Heartland sustainability-linked loan

Heartland Co-op is a farmer-owned cooperative with 70 locations throughout Iowa, Nebraska and Texas. The Co-op’s Conservation Agronomy Team helps farmers select the right conservation practices for their operations and connect with a variety of programs and financial incentives that enable conservation practice adoption.

In 2024, CoBank partnered with Heartland to arrange its first sustainability-linked loan. Through this partnership, Heartland will receive a slight interest rate reduction on its operating line of credit with CoBank if it achieves the ambitious goal of improving agricultural water quality and farmer engagement. The cost savings from the sustainability-linked loan will help Heartland expand its successful conservation agronomy program, provide more benefits to farmers and improve Iowa’s water quality. It will also help Heartland meet increasing demand from its farmer-customers for conservation services that are tailored to their farms.

Additional partners contributed to the success of the sustainability-linked loan. Environmental Defense Fund supported the development of the sustainability-linked loan targets that Heartland must meet to receive the interest rate discount. If achieved, the annual targets would lead to a 33% increase in annual cover crop acres sold, reaching a total of 98,000 acres — an important investment in soil health and resilience — and a 39% increase in farmer engagement by Heartland’s Conservation Agronomy Team by 2028. The targets would also support the installation of 317 new edge-of-field saturated buffers and bioreactors that filter water and prevent nutrients from reaching Iowa streams.

In addition, the Great Outdoors Foundation contributed to the overall success of this blended finance initiative by providing a supporting grant to Heartland. The foundation creates initiatives that enhance Iowa’s environment and improve quality of life through conservation and outdoor recreation.

“The cost savings from the sustainability-linked loan with CoBank will help us expand our successful conservation agronomy program, provide more benefits to farmers and improve Iowa’s water quality,” said Tom Hauschel, Heartland Co-op’s CEO. “This initiative will allow us to meet increasing demand from our farmer customers for conservation services that are tailored to their farms.”

The involvement of multiple partners in this transaction is critical to the success of Heartland’s Conservation Agronomy Team, as the cross-sector collaboration supports the sustainable business model needed for both agriculture and conservation to thrive.