Christian Hiss, CEO Regionalwert AG
Imagine growing up on an organic farm, and seeing with your own eyes not just the great benefits of organic farming to the preservation and sustainability of our planet’s ecosystems, but also the challenges to organic farming growth, scaling up and profitability. This is exactly what Christian Hiss did. And he chose to address these challenges by creating – in 2006 – his own company, RegionalWert AG.
Christian Hiss is a social entrepreneur. This is not only because he has a firm belief organic farming is the way to go. It is also not because he has a good understanding why many – aspiring and existing – organic farmers struggle to form and maintain organic farming as a profitable yet sustainable and responsible business. Christian Hiss is a social entrepreneur because he chose to not succumb to the challenges encountered by organic farmers but see them as a profitable yet meaningful business opportunity. In other words, an opportunity with a real and worthwhile return on investment.
According to Christian, the challenges many organic farmers face, at least in Germany where he comes from and has his business, are:
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Hard to penetrate the market: Organic farming is mostly inheritable which makes it hard for newcomers to enter the business. This makes for a decreasing number of organic farms.
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Difficult to finance: Banks do not easily give loans to support organic farming.
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Low Return on Investment: Organic farming costs more to set up and takes more time to yield produce, meanwhile products offered need to fit to market and be affordable.
Meanwhile, organic farms create lots of positive externalities, such as landscape development and ecosystem preservation. Their value to communities and societies is enormous, from cultivating a relationship to the land, to providing a space for disadvantaged groups to grow and form societal bonds. But, those externalities are in no way generating profits and ensuring financial sustainability for these businesses. And so Christian thought, what to do?
To address all these challenges as a business opportunity, Christian founded his companyRegionalWert AG as a social business. The company is effectively a consortium of smaller companies and businesses, each falling into one of four groups: service, agriculture production, produce conversion, and sale. The businesses share in their profits and cover for each others’ losses. For example, if a RegionalWert AG business earns 10,000 EUR, 70% of this goes to RegionalWert AG, and the rest goes to the business (i.e., farmer). Similarly, if one of the RegionalWert businesses has losses, these are in part – 20% – covered by the RegionalWert group, In this way, the companies help each other and ensure each other’s sustainability and profitability in the long term. They further identify synergies and build on these as part of growing the individual businesses.
In addition, RegionalWert AG has investors who have brought shares into the company. In other words, it is publicly owned. Currently these investors are about 500, mostly individuals who contribute out of philanthropic motives and a strong belief into the RegionalWert AG’s values. The investors’ shares provide important income to finance RegioanWert AG. The company attracts such investors by marketing itself as an entity that effectively promotes and contributes to a sustainable yet profitable future. In other words: ‘we preserve and develop our lands and ecosystems, meanwhile generate profits for the long term’. It is true that these are values an increasing number of investors, and consumers, look for. (download Christian’s presentation here)
Here below a video in which Christian Hiss explains his market and value chain approach in more detail. What do you think? Is he right? … Share your thoughts on our blog!
(turn on the English captions if needed: in the lower right corner of the YouTube player)
