Regionalwert fosters organic farming, food production and regional development through the use of its joint stock company. It invests in companies in the organic farming and food production value chain, and provides capital for start-ups and successions dedicated to socially and ecologically sustainable farming.
Focus: Eco-social Farming, Regional Development
Geographic Area of Impact: Germany
Model: Social Business
Number of Direct Beneficiaries: 52 (2011)
Annual Budget: US$ 325,000 (2011)
Percentage Earned Revenue: 86% (2010)
Recognition: Social Entrepreneur of the Year, Germany, 2011
One of the biggest hurdles for organic farmers is that the main profit pool for their products is retail sales, whereas much less is earned in production and handling. This makes it difficult to finance the purchase or establishment of an organic farm since no one is willing to lend the required funds. With new equity rules for banks the situation is becoming even more difficult as securities are hard to find for potential founders. The result is an increased risk of small farms failing and large agribusinesses taking over, with consequences for food production and regional development.
Innovation and Activities
Regionalwert responded by collecting two million euros in equity capital from nearly 500 residents of the Freiburg region, who do not seek short-term financial returns, and invested the capital in 16 projects throughout the agriculture value chain. Profits made with retailing, for example, are used as a form of cross-subsidization to provide a capital basis for farm purchase or establishment at better than market terms. Regionalwert also provides advice for the establishment of operations and know-how on legal issues and business management. To assess the social impact of Regionalwert's and the portfolio companies' activities, an evaluation system of 64 ecological and social criteria was developed and implemented.
Of the 16 investments made so far, 12 are start-ups that otherwise would not have been able to secure alternative sources of financing. Nearly 50 jobs have been created across the Regionalwert portfolio in the Freiburg region. For the first half of 2012 an additional capital increase has been prepared as the company continues its growth.
To enable the implementation of the concept in other regions, a holding was founded. Committed people elsewhere can thus use the Freiburg model to found a Regionalwert using the expertise and brand of the original. It is not a franchise system, since the holding belongs jointly to all Regionalwerts. The Isar/Inn region founded a Regionalwert in 2011, and talks with other regions are under way.
Christian Hiß has a background in farming, as his father pioneered organic farming by starting a farm in Eichstetten near Freiburg in the 1950s. Christian Hiß did an apprenticeship to become a gardener and later started his own organic market garden. When trying to enlarge the business he was unable to secure bank financing and considered alternative options. In 2006, with the family farm he inherited and his market garden as capital stock, he started Regionalwert as a joint stock company. He persuaded an increasing number of people to invest in the company, while lobbying politicians and decision-makers to foster a paradigm change in farming and regional development policies. In 2007 he began a Master's in Social Banking and Social Finance at the University of Plymouth (UK) and graduated in 2011. He was chosen as an Asoka Fellow in Germany in 2009.