a.s.r. real assets, on behalf of the ASR Dutch Farmland Fund, the owner of the land in question, has implemented a new model to promote sustainable agriculture: the so-called “Transitie Erfpacht” (Transition Leasehold). This initiative positions the fund as the first landowner to introduce such a form of leasehold. The core objective is to facilitate and accelerate the transition of farmers to more environmentally friendly farming methods, such as organic or regenerative cultivation.
The “Transitie Erfpacht” model stipulates that farmers will be exempt from paying leasehold rent for a period of up to two and a half years, spread over the first five years of the contract. This financial relief is intended to create the necessary scope for investment during the crucial initial phase of the transition. With this approach, a.s.r. real assets aims to accelerate the transformation to a more sustainable agricultural economy and thus achieve positive effects on soil quality, water purity, and food quality.
Financial incentive for investments
Dick van den Oever, Fund Director of the ASR Dutch Farmland Fund, emphasises that “Transitie Erfpacht” provides a significant financial buffer during a phase when agricultural businesses must make additional investments for more sustainable farming methods and operational restructuring. Not charging lease costs for up to two and a half years strengthens the working capital of farmers. Farmers can independently decide how to distribute this discount over the first five years of the contract. After this period, regular payment of the leasehold rent begins for the remaining contract term. Mr van den Oever notes growing interest in sustainable business models and stresses that financial bottlenecks can often cause delays in the transition. “Transitie Erfpacht” creates the crucial scope and trust here, according to Mr van den Oever.
The programme is also a result of support from investors who pursue a long-term investment horizon and wish to play an active role in the sustainable transformation of Dutch agriculture. Already at the end of 2021, a.s.r. real assets implemented a sustainability programme that rewarded farmers with a discount of 5% to 10% on the lease for the entire contract period. However, the newly introduced “Transitie Erfpacht” specifically addresses the increased investment needs and the necessity for buffers against potential yield or price fluctuations, which can occur particularly in the initial phase of transitioning to organic or regenerative farming.
Holistic approach and practical development
Farmers who utilise the “Transitie Erfpacht” programme will collaboratively develop a detailed transformation plan with the ASR Dutch Farmland Fund. This plan includes the targeted transition, the operational strategy, specific sustainability goals, and transparent financial planning. Another prerequisite for participation is involvement in the ‘Open bodemindex’ (Open Soil Index). Annual reports on the progress achieved are mandatory throughout the entire transformation phase. The fund has explicitly allocated a portion of its investment budget for this programme.
The development of “Transitie Erfpacht” took place in close collaboration with leaseholders in practice, allowing farmers' experiences to be directly incorporated into the product design. A concrete example of this collaborative development is the cooperation with the Graanbroeders (Grain Brothers) in Friesland.
