Farmers and ranchers are no strangers to the agricultural real estate market. For many growers, their land base is their most powerful asset, enabling them to not only grow crops and livestock, but also borrow money, build their business and secure a stable financial future for their families. For consumers investors, however, the price tag attached to farmland and the management it entails is more than most can or want to take on.
Over the past year of the pandemic, more people have joined the retail investing market. Just think about what happened with GameStop stock. An army of retail investors worked together to inflict pain on a hedge fund that was heavily short in the stock. Last month, Elaine Kub dug into this in her column called "Could the Robinhood Retail Revolution Come for Ag Commodities?". If you haven't already read it, or want a refresher, you can find it here: https://www.dtnpf.com/…
Where does farmland fit in all of this? Financial technology, often called FinTech for short, is also a booming industry, and while it's starting to make inroads in agricultural finance, there are a number of platforms out there that aim to give retail or consumer investors access to farmland as an asset class. Sure, real estate investment trusts have been available for years, but these new models seek to give investors more direct access, allowing them to buy shares of a certain property.
Examples of two such options hit my inbox this week: AcreTrader and FarmTogether.
AcreTrader touted a new listing consisting of 270 acres in the Missouri bootheel that historically grows soybeans and cotton, but the listing notes the soil types are suitable for some of the regions specialty crops, although the basic information I saw doesn't say what those are. It requires a minimum investment of $23,250.
As a start-up, AcreTrader is still early in its funding rounds. Earlier this week it announced it raised $12 million in Series A funding round. As a company grows and matures, its funding rounds progress from A to B to C. You can learn more about AcreTrader and its recent funding efforts here: https://www.acretrader.com/…
In the other example, FarmTogether announced it closed the "largest single-asset crowdfunded farmland investment to date" on a 201-acre organic apple orchard in Washington state for $22 million. It plans to replant the orchard with two organic apple varieties and includes an operating deal with Stemlit Growers, one of the largest tree fruit growing, packing and shipping companies in the state.
"The continued growth we've witnessed validates our mission to provide investors with greater access to farmland investment opportunities while simultaneously channeling funding for the transitions necessary to support sustainable and profitable farming. Through our offerings, we're able to leave a lasting and positive impact in more ways than one," said Artem Milinchuk, CEO of FarmTogether, in a press release. You can read more on this investment here: https://farmtogether.com/…
One of the differences between these two companies appear to be their focus on sustainability, but I'm sure there are plenty of other differences between the two. But the commonality -- the ability to invest in farmland and agricultural operations without having to buy the whole farm -- offers an interesting alternative to consumer investors who don't want to own a farm outright.
Is this business model likely to overtake the farmland market? Highly unlikely, especially since farmers continue to dominate the buying pool. However, if you are interested in investing in different ways, perhaps adding some specialty crops to your financial portfolio or investing in a farm in a different geography than yours, these new ways to invest may be one way to do it.
Katie Dehlinger can be reached at email@example.com
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