Credit line

NBF Announces Reduced Operating Line of Credit for Regenerative Agriculture Practitioners

Farmers who adopt regenerative farming practices could benefit from a reduced interest rate for a financial operating line of credit from the Farmers Business Network (FBN), the FBN announced on January 11.

The FBN Regenerative Agriculture Finance Fund line of credit will replace traditional operating loans with a one-year line of credit that includes a 0.5% discount off the base farmer rate.

A farmer using a $1 million line of credit could save $3,000 to $4,000 a year, says Dan English, managing director of FBN Finance.

To qualify, farmers must meet environmental eligibility criteria developed by the Environmental Defense Fund and backed by peer-reviewed scientific research, including nitrogen management and soil conservation standards. .

These practices may include:

  • no-till

  • Adoption of nutrient management plans, supported by soil sampling

  • Plant cover crops

In a statement, Steele Lorenz, FBN’s head of sustainable business, said, “Regenerative practices can benefit farmers in many ways – through improved soil health, reduced fertilizer costs and higher yields. of resilient cultures. This new operating line will help make the adoption of these practices more economically feasible and can be combined with other incentive programs such as cover crop cost sharing or supply chain bonuses. , ultimately making regenerative agriculture much more accessible to growers across the country.

There is $25 million in a pilot fund, and 30 to 40 farmers growing a combination of corn, soybeans and/or wheat are each expected to receive one-year lines of credit of up to $5 million. RAFF will issue loans to a diversity of farmers, including FBN’s network of more than 33,000 members, and provide underwriting and portfolio monitoring at a discounted rate.

Maggie Monast, senior director of climate-smart agriculture at EDF, said that “the results of the pilot project should enable FBN to make the case for rewarding farmers for their environmental performance through their funding, large scale”.

According to a statement from FBN, the company’s Gradable platform will be used to assess regenerative farming practices. Farmers will enter data into the platform and receive agronomic advice to optimize agricultural production choices. Farmers must agree to provide production data for all enrolled fields for at least three crop years, but do not need to demonstrate a new practice to qualify. This means that farmers who have already invested in regenerative practices such as no-till, cover crops and optimized fertilizer use can participate.

The Environmental Defense Fund will provide oversight of the environmental criteria required for RAFF eligibility. The criteria are designed to include farmers who grow corn, soybeans and wheat in a variety of geographies and who implement a variety of regenerative practices, while establishing a clear system to monitor these practices and environmental outcomes, as well as to measure success. new financial incentives in the field of agricultural financing.

NBF will link farm environmental performance to fund financial performance, creating insights into the relationship between regeneration practices and farm risk and creditworthiness, and providing agricultural investors and lenders a new investment opportunity that has the potential to span millions of acres. NBF plans to grow the fund to $500 million over three years, by accessing the public markets to securitize and sell these loans to investors seeking liquid and environmentally friendly investments.

How to register

Applying for an operating line of credit through FBN Financial is easy and should take less than 20 minutes through the online portal. Growers will spend less than two hours a year with the portal recording information about sustainable practices, Lorenz says. “We have a team that helps you through the process, to talk to farmers throughout the process,” he says.

The aim is to help farmers get paid for the work they do to reduce the environmental impact of their work, adds English.

“We think it’s a way to identify and fund farmers for the practices they practice. Farmers who adopt soil health practices tend to have lower credit risk, and if they repay at a higher rate, they should receive payment.