39. Financing agriculture on big scale by using regenerative farming - Francisco Roque de Pinho, founder of the Land Group
- Maria Escalona
- Feb 6
- 38 min read
Updated: 15 hours ago
In this episode, we had the pleasure of speaking with Francisco Roque de Pinho, co-founder of The Land Group, which he established in 2016 continuing a family's century-old tradition of managing farmland in Portugal and South America.
He has led Union Group, an investment firm focused on real assets in South America, and co-founded Union Energy Group, a hydropower developer later acquired by Polaris Renewable Energy. He also founded Plane Tree Capital, an investment firm specializing in renewable energy and carbon markets, which was later sold to Union Group. Earlier in his career, he worked in renewable energy, carbon credit investments, management consulting, and capital markets at firms like Carbon Capital Markets, Booz Allen Hamilton, Edmond de Rothschild Group, and Banco Icatu.
Beyond his professional life, Francisco is a big wave surfer, co-founding Team Red Herrings in Nazaré, Portugal, to develop surf talent, support ocean-related initiatives, and offer corporate team-building programs.
He holds an MBA from INSEAD and a Bachelor’s in Business and Economics from École des Hautes Études Commerciales de Lausanne. Fluent in English, Portuguese, Spanish, and French, Francisco combines his expertise in investment, sustainability, and risk management—both in business and on the waves.
What does the Land Group do?
The Land Group, co-founded by Francisco and Joaquin Labella was created to help investors turn around stressed agricultural assets. Over time, it has evolved into a platform that enables institutions and family offices to invest at scale in regenerative farming with measurable impact.
They offer a full range of services throughout the entire asset lifecycle, from acquisition to investment relations, regenerative practice conversion, production, procurement, sales, natural resource conservation, infrastructure management, and administration. Currently, they operate 40,000 hectares of land in Uruguay and Paraguay and are actively expanding into Argentina and Portugal.
Their model is straightforward: they acquire conventionally grazed natural grasslands, which are often inefficiently managed, and convert them into intensive regenerative grazing operations. This approach improves land efficiency, increases yields, and delivers consistent, uncorrelated returns to investors—all while generating significant environmental and social benefits.
By scaling regenerative agriculture investments, The Land Group is helping drive the transition to a more sustainable, resilient, and future-focused farming system.
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Regenerative Agriculture: A Climate Solution
Regenerative agriculture is an approach to farming that restores and enhances the health of ecosystems rather than depleting them. It focuses on improving soil health, increasing biodiversity, and enhancing water cycles while producing food sustainably. Unlike conventional methods, which often lead to soil degradation and high carbon emissions, regenerative agriculture actively rebuilds soil organic matter and sequesters carbon, making it a critical tool in addressing climate change.
The Climate Impact of Regenerative Agriculture
One of the most significant benefits of regenerative farming is its ability to capture and store atmospheric carbon. Healthy soils rich in organic matter act as carbon sinks, helping to reduce greenhouse gas concentrations. Studies indicate that well-managed regenerative farms can sequester up to 12 tons of CO2 per hectare annually.
Additionally, these practices:
Enhance biodiversity, restoring native plant and animal species.
Improve water retention, reducing the risk of droughts and floods.
Reduce reliance on synthetic fertilizers, decreasing pollution and greenhouse gas emissions.
Unlike conventional industrial agriculture, which often depletes soil and contributes to environmental degradation, regenerative methods work with nature to build long-term resilience.
Key Strategies for Scaling Regenerative Farming
Despite its benefits, regenerative agriculture is often practiced on small farms or pilot projects. Scaling these techniques requires systemic change, investment, and new policies. Some key approaches include:
1. Rotational and Holistic Grazing
Rotational grazing mimics natural herd movements, allowing land to recover between grazing periods. This method improves pasture health, enhances soil fertility, and increases livestock productivity. Holistic grazing systems, such as those implemented by large-scale regenerative operators, show that well-managed grazing can significantly boost soil carbon sequestration while maintaining profitability.
2. Agroforestry and Perennial Crops
Integrating trees and shrubs into farmland creates diverse ecosystems that support soil regeneration, provide shade for livestock, and enhance carbon capture. Perennial crops, which require less soil disturbance than annuals, contribute to long-term land health and increased resilience to climate change.
3. Financial Incentives for Farmers
Transitioning to regenerative agriculture requires an initial investment, which can deter adoption. Innovative financial models—such as carbon credits, impact investing, and outcome-based payments—help make regenerative farming financially viable at scale. Programs that compensate farmers for ecosystem services, such as improved water quality and carbon sequestration, can accelerate widespread adoption.
4. Data-Driven Decision Making
Regenerative agriculture benefits from advanced monitoring tools, such as remote sensing, soil health tracking, and AI-powered farm management systems. These technologies provide farmers with real-time data on soil conditions, biodiversity, and carbon sequestration, enabling them to optimize practices and demonstrate measurable impact.
The approach of LandGroup to Regenerative Farming
A frequent debate in sustainable agriculture is the role of livestock in climate change. While factory-farmed beef is a significant contributor to greenhouse gas emissions, regenerative grazing systems function differently. Well-managed grazing enhances soil carbon storage, offsets methane emissions, and restores grassland ecosystems. This demonstrates that livestock, when managed regeneratively, can be part of the climate solution rather than a problem.
Scaling regenerative farming requires collaboration between farmers, investors, policymakers, and consumers. By implementing holistic land management strategies, supporting financial mechanisms, and leveraging technology, regenerative agriculture can move beyond niche projects and become a global climate solution.
Regenerative farming is not just an alternative approach—it’s a necessity for creating a food system that supports both people and the planet. As more large-scale operations adopt these practices, the potential for widespread impact grows, offering a hopeful path forward in the fight against climate change.
In this episode we address the following questions:
1:44 – Where are you right now? I was wondering, are you in Uruguay?
1:59 – Can you please set the stage for our listeners and provide us with some background? What's the mission of The Land Group, and what kind of problem are you trying to solve?
5:20 – Great. We will dive later into exactly what the offering is and how the whole business model works. But what actually made you start the company in 2016? What was the spark that led to its founding?
7:20 – Do you have a background in agriculture, or does your co-founder? Was there a family background that influenced you?
9:01 – Let me rephrase what you're actually doing and let me know if I understand this correctly… (summary of The Land Group's approach). Is that correct?
11:29 – What's the foresight like? Is everything so positive, or do you see any challenges that arise from your practices?
13:36 – If you're increasing meat production, how do you balance that out with methane emissions? You mentioned at the beginning that you're carbon positive—how does that work?
17:14 – So, you're saying that one of the key problems in meat production is not actually the cows themselves but rather how they are fed and how land is used? Is that correct?
18:05 – So now the provocative question—are you a vegan?
18:50 – That statistic really surprised me. Is it true that global cattle stock has only increased by 0.8% per year?
19:59 – If you look back, how has the conversation around regenerative agriculture evolved since 2016? Has investor appetite changed?
22:03 – What’s your revenue stream? You mentioned 9-12% returns. Can you break that down? How does carbon credit revenue factor in?
25:33 – So you, in principle, buy the land, correct? You own the land?
25:45 – If you do an exit after five years, how do you ensure that the regenerative practices you started will continue?
29:21 – What are the key changes you implement on the land that increase yield while keeping operations carbon positive?
33:17 – How do crops play a role in this model?
35:13 – How do you measure carbon sequestration? There’s been a lot of discussion on accurate measurement—what methods do you use?
36:25 – If you could only dedicate two hours per week to The Land Group, what activities would you prioritize?
38:11 – What’s the minimum investment needed to be part of your investment model?
39:02 – Has any new belief or behavior positively impacted your professional life in recent years?
40:29 – One thing we haven’t talked about yet is your passion for big wave surfing. How has that influenced your founder's journey?
41:52 – What’s the biggest wave you’ve ever surfed?
45:18 – What makes you feel confident that we can address the climate crisis? Or is this more of a business case for you?
47:26 – How can people reach out to you if they want to connect or invest?
Memorable quotes from the episode by Francisco:
5:31 "We realised that in many cases, the soils had been depleted through poor management over time. And we just started applying what I call common sense measures to address these issues
8:02 "But the reality is that we first see it (Regenerative Farming) as an opportunity to improve investment returns for our investors. And for us, that's a first principle, you need to make money for your investors if you want to attract them to this type of investments
“Regenerative agriculture has gained a lot of attention, but most efforts remain small-scale, artisanal, and difficult to scale. Our goal is to change that.”
“We first see regenerative agriculture as an opportunity to improve investment returns. If you want to attract investors, you have to make money for them.”
“We started applying what I call common sense measures—reintroducing cattle, rotating crops—to restore soil quality. We were doing regenerative agriculture before we even knew the term.”
“There’s a powerful narrative against meat, but the real problem is not the cows—it’s the way they’re fed. Industrial feedlots depend on crops that require massive inputs of water, fertilizers, and pesticides, all with a high carbon footprint.”
“People view regenerative agriculture as a romantic, feel-good solution to climate change. The reality is that it’s first and foremost an economic opportunity—one that also happens to have huge environmental benefits.”
“Every single surf session in Nazaré, something goes wrong. The key is learning how to adapt quickly, have resilience, and manage risk. The same applies to business.”
“We are at an inflection point. In a few years, institutional capital will flood into this market, just like it did with renewable energy. The key is being ready for it.”
“To register a carbon project, you need to guarantee long-term practices—but we can’t control what happens after we sell the land. That’s a challenge for scaling carbon credit programs.”
“Focusing on soil regeneration has made me think about my own health. There’s a striking parallel between soil health and gut health—they both require balance and long-term care.”
Website: https://www.the-land-group.com/
Contact: Francisco's LinkedIn
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Transcript based on AI and beta- status:
Narrator: 0:04
Welcome to Sustain Now, where we discuss the newest solutions to address the climate crisis. In this episode, your host, friederike, takes you on a journey into the world of regenerative agriculture and the challenges of scaling it. While the benefits of regenerative farming are well understood improving soil health, increasing biodiversity and capturing carbon Most efforts remain small scale and difficult to scale. We speak with Francisco, co-founder of the Land Group, about how they are addressing this challenge. The Land Group operates 40,000 hectares of farmland in Uruguay and Paraguay, with plans to expand into Argentina and Portugal, paraguay and Paraguay, with plans to expand into Argentina and Portugal. They work with investors to acquire and convert conventionally grazed land into regenerative operations, creating a model that is both financially viable and environmentally sustainable.
Narrator: 0:55
Beyond agriculture, francisco tells us about his passion for big wave surfing and how the endurance necessary to perform this sport has impacted his professional life. His experience in high-risk, high-performance environments shapes his approach to scaling and how the endurance necessary to perform this sport has impacted his professional life. His experience in high-risk, high-performance environments shapes his approach to scaling regenerative agriculture, where long-term vision, risk management and adaptability are key. We will discuss what it takes to implement regenerative agriculture at scale, the financial mechanisms that make it possible and the broader impact on agriculture and climate. Let's dive in.
Friederike von Waldenfels: 1:33
Welcome, Francesco. It's a pleasure to have you on my show, Sustain Now.
Francisco Roque de Pinho: 1:39
Good morning Federico. It's my pleasure to be participating. Thank you for having me.
Friederike von Waldenfels: 1:44
Where are you right now? I was wondering are you in Uruguay?
Francisco Roque de Pinho: 1:48
Well, right now I'm in Lisbon, where I live, where I have my personal life. I don't know why I end up, of course, traveling a lot to Uruguay. This is where I'm based.
Friederike von Waldenfels: 1:59
Can you please set the stage for our listeners and provide us with some background? What's the mission of Land Group and what kind of problem you try to solve?
Francisco Roque de Pinho: 2:09
Sure. First, let me define the Land Group. We are an independent, fully integrated asset manager and regenerative farmland operator, and that's my business partner, joaquin Lavey, and I set up in 2016. My business partner, joaquin Lavey, and I set up in 2016. We created this company initially to help investors turn around distressed assets in the agriculture sector. Ultimately, we've been helping institutions and family offices invest at scale in regenerative farming, with a real impact In terms of what we offer. We work with these investors. We offer them a full range of services throughout the entire asset life cycle, from acquisition through investor relations and, of course, with conversion to regenerative practices, production, procurement, sales, natural resource conservation and management and infrastructure management and, of course, administration. In terms of size, we today operate 40 000 hectares of lands in uruguay and paraguay and we are currently busy replicating this, this model, to expand into argentina and portugal.
Francisco Roque de Pinho: 3:20
Why regenerative agriculture? First of all, regenerative agriculture or regenerative farming has been attracting a lot of attention, as I'm sure you've noticed. A lot, if not most, of the regenerative efforts remain quite small-scale, artisanal, fragmented and, quite frankly, difficult to scan. They are very romantic, very nice, actually source of most of the food we eat at home, from a small farm in Portugal. That is very, very extreme in terms of regenerative agriculture. They do, but that's not scalable at all.
Francisco Roque de Pinho: 3:51
So we've had a good experience deploying regenerative agriculture at scale in a relatively large scale in Uruguay and Paraguay.
Francisco Roque de Pinho: 3:59
Today we produce pretty naturally, ethically raised grass-fed beef that is also carbon positive. That means that we sequester. Its production sequesters more greenhouse gases than it emits and with this success, we're now trying to, as I mentioned, expand our operations to argentina and portugal, and and and our model is really quite simple we acquire acquire conventionally grazed natural grasslands which we then convert into regenerative grazing. That makes these farms much more efficient. We are building on the success of deploying regenerative agricultural art scale in Uruguay to now expand our operations, to grow them in Uruguay and to expand them geographically to Argentina and Portugal. Our model is very simple we acquire conventionally grazed natural grassland which are not efficiently managed and we transform them into eventually, highly efficient, very intensive regenerative grazing operations that basically deliver to our investors quite consistent and correlated returns and with a series of economic, environmental and social benefits. So ultimately, to answer your question, our broader goal is to scale regenerative agriculture investments and, with that, help drive the transition to a more resilient to a more sustainable, to, let's say, a more future-focused farming system.
Friederike von Waldenfels: 5:20
Great. We will dive later on exactly what is the offering and how the whole business model is working. I'm very interested because there's a lot, as you said, a lot of discussions about how can you actually scale regenerate your agriculture, so we'll be very interested to hear about that more. You started the company in 2016. What actually made you start the company in 2016? What was the spark to actually found that company?
Francisco Roque de Pinho: 5:48
I'd love to be able to say that Joaquin and I had this grand vision of developing a company fully focused on regenerative agriculture at the time, and that we were visionaries because at the time it was very early stage. No one really talked about about the sector. But that's not really the case. What really happened is that we we set up what has now become the land group, essentially as a business to help european investors, primarily family offices, turn around distressed family investments, and those were conventional farmland investments. They were mostly leased properties and that's how we started.
Francisco Roque de Pinho: 6:29
And as we got involved in turning around these assets, we realized that in many cases the soils had been depleted through poor management over time and we just started applying what I call common sense measures to address these issues and call common sense measures to address these issues. And these common sense measures consisted in essentially reintroducing cattle, reintroducing livestock on the lands, introducing rotation with crops and so on and so on to basically restore the quality of the soils. Essentially, we were doing regenerative agriculture at the time, without even having heard of the term. We converted our entire portfolio doing regenerative agriculture at the time, without even having heard of the term. We converted our entire portfolio to regenerative agriculture, starting with cattle, which we have now completed, and we are now working on also converting our crop operations into regenerative agriculture.
Friederike von Waldenfels: 7:20
Do you have a background in agriculture or your co-founder? Is there some background from family that you've been before and then you really thought about a business case for that and actually improving it? Still quite a lot of skills and knowledge to do that.
Francisco Roque de Pinho: 7:38
We're not really. There is a family background. There is a family background. My maternal great-grandfather, my grandfather, my great-uncle, several of my uncles were agronomists and used to manage third-party farmland both in Portugal and South America, but I've never set out to do this. I studied management, I worked in capital markets and consulting back in financial services on the buy side markets and consulting back in financial services on the buy side, and so if you told me back in 2015 that 10 years later I would be operating or managing farmlands anywhere in the world, I would have lost. That said, I'm very happy where I am Now for my business partner, joaquin.
Francisco Roque de Pinho: 8:22
He's Uruguayan. My, my, my business partner joaquin is uruguayan. He was born in mercedes, the city on the on the border with argentina, in the most fertile area of of uruguay, and, even though he also doesn't have a background in agriculture, he's an accountant with the cfa. He was born into it, so his parents own a farm, a couple of farms, and he was surrounded by people working in agriculture, so he has that sensitivity. But the reality, he didn't have any technical background and he's managed to most to learn the sector in the past years. He's in charge of operations and he's been able to put in place great teams, both in Uruguay and Paraguay, that support our operations.
Friederike von Waldenfels: 9:01
Oh, fantastic, because I think that's a big challenge as well. Let me rephrase what you're actually doing and let me know if I understand that correctly. So you're buying existing agricultural land which has been, because of poor soil management or not regenerative practices, not creating a great yield and not a great output. So you buy that land and then you redo that to regenerative farming practices, which means adaptive grazing crops, etc. To increase the yield of the land you bought.
Francisco Roque de Pinho: 9:39
Yes, that is accurate and it's a very important point that you mentioned, because people tend to view regionally developed culture as this fantasy, this solution to climate change, these incredible environmental initiatives, but the reality is that we first see it as an opportunity to improve investment returns for our investors. Improve investment returns for our investors and for us, that's the first principles. You need to make money for investors if you want to attract them to this type of investments. We're not taking grants. We're not working with non-profit impact investors. We're really bringing capital from family offices, from institutions, into this type of assets.
Francisco Roque de Pinho: 10:22
So what we do is we identify a land that has been conventionally operated for a very long time, that has a certain return profile. A lot of times it has been neglected. We acquire that land, we improve it using regenerative agriculture practices and by doing that, we improve the yields that our investors can get out of that asset. But also, very importantly, we improve or we increase, increase the biodiversity, and all of that ends up being recognized in the value of your land. As you said before, carbon positive practices that actually should be the best case.
Friederike von Waldenfels: 11:29
No, like that we can actually implement a better yield, a better financial outcome, including improving it. What's the foresight Like? Is everything so positive or do you see something? Hey, through that practices, maybe something falls back behind or something falls from the table.
Francisco Roque de Pinho: 11:49
Well, no, it's not regenerative agriculture. It's a very broad term and it covers a wide range of practices and not all those practices will improve your investment returns, at least in the short term. Some of the transition towards regenerative practices actually forces you to make a sacrifice in the short term. Some of the transition towards regenerative practices actually forces you to make a sacrifice on the short term. For example, in crops, if you're going to reduce your use of fertilizers, pesticides, fungicides and so on, you will have a drop in profitability initially, which hopefully will catch up over time. But that's one of the main barriers to the adoption of regenerative agriculture is you have to make a short-term sacrifice to do that transition.
Francisco Roque de Pinho: 12:28
In our case, we focus we like very much the livestock sector, cattle sector, because the benefits are immediate and from day one. By implementing our regenerative grazing practices and making a small investment in a small infrastructure that you need, you immediately see benefits in terms of in some cases we can double or triple our stocking rates, which means we can double or triple the number of cows in the land at the same time, which obviously increases our profitability. So it depends on the type of practices that you apply and it definitely does not apply to the entire sector. I was mentioning the food that we source in our home. It's this beautiful farm in the Alentejo region in Portugal where they produce everything in that farm and they're organized as a cooperative and they have all this as a case study. It's extremely interesting, but that model is not scalable. You cannot scale something where, in the same hectare of land, you're going to produce cattle, pigs, crop trees, chicken, fruits, etc. Etc. So, you, you, there are limits to what you can do with the drink by recovery many will probably like.
Friederike von Waldenfels: 13:36
consider that if you put cattles on it um, you know adaptive grazing, what you talked about and saying like, okay, I want to actually increase my yield by producing more meat, which is a little bit contradictional to methane and carbon, what you create more through the meat production, how do you balance this out? That you say, hey, we're going to have actually more meat, we're going to have more cows, which is an increase of the methane part. Well, you said at the beginning, hey, no, but we're actually carbon positive. How does that balance it out?
Francisco Roque de Pinho: 14:11
There's this very powerful narrative against meat that has been going on for decades. For a very long time, I've heard that you should not eat more meat because it's bad for your health and, more recently, because it's bad for the planet. It is a lot of water, it emits a lot of methane and so on, and yes, I do agree. As far as factory farming is concerned, raising beef, very confined feedlots and very intensive models is not sustainable. It's definitely bad for the animals because they stressed, they develop illnesses and so on, and at the same time, it has terrible environmental externalities. So definitely, my advice is eat less meat that comes from from feedlots and those. That type of production is a lot of grains and those grains have a very high carbon frequency. As for methane emissions, I think and there's a lot of this information about about methane emissions and the important points I would not like to get too drawn into this debate because I could be talking about it for hours, but people tend to confuse emissions of methane emissions or carbon that are part of the existing carbon life cycle, which is carbon gets captured in biomass, that biomass gets eaten and then basically the biomass then is converted again into methane and carbon, and so it's always part of that cycle. So, essentially, as far as capital is concerned, as long as the problem is that for 10 years that carbon becomes methane and methane has a very high global warming potential, a higher global warming potential than CO2. So for 10 years that carbon has become more problematic, more potent, but after 10 years it degrades back to CO2.
Francisco Roque de Pinho: 15:52
So the problem that you have is, if you keep increasing your livestock, over time you're creating a bigger problem.
Francisco Roque de Pinho: 15:59
But the reality of global livestock has been increasing at less than 1% a year, so that's not truly the problem.
Francisco Roque de Pinho: 16:05
The problem is the carbon that you dig out that has been under the earth for millions of years and that you dig out to power our planes, our cars, our heating, our entire energy matrix, a large part of our energy matrix, and that you're releasing the atmosphere. So I'm not too concerned about that and I'm more concerned about actually the carbon emissions that are directly associated with the feedlots. Producing corn to feed your animals is as a very high carbon footprint. And now, talking about regenerative grazing, there are studies that show that it is actually carbon neutral and, in a lot of cases, a carbon positive activity, because when you take into account all the emissions from the activity and look at the amount of carbon that is captured in the soils by applying this type of regenerative practices. Actually, this activity is very positive. There's a study that came out with the conclusion that this activity, properly done, captures up to 12 tons of CO2 per year per hectare, which is a lot.
Friederike von Waldenfels: 17:14
So you're saying, like in, one of the key problems in that meat production is not actually the cows pooing and burping, but rather how they get fed, so how they actually turn land to crops which then in the end gets fed to cows, so how the crop is actually getting produced, how much fertilizers they use, how much water they use, etc. Is that kind of as a summary, how I understand it?
Francisco Roque de Pinho: 17:45
It's a good summary, but it's not exclusively that. It's also, obviously, methane emissions. If you continue growing your stock of cows, yes, you are increasing the amount of methane in the atmosphere, but I put that into perspective with all the emissions that take place upstream and downstream of your cattle production.
Friederike von Waldenfels: 18:05
So now the provocative question are you then a vegan or you're not a vegan?
Francisco Roque de Pinho: 18:11
No, I'm not a vegan, far from it. I love meat too much and, as a matter of fact, right now I am a carnivore. I started this carnivore diet three weeks ago, where I only eat meat and nothing else and I do not eat anything that is plant-based. I do not eat any carbs, just meat, basically meat, eggs, fish, and it's an interesting exercise that I'm doing. Let's see where it takes me.
Friederike von Waldenfels: 18:41
Super interesting. I love the different perspective. What really surprised me was the statistic which you said. Is it really only 1% increase of kettles in the world?
Francisco Roque de Pinho: 18:50
The statistic that I've seen is that globally, cattle stock has been increasing by 0.8% a year.
Friederike von Waldenfels: 18:58
Okay, it's probably still quite a lot. I can imagine how many cows we have and as well chickens. Is the chicken included?
Francisco Roque de Pinho: 19:06
No, no, just livestock, just ruminants.
Friederike von Waldenfels: 19:08
Okay, okay. So coming back to, as you said, since 2016, you have done it a little bit accidentally how you went into that. If you look back now, over these few years, how was it for you, you know, when, suddenly, 2019, this wave of climate and the new term regenerative agriculture came, and how was it then and how do you see it now? Hence, the appetite has been a little bit reduced in investing in, let's say, sustainable, focused investment classes. Do you see the same or do you see it differently? Do you see that this hype which has been created is still going on in your segment, because it's not only about sustainability, it's a lot about return on investment?
Francisco Roque de Pinho: 19:59
I think there are interesting points in the development of regenerative agriculture and, having worked in renewable energy 20 years ago, I feel we are at the same point. At the time, when I started working with renewable energy back in 2006, the renewable energy sector was on the cusp of receiving a lot of capital from institutional investors. It was just about starting, and nowadays, when you look at the sector, you realize it's impossible to work in that sector unless you are a utility, unless you are a pension fund or a well-capitalized infrastructure fund with very low investment returns. So the sector has matured and renewable energy has become an asset class in itself, and I think the same will happen eventually with regenerative agriculture. I think we are right now at that inflection point, but I think that all the hype around regenerative agriculture actually goes against it. It's its worst enemy.
Francisco Roque de Pinho: 20:59
There's a lot of people saying that regenerative agriculture is the silver bullet to solve the climate crisis, which it isn't. It can help to mitigate climate change, but it will certainly not solve it from one day to the other, and I fear that that removes credibility from the sector. So those are natural. It's the evolution of the sectors there's hype, then there's less hype and there's a little slowdown and then the capital comes back stronger. So for me the vision is clear there will be a lot of institutional capital entering the market in the coming years. I'm not sure if it's this year, next year, in five years. We are certainly positioned to develop our activities based on that capital. But you need to be patient and the main issue I see for regenerative agriculture today is a lack of capital. There's actually lack of capital and lack of education and training. These are the two main barriers that I see.
Friederike von Waldenfels: 22:03
For a second, so what's your revenue stream right now from an investment perspective? Coming as an investor in I think you're in the deck I saw you get up to 9% to 12% return on investment. Can you break that down? How do you make that actually possible? How much is that? Carbon credits as well as a revenue stream included. Just to understand a little bit more, what is the pure yield you're creating by implying these new methods?
Francisco Roque de Pinho: 22:34
by implying these new methods. So let me preface that by saying that farmlands, as an asset class, tends to generate quite modest investment returns. So the numbers that I'm going to discuss should not be viewed in the context of other asset classes like private equity. Otherwise you'll be disappointed, and also our investors, the ones we work with today, which are primarily family office institutions. They invest in the sector primarily for wealth preservation, also to diversify their portfolios, also as a hedge against inflation. All of that because family is a real asset with quite limited downside risk. So it's an attractive investment opportunity for those investors that seek stability rather than high volatility, high return opportunities like other asset classes.
Francisco Roque de Pinho: 23:19
Let's just take conventionally grazed Euro-Wine grasslands as an example, and investors, by investing in this type of asset, can expect a dollar-denominated total baseline operating return of about 7% to 11%. And that's composed of a number of elements. First, what we call baseline cap rates of 2%, 3%, and that's the rates that these investors would get just by buying the land and leasing it outright to a third-party tenant. That's simple, passive income, very simple strategy. Now, if that investor is willing to operate or to hire someone like us to operate that land actively, manage it using more traditional, extensive grazing practices that have been used in Uruguay for centuries. These investors can generate an excess return of about 1-2% over passive land ownership, and that's the reason why a lot of land is actually leased rather than operated, because it's not worth the trouble for a lot of people. Then, on top of that, we can consider capital appreciation of about 4-6%, which is, on average, the rate at which Uruguayan land has grown over time for the past 20 years, and we expect that to continue, because there's inflation, there's an increase increasing global food demand I hope that the global population is going to go to 10 billion people who need to feed them.
Francisco Roque de Pinho: 24:42
There's constrained land availability and so on and all of that takes us to the 7% to 11% return that I mentioned. Now, if you implement rigorous regenerative agriculture practices, like we are doing, you can unlock an additional 2% to 3% annual return. So we bring that total investor to about 9%, 14%. 2% to 3% is not great in an absolute basis, but compared to the base return, it's quite an improvement and, by the way, we call this the regenerative alpha Ultimately. Besides that, we call this the regenerative alpha Ultimately. Besides that, we have a lot of upsides. So by applying these regenerative practices, we managed to shift what was a purely defensive asset to actually one that gives you a better financial performance and that has a lot of environmental returns that are not quantified in these numbers.
Friederike von Waldenfels: 25:33
So you in principle buy the land right, like you really own the land.
Francisco Roque de Pinho: 25:39
Yes, we're not the land group personally, even though we have stakes in the assets we buy, but we buy it on behalf of our clients.
Friederike von Waldenfels: 25:45
So you're buying the land on behalf of your customers and then you improve through the regenerative rate of agriculture, the yield, introduce feedstock etc. And I've read some of your papers that either you go for the high yield and keep it or you do an exit after five years. If you do an exit after five years, first of all, what are the reasons you would do an exit after five years and, as well, how do you then ensure that the regenerative practices you started are actually going to be continued?
Francisco Roque de Pinho: 26:21
Number one, very good point. We do not manage land pools of capital, or more commonly known as funds. So our management is non-discretionary in the sense that we acquire lands using the company. We set up a company for each investment that our investors make. We acquire land using that company and then we manage that company and the lands according to an annual business plan that has been developed and agreed with our clients and ultimately the client can get as involved as he wants. Very often it's quite a lot at the beginning and much less over time, because they gain their trust and, very importantly, they retain the right or the decision to fire us if we do not do a good job. So it's a totally different model from a typical fund where you round up investors, you put them inside the funds, you invest the money for 10 or 12 years and then you exit and return the money and during that time there's nothing they can do. They just receive reports telling them how you are managing that money.
Francisco Roque de Pinho: 27:26
In our case, there's this interaction with investors. What that allows us to do is to really tailor our management approach to each investor's needs. So some investors will want to invest for the very long run. Our last transaction, which was the acquisition of 9,000 hectares of farm in Uruguay, we did it for a European family. The owners tell us they acquired this asset for the next 10 generations, so they have no intention of exiting that investment in the medium or even long run. So, which is great for us, it really allows us to invest with a very long-term vision.
Francisco Roque de Pinho: 28:08
As some others, what they want is to do more of a financial arbitrage, which is to acquire the lands, convert it using these regenerative practices and, within a certain period, which can be five years, can be ten years sell that land and capture that capital appreciation. That brings up your question about how can we ensure that the regenerative practices that we've implemented will be maintained. The answer we cannot. So we cannot, which is an obstacle to develop carbon projects, because to be able to register carbon projects, we need to ensure that those practices will be implemented over the long run, and so that can reduce our options in terms of liquidity. But because the practices we implemented are common sense and basically allow us to produce to make our land more profitable. There's really no reason why someone who buys the land would get rid of those practices. What may happen is that they don't want to operate the land, they buy the land and they hire another operator, and that operator will obviously continue operating the land that way because it doesn't make any economical sense to go backwards.
Friederike von Waldenfels: 29:21
Coming back to the method, can you maybe break that down into two, three points? What are the two, three key points? You're actually changing? Which makes the farm, on one side, higher yield, but also along your goal to be carbon positive If you go visit Uruguay?
Francisco Roque de Pinho: 29:42
you can come and visit whenever you want. We do that very often. We always have people visiting our operations. So if you go, visit Uruguay not our farms but other farms and actually 99.9% of the farms in Uruguay that raise cattle you will have this very romantic, bucolic view. You have these very large tracts of lands with cattle grazing, extensively fixed wire fences and gauchos on horseback, which is fantastic. It's how cattle has been raised in Uruguay for the past 300, 400 years and it worked well enough, but it's not the most efficient way to do it.
Francisco Roque de Pinho: 30:24
So what we do when we acquire one such farm is, first of all, we get rid of a lot of the wire fences and we make very small investments in a number of things. First of all, electrical fences and energizers to power them. We buy a quad bike. We do not get rid of the gauchos on a horseback, but we complement that with a quad bike and we install a modular water distribution system so that the cows can have easy access to water without having to walk for kilometers. And we, instead of having the cattle roam freely in the entire farm, as has been the case for so long, we build smaller paddocks of about one hectare each and using the wire fences, and we make our cattle graze in the same place for 24 hours, so in the same one hectare paddock for 24 hours, and then we move the cattle to the next paddock and so on, and so on, and so on, and by doing this we create a high impact in that paddock, in that part of grassland or pastures for a short period of time.
Francisco Roque de Pinho: 31:30
So that forces the cattle to eat everything, so they cannot be picky and just choose the nice stuff and ignore the weeds. Some of the weeds are actually pretty good for them. They bring them certain proteins that they cannot find in the nice grass and so they are forced to eat everything. That gives us a better use of our resource, because really our job is to. We are gardeners, we make grass grow and then we use the cattle to convert that into food, and so the cattle are going to eat all that grass and then fertilize that area, trampling on whatever they did not eat. So very high impact in a short period of time. And then they move on to the next paddock and suddenly that paddock that is high impact will have three months, six months, nine months, one year to recover and then they will be back to that.
Francisco Roque de Pinho: 32:18
So it's a circular model and it's very efficient because you use better the resources that you have. You create soils, you build up soils because, by the effect of the cattle, you're actually leaving roots in the soils and biomass that would degrade organically and then it will restore. That will bring back carbon to the soils and then you give it enough time for the product to recover and the grassland will then grow richer, with more types of grasses, because the cattle ate everything, so they did not eat selectively. When they eat selectively, they allow the weeds to take over the area and so on. So it's a very efficient way to produce meat because you can have more cattle on your land. So using the same resource, which is again the grass, you can have more cattle, a higher number of heads, on your land, and at the same time you are building up soils, you are creating structure in your soils, improving water retention and so on all these benefits of regenerative agriculture that I've mentioned before.
Friederike von Waldenfels: 33:17
And how is the crops playing part of that?
Francisco Roque de Pinho: 33:20
So crops we are now in the process of converting our crops to make them more regenerative. It's slightly different and, as I mentioned before, with cattle from day one you are more efficient and it's a very simple process. So that's why we tackled that part of our farms before, and now we are doing the same with crops. All our crops until now were leased to third-party tenants and that brought quite a lot of challenges, because the interests of tenants and landowners are never fully aligned. The landowner wants to build value over the long run. Tenants want to extract as much value as they can in the short term. So you will always have that tension to manage, and we've been for several years trying to convince our tenants to adopt regenerative practices for example, use less fertilizer, use less pesticides or herbicides and it's been a struggle, simply because they they don't see the point. So they've been doing things in a certain way for 30 years. They don't see the point of doing it just because we are asking them.
Francisco Roque de Pinho: 34:21
So what we are doing now is, as the our lease agreements expire, we do not renew them and we take over the operation of the crops. And as we do that, then for the crop operation, we essentially make sure that we have proper rotations. We use different types of crops over time, so it's a diversified crop profile. We never leave the salts exposed. We use cover crops to keep them covered. We, of course, reduce the use of fertilizer or use more organic fertilizer rather than chemical ones. We try to reduce the use of chemicals and so on, but it's a learning process. We are doing actually quite well. We already planted 700 hectares of soybean in one of our farms and it's going very well so far.
Friederike von Waldenfels: 35:13
How do you measure the carbon? How much carbon do you store? There has been a lot of discussions about what kind of methods are out there to actually measure that accurately as you can.
Francisco Roque de Pinho: 35:24
First of all, it takes a long time to see the impacts or the effects of the carbon, of the organic matter that you are actually dealing up in your soils, until we started doing regenerative grazing in 2019, and we started recently measuring the proportion of organic matter and carbon in the soils. So we do not have the results yet. We're actually waiting now for the first results and we're doing that at the farm. That is a typical case, where it's a natural grassland and we converted it from conventional to adaptive grazing. We did not do it at the other farms because we are rotating the pastures with crops, so on the one hand, you have regenerative cattle, on the other hand, and then the next year you have not, so regenerative crops, so it doesn't really make sense to measure the desiccated air.
Friederike von Waldenfels: 36:15
So now you've been, as we said, on it since 2016. If you could only dedicate two hours per week to the land group, what activities would you prioritize?
Francisco Roque de Pinho: 36:25
I don't tell that to my business partner, because he will complain that I do not spend enough time working on the land group. He would like me to work 24 hours on it, as he does he's a very dedicated man but more us on it, as he does. He's a very dedicated man. But more seriously, answering your question, there's two things that I would do. We actually the same thing is talking to investors on the one hand, existing investors and, on the other hand, prospective investors.
Francisco Roque de Pinho: 36:46
I would be talking to existing investors for a very simple reason, which is trust is very important, and you can only get that trust by communicating transparently with them. That's very important. They do not really have mostly not all our investors are not agricultural specialists, so they need to trust that we're doing a good job. They give us a lot of leeway, but I fear that I always feel that it would be quite easy to fall into a routine of not providing as much information as we do, which is fine as long as they trust us, but if then there is misunderstanding, we risk losing that trust. So we definitely spend a lot of time continuing to talk to our investors on a regular basis, informally on the phone or in person and more formally through reports. So that's key.
Francisco Roque de Pinho: 37:36
Second is talking to prospective investors. That's very important because we, while investors come and go, we didn't lock them up into a fixed fund structure that would allow us to relax for 10 years and at any point in time, we can be fired, we can be the investor, can decide to sell this asset because it needs liquidity or for succession reasons and, very importantly, we also want to continue growing. So it's very important to have a pipeline of potential financial partners. That can only be achieved by traveling and meeting those investors in person.
Friederike von Waldenfels: 38:11
What's the minimum investment you need to do to be part of your investment scheme?
Francisco Roque de Pinho: 38:17
We generally say a minimum of $10 million. We could stretch it down to $5 million, but below that it doesn't really make sense because these are single, individual investments. So it's not worth buying a farm and operating it regeneratively if it's less than that, because you're going to have to scale it.
Friederike von Waldenfels: 38:35
So you, as an investor, need to bring a ticket of 5 to 10 million.
Francisco Roque de Pinho: 38:39
Yes, or get together with your friends and invest as a club. As a matter of fact, most of our with the exception of one, most of our mandates are groups of clubs of investors who are working together.
Friederike von Waldenfels: 38:51
Okay, if you look back, is there any new belief or behavior which has positively impacted your professional life in the last few years?
Francisco Roque de Pinho: 39:02
It's really regenerative agriculture. I described how I stumbled upon, or how we stumbled upon, regenerative agriculture. Initially, we started by doing it without knowing about it. Over time, we've learned more about it. We've become quite specialized in regenerative agriculture. We know what we are doing and I think we're doing a good job. That has had a lot of impact because we're really focusing our growth on regenerative agriculture. We believe there's tremendous potential and that has really had an impact on my professional life.
Francisco Roque de Pinho: 39:35
Then on a more personal perspective, paying close attention to soil health, to regeneration and so on has really created an interest a personal interest in that for me, and I'm currently in the process of regenerating a tract of lands in Portugal that has been neglected for a very long time, so I'm applying all those things I've learned in my job in my personal life. So I'm applying all those things I've learned in my job in my personal life and also looking at the soil health, regeneration and so on has also brought to my attention the importance of food. I mentioned previously how I'm doing this carnivore diet. I've been reading a lot about food and the impact on our health and for me it's very striking the parallels that exist between soil health and gut health. It's actually very similar mechanisms and so, in the same way that we need to take care of our soils to have a good, healthy planet, we need to take care of our guts.
Friederike von Waldenfels: 40:29
One thing we haven't talked about yet is your passion for big wave surfing. I was really like when I was reading about it. It's like, oh my God, that's amazing. Maybe you can elaborate a little bit about that. Did it influence your whole founder's journey being a big wave surfer and what does it actually mean to be a big wave surfer?
Francisco Roque de Pinho: 40:49
I like to say it's my midlife crisis and it's probably better than other ways of manifesting my midlife crisis. I've started that in 2017, when I moved to Portugal by accident. I'm a surfer, I've always been a surfer, but I've never surfed big waves. I had no interest in surfing big waves.
Friederike von Waldenfels: 41:10
From where did you move, by the way?
Francisco Roque de Pinho: 41:12
I moved from London, so before coming to Portugal in 2017, I spent 14 years in London. Not much surf while I was there, only on vacation.
Friederike von Waldenfels: 41:21
I was like, hmm, London surfing. I want to see how that works.
Francisco Roque de Pinho: 41:25
No, maybe in the future with those surfing pools, but we're not there yet. When I moved to Portugal by curiosity, I went to course to learn to drive jet skis in the waves in Nazareth and I was hooked. I was hooked and the rest is history. This has really taken over my life at least part of my life that I did not spend the time of that I did not spend working, and it's become a big thing. I'm really surfing big waves at quite a high level.
Friederike von Waldenfels: 41:52
What's the biggest wave you ever surfed?
Francisco Roque de Pinho: 41:54
Wave heights are always very subjective and when you talk about world records, well, people have opinions and in the end you might believe that the wave has that height or not. In my case, I measured my biggest wave because when you're surfing in the Zoraida there's always plenty of cameras shooting you. So I had nice pictures, very clear pictures, and I measured it very simply, basically seeing my heights on the estimated height on the wave and then putting on top of each other to come up with the height, and it came up to 17 meters. So I'm quite confident that I've set the wave above 15 meters which is really steep at my age.
Friederike von Waldenfels: 42:34
Wow, so you love to take risks.
Francisco Roque de Pinho: 42:38
Calculated risks? Yes, which is a good segue into the question, which is how has surfing influenced my founder's life? Well, I was an entrepreneur before becoming a big wave surfer. Probably both of us have influenced each other. And when I launched my first business back in 2007, just as the global financial crisis was hitting, so we struggled for several years. It was a really tough environment to launch an asset management business and you really need to go. That really taught me to be resilient, to have stamina. Surfing big waves is a very hard sport. It's not technically difficult, but it's very hard. It's hard on your body, on your equipment, on your mind, and it's very easy. Just to. After a couple of well, actually, after my second or third session, I nearly I felt like I nearly died. I was underwater for a very long time and I remember being on the beach, not being able to stand up and thinking well, that's the moment you, you need to decide either to give up or to do this, this sports, properly, which and I ended up deciding to do this sport properly.
Francisco Roque de Pinho: 43:48
So I think there's the, the resistance, or stamina that I learned with my first business certainly helped me break into big wave surfing and actually go into the sports now it's the other way around, and I feel that that there's many lessons to to take from big wave surfing that we can apply to business, and resilience, for me, is the most important. We there's not a single surf session in israel where something doesn't go wrong. If something doesn't go wrong, we look at each't go wrong. We look at each other at the end of the session and think that that was not normal. We always break equipment, we get injured, we end up with a jet ski on the beach after five minutes.
Francisco Roque de Pinho: 44:29
It's such a chaotic environment that something always happens, and you can try to or you should try to manage that by organizing yourself, by being more resilient. That means having redundancy, having clear procedures, developing the ability to adapt very quickly to changing conditions, and all of that applies to the business, and it applies so much that actually we've been doing lectures in companies talking about resilience, big wave surfing and lessons for business. It has attracted quite a bit of interest, so much so that now the team I co-founded in Nazaré, called Red Herring Nazaré, is also organizing a team of sites for companies to talk about those subjects and also give them experiences in the ways.
Friederike von Waldenfels: 45:18
Amazing, wow, very impressive, like 17 or 15 meters, I can imagine. I really like the analogy to resilience and I think this is probably what we need as well to manage the whole climate crisis and et cetera. And usually I ask the last question is what makes you comfortable that we manage the climate crisis, and etc. And usually I ask the last question is what makes you comfortable that we manage the climate crisis? But I'm not even sure like are you along to fight the climate crisis or is it for you more? It's a great business case and it helps the climate crisis.
Francisco Roque de Pinho: 45:54
Yes, as discussed previously, for us to be able to attract capital, we need to show investors that it is financially viable, so that this conversion that we do from conventional agriculture towards regenerative practices is profitable. Second, we address climate change. So it's great that we're able to make profitable investments that, at the same time, help address climate change. Now, to answer your question, I don't think we're doing enough to address climate change. I am old enough to remember the Rio Summit in 1992. And I also worked in the climate change sector back in 2006-07 with renewable energy and carbon credits, and so I've been following that sector for quite a long time, and it's a bit like Groundhog Day Whenever there is a COP.
Francisco Roque de Pinho: 46:43
It feels like we are repeating the same process with more or less the same results. So we were not doing enough to focus a lot not just on mitigating emissions, but also on mitigating the impact of climate change. As in everything, we are human and I think we really make the change. We need to take measures when we get hit by a catastrophic event, by a black swan, as was the case with COVID. It was impressive how we managed to mobilize the world to tackle COVID. Well, I think we are waiting for that to happen, with climate change, to really take measures. Until then it's a lot of posturing Oof. Sorry for being so cynical.
Friederike von Waldenfels: 47:26
That's a hard ending to that amazing conversation.
Francisco Roque de Pinho: 47:31
But we are doing our part.
Friederike von Waldenfels: 47:33
Exactly exactly. No, wow, I really enjoyed that and I would have loved to dive a little bit more into you know your journey as well, coming from the carbon credit markets to do that, but you know there's always a next time, hopefully either in Uruguay or maybe you know, surfing a big wave in Portugal. So thank you so much for joining my podcast. I really enjoyed this conversation and if people want to reach out to you, what's the best way? Or if they maybe even want to invest.
Francisco Roque de Pinho: 48:05
So the best way to reach out to us is through the usual channels, through our website, where we have a contact form via LinkedIn, but of course, they can also contact me directly. My email is fairly simple. It's francisco at the-learn-groupcom, and we will always reply to the emails we receive, so feel free to contact us.
Friederike von Waldenfels: 48:27
Okay, thank you so much for joining my podcast today.
Francisco Roque de Pinho: 48:31
Thank you, friederike, it was a pleasure. Thanks for having me.
Friederike von Waldenfels: 48:36
Thank you for joining today's episode. You can find the show notes, background materials. Thanks for having me.
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