Bryan Welch—B the Change
Sallie Calhoun is a preeminent impact investor focused on soil health and agriculture. But she didn’t start out that way: Calhoun started her career designing medical ultrasound systems and then worked in engineering management. In 1975, she became chief operating officer and chief financial officer at Globetrotter Software, which she ran with her husband, Matt Christiano. She says they loved running the business but eventually got an offer “too good to refuse” and sold the company in 2000.
Within a few months, the city-dwelling couple bought a ranch in California. Since 2001, the couple have run the 7,600-acre Paicines Ranch south of Hollister, California.
Today, Calhoun works to develop systems of food production that improve soil health, sequester carbon and produce great food. Sheep graze in the ranch’s drought-tolerant vineyard, and Calhoun and her colleagues are converting 500 acres of organic crop ground to regenerative agriculture practices that build soil health. Every year, dozens of ranchers, farmers, activists, philanthropists, sustainable agriculture investors and conservationists attend seminars at Paicines Ranch’s conference center.
Through her investment firm, Cienega Capital, Calhoun has invested about $21 million in soil-related opportunities: farmland investment, direct land and operating loans for independent farms, and investments in food companies that support the right kind of farmers. “It’s our strategy to use all of our forms of capital — investment, philanthropic, ecological and human — to work toward improved soil health. We think that’s the most valuable, most fundamental, investment.”
Calhoun opened up to B Magazine about her evolution of her career into becoming a sustainable agriculture investor, and why investing in dirt is so high on her radar.
How did your passion evolve from tech to sustainable agriculture?
The qualities that are useful in both fields are curiosity, a willingness to learn and comfort with constant change. Financial and management skills are certainly helpful, but coming from a place where knowledge and implementation are constantly changing seems particularly helpful in the field of agriculture right now.
I think it helps that I am a woman. As we look around, it seems that women are leading the drive in regenerative agriculture in many ways. I believe that we are more ready and willing to see nature as a partner than as an enemy to be dominated and controlled. I often say that the sooner women take over agriculture, the sooner we will see the changes that need to be made.
Why have you made soil your target as a sustainable agriculture investor?
All life on the planet depends on the soil and its almost infinite number of residents. The more we understand about soil biology and plant biology, the clearer this becomes. Everything we eat depends on the soil, and many of our current health issues stem from our poor treatment of the soil. As we degrade the planet’s soils we destroy diversity, productivity and our own resilience.
Of course, the thing that adds extra urgency to the soil issue is climate change. Much of the excess carbon that is in the atmosphere used to be in the soil, not as fossil fuels but as soil life. Even if we stopped burning fossil fuels today, we have to get the excess carbon out of the atmosphere or significant climate change will still happen. Improving soil health, which sequesters carbon, is the only way we know to quickly suck huge volumes of carbon out of the atmosphere and put it back where it belongs. It can be done relatively quickly and has lots of co-benefits, like more productivity, more resilience, less flooding and better nutrition. It would be one of the most important jobs of the 21st century even if climate change didn’t exist. With climate change, we believe that it becomes the most important project for mankind.
What are some of the most interesting regenerative agriculture investments you’ve encountered?
One of the most unusual investments we have made is in a food-manufacturing company in Louisville, Kentucky, called Custom Food Solutions. We met the CEO Mike Higgins, who is committed to buying local produce and creating school food with it and then trying to sell into the schools of Kentucky. When we met him, he was either going to have to sell the company to a large food company or take on an outside investor who would allow him to maintain his local focus. We are that outside investor.
Another deal that has been interesting is a small farm in Arkansas. I met the young farmer, Cody Hopkins, when the farm he had been renting was about to be sold. I made a commitment to help him purchase the farm with a bridge loan until he could get federal Farm Service Agency (FSA) financing. When we learned that FSA doesn’t allow bridge loans from private individuals, we bought the farm and rented it to Cody, with an option to purchase at the acquisition price when he could get an FSA loan. Cody has gone on to attract significant capital to create an Arkansas co-op that is marketing pastured meat from 14 producers throughout the state.
One of the things we look at when we evaluate the return from a deal is the positive ripples that the investment sends out and spreads into the world.
What advice do you have for agricultural entrepreneurs who are seeking outside business and farmland investment?
As I mentioned, we invest primarily in support of producers who are innovating toward more sustainable agriculture and healthier soil. Unfortunately, this is generally the low-financial-return part of the ag world. Returns from conventional agricultural investments primarily come from the creation of branded products that are eventually sold to huge food companies as they make the shift toward natural, organic and local foods.
We are making unconventional investments in farmers on the land. We sometimes call our strategy “high risk, low return,” but that is the case only if we focus solely on financial return. We believe that we create high returns if you look at the social and biological benefits as well.
We also don’t make investments that attempt to profit from land appreciation. Our goal is to keep good land in agricultural production and good farmers on the ground. We will need more, not fewer, farmers to make the changes to agriculture that are needed.
My main advice would be to raise as little outside investment as possible and be very careful about where you take money. My first investment in this space was a loan to a rancher friend who had to buy out his lawyer and doctor partners to keep them from developing hundreds of homes on his ranch.
The key question is whether your goals are aligned with your investors’ goals, and this is often not the case. If you are building a brand but want to operate your company for the long term according to your values, you may not be able to do that once you take investment capital with a time frame for exit. If you raise too much money you may give up control.
Why did you decide to become a rancher instead of relaxing after you sold Globetrotter? What inspired you to become an independent sustainable agriculture investor?
My husband became interested in the Paicines Ranch from the first moment he drove past it. He announced at the time that he was going to buy the ranch. It was owned by developers who were planning to build thousands of homes and several golf courses. I told him he was crazy.
hen, a couple of years later, the development project was derailed by county government, and we sold our company in the same month. It seemed like fate, so six months later we owned the ranch, with absolutely no knowledge or plan about what we were going to do with the land.
We actually got into ranching rather than renting the place to an operator and being landlords when I was introduced to Allan Savory’s ideas on holistic management. I couldn’t let go of the idea that well-managed livestock might restore California’s grasslands, and I still can’t.
Becoming an investor was a much harder decision to make. Within a few years of selling the company I met a number of people who were involved in changing the way money works in the world, particularly Don Shaffer (CEO of RSF Social Finance). Once I started thinking about where the profits from the sale of our company were and what they were doing in the world, I started thinking about how we could handle that differently. I decided quite grudgingly that we should be doing direct investing and lending if I wanted to see change in the world.
Fortunately, I found Esther Park, who runs our investment firm, and the collaboration has been great. It is possible to put joy and delight back into investing.