Banking on the future

Near Freiberg in Germany we found an interesting mix of business, sustainability and focus on the future. Four years ago farmer Christian Hiß founded the Regionalwert AG (Regionalwert plc) there. With assets from the plc he buys agricultural businesses with no family successors and leases them to qualified organic farmers. His concept impresses many investors.

The German media has shown interest in Hiß’s idea. The German edition of the Financial Times and business magazine Brand Eins have written about it. Many people think of business plcs and big money decisions and insane returns. But at Regionalwert, money is only one part of the business. Everyone who buys a share has a vote and can join in the decision on how the farms should work. This involves mainly the intangible assets in the region like production near the point of sale, fair employment or ecological agriculture

The problems which encouraged Hiß to start his company in 2006 is known in many parts of Germany. Agricultural family businesses don’t have successors and the land is rented out to bigger companies. They rely on monoculture and large-scale farming which takes away the control of how to use the land.

Regionalwert AG also buys companies where no successor exists and rents them out. But this only happens with a condition that they are recognised ecological businesses. And they also have to report to the shareholders, for example about their ways of distribution and contracts of employment. Under these conditions the proceeds of those companies are small but the shareholders are only (if at all) interested in a long-term increase of their assets. Nobody relies on a short-term pay-out. The shareholders want to have a say in how their region is developing agriculturally.

Hiß has already received an award for his idea, even though this is not the only way people can have shares in agriculture. Large companies, mainly in eastern Germany, are collectives and therefore have many members who have a share in future development. They do not always work towards the maximising of profits. Most of the time it is just as important to create more jobs in the region and to produce for the region.

What do you think about shareholding in agricultural businesses? Is it a sensible way to create more agricultural understanding? Or does this cause more businesses to end up in financial difficulties? Do you know more examples where similar shareholding projects have worked well?