New financial arrangements: agriculture, landscape management

These are some examples of new, creative financial arrangements for system innovations in the field of agriculture and landscape management. The new arrangements imply a new approach to one or more of the following aspects of financing: time, actors (new parties or old parties with new roles) and methods of settlement.

 I Non-bank forms for financing for multi-functional agriculture

One form of system innovation in Dutch agriculture is the development of multi-functional businesses that combine agriculture with, for example, recreation or care. These businesses sometimes need alternative forms of financing because of the difficulty of securing a bank loan if they have insufficient collateral. There are also entrepreneurs who prefer to avoid taking out a bank loan because other structures are more appropriate for their business strategy.

There are now various alternative forms of financing. The example below is taken from a study of new forms of financing for multifunctional agricultural enterprises in the Netherlands in 2009, wich contains many  more examples (see sources: Veen et al, 2009).

The Pergola companyThe Pergola company is a form of financing in which private individuals participate (community supported agriculture). The farmer promises to take optimal care of the land, plants and animals. The farmer signs an agreement with the customers of the pergola company making them participants in the business. The participants agree to buy part of the crop and to bear the costs of it, regardless of the size of the harvest. Accordingly, the farmer receives a fixed amount and therefore a guaranteed income. The customers are consulted on the production plan, can inspect the figures and are entitled to good and fresh produce.

The Limited Partnership (Commanditaire Venootschap - CV) This is an alternative form of financing, in which one or more partners operate a business under a common name. A CV comprises one or more managing partners and one or more silent partners. The managing partners contribute money, goods, labour and/or goodwill and are authorised to act on behalf of the company. The silent partners' contribution is purely financial and they may not act in the company's name. A silent partner could be a wealthy individual or a care institution, but also an entrepreneur who contributes his business and receives part of the profits of the enterprise in which he is a partner in return.

II Financial arrangements for Network Landscape

Network Landscape is a concept devised by InnovationNetwork, the Dutch network organisation for system innovation in agriculture and green space. It is a response to the observation that an attractive landscape is no longer a by-product of agriculture as it used to be. The premise behind Network Landscape is that landscape is a main product as well as agricultural output. An example of how the concept works is the idea of so-called Fram hubs, which consist of paths and planted greenery connecting farms. The ambition with internodal arteries is to facilitate the development of business in a small-scale landscape, while simultaneously offering citizens the opportunity to live in an attractive landscape and take responsibility for the management and maintenance of the characteristic planting.

Guaranteed view According to the Network Landscape concept, citizens and companies with an interest in the internodal arteries help to pay for it. However, it was often difficult to arrange direct payment to maintain the quality of the landscape. One of the new financial arrangements devised by InnovationNetwork is the guaranteed view insurance policy, with which home owners can insure an uninterrupted view for a certain period, for example 20 years. Part of the insurance premium is used to fund the management of the landscape

The homeowners then receive compensation if their view is blocked. The Dutch Ministry of Agriculture has selected two areas to carry out pilot projects with this alternative form of financing of landscape management.

III Landscape auction

Another form of financing is the landscape auction. At a landscape auction (physically or via a website) a person can adopt (‘buy') a landscape element such as a hedge, a country lane or an orchard.

IV Regional account ('Streekrekening')

A final example of a new financial arrangement in the Netherlands is the Regional Account. It is an arrangement offered by the Rabobank in association with national and regional nature conservation organisations. Public authorities, companies and regional organisations can open a regional account with one of the affiliated banks. They receive at least the standard interest rate on their savings. The Rabobank then also pays a bonus, which is paid directly into a fund. Participating companies are invited to donate the same percentage or more. The regional account arrangement provides business customers with a means of taking responsibility for the area in which they operate and their employees live. For the nature conservation organisations it represents a new and appealing way of generating income.

The Groene Woud The first regional account in the Netherlands was created for the Groene Woud, an area in the province of Noord-Brabant designated as a National Landscape. It supports the Groene Woud Regional Fund, which also receives income from bequests, gifts, subsidies and revenues from a local lottery. The income is managed by a foundation, which uses the funds to purchase land for nature conservation and to restore characteristic landscape elements. The foundation also promotes sustainable economic development in the region. 

Sources

New arrangements/agriculture (in Dutch) Veen, E., M.Vijn, B.van der Waal en A.Dekking (2009). Alternatieve financieringsvormen - een kans voor het multifunctionele landbouwbedrijf? Een verkenning van niet-bancaire financieringsvormen voor het multifunctionele bedrijf. Wageningen UR, Praktijkonderzoek Plant & Omgeving Bv. Akkerbouw, Groene ruimte en Vollegrondgroenten: Wageningen 

New arrangements/landscape development

http://www.innovatienetwerk.org/en/concepten/view/15/Netlandschapafgeslotenconcept.html