A new farm operating loan will come with a lower interest rate to producers who achieve certain climate change and water quality benchmarks, the Environmental Defense Fund and Farmers Business Network announced.
The FBN Regenerative Agriculture Finance Fund will offer a 0.5% interest payment rebate “to reward farmers who meet soil health and nitrogen efficiency standards,” FBN and EDF said.
“FBN’s $25 million pilot fund is currently enrolling 30-40 farmers growing corn, soybeans or wheat,” said Maggie Monast, EDF’s Senior Director of Climate-Smart Agriculture, Finance & Markets, in a blog post. “The pilot will allow FBN to connect farm environmental performance with the financial performance of the fund and create new insights into the relationship between regenerative practices and farm risk and creditworthiness.”
“FBN plans to scale the fund to $500 million over three years and access public markets to securitize and sell these loans to investors seeking liquid, environmentally friendly investments,” Monast said.
Enrolled farms must meet certain criteria, FBN said.
On at least 70% of farmed acres, the farmer has to use one or more of the following practices:
- Ground is minimally disturbed (strip till, no-till – as defined by the NRCS)
- Crop rotation has live roots (cash crop, cover crop, perennials) in the soil for at least 70% of the year
- other regionally appropriate soil conservation practices outlined by the NRCS (e.g. riparian buffers, wind breaks) and approved by the program.
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