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Farm futures: private equity goes organic

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Articles - May 2013
Monday, April 29, 2013
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After four years, Farmland LP is just getting to the point where profitability and returns for investors are in sight. On a sunny day in March, shepherd Mac Stewart is tending his flocks of sheep dotting some of the pastures. The Wells and Bradford show off the still-unfinished giant portable henhouse that will be home to 1,000 of the many free-range hens roaming underfoot, as well as the updated seed-processing barn where this year Farmland can turn out organic grass seed. At around year five — either at 2013’s end or in 2014, Farmland hopes to reach a point where enough of these different organic ventures equal profit and cash dividends to investors.

Chrissie Zaerpoor, an eight-year farming veteran at her Yamhill County Kookoolan Farm, which has a fine reputation for pasture-bred meats and eggs and prime CSA veggies, looks on the Farmland model with curiosity.

“Some things strike me as cool; a lot of young farmers would love to be doing this kind of work but don’t have the capital to get started,” Zaerpoor says. Having a single person concentrate on the rotational land-management plan, as Bradford does, is a luxury small farmers caught in the hectic day-to-day don’t get, she says. However, she adds that it remains to be seen whether Farmland’s model will truly benefit its tenant farmers in the long term.

“There’s an old expression that you can measure a farmer’s worth by the size of his muck heap,” she says. “In this model, that asset belongs to Farmland LP, not to the farmer. It is one of our own best assets, but as a tenant farmer, you can’t take those soil improvements with you if you leave.”

Farmland LP’s Bradford would likely agree with Zaerpoor, though he sees this as a positive for farmers.

“With this pasture-based, livestock model, we are taking on the input investment, so if you are a veggie or grain farmer with us, your input costs will be low,” he says. “And the rotation program takes care of a lot of your fertility. If you are young and getting started, this model lets you get in at a scale that your business is at.”

Bradford’s partner, Wichner, perhaps as any financial expert would, views Farmland’s task as proving economic viability.

The fund has one of the highest scores possible for a “B Corp,” a Certification signifying social and environmentally responsible practices, Wichner says. “But what I actually have to prove is that our business model works better than commodity-based agriculture. The social benefits of what we are doing? Well, our investors get those for free.”

April Streeter is a Portland-based freelance writer. She can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Article appended: The following sentence, a quote from Farmland LP partner Craig Wichner, was changed to reflect additional context. "But what I actually have to prove is that our business model works better than commodity-based agriculture." The original sentence did not contain a reference to commodity-based farming.



 

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