can be held accountable to a consistent framework of performance for sustainability. Focusing on outcomes, rather than specific practices or processes, is what will enable Leading Harvest to succeed in this goal.
Establishing Credibility, And Avoiding Inspection Fatigue
Beyond achieving nationwide coverage, one other benefit of Leading Harvest’s outcomes-based design is that it makes it easy for farmland managers of all sizes to reduce their burden of inspection fatigue by repurposing their compliance with other sustainability schemes.
With the proliferation of eco-labeling schemes in the agriculture, food and beverage industries, inspection fatigue is becoming increasingly common among farmers in the US and globally. This phenomenon is what farmers experience when they lose valuable time that they could be spending on their operations rather than working through paperwork for a myriad of certifications and regulatory requirements. For small farmers especially, this can be particularly painful when farming itself is growing more and more demanding.
By being outcome-based, Leading Harvest’s certification approach inherently means that farmers and farmland asset managers who already comply with other relevant standards can leverage their standing with these other certifications towards their Leading Harvest conformance.
What’s more, all of Leading Harvest’s certification decisions are made by a third party auditing firm. Third-party verification is key for credibility, especially in such a broad-based, inclusive, outcomes-based framework. Leading Harvest itself focuses on setting and refining the standard, yet avoids conflicts of interest by allowing third parties to conduct audits against the standard they set, and requiring farmers to manage their relationships with auditors independently. K-Coe Isom, one of the leading auditing bodies serving the agriculture industry, conducts a majority of Leading Harvest’s audits.
Fostering Owner-Tenant Collaboration
Another unique aspect of Leading Harvest’s standard is that it is the first sustainability standard for farming to directly engage the tenant-owner relationship by requiring both tenants and owners to sign written agreements committing to sustainable practices.
“Tenant-Operated Operations” is actually one of the Leading Harvest standard’s 13 key principles, and seeks to acknowledge that these two parties have different incentives for how they manage land. To ensure sustainability, those incentives have to be well-aligned.
This is an extremely important nuance, and will be crucial to the standard’s successful adoption. About 40% of the commercial farmland in the US is rented by the principal farm operator, rather than owner, and additional disruption to the ownership landscape is underway given the impending demographic transition in farming communities. Leading Harvest’s attention to this relationship provides confirmation that farmland owners and tenants will experience the greatest mutual benefit if they can work together, specifically on balancing the profitability of day-to-day operations with longer-term drivers of production value, such as soil health and water availability.
Bedrock To Build On For Other Sustainability Initiatives
Finally, the breadth and flexibility of Leading Harvest’s standard make it extremely amenable to other changes that drive sustainability in farming.
To begin with, there is a lot of agreement between Leading Harvest’s key principles and the values inherent in USDA Organic, GLOBAL G.A.P. and Regenerative Organic Certification. These three, among others, are already common in farmland management in the US and are growing in popularity, especially as organic and regenerative agriculture have gained public favor. Leading Harvest’s structure makes it straightforward for farmland managers to maintain multiple certifications simultaneously, which could drive increased adoption of sustainability metrics and lead to value add for both farm operators and farmland investors.
On top of that, Leading Harvest is making a strong effort to be as inclusive as possible for small family farms in the US - a crucial step for sustainability in the industry given that 96% of farms in the US are still family-owned. Leading Harvest has secured dedicated funding from the Walton Family Foundation to support this effort, and will start by piloting an educational program directed at crop farmers in the Upper Mississippi River Watershed over the coming year. Their efforts are extremely promising for the momentum of sustainable agriculture nationwide.
FarmTogether’s mission is to support sustainable and profitable farming by leveraging technology, and removing the barriers to entry to farmland ownership, all the while providing individuals, our investors, with an opportunity to share in the rewards from farming well.
We enrolled our entire portfolio in Leading Harvest’s program because we see their standard as the north star for sustainable farmland management, and we plan to lean in heavily in this partnership as we continue to grow.
In our portfolio, we partner with operators who have a track record of successful farm management and who align well with our interest in sustainable production and promising financial returns.
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Disclaimer: FarmTogether is not a registered broker-dealer, investment adviser or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.