Today Ross and Christophe are joined by Propagate Co-Founders Jeremy Kaufman and Ethan Steinberg to discuss the fundamentals of agroforestry and how the Propagate model works to provide farmers with capital for planting trees. They walk us through the process, explaining how an analysis of crops appropriate to the bioregion and the farmer’s goals work together to determine the specific tree crop appropriate to the project.
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change Podcast by Nori, the world’s first carbon removal marketplace. Here are your hosts, Ross Kenyon and Christophe Jospe.
Ross Kenyon: Hello, welcome to the Reversing Climate Change podcast with Nori. I’m Ross Kenyon. With me here is Christophe Jospe.
Christophe Jospe: Hey there.
Ross Kenyon: Hey, we’re here with Propagate Ventures. We’re in New York right now because we had the good fortune of winning the Blockchain for Social Impact Consensus Hackathon. So we’ve been out here taking interviews with everyone and getting some podcasts recorded. And we’re here today with Propagate Ventures. I’ll let Christophe introduce what they’re up to.
Christophe Jospe: Yeah, I mean, well, to be honest, I’m not here because of the hackathon. There was a concert that I decided to come in for. So like way in advance, bought my ticket.
Ross Kenyon: What? What concert was this for?
Christophe Jospe: I don’t know. You know, it’s a jam band called the Grateful Dead. You know, it’s kind of funny to bump into our friends. Well, what were you guys doing last night?
Ethan Steinberg: We had all three of our co-founders in town last night and thought it’d be a nice team experience to go to Madison Square Garden and see Christophe watch a jam band play music.
Ross Kenyon: You’re watching him watch the band. Right, right. This is a Grateful Dead tribute band thing that you guys went out to.
Unknown speaker: I mean, the original members are part of the Oh, okay.
Ross Kenyon: Yeah. Oh, okay. And you just coincidentally saw each other last night? Yes. Dude, what is the connection between the jam bands, the hippie thing, the environment? I guess it kind of all goes together. Is this like a common thing? Because I’m newer to this space.
Jeremy Kaufman: Yeah. I mean, fish are in the ocean, right? Fish are in the ocean. The oceans are dying, right? So we got to make sure we save the fish.
Ross Kenyon: So fish, fish, you know, it works. Yeah. It’s just a cultural thing that I’m sort of dipping my toes into. Everyone here loves fish and I just know like bouncing around the room or whatever. Yeah. I feel like I might have derailed us there.
Christophe Jospe: That was super important.
Ross Kenyon: We had to do that.
Unknown speaker: You can give us a proper intro if you like. I think it’s good context for how we met though. Yeah. Do you want to tell our listeners?
Jeremy Kaufman: Well, I was not there. It was actually my other two co-founders. Maybe Ethan can give a little bit.
Ethan Steinberg: Yeah, we were all here in New York at a conference and Gary Green, who’s our third co-founder, who’s not here with us right now, here and I were leaving an event. It was a dinner and after party of this conference. It was all about Climate Change Solutions, it was a really nice art gallery downtown. On our way home, Harry and I hopped on the train and we’re kind of spitfiring these ideas about climate change and agroforestry. And this gentleman sitting next to us is like, hey guys. That’s really interesting. Let me tell you about what I’m up to.
Fast forward a couple months or so and here’s this gentleman sitting across the table from me. So that’s how we all originally met. Harry, Kristoff and I kind of all met on the subway while we were all just thinking about How to make climate solutions come true. And that was it, right? So here we are. Totally.
Jeremy Kaufman: And we seemingly can’t get rid of you, Chris.
Christophe Jospe: Yeah, no. We’re going to keep it going. I remember hearing two words that really made my ears perk up because I know it’s kind of a thing, a bit of a buzzword, regenerative agriculture. And I remember you talking to Harry about, hey, that was cool that was brought up at the Nexus Summit. Which, you know, for any young bright-eyed millennial who wants to make the world a better place, seems like a pretty good summit to go to.
Ethan Steinberg: Definitely. Yeah. The conversation in that room has always been on the edge of what’s next for making the world work for like 100% of humanity. I know a lot has happened at that conference with folks who are really, really keen on driving social change and driving environmental impact and kind of all these things that I think make our lives happier because we’re focused on it. But definitely.
Christophe Jospe: Totally. So you guys are with Propagate Ventures. Give us a little context. What is Propagate and what do you do for Propagate?
Jeremy Kaufman: Yeah, so Propagate Ventures is something that we started about a year and a half ago. We kind of went on the road to do some research around regenerative agriculture, which for anyone who’s not familiar... It is kind of has two pieces and facets to it that are you can go deeper, but really it comes to restoring soil and building soil over time with agricultural practices and in the local environments where that’s happening, providing opportunities for people to get engaged. How do you get them doing this? There’s a multitude of ways in which you can restore soil, from cover cropping to no-till agriculture to effective microbe inoculants in the soil, all the way through to what we’re encouraging, which is what’s called agroforestry, which is the layering of tree crops in with traditional cropping systems like pasture-raised animals or alley cropping grain.
Ross Kenyon: Your name, Ventures. Are you an investment fund?
Jeremy Kaufman: Yeah. So what we’re doing is we’re trying to actually securitize tree assets on farms across the US. So that looks like looking at the trees on other people’s farms and actually trying to help those trees be separate from the value of the land itself. And those trees produce fruit, nut and timber and sequester carbon in the process. So making that an investable asset for people.
Ross Kenyon: So it’s like an asset-backed security that’s environmentally inclined.
Jeremy Kaufman: Right. And also produces tangible yield and profit for investors and people on the ground who are actually the farmers and landowners.
Ethan Steinberg: One of the interesting ways in which this all And kind of back to regenerative agriculture. It’s agricultural. It’s literally the plants in the landscapes, the people that are living there as well, the wider community. So all these different aspects, how do you give those systems the capacity to thrive over time, to be regenerative, if you will, or have the capacity to grow and become more valuable as a living system that supports all those other systems together? So if we think about sustainability, sustainability... There’s probably some of us who are moving past the concept of sustainability.
So sustainability really being is we need to create the opportunity for the world to sustain our needs. Moving past that in a positive way means moving towards like a More regenerative framework, which is held in the idea that sustainability literally means sustain. Sustain the status quo of where we are today has problems and doesn’t necessarily mean we’re guaranteeing the living systems on earth today. So how do we create that and agriculturally, which is where our focus is, how do you work with landscapes so that the landscape itself has that capacity to thrive into the future and be supportive of itself?
And our core focus is doing that with trees as the core concept. So everyone’s like, trees are good, right? I’ve heard trees. Trees are good. Trees are good, right?
Ross Kenyon: I like some trees. Yeah, some of them.
Ethan Steinberg: Right. And like people know that, but why are trees good? And how do we get those trees onto our landscapes to make agriculture in and of itself work for 100% of humanity? Like can agriculture be a mechanism that solves problems rather than create them? Right. Okay. Yeah. That’s where we sit and that’s what we look at on a daily basis of how do we get more trees into the landscape knowing that they have this extraordinary amount of environmental benefit, but they also provide the capacity for like the social and economic pieces because Because if we take a tree crop, fruit, nut, or timber, there’s markets for that.
People have to manage the trees. So you’re looking at spurring local economies, ensuring rural livelihoods. And then if we think about all these grand things happening in the world, younger folks are moving to cities and droves.
Jeremy Kaufman: The average age of the farmer is above 59.
Ross Kenyon: That sounds about right. Whoa. Yeah, it’s rough. I met some people that moved from Philly to become farmers in New Hampshire. And I was so weirded out that you could just become a farmer, like change careers and do that. Like I’ve never heard of anyone doing that. It’s still kind of hard to wrap my head around it. So I’m not surprised the average age is so high with that. I have two questions. I want to be walked through the entire securitization process for that because that’s super interesting. And then a general conceptual question sounds like.
Christophe Jospe: Ross, you’re only allowed one question at a time.
Ross Kenyon: I will take my two and I will take it forcefully.
Unknown speaker: We won’t count. We won’t count.
Ross Kenyon: Sounds like you’re a for-profit company of some, right? Okay. You’re basically trying to make profit work for the environment, it sounds like, which is something that we’re really interested in too. Because if you can like marry those two instincts, then you can reward people for doing the right kind of thing. And everyone wins out of that. Does that motivate you? Is that a big part of what you’re about? Yeah.
Ethan Steinberg: Yeah, you know, it’s interesting because we’ve gone through an extraordinary amount of iterations in our thinking of like, how does this business model work and how do we structure our business from a business structure perspective so that like it still meets some of our goals. And so with that in mind, first of all, we’re a public benefit corporation. That’s our legal structure, which is important to the degree that it gives us the flexibility to really focus on some of the environmental and social aspects of what we do.
Ross Kenyon: But does it give you certain mandates like you can’t do certain things? Yeah.
Jeremy Kaufman: Yeah, we’re not just bound to delivering a return for our shareholders. We’re also bound to delivering the environmental metrics that we put in place from the get-go of the company.
Ross Kenyon: So you have like a fiduciary responsibility and then you have like a corporate social responsibility one. And it’s just written into you.
Ethan Steinberg: It’s literally those aspects of our business are married together. So it was like, we talk about our shareholders, our stakeholders, and the folks that we are actively working with. It’s how do we drive value across all of those things? So it’s not just, We as a business, we believe that there are multiple forms of capital and there’s different relationships with all those pieces of capital, whether it be financial capital, social capital, human capital, there’s environmental capital, right? And we can go into more detail about all that. But those aspects are really core to understanding how our business flows and where we are placed in some of those flows.
Is that a little too esoteric of a comment?
Christophe Jospe: Well, I’m getting this metaphor in my head. If the past was give a man a fish and sustainability is teach a man a fish, when we’re talking about regeneration, it’s not only teach a man how to fish, but enable those fish to multiply. So you get this centripetal sort of expanding... Where things keep getting larger and larger. Totally.
Jeremy Kaufman: Teach the man to make sure that there’s enough fish in the ocean so he doesn’t overfish.
Christophe Jospe: Yeah. Let those fish go swim in a way that allow even more fish to propagate. Right.
Ethan Steinberg: There you go. Yeah. And to comment on that, like if we’ll get into the depths of regeneration, it’s both teach the men and the women to fish, right? So it’s all these aspects and like how does the ocean in and of itself operate so we can have more fish to go fish, right? Cool.
Christophe Jospe: Let’s go deep, but let’s wade in there. Yeah. So wait us in.
Jeremy Kaufman: Cool. Go for it. Yeah. So one of the questions was around securitizing trees. Yeah. Maybe that’s a good place to start off.
Ross Kenyon: Maybe even like the basics of agroforestry and projects like that too. Even more basic, but I am super curious about that and we can build up to it.
Jeremy Kaufman: Yeah. Okay, great. So... You can think of agroforestry kind of as just the intentional integration of trees into agricultural landscapes. There’s a multitude of different ways in which that occurs, but there’s a lot of net benefit, both from a financial perspective as well as an environmental perspective. You can close your eyes for a second and really think of kind of a combine driving through a cornfield. Now, what I want you to do is think about the width of that combine and having rows of trees that would run along the width of that combine.
So you have this kind of dual yield in that you have tree crops next to corn. But what ends up happening is some sort of magical environmental benefit where you have these corridors for wildlife. You have decreased soil erosion. You have increased nutrient retention in the soil, increased water production. You’re actually recharging more water into the aquifer over time. And then on top of that, you’re also sequestering more carbon and you can get the same yield with 30% less sun. That shade cover that you’re going to get from the tree crops does not actually inhibit some of the yield that you’re going to get from the annual yield in the middle.
The same benefits go for cattle, for example. So having shade actually increases weight gain in cattle when you’re pasturing cattle. So there’s direct economic benefits that occur when you’re integrating trees into the landscape.
Ross Kenyon: And so you’re looking for projects to put money into like this, right? You’re looking for farms that might consider doing this if they had capital or some sort of stream coming off of it?
Jeremy Kaufman: Yeah. So I mean, the way in which we found it is there’s a couple different types of farms, ones that are well capitalized and the ones that We want to make our programs available to every farm that’s out there. So that way, putting trees on farms is more broadly accessible and what That takes is putting a program in place that actually allows them to implement that at a low to no cost option. And that’s where we actually bring investors to the table and say, can we securitize trees on those farms and actually make those economically viable separate from the farm itself?
Ross Kenyon: That’s what I was going to ask. I was going to guess at how you do this. And my guess is that you probably fund the creation of these trees being planted there. And then you’re like selling them in a secondary market as a collateralized asset or a securitized asset.
Jeremy Kaufman: Is that how you monetize this? We’re going about this and we can kind of get into technical details here. So for farms that we would provide what we were calling our evergreen model, which is a profit share model where we’re actually implementing these trees on broad acre. We are engaging in a long term lease agreement with a landowner. And then what we’re doing is going out and putting the trees in the ground and taking out all the upfront costs for those landowners and meeting those capital requirements with investors that are willing to come to the table and do project level investment.
Sounds like a power purchase agreement for trees.
Ethan Steinberg: A produce purchase agreement is the term that’s been getting thrown around the last two weeks for us. What is that?
Ross Kenyon: I’m not familiar with this concept.
Jeremy Kaufman: It’s a concept in distributing solar arrays. In the way in which the solar industry grew, they were able to put in place these power purchase agreements, which built certainty into the fact that the energy coming off of those solar panels would actually be purchased. They were actually able to go into the landscape and say, we know this energy is sellable. It creates certainty, which allows for investors to come to the table and say, we know that we can invest in this because the market’s there and it’s ready.
Ross Kenyon: It’s like a futures contract? In a way, yeah.
Jeremy Kaufman: It’s a forward contract.
Ethan Steinberg: Yes. So if you’re asking yourself and you’re sitting there and you’re like, why are these guys doing this? What was it that they heard going on in the world that they decided they needed to go figure out a financial mechanism for trees? It’s kind of out there and people tell us we’re crazy sometimes, which I’m excited by. So like we went out there and we had all these conversations with farmers all across the United States. The core thing was like, hey, we know there are environmental benefits with trees, even better if they’re tree crops because then there’s economic benefit for trees that produce a crop or timber.
And so for us, we were looking at it like, okay, what are the things happening or what’s keeping those things from happening for these farmers that are like, hey, we want the benefit because it creates more stable income on our farm because it essentially stabilizes the total crop production, especially with the spinning wheels of climate change that everyone hears about. So the difficulty with trees is they take time to grow, much slower than your average crop. Maturity, if you will, is longer. And so for us, we’re looking at it and the core idea is how do you cover essentially the short-term risk to get those trees in the ground?
Once the trees are on the ground, you have the environmental benefits swing in, some of the social benefits swing in. So as much as you’ve done your cost modeling for those trees, and then as those benefits come along, it’s like, Economic benefits over time look at your breakeven points and whatnot.
Jeremy Kaufman: The real risk there for the farmer is if they’re going to capitalize, say, 100 acres, they’re already grazing cattle, they put their money into the land, they put their money into the cattle, they want to have trees. They’re cattle poor or something like that. Sure. They’re cattle rich, but cash poor. Yeah. Yeah.
Ross Kenyon: You call it your house poor. If you’re rich, you have a nice house, but you have no liquidity. That’s kind of what I was going for. Yeah, yeah, yeah.
Christophe Jospe: But they live in a nice neighborhood and you just want to sort of put some nice things around their house so that it gets its full value.
Jeremy Kaufman: Right. And trees are durable assets. So they’re performing despite what’s occurring in the economy. Right. So you can imagine even if the economy is going to shit, people still want to eat apples. Right. People still need...
Unknown speaker: That’s a great out of context line.
Jeremy Kaufman: Right. Yeah. So the end result is you’re putting these pieces of land into more productive per acre vertically integrated production. It helps stabilize the farmer’s long-term asset value of the land on top of producing a year-over-year cash flow.
Ross Kenyon: Okay, so you take the short term risk, you have the capital to make these investments in trees, and then how might I buy it? Say I’m like, I really like this idea, and I want the farmer to get paid, and I want to get paid too. How do I participate in this?
Jeremy Kaufman: We call a subsoil analysis, which is an agroforestry audit where we’re looking at what is occurring on the ground, what your soil type looks like, what ecosystem you’re in. And we’re making both onsite analysis of what tree crop systems would work for the land itself. And then what the markets around you may support, as well as where we can potentially pull in some of the forward contracts to build more certainty in that project level implementation. And then we hand over this recommendation and then give them options for how that might be financed, whether or not we’re taking on full asset ownership or they want to buy into the ownership of that as an asset on their land.
Ross Kenyon: I see. And then does it get packaged and go to like the Chicago Mercantile Exchange or is there some other, where do these sell?
Unknown speaker: That sounds nice. That’s the goal.
Ross Kenyon: You’re not there yet.
Ethan Steinberg: No, no, we’re not there. Look, we’re about a year and a half into our business and there’s a lot happening in the industry around agriculture. And a lot of the conversation today is driven behind like IOT in the agriculture space.
Unknown speaker: Sorry, IOT is?
Ethan Steinberg: Internet of Things. Yeah, we’re all kind I get it.
Unknown speaker: It makes sense. You guys are West Coast folk. Is that a thing? Is the West Coast all about Internet of Things? Yeah, why not? I mean, for today it can be, right? Okay. What’s the East Coast doing?
Ethan Steinberg: That’s a great question. That’s a great question.
Jeremy Kaufman: Hopefully trees. We’re moving money around.
Ethan Steinberg: Oh, okay. Yeah, very. We want to do that too, then. In the agricultural space, people’s brains are spinning about like, whoa, technology has this insane application for tracking and managing our landscapes. But if we step back to what we talked about earlier, It helps you understand what’s happening. It’s an extraordinary thing. And so we’re sitting back and laughing at times, like, great, one of the ways you apply that is you put trees in the ground. So like we’ve been talking with this like silly idea that trees are, sure, they’re a technology, they’re a biological technology.
So like in our craziest silly imagination, we’re a biotech company, which is not true at all, right? Like that’s not what we do, but like trees are a natural technology. Like the earth gave us these like amazing beasts and these like behemoths of like, they do so much, right? A reverse smokestack. Yeah.
Ross Kenyon: Oh, that’s very poetic. Yeah.
Ethan Steinberg: I channeled my inner Jim Morrison. Yeah.
Ross Kenyon: Yeah, I can see that.
Christophe Jospe: I love the music references going on here. Let me just throw another metaphor in there. But this is going to be both figurative and literal. You’ve got apples and oranges, apple trees and orange trees. Obviously, they act a little bit differently. And for each farm that you take a look at has its own design. Stratification of whatever plants are going on and the way that you want to manage it and advise farmers of what their options are. But at the same time, you’re creating a standard package in a way as a sort of funnel for those investors who say, hey, I want the farmers to adopt this regenerative agriculture on my land.
How do you deal with all of the differences or nuances amongst the land in some of your advice or management techniques?
Jeremy Kaufman: Yeah, luckily there are a lot of really awesome people who have pioneered the best practices in the space and are currently practicing doing that. So we lean heavily on some of the people who have been doing research for the last 50 years and what crop types work in what regions. So a lot of research is already in place. Right. Right. Right. Right. And the management of apples is intensive. You’re an orchard versus the management of timber is a lot less intensive. So if the landowner doesn’t want people on his land, right, the option that they’re going to have to go with is timber because managing an apple orchard on their land is far less viable if they don’t like people.
So a lot of the work that we’re doing is more soft skill, trying to really analyze what the soil can support, provide options, and then showcase the management around that. And then from there, distill down for what the landowner actually wants as an asset that fits their life goals. That’s all based on the time to yield. That’s based on what their land can support. And on top of that, whether or not they actually like people or not.
Ethan Steinberg: And what’s interesting about this is that some of this is really site-specific. You have different soil types and you have some of these things Jeremy just mentioned. For us, it’s that methodology can almost be scaled out on the bioregional basis. So if you’re familiar with the concept of a bioregion.
Ross Kenyon: Why don’t you explain it for the listeners? Yeah. And not for me. I already know all this by heart.
Ethan Steinberg: Oh, well, hey. You’re welcome to explain it. We can work on this.
Ross Kenyon: no. Please, please. You do it. Just pull up the Wikipedia page.
Ethan Steinberg: Yeah. And feel free to jump in if I’m missing anything here. I mean, in our perspective, especially with agriculture, different crops make sense for that region because of the climate and these are like the weather patterns and these are like the humidity in that region. So those things in the environment do not pay attention to political boundaries. There’s a lot of conversation about bees right now. So it’s not like a bee is flying and they’re like, oh, can’t go into New York State from New Jersey. It’s a political banter. You’ve got to stop flying, right?
So the environment doesn’t pay attention to that. We as a society have built and have organized our society around this socio-political boundary. So like the concept of a bioregion has more to with what are these like larger regions across our landscapes that the environment moves and the environment moves. Everything from the climate, the weather, the crop types, the different species that are there.
Ross Kenyon: Is this like chaparral, alpine, subalpine, stuff like that?
Jeremy Kaufman: Yeah, those are ecotypes. Bioregions are larger tool sets that can apply across different ecotypes. So you can think of it like a temperate climate zone. In the temperate climate zone, you have kind of different regional areas. In different regional areas, there’s a spectrum in the bioregion where you can potentially in one area might be better for peaches because you have a little bit more solar degree days versus one area is better for apples because there’s a longer term frost period. There’s nuances in the bioregion as to what the resource base is best suited to support.
And you make that analysis based on the location, right? So in Iowa, you have a lot more solar degree days than you do in New York State, right? So you’re going to make the analysis based on what’s available to you given your location.
Ethan Steinberg: And so like back to your point about apples and oranges is like the places that oranges are grown don’t make sense in the bioregion that you would grow apples and vice versa, right? Most citrus fruit, those citrus trees are typically grown in like a tropical climate zone or subtropical, call it like Florida.
Ross Kenyon: Arizona too.
Ethan Steinberg: Yeah. And so whereas like your palm fruit, it’s like your apples, your pears are grown in more temperate climates, which you’re looking at like the Northeast, right? Like how many orchards are there in the Northeast? If you’re dating someone, you go brunch and you go apple picking. Yeah, that’s like your options. New York, you get online, you do your online dating thing, and you go to an apple orchard. There’s levels of apple picking.
Jeremy Kaufman: For dating? Well, it depends on who the date is.
Unknown speaker: Talk to us about the levels.
Jeremy Kaufman: You can go anywhere from conventional apple picking, which is great and encouraged.
Unknown speaker: A little mainstream for me.
Jeremy Kaufman: It’s a little mainstream. So if you’re looking for more deep cuts, you can find a small apple grower who only has a certain amount of supply. You contact him directly or her directly. You go a little bit of apple picking on a private tour. Or if you’re really well versed in apples, you go wild foraging and you go picking for wild apples deep in different forested areas and you mark them so that way you can return them year over year.
Ross Kenyon: My wife is Lithuanian-American. We spend a lot of time over there and they love picking mushrooms and they all have like a family like mushroom area where they’ll go. Yeah. And it’s a little new to me because I’m kind of a little bit of a city slicker I feel like compared to that.
Jeremy Kaufman: If you like cider, hard cider. Yeah. Some of the best cider apples came from wild apple varieties. Cider is a nuanced thing. You think about dessert apples, you think about Honeycrisp. That’s been cultivated over time for certain genetic traits that are suited for distribution, suited for flavor, that can sit on a store shelf. But cider apples, you have kind of this wide variety of flavor that you’re trying to pull from. You can make up a fermented product.
Ethan Steinberg: For a cider apple, the acidity makes for better cider. So like the colder climate creates a more acidic apple. So like this, like, okay, bioregions. And then you look at like, what are the markets for these things? And like there’s different grades of apples. So the apples that you see at the grocery store are typically not the apples that go into cider. If you guys have heard this concept of ugly food, Yeah, yeah. Yeah, so ugly food are like the produce that doesn’t end up on the shelf for like a farmer and they’re looking at like how are ways that I create more revenue with what I’m doing.
Say they’re orcharding and they’ve got all these apples, not all those apples make it to the shelf.
Ross Kenyon: Yeah, it’s got like a little too bumpy, doesn’t look quite good enough.
Ethan Steinberg: It’s still good to eat. Yeah, of course. There’s nothing wrong with that. Some of them probably taste better. Yeah.
Unknown speaker: I’m guilty of not taking the ones with wormholes.
Ethan Steinberg: Well, yeah, totally. And like, that’s it. You’re like, okay, this one’s for my teacher.
Ross Kenyon: I feel like asymmetry is a sign of quality though. You know, like you look at it, you’re like, if it’s a little too perfect, I’m like, oh, this was like made in a lab or like, it doesn’t seem like it was grown on a tree.
Ethan Steinberg: Well, we’ve been tricked to think almost that like everything we buy in... The grocery store has to be perfect. And the reality is nature is not perfect. And we need to have a better understanding of how the balance of those imperfections is sort of perfect in and of itself. And like, whoa, is that esoteric? And we can talk about it. All day if you want. But like for the context of like how we’re looking at it and like us as a business and like where does this go? It’s like, whoa, these guys just threw so much information at Apple’s at me right now that I don’t even know.
Are you guys like finance guys? Are you farmers or what is this now? I don’t even know. Who are you? So it’s mixing all these things, right? And like there’s all these different ways to cut up what’s happening in the world. And for us, we’re trying to look at it’s like there are marginalized people. Components to both the social groups we work with, but the environmental aspect of our lives and our business. And it’s like, how do you bring those together in a way that works for more people and that works in a way that doesn’t create a situation where in 50 years we’re like, Like this earth is not habitable.
And like that’s difficult. And it’s really tough for people to process climate change, I think, because it’s so big and it’s so scary that there’s a lot of like doom and gloom associated with it. And that sucks. Like I don’t want doom and gloom. I want happy things and unicorns and cupcakes. And apples.
Ross Kenyon: And apples. Dessert apples nonetheless.
Jeremy Kaufman: And like cider apples and the whole thing, right? Part of it is that you have a lot of stakeholders in the process. Just going and financing trees isn’t just going and financing trees. It’s figuring out what are the different ways in which you engage with all the stakeholders in the process and getting buyers involved sooner in the process so that way they can deliver more certainty to farm level.
Ross Kenyon: Are these buyers, though, are they collecting delivery? Are they taking delivery? So they want timber or they want nuts or something like that?
Ethan Steinberg: Yeah, exactly. So here’s a really good example of timber, a decking company that builds decks for people’s homes. Can you imagine the amount of wood they go through, like a company that makes stairs? They need wood. Yeah. All that wood sequesters carbon because they’re trees before they get processed into wood that ends up being a staircase you walk up and down that doesn’t squeak. So all those needs are there. And so if we take a timber thing, timber is going to be what, like 14 to 30 years before your harvest?
Depending on wood type and where you are in the world. And so all that, it’s like sequester all the carbon while you’re doing it. You’re going to access that carbon, which is the wood itself. And you’re going to turn it into stairs. Like the guys who are making the stairs or the guys that are making decks and whatever, it’s like, can we get them involved in the process earlier? Yeah. That gives them the capacity, like when they go to their customers, like check out what carbon we sequestered in the process of making you this pretty deck that you’re going to barbecue on for the holidays, right?
Or like whatever it is, right?
Ross Kenyon: It’s like that Portlandia sketch about like meeting the chicken that you’re going to eat. Yeah, totally. Yeah, right. This is the tree that we’re going to cut down for you. This is what we’re going to.
Jeremy Kaufman: Except you’re just doing it on an industrial scale.
Unknown speaker: You guys actually name trees, right?
Jeremy Kaufman: Yeah.
Unknown speaker: Our names, Toby the Third, the 2,037,000th.
Christophe Jospe: So I have a question. So we’re talking about sequestering carbon. And that makes my ears perk up because that’s what we’re trying to make happen more quickly. And at the end of the day, when someone pays for something, they want proof that it would have happened beyond what would have happened otherwise. And what really excites me about you guys, well, first of all, there’s a whole lot because we’re talking about cupcakes. That excites me. But you’re coming in and you’re making things a little bit different and saying all you have to do is these small tweaks and managing your land and in concert with growing the land you can put some animals and yada yada yada and soon we’re sequestering way more carbon.
Sure. How does the magic work?
Ethan Steinberg: Talk me through that a little bit. This will just lead a little bit into how does it all work. We pretty strongly believe as a business that the market has a capacity to drive things forward. And as far as we understand the way that society has worked thus far, the market’s been pretty successful in getting shit done.
Ross Kenyon: One of the things it’s known for.
Ethan Steinberg: Yeah, it’s like it’s known for that. It’s like, can we access that and use it to benefit both our lives as humanity, but also benefit the planet and like Earth as its own living system?
Ross Kenyon: You’re like speaking right to us right now because this is what we get really excited about too. When you can like marry those things together, you got powerful forces at work. Absolutely.
Ethan Steinberg: Sure. And you’re seeing it over and over, right? So like the conscious capitalism conversation, the social entrepreneurship conversation, like There’s a group of consumers that I call aspirationals. And this is pretty common knowledge, I guess, out there in the social venture space is it’s millennials plus. Millennials are not the only group of people that buy conscious products. There are aspirationals and that extends to my parents who are now like, well, Ethan’s been telling us to pay attention to all the things we should be buying since he can speak. But maybe we should change our purchasing patterns.
There’s these different market movers, if you will, that help... Give us the capacity to say, what are the important bits to get that done? And then I know Jeremy wants to comment on this. So for the consumer brands, they want to work with the people who are buying their product. They need to connect genuine relationships. How do you do that? It’s like you connect with people through their passions. People are not passionate about going to work and staring at an Excel sheet every day. I’m sure some people are, but... That’s not a common passion.
People are passionate about things like puppies and the local food shelter. People are passionate about music. They’re not things that big companies have really wrapped their heads around until now. These are some of the market drivers for us. Then looking past it, it’s like, how do we get all that stuff into the supply web for those companies? We’re trying to move off of the supply chain because it’s too linear. Connecting points A to B to C, but that’s not how they work. They work like webs, right? There’s different actors all over the place that are interconnected, that are integrated in the work they do.
The components of each of their business touches each other. That’s not a chain, that’s a web.
Ross Kenyon: Yeah, it’s a nice model. It’s like an easy way to think about it and isolate like one particular chain. But obviously the entire economy is just like one giant web.
Ethan Steinberg: You can’t say like there’s one supply chain for a company. Totally. So like how does it work? How do we get those companies, those consumers, those actors together in a way behind like a holistically managed framework using the market to our advantage? That’s where we are thinking about constantly. And like the carbon sequestration thing is really focused on we need to draw down gigatons of carbon. And that’s such a big number. That was a gigaton. Let’s just put it this way.
Christophe Jospe: We need a sound effect that every time someone says gigaton, it just goes gigaton. Producer Paul, can you work on that?
Ethan Steinberg: So it’s a big number. It’s like, how do we get it all out? There’s three places carbon goes, okay? It goes in the atmosphere. There’s too much in the atmosphere. It goes in the ocean. There’s too much in the ocean. Oh, where’s the other place? It’s soil. Great. So let’s get it into the soil. How do you get it into the soil? Because carbon, you can’t just look up and touch it and pull it. It’s not like throwing darts. You don’t just throw it and it hits something and you’re done.
You have to get it somewhere. It’s invisible. You can’t literally see it. And trees do that. So... That’s part of like the whole thing of like what’s sexy. And when I say sexy, I mean like SEQ, like sequestration and then C for carbon.
Ross Kenyon: That’s the worst neologism I think I’ve heard of. I love it.
Ethan Steinberg: We have some really amazing Australian friends who pioneered that one.
Jeremy Kaufman: Yeah, it’s from Rugrarians. Yeah, those are the leading farm design group out in Australia.
Ethan Steinberg: Oh, that’s cool. Yeah, I’m not familiar. Yeah, we can share some cool landscape designs here.
Jeremy Kaufman: Okay, that sounds good. A few references that Ethan have there around supply webs from one of our advisors also. There’s a good call to action in our space of regenerative agriculture where folks are...
Ethan Steinberg: Right. How do we do that as a business? I know Jeremy wants to comment on that. What are the ways that we do it? What wakes us up in the morning? I assume might be a question. I think back to what you were saying.
Unknown speaker: You can assign yourself a question.
Ethan Steinberg: No, I didn’t mean to assign it. I just want to make sure that we’re answering some of the questions. We’re like, okay, so we’ve covered a lot.
Ross Kenyon: If I think you’re going in the wrong direction, I’ll start making moves to stop you.
Jeremy Kaufman: I mean, I think going kind of straight to the point on carbon sequestration and working our way back up from that, right? So Ethan described kind of like the market forces that drive a lot of the thoughtfulness around how we’re trying to bring dollars into the space. At the ground level, there’s kind of like a set of practices that are done on the farm level that help sequester carbon. Right. They all have different rates. They all have different benefits. Like if you don’t till like a certain amount, right? No till, cover cropping.
So making sure that across the entirety of the season that there’s good green cover on the ground. In a place of harsh winter, hopefully you’ve left something underneath the snow cover. Even though that it’s going to die, there’s some sort of either perennial or annual grasses that are there holding the soil together. So nothing’s actually being off-gassed. It’s not in the grass though. It’s in the soil. The carbon’s in the grass and the soil. Carbon is the main fundamental element that goes That goes into the production of any sort of vegetation, whether that’s grasses or that’s trees.
So you have kind of a spectrum of things that you can do in farmland to kind of work through that process. In conventional agriculture where you’re tilling or you’re not cover cropping, the benefit of switching to a cover crop or a no-till method is vast in terms of the amount of carbon that your farm’s letting out into the atmosphere. But then there’s all these next level practices that you can get into that all help So you have things like bringing in effective microbe that’ll increase the rate by which you have kind of the churn.
So carbon, if you can think about it, you want to bring the vegetation up and then bring it back into the soil and recycle it over time. The things that do this really well are animals, right? So you have kind of a cow eating grass and then the cow poops out very, very rich fertilizer source, right? And that actually ends up feeding the soil to produce better grasses over time. There’s different management of cattle in that process that can actually be degradative or ones that can be regenerative. Degradative. Yeah, degradative.
Degradative. I don’t know what the word is.
Ross Kenyon: Yeah, right. It’s a pretty serious issue.
Jeremy Kaufman: We sometimes make words up because you’re in tech, man.
Ross Kenyon: You can do whatever you want. You don’t have to follow any rules.
Christophe Jospe: I mean, sexy. We’ll credit that to your Australian friends. So I want to take this a little philosophical. It sounds like, at least from my understanding, it sounds like there’s a bit of a David and Goliath fight because there’s big ag hand motions, which might be... Soils are incredibly carbon depleted. A big reason for that is because the same plots of land have been tilled over and over when you plant the same soil. A little bit.
Jeremy Kaufman: I would like to say they’re actually That sometimes we talk a lot in a way that might actually marginalize some groups of folks who have some of the highest potential for change. And a lot of people who work in conventional agriculture have some of the largest land-based and have been doing it for years intergenerationally. So the last thing that we wanna do as an organization is marginalize them. We actually wanna work with them. So we think that a conventional farm that has trees on that farm is better than a conventional farm that doesn’t have trees.
We’re not necessarily 100% against big ag. We want to work with big ag to transition because they have all of the power and they have all the financial backing. If we can move the needle on big ag toward a direction that is better, both through some conflict, but also through really providing a solution that they feel like they can own and still make money off of. But On the ground level, if we’re talking about farmers, really farmers, we can’t kind of box them into this group as like just being one type of person.
There are a variety of decision makers and they all make decisions based on their unique situation in their life. The end result though is they want to have a livelihood based on their land. And the ways in which that has been done traditionally is through market certainty from larger scale organizations. So like a good example of this is Organic Valley, which is a co-op in Wisconsin. They grew over the course of last 30 years, 40 years into a very large organization. But what they did was they provide market certainty where farmers in the region could sell their products into.
That certainty gives farmers a lot of comfort. Where they’re part of a bigger thing. That mechanism is something that’s really important that we need to learn from.
Ethan Steinberg: And it’s not much different than how everybody thinks. That’s how society works. We want to interact with other beings and we want to be part of things that We’re passionate about together. So it’s really tough to like marginalize certain groups. I mean, and even with big ag or like, here’s the thing. It’s like, okay, what? There’s 7 billion plus people on this planet now, whatever the number is. Yeah. Is that it? It’s a lot. Okay. It’s a big number. And like big ag controls a portion of the capital, but like most of the world’s farmers are not In like the big ag paradigm, they’re smallholder farmers.
Ross Kenyon: Like subsistence level, a lot of them, right?
Ethan Steinberg: Yeah. And I think this is one of the unfortunate situations with big ag and it’s relatively easy to overcome. Okay. So one of the unfortunate situations is like you have all these smallholder farmers. All over the world, you have indigenous groups across all over the world that have an extraordinary amount of knowledge about those local bioregions, like the crop types that go there, how and which to manage a healthy society in conjunction with healthy landscapes. The unfortunate situation is industrializing our agriculture system has marginalized those groups and their knowledge bases.
And their knowledge base is... Wildly important for us to think about us as a business, but us as humanity and us as the agriculture industry to think about how we work together. There needs to be a big call for collaboration from the big ag companies, the smallholder farmers, the indigenous groups, so that we can look at our landscapes and be like, how does this work? And how do we make this work? And like guarantee that it works into the future without continuing to extract the same things out of either our culture or out of our landscapes over and over and over again, because eventually there’s nothing left.
This is scarcity and it’s like finest. And some of the smartest people that understand how to think past and outside of that scarcity mindset are marginalized and don’t have access to the conversation. And that’s really important.
Ross Kenyon: Well, Kristoff, you got to ask your philosophical questions, so maybe I get to ask a quotidian kind of a pedestrian question now. How’s business and where are you at now? Are you guys already selling into the market? Are you raising money now? What are you doing? I was very accused of what are you doing? What’s going on?
Ethan Steinberg: Yeah, look, we’re a young company and we’re thinking about some of these really big things. And in order to get there, it’s not easy. Like one thing that I think we have a benefit to the way we think, and this probably has to do with what we do, like trees take time. They grow slowly. They make strategic decisions that get implemented over years. It’s not like we’re building software. You can’t just iterate in two weeks and move on. Trees don’t work like that. And we’d probably sequester all the carbon that we needed to tomorrow if they did.
Unknown speaker: You should just disrupt trees. We can hack them. Are you A-B testing?
Ethan Steinberg: I would love to, but okay, let’s go A-B test. That’s going to take years. We can’t A-B test in a month. Where are we as a business? That thinking, that methodology of longer I like that number. And people love it. Everyone loves it. And we love it. But, and there’s like a big but here, is that with that in mind, it takes a lot of time to set the infrastructure in motion to get to a trillion trees. So like a huge part of this is like, and go back to what I was saying about like smallholder farmers and the indigenous groups is- That knowledge, we need to share that knowledge.
The best orchardists in the United States, how do we get their knowledge base shared with the next generation of farmers in this? And there’s a lot of infrastructure there. So there are industry level bottlenecks that keep us from getting...
Jeremy Kaufman: We’re not talking about a tree that’s one foot tall and walking through Alberta, Canada and just putting it in the ground and not knowing whether or not it’s going to die. It’s ensuring that tree is going to live and be productive through its lifespan. Managed trees and unmanaged trees. And we’re talking about managed trees that has an associated cost to it, has associated operational expenses, associated labor expenses. So building out all of the economics behind it that make it something that an investor can come in and see and then make it investable where they can actually get a direct touch on projects on the ground.
Unknown speaker: So you’re modeling it now. Is that what you’re saying?
Ethan Steinberg: Yeah. Essentially what we’re doing is knowing that there’s all these things that need to take place over the course of the next, say, 20 plus years. I believe that there is an operating system that needs to be put in place that we can build on top of that the infrastructure for all these things can be built. And so for those of us on our team that have worked in software, there’s some thinking that comes out of the software side. And you guys will understand this is we can apply that methodology into, say, agriculture as we’re doing.
So it’s like, how do we go iterate on it? How do we build the operating system, the platform for developing this across extraordinary pieces of land? It’s agile for trees.
Jeremy Kaufman: And you’re looking at a multitude of layers here. You’re looking at the economic layers of what does it take to deploy this many trees in this region. And then you’re looking at legal layers of, okay, what are the types of legal agreements that can be very easily said yes to for actually enabling that deployment?
Unknown speaker: You’re making like standardized contracts.
Jeremy Kaufman: Standardized contracts. And also on top of that, equitable contracts where there’s full transparency and no abuse in that process. We’re not deploying trees on land that we own. We’re deploying trees on land that other people own. And doing that has particular nuances to different options of what might occur on a given piece of landscape.
Ross Kenyon: If I were to want to participate in this and I wanted to buy some, is it a commodity where they’re interchangeable or would it be closer to the way credits work now or offsets work now where I’m choosing a project? I want this walnut guy who is walnut tree shelter pigs. Like I want that guy in Alaska. I’m not going to do that.
Jeremy Kaufman: For sure. Long story short, we want to do both. Well, if climate change works, there could be, right? True, true. Long story short, we want to do both. We want to give investors a multitude of ways in which they can come in and plug in. We want them to be able to do direct investing. We want them to invest at a fund level. We want them to invest. So like our whole thing is, can we build out this operating system?
Ethan Steinberg: Can we create the operating system to do that? And then work with All these various levels of different stakeholders should get involved, whether it’s direct investing, whether it’s a fund. There’s plenty of different ways to chop up that pie.
Unknown speaker: And you’re going to chop them all up. You’re going to try and do all of them.
Jeremy Kaufman: I hope so. And there’s stages of development, right? So it starts with a direct investing model, putting more trees in the ground through direct project level finance. And then from there, getting to a level where you can do actual ecosystem investment.
Ross Kenyon: Are you guys Series 7? Are you guys certified, looking to become licensed to do securities sales?
Jeremy Kaufman: Not yet.
Unknown speaker: You’re aiming that way?
Jeremy Kaufman: In the future, there’s an aim toward that direction. We’re going to take it step by step. Ah, okay.
Ethan Steinberg: So like, in our, like, wow, there’s dreams. Super successful. What does that look like? It’s not like a five-year projection from now. It’s 20 plus years. It’s like, we’ll sit back and think about this and we’re creating environmentally positive wealth for the next three generations. Longer. Trees don’t just disappear unless you cut them down. Think about the redwoods. They’re huge and they’ve been there for years. Can we use the market to create the opportunity to generate intergenerational value? We’re thinking about this well past our lives, which I know is hard to digest for the average investor today.
Ross Kenyon: For crypto people, a single day is a month. A month is a year. It’s Accelerated timeline.
Ethan Steinberg: I know. It’s really tough to digest and our timelines are different. And we’re starting to figure out as a society of how do we interact with the Chinese have done a really good job at it. At what? At thinking intergenerationally.
Jeremy Kaufman: American culture has not traditionally been able to do that very well. You have to think in different timescales when you’re talking about landscape development and you need to think about hundreds of years back and then hundreds of years forward. That’s the shift that needs to happen for being able to really create a land-based economy that actually works for 100% of humanity.
Ethan Steinberg: So if the next question is about like, what’s the tangible pieces? Like, how do I get involved? And if you’re listening to this right now, and you’re like, oh, what do I do next? Do you have a website? We have a website. Yeah, we have one of those. We’re doing a couple different things that we see.
Jeremy Kaufman: We can kind of go through a few different options here. Like if you’re a landowner and you’re interested at all in putting trees on your land, get in touch with us. You can find us at PropagateVentures.com. You can contact us directly through the site and register your project. Do you call them patricians or no? Patricians?
Ross Kenyon: Like a Roman aristocracy.
Jeremy Kaufman: There’s other ways in which you can get involved from more of a high level. If you’re a buyer, you’re a brand, and you’re interested in investing into your ingredient list, we can talk to you about what that might look like within your supply web. If you’re an organization that wants carbon offsets or wants to engage in We can talk about carbon offsetting or insetting. Propagate.org is a really good place.
Ethan Steinberg: Yeah. So I’m going to talk a little bit about this. I’m going to talk a little bit about this. We’re doing research. We’re distilling white papers. We’re talking about some of the scientific things happening in agriculture, different genetic modification for disease resistance and some of these. What’s that application in climate change? That’s what Propagate.org does. If you guys are cool with it, we’ll throw this podcast up on Propagate.org and share- We’ll talk about it. Evaluate how you did.
Ross Kenyon: These guys were so, so, I don’t know. No, that was super fun. No, we should definitely talk about that. Chris, I want you to take us off here. Well, it’s been a delight having this podcast here.
Christophe Jospe: Apologies to our listeners for hosting this in the Lower East Side where they are banging away outside, sort of putting up some metal casing.
Ross Kenyon: I couldn’t hear it until the headphones came on and then it’s like everyone’s banging on pipes. Yeah, there’s no way we’ll get that sound out. No, it’s just there now.
Christophe Jospe: I knew it when I was in the subway and heard these two talking about regenerative agriculture.
Ross Kenyon: And you’re creeping on them?
Christophe Jospe: Yeah, I was like, they’re doing something differently. And I think that’s really what it takes. You have to approach this problem from a completely different mindset, you know, to quote... Einstein, we can’t rely on the same level of thinking to solve the problems that got us there. Paraphrase, because I know I just slaughtered it.
Jeremy Kaufman: Can I give you another quote? Can I give you another quote as well? We like to repeat. It’s from one of the pioneers of agroforestry in the tropics. He’s named Ernst Gotch. He says, it’s not a sin to cut down a tree. It’s a sin not to plant a forest. So it’s an important distinction there.
Ross Kenyon: We’ll meditate on that. We’ll think about that. And thanks so much for being on the show, guys. Thanks so much for coming in.
Ethan Steinberg: Thank you guys for hosting us. This has been really wonderful. We appreciate it. No problem. Thanks a lot.
