The Business of Soil Health

Ep 4 - Matt Nicoletti: The Methadone Clinic for Agriculture

In this episode, Patrick Smith interviews Matt Nicoletti, Director of Business Development at Penny Newman Grain—a California grain trader founded in 1878 that has grown into a global leader in bulk commodity logistics. 
We dive into how Penny Newman is both advancing soil health through innovative inputs, and working to transform their legacy business.
Their unconventional approach challenges some of the received wisdom in regenerative agriculture:
🚜 𝗜𝗻𝘁𝗲𝗴𝗿𝗮𝘁𝗶𝗻𝗴 𝗦𝗼𝗶𝗹 𝗛𝗲𝗮𝗹𝘁𝗵 𝗶𝗻𝘁𝗼 𝗔𝗴𝗿𝗶𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀: Penny Newman is leveraging their scale to produce and distribute innovative biological inputs, integrating them directly into large farming operations without asking for fundamental operational changes.
🐛 𝗣𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘇𝗶𝗻𝗴 𝗢𝘂𝘁𝗰𝗼𝗺𝗲𝘀 𝗢𝘃𝗲𝗿 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀: Instead of focusing on cover crops or no-till methods, Matt's team optimizes soil biology through biological inputs. The result is rapid and dramatic improvements in crop yield and vigor, which really grabs producers' attention.
💰 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗪𝗶𝗻𝘀 𝗕𝗲𝗳𝗼𝗿𝗲 𝗠𝗶𝗻𝗱𝘀𝗲𝘁 𝗦𝗵𝗶𝗳𝘁𝘀: Matt's approach focuses on delivering immediate economic results rather than waiting for farmers to adopt new practices or change their mindset. Showcasing the power of soil biology opens the door for producers to explore further.
⚡️𝗔𝘀 𝗼𝗽𝗽𝗼𝘀𝗲𝗱 𝘁𝗼 𝗮 "𝗺𝗶𝘀𝘀𝗶𝗻𝗴 𝗺𝗶𝗱𝗱𝗹𝗲" 𝘁𝗵𝗲𝘆 𝗮𝗿𝗲 𝘁𝗵𝗲 𝗺𝗶𝗱𝗱𝗹𝗲: Penny Newman trades and transports commodities into California from all over the world. We discuss some of the challenges they're facing as they navigate their customers' Scope 3 emission reduction programs.
Notable Quotes 
(17:16) It's much more difficult to save your way to profitability than it is to grow your way to profitability…one of the mistakes that I made early was trying to get growers to drastically reduce their nitrogen inputs. So let's use the tomato market, for example. If you were to reduce, let's say that tomato grower was using 200 units of nitrogen in the form of UAN 32. That means that they're using roughly 70 gallons of UAN-32 and a gallon of UAN-32 in the current market costs roughly, you know, $2. Okay, so you're spending $140 per acre. So if you reduce your nitrogen inputs by half, you're going to save $70 roughly. Okay, and that's material on a per acre basis, like any grower who you go to and say, hey, I want to take $70 out of your input budget. They're going to like that in concept, right? However, when you look at, you know, where the profitability comes from, going back to yield increases, right? The tomato market is today, $112.50 per ton. Average tomato yield last year was roughly 50 tons per acre. So a, which would mean that a that a five ton yield increase would be a 10 % increase in yield, which is absolutely attainable, right? And at five tons times $112, you're north of $500 in profitability increase, right? So I would rather make $500 than save $70.
(09:57) If I can't show up and show results within – call it the first year of working together – Then I don't get invited back. You know, my customers are not people that say, I want to go regenerative. Let's work with Penny Newman. These are people who are just wanting to maximize profitability on-farm and looking for innovative ways to do that.
(08:40) It's kind of like a methadone clinic, right? You're weaning growers slowly and steadily off of those things, but doing it in a way that you don't see this big yield decline. Because I think one thing that you obviously think a lot about, is how growers manage that perceived risk, right? And when we talk about soil health and regenerative, we're generally talking about management practices that are oftentimes difficult to implement that growers don't have experience with. And in the regenerative ag circles, you hear people talk about this sort of yield dip that is inevitable when you go quote unquote regenerative. And as much as I love that word and I love the movement, I don't necessarily align ourselves with it as much anymore because if that's what regenerative ultimately means, then I can't necessarily claim that what we're doing is quote unquote regenerative. I personally believe that it is because we are emphasizing the restoration of, you know, soil, natural soil biology and creating an ecosystem that more closely mimics what exists in nature and the way nutrients cycle through the soil in nature.
(25:22) It's fun because a lot of times you actually can get that mindset shift after you've shown somebody the power of, call it soil health and emphasizing that. We've seen that in a myriad places with large, call it industrial growers that have started to use carbon -based inputs and have said things like, I've never seen an immediate yield and vigor response from any sort of input like we have when we use this, right? And it was ultimately the power of biology that drove that.
(46:50) I'm optimistic. You know, it's a total mess out there right now. Like I said, it's a bloody ocean, you know, at the crop input level…. there's no doubt about it, that our food system is facing challenges that growers are facing so much economic pressure, interest rates, you know, labor and materials, inflation and input, and inflation, those problems are all real. You know, water limitations in California through regulations like SGMA, problems are all very, very real. But I do believe we're going to innovate our way out of this. The sad fact of the matter is there is going to be a lot of people that don't survive this paradigm shift, right? But I also think that the ones that are most at risk are the ones that are in the current environment that are facing these mounting economic pressures, not willing to adopt these new, call it innovations or embrace this paradigm shift towards a more regenerative future. 
Links for Resources Mentioned in the Episode
Penny Newman farm products division - https://penny-newman.com/farm-products/
PlanetFWD - https://www.planetfwd.com/

Ep 3 - Mitchell Hora: A New Scoreboard for Agriculture

Mitchell is a 7th-generation Iowa farmer and the Founder/CEO of Continuum Ag, a soil health data intelligence company. He’s one of the leading evangelists for scoring crops according to their Carbon Intensity as a measure of climate impact that’s strongly aligned with how producers operate.
Mitchell shares his journey into regenerative agriculture, starting from his seventh-generation family farm in Iowa and discussing how early mistakes with cover cropping fueled his drive to ensure that farmers have the data and technical support necessary for success. He emphasizes that soil health practices can deliver significant long-term benefits, including reduced input costs, increased resilience, and lower environmental impact, but stresses the importance of farmer-to-farmer technical assistance over government-led programs.
Mitchell also highlights Continuum Ag’s role in helping farmers understand their carbon intensity scores, which are becoming critical as markets and policies like the Inflation Reduction Act incentivize low-carbon farming practices. He explains how these scores can drive new economic opportunities for farmers, particularly in the biofuels sector. Mitchell is optimistic about the potential for agriculture to shift from being part of the problem to being a key part of the climate solution, as more farmers adopt regenerative practices that are backed by data and verified for legitimacy.
 
Notable Quotes 
 
(00:05:33) The corn just looked like crap too. I've got some pictures of it and stuff, just nasty. But a lot of farmers run into those issues where we're planting corn, that's a grass, into a cover crop, namely cereal rye, which is used more than 90 % of the time across the Midwest. But cereal rye, also a grass, said they are in competition to each other. And we got what's known as the carbon penalty, where we had too much carbon biomass out there, tried planting corn into it, and just screwed things up...It was our fault. We didn't know what the heck we were doing. Our soil health was not ready for it, meaning our biological activity was not great. We had been no tilling, but we were conventionally farming, right? With plenty of pesticides and plenty of synthetic fertilizer. And just no till alone doesn't get you where you need to go. 
(00:08:51) We've changed our system to revolve around this cover crop. And the cover crop is part of the program that now we're able to have huge success with it. We’ve decreased our need for fertilizer and pesticides significantly. We've reduced fertilizer by about 50 percent. We've reduced our pesticides by about 75 percent. We've reduced our need for federal crop insurance for any farm subsidies for any replant. We haven't had a replant in years. We haven't had any crop insurance claims in years. We're just so much more resilient.
You don't have to lose money in year one. Now, it might take some off-farm money to offset the cost and to maintain and to break even in those first couple of years, but you can absolutely be money ahead very, very soon into this journey as long as you don't screw it up like we did, and that's why the technical support is just so critical
I really worry about how fast this is going. And I know that regulation is the wrong way to do it, because the technical support is not readily available at scale. The logistics, the logistical support not ready at scale, namely cover crop seed, the ability to apply all these cover crops, the labor to get it all done. Those infrastructure components don't exist today. They've progressed a long way, but like, It takes time to let that stuff really get going and let supply and demand just fuel it.
(00:11:39) The real technical assistance needs to happen farmer to farmer. That's how farmers learn best anyway. And that's becoming more readily available. I think social media has helped with that. There's a gazillion different field days and events and social media connecting people to really tell their story and learn from each other. But we've got to make sure that it's that farmer to farmer technical assistance that is really bolstered up.
(00:17:14)In order to help farmers adopt these regenerative ag practices, especially cover cropping and no tilling and implementing more diversity, the biggest two concerns always boil down to logistics. How do I do it? How do I change? How do I make my equipment work? How do I work within my labor? How do I make this work for my soils? It's logistics and it's economics. How do I not lose yield and lose money? This stuff costs money. How do I cover that cost and how do I justify spending the money? And as you think of it as a long-term return, you know, long time to get real return on investment, as farmers, most of them are operating under a one-year operating note and one-year rental agreements and such. How do you look to invest long-term when you're living in an annual financial cycle?
(00:20:18)Now with the CI thing, I think it's the very first time that there's a new scoreboard for agriculture. The scoreboard has always been the yield monitor. The point system has always been the bushel. The financial system has always been getting paid a commodity price by the bushel and therefore you got to have volume. And we have the yield monitor, the scoreboard, and we could see what is scoring the most points and that's what's driven on every pass. That's what drives the decisions. Well, now for the first time, we've created a new scoreboard with our topsoil tool. The scoring mechanism is carbon intensity in the GREET model and with 45Z coming through. There's finally a new scoring mechanism where farmers can earn points directly and earn financials directed from the points that they've created and the lower the carbon intensity score the more financial reward you can garner 
But what I'm so bullish on here is the impact that this is going to make in non-biofuel markets because they're going to have to respond. Most of my corn today goes to feed pigs, but there's no tax credits for low-carbon pigs, even though 65 % of the carbon footprint of the pork industry comes from the Scope 3, the feed. So if the pork industry is going to decarbonize, they've got to address their biggest component of their carbon footprint, which is the grain, the feed.
(00:40:35)We're getting hundreds of farmers a week coming in. And we're spent, I think last week we spent like maybe $1,500 on marketing. Like, that's it. So like amazing that, and now we're doing a lot of speaking, we've got our dealer network, we've got a lot of momentum and buildup, right? But still like farmers are really excited about this. They're coming to the table, they want to help. They want to help.
[Regarding offsets...] I was there when we wrote the protocol for Climate Action Reserve like I saw how the sausage is made and therefore I know we took those rules from forestry from other stuff we copied and pasted and said this what we're gonna have to do for ag and it just doesn't work that way. 
But I love carbon intensity because there's no contracts. There's no rules coming from these registries. It's simply, here's your bushels you produced that year. What were the practices that went into those bushels? That goes into the carbon intensity score from the GREET model. And when you sell the bushels, you sell the score and now it's part of the next person's score. That those bushels are part of their scope three carbon footprint. And my data goes with those bushels. They're able to update their reports. Done deal. No contracts, no nothing. I get paid upon delivery and I have full flexibility.
So really excited for those opportunities there for farmers to tell their story and go from being part of the problem, which we absolutely are today, right? Agriculture is part of the problem today. That is a fact. But we are doing a good job and reducing our impact and can really be a huge piece of the solution. And now there's some data to be able to back that up and real opportunity coming to fruition.

Ep 2 - Matt Rohlik: Producer Compensation in Early Supply Chain Decarbonization Efforts

Matt Rohlik is the Managing Director of Sales and Strategic Partnerships at ARVA Intelligence. 
 
ARVA plays a key role in the “insetting market” – the market for ecosystem assets *inside* companies’ supply chains. This is a crucial tool for ag-dependent companies to decarbonize their supply chains, which make up a significant amount of their total emissions – in most cases, more than 50%.
 
Matt has a deeply informed insider’s perspective on how the insetting and carbon offsetting market are shaping up in ag, demand dynamics from ecosystem buyers, and the challenges and rewards of facilitating and supporting producers who are creating and selling this new asset class.
Matt shares his background in farming, finance, and precision agriculture, and dives into ARVA Intelligence's role in ecosystem asset markets.
 
Matt discusses the complexities of insetting programs, offsets, carbon intensity (CI) scores, and their practical implications for growers, consumer packaged goods (CPGs), and supply chains.
 
Matt explains the growing interest in sustainable practices like cover crops, nutrient management, and soil health improvement, as well as the financial incentives that are now being offered to farmers to adopt these practices. We talk in detail about what payment ranges producers can expect to see from these programs. And we explore the challenges around regional implementation, trusted partnerships, and the future of ecosystem asset quantification, including carbon credits and CI scores.
 
The episode highlights the importance of communication between growers and buyers, the need for regionally appropriate practices, and how ARVA is helping bridge the gap between sustainable agriculture and market demand.
Notable Quotes 
 
[04:44] - in the last three months, we've seen science-based target initiatives, or what's called SBTI go from around 6,500 to 8,000… about 18 to 20% are ag-specific…. (~05:00) …there's a lot of money that's coming into here that is gonna influence supply chains
[06:36] When you bring farming people to the table with our urban cousins, we find out that we're not actually that very far away in our thinking and what we do for the environment. The problem is we just don't talk….So the transparency of food is just an evolution that's coming. And knowing how my food was raised, is it in some type of a protocol or standard that meets what we feel is generally acceptable? And I think it's actually a really good thing from the perspective they get to see a little limelight of what we do on a day-to-day basis. And when they find out that our tractors are more advanced than their Teslas, I think we're going to have a lot more in common than they think.
[11:54] $15 to $35 an acre is a potential for farmers in these programs and which in today's world with a depressed economy 12 months ago corn was $2 higher you know so you think about 200 bushels of corn at $2 and that's a lot of money that has gone away where this is definitely helping I'm going to say keep farmers afloat per se but it's definitely helping on the revenue perspective side or the net revenue side
[13:39] And we did a test for five years where cover crops and we implemented no-till, and it did not work very well. And we had all the experts there, and we followed it to the T, and frankly, we lost about $400 an acre…that is not sustainable…(14:39) Now if our farm in Arkansas, we use cover crops, the organic matter is increased by almost a half a point over three years, which is phenomenal.
[15:29] …the program I might have here doesn't fit the program in Boone, Iowa or Effingham, Illinois or Fort Wayne, Indiana or Columbus, Ohio. We have to be very realistic and I think the end buyers and CPG's are starting to see that this is not just a cookie cutter approach. It definitely has to be agronomically led.
[~16:00] And as we go down the path things like biologicals, humics and fulvics, which most people don't even know what they are, in the CPG world, they're building soil health. I can think of four or five companies off top of my head that they are doing a really, really good job of building up soil health that are in return, allowing for commercial fertilizers to be reduced or have efficiency that we're seeing 10, 15, 20%. I mean, that's outrageous. It's not fully recognized by the community…(17:12) of sustainability yet, but it will be because it's definitely something that you know those biologicals are doing a heck of a lot to restore the ground and build a true soil health perspective.
[24:23] Okay, so let's just, we'll pick on Alabama for the moment. So Decatur, Alabama, let's say that there's a mill there that's processing corn and soybeans going into chickens. They are not like, when I look out my window here and it's all corn and soybean fields, right? If you've been to Alabama, it's not like that. So they probably, let's just say for hypothetically, they take 30% of the grain there. Okay, 30% gets procured locally to feed those chickens. 70% in that case, that grain actually comes from Southern Illinois and it comes in on the CSX rail. So you know, the CPGs are looking at traceability of where the impact of that grain is. You can't put all the scope three emissions right around that plant because that's not realistic. Only 30% is there. The rest of it is actually in southern Illinois. So understanding where the movement is.
[33:22] There's more demand than there is supply. The biggest thing that scares the supply side away is these long contracts. Right, that's the number one killer for the carbon offsets in row crop. Whereas the pasture and rangeland...[37:22] you put some interseeding in there, you do some cross-fencing, you do some water improvements, and you put 30% more AUMs on a pasture, you get a heck of a lot of carbon sink. Doing that, so the carbon credit, that makes sense, right? That's very palatable.
[43:16] Personally, I'm a very big fan of carbon intensity for multiple, for the inset markets, the biofuels markets, and if you want to throw carbon offsets in there as well, because it's really a true measurement of what's happening and overall true measurement of how efficient you are, how efficient the carbon is. That's the whole point, carbon intensity. The unit of measurement I think is pretty great…(45:02) It sets up a very clean line in order to get there because you're benchmarking the entire supply shed. It's great.
[56:19] I think one of my favorite stories is… I just got it this past week and as you know, they farm economies down a little bit at the moment and one of our partners forwarded me an email from a farmer and this really hit home to me. He said, “The program you did with X CPG last year in ARVA allowed me to make the payment on my tractor that I'm now sitting and planting my crop for 2024.” And when you think about that perspective, you know, this is, that's a pretty powerful story.
 

Ep 1 - Maggie Monast: The Financial Pushes & Pulls for Stakeholders Across the Value Chain

We kick off the podcast with a fantastic overview of the interlocking pieces of the puzzle of financing soil health transition.
We delve into how farmers, lenders, insurers, and companies across the ag value chain are adjusting to regenerative practices, and the systemic challenges they face in transitioning to climate-smart practices.
Our Guest
Maggie Monast is the Senior Director of Climate-Smart Agriculture at the Environmental Defense Fund (EDF).
With over thirteen years at EDF, Maggie has been at the forefront of soil health economics, offering a unique view across the value chain. She’s worked closely with producers, lenders, large corporations, insurers, and policymakers.
The common thread throughout her work has been finding sustainable solutions on farms that are also economically viable.
Summary
Maggie shares insights on the financial complexities of regenerative practices, highlighting the detailed nature of farm budgets and practices like no-till, nitrogen efficiency, and cover crops – and their compound effects.
She discusses the role of data, policy, and economic incentives in supporting farmers and emphasizes the need for collaboration between forward-thinking farmers, lenders, and companies to foster widespread adoption.
Patrick and Maggie also explore how lenders and insurers can better align financial products with regenerative practices, and how supply chains are gradually integrating sustainability into procurement processes.
Notable Quotes 
[01:47] …that honestly surprised me, because this group of farmers, they're business savvy, and they're very committed conservationists. They've been doing this stuff for a long time. So if they still had questions about how some of these practices were affecting their bottom line, that told me that there was a much bigger issue there.
[~23:21] I always say regenerative agriculture can be profitable that doesn't mean it *is* going to be. It depends on a lot of things and that's why we have to get the financial incentives and support right to make sure that farmers can make that transition successfully and maintain it over the long term.
[~26:01] If you want to know somebody who cares more about farm profitability than maximizing yields, that's a lender. If you want to know somebody who cares about the long-term value of land assets, also a lender. If you want to meet somebody who cares about the risk of their overall lending portfolio, also a lender. But I think they had not quite connected the dots between, for example, portfolio risk and climate risk, or land value and soil health, or profitability and nitrogen efficiency.
[~40:47] And, you know, crop insurance is backward looking in its model. What I would love to see is some more kind of forward thinking about what are these climate risks that are accelerating and how can crop insurance work symbiotically either through the crop insurance program itself or with other programs to help farmers take adaptation actions to actually reduce that underlying risk.
[~51:16]  it's a thing now, you know, over half of the top 100 food and beverage companies have net zero targets. And so while I can't say that, you know, everything has been figured out and they've all totally nailed it, you know, in the last 10 years, the movement and the investment is undeniable.
[1:02:23] we are in a moment for regenerative ag or climate smart ag in terms of the investment, both public and private, that is going into this space in the US. You know, we've got massive federal investments, more private investment than we've seen before, and we have to figure out how to turn that moment into actual change. So I would say now is the time for everybody that we've talked about during this podcast to get out there and try something. It might not work, that's okay. But it's really important that we figure out what is going to meet farmer needs in financing the transition and how those pieces
Links for Resources Mentioned in the Episode 
EDF’s Agriculture Finance Resources Hub
Soil Health Nexus hub: a collection of case studies, reports, and other research-based materials that have examined the profitability of conservation practices on farms within the North Central Region of the U.S.
AGree’s Conservation and Crop Insurance Research Pilot which found a 24% reduction of prevent-plant claims from producers implementing cover crops and no-till/reduced-till 
Making Regenerative Agriculture Profitable for US Farmers - a study from BCG that projected a 70%-120% increase in profitability from soil health practices on Midwestern wheat farms in the U.S.
Farmer’s Business Network’s Regenerative Operating Line
LandCore's risk model
The AgFinance Sustainability Coalition (including Akiptan and the Federation of Southern Cooperatives)
Managing Climate Change Risks at Agricultural Finance Institutions, EDF & Deloitte’s first global survey of ag finance institutions on climate risks and opportunities
Field to Market climate-smart innovative finance initiative, funded by a grant from the USDA Partnerships for Climate Smart Commodities
Evaluating Greenhouse Gas Emissions and Climate Mitigation Goals of the Global Food and Beverage Sector, an academic overview of food and beverage supply chain sustainability goals, surveying the disclosure and emission goals of the top 100 global food and beverage companies
Chapter: Introduction (00:00:14)
Chapter: On-farm soil health economics  (00:00:45)
Chapter: Lending and soil health (00:23:39)
Chapter: Crop insurance (00:38:12)
Chapter: Crop insurance & Federal Policy Regulations (00:41:53)
Chapter: Commodity markets, decarbonizing supply chains and insetting (00:49:46)
Chapter: Disjointed corporate supply chain programs (00:52:25)
Chapter: wrap-up & next steps (01:02:04)
 

Trailer - The Business of Soil Health

The official trailer for The Business of Soil Health podcast.