HeavyFinance has closed a new €50 million private credit fund that will support European agricultural small and medium-sized businesses (SMEs) with tailor-made finance. The funding will be available to finance solutions to advance the decarbonisation of agriculture in Bulgaria, Latvia, Lithuania, Poland and Portugal.
The European Investment Fund (EIF) has committed €20 million to the fund to help attract additional investors. The EIF commitment is backed by InvestEU, an EU programme to mobilise at least €372 billion for European policy priorities including the green and digital transitions by 2027.
Supporting farmer efforts to adopt green practices
The fund will provide mid-term debt capital for small and medium-sized agricultural companies to support them in their efforts to reduce their carbon footprint through greener practices. These include alternative soil-friendly techniques that sequester carbon and improve soil health such as no-till farming, less reliance on synthetic fertilisers and use of less polluting farming equipment.
“Farmers are facing unprecedented challenges due to climate change, but they are also at the forefront of finding innovative nature-based solutions,” said HeavyFinance’s chief executive officer and founder, Laimonas Noreika. “This fund represents a crucial step in HeavyFinance’s commitment to eliminating one gigaton of carbon dioxide from the atmosphere by 2050.”
More than 10,000 soil samples already taken
Established in 2020, HeavyFinance has taken more than 10,000 soil samples to help measure carbon storage on farmland. Targeting small and medium enterprises, HeavyFinance has issued more than 1,700 loans to farmers facing barriers to financing from traditional institutions to help them advance their transition to more sustainable agriculture.
“We facilitate the shift towards sustainable agriculture with the Carbon Farming Programme allowing farmers to create an extra revenue stream from the sale of carbon credits and Green Loans providing 0% interest loans aimed at advancing regenerative agriculture practice,” Noreika explained to AgTechNavigator.
“Farmers remove carbon emissions from the atmosphere by applying regenerative agricultural practices like like no-till farming, minimum tillage, cover crops and other scientifically proven methods.
"HeavyFinnace quantifies carbon sequestration by conducting laboratory soil samples, monitoring fields through satellites and applying other technologies to provide rigorous data to international standards bodies to create carbon credits. After the sale of carbon credits, proceeds are shared with the farmers.”
The platform hopes to generate soil carbon credits
HeavyFinance is currently undergoing a validation and verification process for international standards bodies to generate its first carbon credits that would later be sold to other companies.
“With an urgent need to address climate change, we foresee an increasing role of nature-based solutions like regenerative agriculture,” Noreika said.
Asked what are the particular challenges and wins in Bulgaria, Latvia, Lithuania, Poland and Portugal, he replied, “Farmers across the EU face a lot of challenges, including soil degradation, more frequent floods and droughts, workforce shortages and very low access to capital.”
For example, the financial gap in the agricultural sector in the European Union exceeds 62 billion euros, according to a report from the European Commission and European Investment Bank.
“The vast majority of it is attributed to small and medium-sized farms that struggle to get loans from traditional financial institutions,” said Noreika. “European Union Countries tend to be better positioned than other countries in the integrity of carbon accounting since historically the European Union has gathered public data on Soil Organic Carbon.
"This data serves as a foundation for conducting robust science-based modelling for carbon accounting that enables us to get credited only for that carbon that was sequestered. This can be a competitive advantage in securing a better price to other countries.”
Financial support needed for Europe’s farmers
He added that weeks of farmer protests in Europe – partly down to crippling debt – serve to further illustrate the need for agricultural financial support.
“Having around 10,000 conversations with farmers a year, we’ve never met a farmer who denies climate change and does not see the inevitable need to implement regenerative farming practices. So the consensus on the need to fight climate change exists but we still have major discussions between farmers and European governments on precise measures and support mechanisms to make it happen.
“We have already seen significant efforts from farmers to shift to regenerative agriculture and I believe that with additional financial support European Union can achieve its carbon neutrality goal for this sector.”
