Mirova Invests $30.5M in Varaha for Regenerative Farming in India

Mirova Invests $30.5 Million in Indian Climate Tech Firm Varaha

The French investment firm, Mirova, which focuses on climate-related initiatives and is supported by companies like Kering, has made a $30.5 million (€26.4 million) investment into Varaha, an Indian startup specializing in climate technology. This capital injection is intended to facilitate the expansion of Varaha’s regenerative agriculture program, benefiting a substantial number of smallholder farmers located in northern India.

A Novel Investment Structure

This transaction represents Mirova’s inaugural carbon-focused investment within India, distinguished by its unconventional structure. Instead of acquiring equity, the Paris-based firm is providing capital in exchange for a portion of the carbon credits generated by Varaha’s projects over time.

Mirova’s Carbon Investment Strategy

This arrangement aligns with Mirova’s broader carbon investment strategy, which directs corporate funds towards projects demonstrably reducing emissions. As an affiliate of Natixis Investment Managers, Mirova’s backing includes prominent organizations such as Gucci’s parent company, Kering, Orange, L’Occitane Group, Capgemini, Unibail-Rodamco-Westfield, and MANE. These entities are actively seeking to offset emissions throughout their supply chains through verified carbon reduction efforts.

The Rise of Regenerative Farming

Regenerative farming – a system focused on restoring soil health and increasing biodiversity through techniques like crop rotation and reduced tillage – is increasingly recognized as a viable solution for enhancing agriculture’s resilience to climate change. In India, where millions of small farmers grapple with diminishing soil fertility and unpredictable rainfall patterns, this approach is critical for both long-term sustainability and immediate survival.

Varaha’s Operations and Technology

Established in 2022, Varaha specializes in the design and implementation of carbon projects centered around regenerative agriculture, agroforestry, and biochar. The company operates through a network of 48 local partners who manage field operations. Its proprietary software provides real-time monitoring of these projects, accurately reporting and verifying both climate and social impacts.

The Kheti Project and its Scope

Mirova’s investment is directed towards Varaha’s Kheti project, which collaborates with farmers in Haryana and Punjab to implement low-emission practices. This initiative generates verified carbon credits, offering farmers an additional revenue stream. Currently, the project encompasses over 200,000 hectares and is projected to extend to approximately 337,000 farmers across 675,000 hectares as it expands.

Tailored Approaches to Indian Cropping Systems

Varaha’s methodology is specifically adapted to the unique cropping systems prevalent in India, particularly within the country’s rice-cultivating regions. A key focus is the direct seeding of rice and the incorporation of crop residue into the soil – a significant alternative to the common practice of burning agricultural stubble after harvest, according to Madhur Jain, co-founder and CEO of Varaha.

“Rather than burning the leftover plant material, specialized agricultural machinery is utilized to chop it and integrate it back into the soil,” Jain explained in a recent interview.

Reducing Tillage for Soil Health

The startup also champions reduced tillage practices, decreasing the number of plowing rounds from multiple passes to just one or two. This approach helps preserve soil carbon and enhances the soil’s capacity to store more carbon over time.

Investment to Support Machinery Procurement

Varaha intends to utilize Mirova’s investment to acquire the necessary machinery for implementing regenerative agricultural practices. Specifically, the company needs to procure equipment for direct seeding and crop residue incorporation.

“Implementing direct seeding of rice, as opposed to the water-intensive transplanting method, requires a substantial number of direct seeders,” Jain stated. “Due to the limited adoption of this practice, the current market supply of seeders is insufficient. Therefore, direct engagement with manufacturers is essential.”

Carbon Credit Verification and Revenue Sharing

The carbon credits generated through the program will be verified using Verra’s VM0042 methodology. A revenue-sharing model is designed to ensure that proceeds are directly distributed to the participating farmers. The project is also pursuing Climate, Community & Biodiversity (CCB) certification from Verra, recognizing projects that deliver environmental, community, and biodiversity benefits.

Addressing Concerns Regarding Carbon Credit Verification

While Verra is a leading organization in carbon credit verification, it has faced scrutiny following reports suggesting potential overestimation of carbon savings in some approved projects.

Varaha’s Commitment to Scientific Rigor

Despite these concerns, Varaha continues to prioritize Verra for its regenerative farming project, citing its “most advanced scientific methodology in soil carbon,” according to Jain. He also noted that Varaha is not exclusively tied to Verra and collaborates with other recognized standards, including Puro and Isometric.

“Regarding soil organic carbon, no Verra credits have been challenged to date,” he added.

Broader Benefits of Varaha’s Approach

Beyond reducing emissions, Varaha’s technology aims to improve soil health, decrease water consumption, minimize chemical inputs, increase crop yields, lower farming costs, and contribute to improved air quality. The startup also plans to launch dedicated programs for women farmers, promoting gender inclusivity within rural communities.

Strategic Partnerships and Funding

Varaha’s reputation has been further enhanced by a recent agreement with Google, representing what the startup describes as the world’s largest biochar carbon removal deal. The tech giant will purchase 100,000 tons of carbon dioxide removal credits from Varaha by 2030.

Investor Portfolio

Varaha’s investor base includes RTP Global, Omnivore, Orios Venture Partners, IMC Pan Asia Alliance Group’s Octave Wellbeing Economy Fund, and Japan’s Norinchukin Bank. To date, the startup has secured $12.7 million in venture funding, including $8.7 million from a Series A round completed last year.