The trend toward sustainable agriculture continues, but it faces obstacles in mainstream American agribusiness, whose aims focus more on profit than ecology. As a result, sustainable and regenerative operations often find it difficult to raise capital.
One lender that is stepping into this gap is Steward, a sustainability-oriented lender founded in 2016.
“We are champions for the unsung stewards—those proving that there’s a more sustainable way to grow, raise, and catch our food by taking responsibility for the health of their soil and local communities,” says the company’s website. https://gosteward.com/ “But the going is tough for human-scale producers who struggle to access loans that will propel their businesses forward. Our goal is to bring regenerative agriculture and mission-driven lenders together to share in the good work of rebuilding local and equitable food systems for all.”
I interviewed Steward’s founder and CEO Dan Miller about his company. Although Steward is based in Portland, OR, its eight employees work remotely. Miller himself lives in London.
Steward’s borrowers, says Miller, are “farmers focusing on soil health and the health of the ecosystems as the primarily element of their farming.” Other goals include “healthy food, aligning farming practices with ecology conservation of resources, fair pay and wages, income and value to producers, and supporting rural communities.”
Steward makes “loans for land, real estate, and equipment,” with “some working capital for inventory,” Miller adds. So far Steward has lent $22.1 million: $10 million in 2022, and a goal of $15-20 million for this year.
So how can growers prove their operation is sustainable? The terms are directly stated in the loan contract, Miller points out.
Lenders are mission-driven, and anyone can participate, the minimum amount being $100; some funders have provided as much as several hundred thousand dollars. Hence loans can pool the resources of several individual lenders.
As for fees, the borrower pays 2-3 percent upon loan origination (there are no fees to apply). The interest is paid to the lender, with Steward taking 0.5 percent as a servicing fee; one recent loan, financed at 8 percent, would thus pay 7.5 percent directly to the lender (on a monthly basis) and 0.5 percent to Steward.
The firm’s interest rates have been between 6 and 8 percent from the beginning. Miller observes that although commercial lenders have raised their rates to more or less the same level, Steward has not needed to increase its rates.
The typical borrower? Diversified regional fruit and vegetable farms of sizes from 50 to 100 acres, says Miller, often with livestock as well.
“More and more we’re working with small grains and pulses. We’ve funded a lot of aquaculture. We definitely do niche varieties,” including apiaries, he adds.
Steward also favors operations with “multiple business lines, value-added products, and farmstands.” Observing that the firm is investing in “not just producers, but value-added infrastructure,” Miller emphasizes the need for added value: producers are realizing that their best bet for prosperity is to control sales and marketing all the way through the supply chain.
Steward does loans nationwide; the main concentration is in the Pacific Northwest, including Montana, where it is funding a meat processing facility for a collective of 5 family-owned ranches, which have a value-added meat operation.
Sustainability is not a passing fad: large retail purchasers are increasingly including sustainability requirements for its suppliers. As these increase, more and more growers are likely to be looking for lenders like Steward.
