From Farm to Future: How Funding Solutions are Shaping Agricultural Emissions

Nicole Rojas:

Our team has completed grant applications with a 90% success rate. And we can do this over 30% more cheaply than traditional grant writing, which allows for one, more money in our customer's pockets, and two, more shots on goal with a range of grants that they can apply to. So this ultimately solves two key issues that we heard after talking to so many different stakeholders around the value chain on how do I use my data in a more seamless way that isn't so much of a manual load on my shoulders? And then two, how do I make these projects make financial sense?

Michael Torrance:

Welcome to Sustainability Leaders. I'm Michael Torrance, Chief Sustainability Officer at BMO. On this show, we will talk with leading sustainability practitioners from the corporate, investor, academic, and NGO communities to explore how this rapidly evolving field of sustainability is impacting global investment business practices and our world.

Speaker 3:

The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates or subsidiaries.

Alma Cortes Selva:

Welcome back to another episode. I am Alma Cortes Selva, Senior Advisor at the BMO Climate Institute. In today's episode of Sustainability Leaders, we will be talking about funding solutions that are helping the beef and the dairy industry reduce their carbon emissions and foster more sustainable practices. I'm joined today by Nicole Rojas, CEO at Lasso Solutions, an agricultural startup that is leveraging the benefits of technology to provide solutions to traditional agriculture.

Welcome to the show, Nicole. And if you don't mind, introduce yourself to the audience.

Nicole Rojas:

Thank you so much, Alma. I'm so happy to be here. As you mentioned, I am the co-founder of Lasso. Lasso is the funding assistant in a box for the agricultural sector, and I'm so excited to be talking to you about that today. My background is across engineering, data analytics, food and climate. So specifically I studied chemical engineering in undergrad, I switched gears and went to management consulting and primarily was working for food and beverage clients. And then I also worked at a data analytics startup. So I was really excited about combining my experience across food and beverage, but then also with data analytics. So I went to grad school at Stanford to explore a career in combining both of those.

Beyond my professional background, personally, I am from Green Bay Wisconsin, so proud Cheesehead. I grew up down the street from dairy farms, so I was really excited about combining my personal passion for the dairy industry with my professional background. And I'm really excited to talk to you today about our work at Lasso and the power of AI to get more funding in the pockets of farmers.

Alma Cortes Selva:

A very impressive background honestly. What is Lasso and how it works? How did it come about? Do you mind, how did you combine your personal passions with your professional career? If you don't mind talking a little bit about that.

Nicole Rojas:

Yeah, so before talking about Lasso, how did we get here? So we really asked this question, how do we help with both this challenge and this opportunity when it comes to sustainability in the agricultural sector? And what we heard over and over again is two challenges. One is the challenge with dealing with on-farm data and the complexity and manual nature of that. And then two of how do you make the sustainability projects or initiative make sense on-farm? And so what we have developed is Lasso is a software and services platform to make it easier than ever to identify, apply for, and manage funding for on-farm projects, including sustainability projects.

Our high level process of what we do is first we get the context. So we first figure out, okay, what's the farm profile and what's your proposed project? So whether it's installing new equipment, planting a new type of cover crop or making an energy efficiency improvement. Second, we then share all eligible funding from federal, state, regional and local sources. And we do the work to go through the long list of requirements to make sure that someone is not only eligible, but competitive. We then put together the application from start to finish. So we'll manage all the stakeholders, the inputs needed and the narratives to create a high quality application. And then finally, we make sure all your I's are dotted and T's are crossed once you get the award to make sure you can get reimbursed as soon as possible. So that's our process.

For our software. Our software can extract data from uploaded documents, auto fill forms, and generate narratives validated by our expert grant writers. So we are doing this more quickly and therefore at lower costs than traditional grant writers without sacrificing quality. So for example, our team has completed over 30 grant applications with a 90% success rate, and we can do this over 30% more cheaply than traditional grant writing, which allows for one, more money in our customers pockets, and two, more shots on goal with a range of grants that they can apply to. So this ultimately solves two key issues that we heard after talking to so many different stakeholders around the value chain on again, how do I use my data in a more seamless way that isn't so much of a manual load on my shoulders? And then two, how do I make these projects make financial sense?

Alma Cortes Selva:

I have two follow up questions. Do they have to be located in a specific state or you cover the 50 states of the US? And does it have to be sustainable projects or any type of funding projects?

Nicole Rojas:

Great question. So from a geography perspective, we are nationwide. We are only US focused for now, and the type of customer that we typically work with are farmers or agricultural producers, rural businesses, and more recently conservation nonprofits. Ideally, they're open to government grants. And then what's really nice to have is that they already have a project and a vendor identified that really makes the process of applying and identifying funding more seamless.

We also have partners that we do work with. So while our work has typically benefited individual entities, we also will work with vendors like solar installers or food organizations like co-ops processors, et cetera. So we then provide this funding support and our tool to support their customers or their member farmers. And in terms of example projects, we've helped everything from solar renewable energy projects in California, Wisconsin and Michigan, for example, all the way from $40,000 to $400,000 award size. We've helped with agroforestry and manure management in Wisconsin. And we've also helped not just I guess what you typically think of as sustainability initiative, but it is an energy efficiency improvement with grain dryer upgrades in Minnesota, for example.

Alma Cortes Selva:

That's very impressive. You mentioned that it's tailored, especially at the beginning, you tailor it for beef and dairy industry and it seems you're even branching out to NGOs. Is that correct?

Nicole Rojas:

Yes.

Alma Cortes Selva:

And given the new landscape, we are seeing a lot of challenges, but then a lot of opportunities for the beef industry. Can you talk a little bit about what do you see? And then whether the Inflation Reduction Act or IRA is providing additional opportunities, how is that affecting the farmers? And then what are you seeing as well in terms of your clients?

Nicole Rojas:

Absolutely. I guess to your first point is we've expanded beyond beef and dairy, like you mentioned, and we do help across all agriculture. But focusing on beef and dairy, what we see, just like you said, is there's both a challenge and an opportunity here. So the challenge first is that there's intense scrutiny from the climate side and emissions. So we've by now all heard about how much methane, which is a potent greenhouse gas, comes from the cattle industry. Therefore, there are more demands on our producers and ranchers to implement on-farm changes to address these sustainability concerns. However, like I said, we've talked to so many different producers and ranchers, and what we heard over and over again is that what to them sustainability means is passing on my farm to the next generation. That means I need to keep taking care of my animals and my land and improve the financial sustainability of my farm. If I'm asked to do work that increased my costs, I need to get the financial support to cover those costs.

So that's where we actually see an opportunity. So dairy and beef farmers can really move the needle on sustainability by continuing to take care of the land and their animals like they have for generations. And there's now more funding than ever before, which I'll talk about in a second with the Inflation Reduction Act, from public grant opportunities, private funds from companies and carbon credits to pay for these different on-farm initiatives. But for farmers, accessing that funding is time-consuming and quite frankly, confusing. There's limited time to fill in all of the paperwork that's required and limited knowledge on all of the opportunities that they could be eligible for. So we therefore created this platform to help producers and ranchers, one, know all funding opportunities that they're eligible for, and two, access that funding using less of their working hours to take those challenges head on.

In regards to the Inflation Reduction Act, it's added to programs that we all know and really appreciate. So it's added around $20 billion over five years starting last year in 2023. So for example, they've added over $8 billion to the Environmental Quality Incentives Program or EQIP cost share program. There's also, and I think it's actually due today, The Regional Conservation Partnership Program, the day that we're recording, excuse me. And that's really exciting all through the Natural Resources Conservation Service or NRCS. So really exciting programs there for both conservation and sustainability.

What that means tactically though, is that there's now more awardees that can be funded or costs to be covered per applicant. So for example, the Rural Energy for America program, historically it covered up to 25% of project costs and there were application windows two times a year for projects for renewable energy or energy efficiency improvements in rural areas or agricultural producers. So for any folks that are doing renewable energy projects like solar or wind or energy efficiency projects like grain dryer upgrades for example, they should definitely apply for that guaranteed funding amount.

Alma Cortes Selva:

You mentioned that project. Would that be one of the clients, a typical clients that comes to Lasso? And then what kind of projects are they doing? Are they doing more energy efficiency? Are they doing GHG emissions reductions or other projects? Do you mind talking a little bit about the profile, the process, how they're approaching Lasso?

Nicole Rojas:

Yes, absolutely. So for the types of projects, so specifically for the Rural Energy for America Program, it's called REAP for short. REAP projects really range from renewable energy. And so that's most typically what we see and what we've worked with, solar and wind. But then also energy efficiency improvements as well on-farm. And that can be anything from installing LED lights on the farm or improving the type of lighting in general or different small changes you can make to even larger equipment like the grain dryer upgrades, which does constitute as an energy efficiency improvement. And so it is not only reducing emissions, but it's also often improving the overall economics of the farm.

And then I described the process earlier of how they come to us, but basically you can either go to our website, email us, or call us, and like I said, we get the context on the project that you want to do. We then show the list of funding that they're eligible for. And then based on their interest and then their score and competitiveness for the grant, we'll either move forward or prioritize or deprioritize certain funding. And then we will put together the application on their behalf, get any input from them. Then they'll have the final sign-off and make sure, yep, that looks good. And then we will submit it and then help them after they get the award to make sure, hey, I'm meeting the requirements of receipts I need to turn in, or the checklist of what do I need to do in order to get this award?

Alma Cortes Selva:

Oh, that's very important because they also have to fill to make sure that they get the funding afterwards, they have to fill some certain requirements. So it's great that Lasso is helping them through the entire process.

Nicole Rojas:

Yes.

Alma Cortes Selva:

You mentioned that profitability and then the economies of the farm. How important is when you talk to the clients that the projects are profitable? And how do you ensure that it makes financial sense for the clients?

Nicole Rojas:

Yes. So for us, the question is not actually how important is it, but rather it's the go or no-go decision. Farms are businesses and you wouldn't ask just any random business to take on a new initiative that wasn't going to be profitable for them. So the same applies to our farmers as well. And so what we see when it's time to evaluate a new project or initiative on farm is two key questions. The first is how will the project improve my economics by either lowering my costs? So for example, like I mentioned before, my energy bills, my input costs or labor, or increasing my revenue. So for example, increasing the value of the product that I'm making, increasing the yield of that product or creating a new source of income. That's the first question.

The second one is how will I cover the project investment that's needed? And there's a couple pieces of the puzzle to figure this out. So there's government grants like we just talked about. There's loans, there's private grants, and then carbon credits. We at Lasso are first focusing on grants due to the standardized application procedure, the large funding opportunity, and the low level of technical disruption. So these grants help with the upfront investment. So that's the second question, but they also enable projects to come to fruition that improve the long-term economics of the farm. That's the first question.

Also, in our process of putting together a grant application, most of these grants require a financial return calculation, and that usually can tell you right upfront if the project is going to be worth it or not. And so we do that exercise with our customers to make sure, one, before you even start the project, before you even apply to this grant, does this make financial sense for you?

Alma Cortes Selva:

When you're saying financial sense, are you looking at just one year, five years? Are you looking shorter, longer term? Because I think having that discussion with the clients with the farmers is probably very important for you.

Nicole Rojas:

100%. So it's both short-term and long-term, right? The short-term is how am I going to cover this cost? But if I have an upfront investment, what's my return on investment? What's my payback period? And what's my net present value for this? So for example, because I mentioned before, let's use the REAP program, REAP requires you in the application to calculate the simple payback. So the cost of my system divided by the yearly energy benefit to figure out is my simple payback going to be less than 10, 15 years? Because if it's not, you're going to score lower, and that also means it's less financially viable for you in general, with or without the grant application. And so we go through that as well. So again, let's take the solar example. You have the maintenance costs every year, but then what's your energy savings that you're getting from the solar system? Can you get any renewable energy credits or RECs, for example? Can you get any carbon credits as well? And so we take that all into the equation when calculating if a project makes financial sense.

Alma Cortes Selva:

You're very complete and you're looking at every stage of the projects. That's very impressive. You also mentioned that you're using AI. Can you describe how Lasso uses AI?

Nicole Rojas:

Yes. So the primary benefit of our AI is that we can make our grant writers and our team 10 times more productive. And that manifests itself in two ways. So first is organizing and mapping unstructured data into a grant application, and then the second is actually generating narratives for proposals within that grant application.

So that's really the key piece of our AI, however I think it's important to mention that getting accurate results for our customers is vital to us. So if anyone here has used an AI tool, you'll know that you can get what's called hallucinations or incorrect or nonsensical responses. And obviously we don't want that for our customers. And so we improve our models from feedback from expert grant writers that also have very high success rates. We also improve the outputs with a repository of successful applications and grant rubrics that we have in our databases. And then before submitting, a human reviews your application to assure quality before the submission. So then what that means is we're therefore able to put together a grant application in about a third of the time it typically takes with 95% accuracy.

Alma Cortes Selva:

Wow. The other question that probably our farmers that are listening in, it's about the safety of the information, because you hear AI and then you hear, is it safe to use it? Can you speak a little bit about how Lasso guarantees the safety of the information use?

Nicole Rojas:

Absolutely. And I'm so happy you asked that question because it's very important to us. The security and privacy of our customers' data is a core tenant to our work at Lasso. So first, we store your data securely with the most advanced data security standards. And second, very importantly, we do not share your data with anyone without your knowledge or consent. So we will only use your data to apply for a specific application if you as the customer say, "Yep, please use this to apply for this application." So your data is also not used to train any open source models. It only lives within the lasso ecosystem. So that's also a really final but key point as well of keeping it just within the lasso ecosystem. And it's really just between us and the customer.

Alma Cortes Selva:

And a follow-up question. You mentioned several times a 90% success rate, which sounds really, really impressive. How does that compare, if a farmer were to fill it out by himself, would that normally be a 15% success rate probably so that they have an idea of, and then the amount of work that they're saving by using Lasso?

Nicole Rojas:

Yeah, great question. It of course depends on the grant. So for example, a rebate application from your utility provider is really straightforward and has a very high success rate, which is great. Federal grants with longer narratives, the success rate really can range from there. Anecdotally we heard is around 50% to 60%. Again, it depends on the state. What's really important to us is not only our software in team ensure, okay, high quality application, but our process as well. Before you even jump into the work of, okay, I'm going to put together this application, we'll do the work up front with you to very quickly score you and how will you compare with other applicants to make sure you're in the range of you're going to get accepted in the state that you're in.

So we'd call this the pre-screening process, and that's very important and that has really been crucial to our high success rate as well, is that we're not going to waste your time or tell you, "Yeah, sure, please apply for this application," if you really aren't a strong candidate for it. It's a waste of your time and often your money, if you're paying for a grant writer that's saying, "Yeah, yeah, no problem, we'll put this application together." The key piece for us is not only our process once we get started on the grant to turn in a high quality application, but this pre-scheming process beforehand as well.

Alma Cortes Selva:

That sounds really great. I would be very happy if I was a farmer making sure that my grant goes through because I've heard abysmal acceptance rates even before IRA it was even worse because I've heard there's only 25% funding. So a 90% acceptance, or the possibility of getting a fund is very impressive. Is there anything else that you would like to add? And then how can people reach Lasso? Word of mouth, website? How do we get in contact with Lasso?

Nicole Rojas:

Great question, Alma. So if you are interested, even if you have a very high level project in mind, are interested in learning more, definitely, definitely reach out to us. So the three main ways is to, one, you can go to our website at JoinLasso.com, so that's J-O-I-N-L-A-S-S-O.com, and you can even put your email there or sign up and you'll get a note from us. That's one. The second one is email us at contact@JoinLasso.com. And then you can call me at (312) 833-7726 for any and all questions. What we'll do is we'll have a very quick intro call, it's usually less than 30 minutes, to understand your needs and make sure that we can support you in what you're looking for. And like I said, if it's not a strong fit with a particular grant or not competitive, we will not waste your time. So we'll also be really upfront on, hey, what's a great fit for you or what's not? So yeah, we'd be excited to work with anyone that's interested.

Alma Cortes Selva:

Thank you so much for joining us for this episode. It was wonderful to learn about the tools that farmers can use to help fund their sustainability journey. Thank you so much, Nicole. Really appreciate it.

Nicole Rojas:

Thank you, Alma.

Michael Torrance:

Thanks for listening to Sustainability Leaders. This podcast is presented by BMO. You can find our show on Apple Podcasts, Spotify or your favorite podcast player. Press the follow button if you want to get notified when new episodes are published. We value your input, so please leave a rating, review and any feedback that you might have or visit us at bmo.com/sustainabilityleaders. Our show and resources are produced with support from BMO's Marketing Team and Puddle Creative. Until next time, thanks for listening and have a great week.

Speaker 5:

For BMO Disclosures, please visit bmocm.com/podcast/disclaimer.