Fisheye Farms got started in Detroit’s West Village neighborhood in 2015 with just 1,200 square feet of raised bed space. The farmers discovered quickly that the city’s resurgent restaurant scene meant there was plenty of demand for local, sustainably grown vegetables.

“We were making sales and growing a lot of produce,” said co-founder Andy Chae. “We had a business going, and the whole time we were trying to find more land and just hitting roadblocks everywhere we went.” When Chae and co-founder Amy Eckert found a promising parcel, they approached their bank for a loan, but they were quickly shot down. So, when a team from Steward, an investment start-up looking to funnel capital into regenerative agriculture projects around the world, expressed interest in giving them a loan, they were intrigued.

Thanks to their partnership with Steward, Fisheye Farms acquired a plot that’s nearly 10 times larger than the original, in the neighborhood of Core City.

It’s one example of how during a proof-of-concept phase over the past year, Steward put $2.2 million into 16 varied projects hand-picked by the company’s team. Now, farms can apply for funding directly on Steward’s website. And on the investment side, anyone can buy into the Steward Farm Trust—a fund that will provide loans across the portfolio of farms—with a minimum of $100.

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“That was the idea all along,” said founder Dan Miller, a real estate and tech entrepreneur, “that people can come to the website and invest directly, and farmers can submit directly—and we connect those two components.” Investors at certain levels will also soon be able to invest in individual farms.

Over 2,000 farms applied for funding in the first year, and Miller is looking to scale up. “I’ve generally found that these farms … have economic opportunities. They are just starved of funding,” he said. “More people are getting into regenerative and sustainable farming. We’d love to be working with hundreds, and hopefully thousands, of farmers in the not-too-distant future.”

The Steward Model

Steward is not the first company promoting and enabling investment in sustainable agriculture. Dirt Capital is known for its work helping organic farmers in the Northeast buy land, and Denver-based Bio-Logical Capital has financed and helped execute regenerative agriculture projects in Vermont and Hawaii. Online platform Kiva connects investors to small-scale farmers around the world. And Arabella Advisors and RSF Social Finance have advanced “impact investing” in various food system projects, including sustainable agriculture initiatives.

While each project approaches the challenge slightly differently, Miller says this alternative funding is still just a drop in the bucket compared to the financing that goes into industrial commodity agriculture. “Almost all agricultural lending is driven by government policy, whether it’s direct government lending or through banks that have government programs, and those policies incentivize large industrial production,” he said. “So, the second you’re not [producing] commodity products, you’re in another bucket that’s too small, too complicated, and is completely ignored.”

Anu Rangarajan, director of the Cornell Small Farms Program, said accessing capital is a huge issue for the small farms her team works with around the country, especially those run by new farmers who don’t inherit land. “It’s pretty well established that funding is a real issue these days given that land values have gone up a lot,” she said, “and then having operating capital is also a challenge.”

Rather than competing with other “good food” investment vehicles, Miller sees Steward as complementary, with each company adding eggs to the still-tiny basket of investors trying to tip the scale in the other direction.

Plus, while many funds focus specifically on land, Steward also provides loans to improve infrastructure. For instance, loan recipient Omar Beiler, an Amish grass-fed dairy farmer, bought processing equipment that allowed him to sell milk, butter, and ice cream directly to customers.

“Whatever the farmer needs, we’ll adjust accordingly,” Miller said. In addition to the investments in Beiler’s operation and Fisheye Farm, Steward has helped Oregon-based East Fork Cultivars buy 12 acres of land to grow certified organic hemp and Louisiana-based Dusty Roads farm buy a walk-in cooler for its organic vegetables, more than half of which had been going to waste due to lack of refrigeration. Steward has also funded several international projects, such as a natural winemaker in Switzerland and a pomegranate farm in Morocco.

While the farms the company has funded so far are diverse in location and crops, the farmers are overwhelmingly white, a point Rangarajan hit on right away when evaluating the company’s model. Miller said the team is actively working on diversifying their portfolio, and noted the many women and LGBTQ farmers who had accessed funding. “We’ve had many ongoing discussions about how to guarantee more inclusivity in an area that is historically harder for people of color to break into or thrive in,” he said.

To apply for funding, farms fill out an application on the website. Steward then evaluates applications based on business plans and farm practices. For example, it requires farms to be regenerative, meaning they “increase biodiversity, enrich soils, improve watershed health, sequester carbon, and enhance ecosystem services,” and sustainable, defined as “prioritize[ing] self-sufficiency and capable of sustaining farmers, resources, and communities.” It also sends employees and consultants to visit farms the company is considering investing in.

Once a farm is accepted, Steward works with the farmers to structure a loan based on their specific needs and resources. Miller said loans could range from $10,000 to $1 million (the majority from the first round of funding were six-figure numbers). Each farm also gets a “farm steward,” who is tasked with offering guidance and resources as necessary.

Any investor with $100 or more can go to the website and invest in the Steward Farm Trust, which owns the entire portfolio of loans and has a projected annual return rate of 4 to 6 percent. The company is calling the model “crowdfarming,” since individuals can do it easily online and they’re investing alongside others. But unlike crowdfunding models such as Kickstarter, the online investment pathway does not allow you to select a specific project; the lending is spread across Steward’s portfolio of farms. There are opportunities for “qualified” investors to put their money into specific farm projects, but that is through a separate fund and requires more capital.

The challenge, then, will be finding investors who are interested in supporting regenerative agriculture and are willing to bet their money on it—with returns that are much higher than what one would make from a savings account but with less potential for profit than investing in, say, stocks.

One challenge, Miller said, is that “people don’t invest in farms. It’s not something they have in their investment portfolio. So, we’re going to have to educate them about that.”

Future Stewardship

Another challenge is that while Steward has big plans for the future, many of the farms it has funded have not yet entered the repayment phase. And the small farms will have to manage high interest rates—Steward’s loan rates are between 8 and 10 percent—while working within tight margins and in the face of unpredictable weather patterns.

Rangarajan of Cornell’s Small Farms Program said she was concerned that those rates were so high, farmers may not be able to manage them. “The margins on a farm are so low,” she said, “so if you have a crop loss, that could be an issue, people defaulting on loans because of loss.”

Miller recognized how high the rates seem to farmers used to seeing government subsidized rates of around 2 percent, but said that is another example of how the system privileges large commodity operations, in terms of only giving larger farms access to artificially cheap capital.

“Steward aims to build a capital market for sustainable agriculture that fairly compensates both parties—investors earn returns commensurate with the risk of small farms and farmers access flexible funding tailored to their needs,” he said. “Though the interest rates are higher … we have found that farmers are able to grow rapidly with appropriately tailored funding, especially when supported by Steward and our network of Farm Stewards.”

At East Fork Cultivars, CEO Mason Walker and farm founders Nathan and Aaron Howard had been growing CBD-rich cannabis since 2015. The team had been looking to grow hemp for several years but hadn’t been able to access land. That changed when they met Miller. When a neighboring farm went up for sale, they were able to buy it with a $640,000 loan from Steward. That loan came with a 9 percent interest rate, but Steward gave the farm a two-year grace period before they’d have to start making payments, which was crucial, Walker said.

“It’s certainly way more expensive than a traditional mortgage, but [we liked that] they would be an ally for us and a strategic partner to support our mission,” Walker said. “The consultants on staff also helped us buy farm equipment, and with budgeting and marketing opportunities.”

Rangarajan said that this kind of ongoing partnership could make a big difference in whether the Steward-funded farms are able to succeed. “When people are ready to scale to build toward greater and greater farm viability … the three- to four-year stage can be the make-or-break point,” she said. “To be able to go into partnership with someone who understands that risk and is supportive as the farm grows, I think that would be really exciting.”

Today, East Fork is growing certified organic hemp for CBD and has also turned its farm into a kind of living lab. Researchers from the University of California, Berkeley are using the site to study how growing cannabis impacts wildlife migration patterns. Meanwhile, the farm team is experimenting with how to reduce energy and water use and creating and testing its own fermented soil amendments in hopes it will improve the soil and help the plants defend themselves against pests.

At the end of the day, Walker said, “We would not have bought this property without Steward.”