How important are gene banks like the Svalbard Global Seed Vault?
The crops that make up our food supply – the rice, the wheat, the corn – are a result of thousands of years of agricultural history and hundreds of thousands of varieties. For example, there are about 200,000 different types of rice. We need to make sure we don't lose those varieties, as one of them might have an answer for a disease that comes along, or that might be able to handle climate change better. You can’t just leave it in the field and hope it will adapt, we have to improve it and you simply can’t grow all of these in one field at any one time. So we take that seed and put it into a freezer. It’s as simple as that.
The seed vault in Norway is the tip of the iceberg – almost literally – in that it is the final backup in case of catastrophic events such as natural disasters or war. Supporting that is a global network of international and national-level gene banks. The seed vault at Svalbard contains about 860,000 crop varieties. But there are some two million varieties of crop globally that are important for food security, and the idea is that eventually all of these would be secured.
What is the Crop Trust’s role?
The Crop Trust was established to create a global system that will fund this crop diversity in perpetuity. The challenge is that reliable financing of freezers is absolutely essential, yet it’s not always that interesting for every country and donor. What is more interesting is the fact that we will have to feed three billion more people by 2050, and climate change means that agricultural yields are dropping on average by 2% per decade. Increased population and decreasing farm yields don’t add up.
So the Crop Trust was established by the world’s governments under the auspices of the United Nations; they realised that this global work to conserve food crops needs stable funding, management and oversight. The idea was to create an entity to do that – the endowment fund of the Crop Trust.
The core aim of the investment vehicle is to put the Crop Trust on a sustainable long-term financial footing so that it will be able to deliver on its objective of securing global crop diversity forever.
What is the aim of the fund?
We’re raising money for the endowment fund. We have a target of $850 million in total, and $500 million by early 2016, when we will have a pledging conference at the World Bank Spring meeting in Washington, DC.
What would happen is that you would take that investment income from the endowment at an assumed 4%per year and you would be able to fund the global system of crop diversity from that. It only costs $34 million a year to do this, which is close to nothing in the grand scheme of things.
However, having to scramble around for $34 million on an annual basis is not an easy task, and neither the public nor private sectors enjoy being asked for money every year. The idea is that the endowment would be the sustainable source of income for these collections forever and there would be no need to focus on constant fundraising.
Even if the endowment fund outperforms, as it has in previous years, we can only take 4% a year from it, so that limits the risk. If we are 6% or 8% up one year, we have to leave the rest in.
And if we’re down 2% the next year, we still have money to fund the gene banks. The idea is to be conservative and be able to fund it in perpetuity.
Do governments have a role to play in the fund?
Crop diversity is a global common good. Countries are interdependent on each other’s crop diversity. For example, Germans each consume six tonnes of potatoes every year, but these potatoes originate from Peru. The truth is every country relies on each other for food diversity. That’s why we’ve created an opportunity for a sharing concept whereby you take the endowment target, you take the governmental donors – donors with economic development funds – and based on their gross national product you create a percentage of the endowment that each country is requested to contribute.
So we are reaching out to the government donors and asking them to give, which is what the 2016 pledging conference is all about.
Where does the family office fit in?
The role of the family office is to try and tap other sources of funding than these official donors. Using a social impact investing theme we are creating an investment sharing facility where you invest and get a good return, you then split that return — some will go to conserve crop collections worldwide and most will go back to the investor. Our expected return is more than 10% per annum, of which 2-3% would go to the Crop Trust. That 2-3% would also be considered tax deductible by the investor.
Where the family office fits in is that we need to meet these investors. As a small organisation we don’t have access to the world’s family offices, which is why we have formed a partnership with Deutsche Bank and Global Partnership Family Offices.
There are many family offices with ties to agriculture so there’s an opportunity there. Also, there are a lot of investors that want to invest in something different, and we offer them that. We offer sustainable investing; it’s good for the planet’s future, it’s necessary for your children’s future and it’s a good investment. The investment sharing facility would invest in global equities of ESG compliance, therefore investing wisely and fairly. At the end of the day, the investor can say they have helped save banana, coconut or their favourite crop forever.
