Why We Exist — On a Mission To Democratize Farmland Investing
It’s been nearly two years since we launched our first deal on FarmTogether.
At that time, our team was just five people — myself, and our now Head of Product, COO, and Director of Farmland Management.
We shared a common vision: to ensure long-term environmental and economic prosperity for all.
For us, the answer was just below our feet.
Farmland: The Newest Oldest Asset Class
A few years ago, my two good friends — the founders at Grammarly — came to me and asked where they should invest.
At the time, I was working for the Ontario Teachers’ Pension Plan, a forward-thinking pension fund with $200B of the asset to date.
The answer was a no-brainer. Farmland.
- Returns. Farmland has historically provided real, positive annual returns. Between 1992 and 2020, farmland provided an average annual return of nearly 11%.
- Stability. During the same time period, the volatility of farmland was just 6.8%. When you compare this number with the volatility of the S&P 500 (17.1%) and privately owned real estate (7.4%), farmland’s returns look even better.
- Appreciation. American farmland has risen in value by nearly 6% each year over the last 50 years. With the growing demand for food, coupled with increasingly scarce natural resources, farmland will only become more valuable over time.
- Safe-Haven. Farmland’s reliable value makes it one of the most recession-resistant asset classes available. We’re seeing that farmland is even replacing gold as the go-to safe haven.
- Inflation Hedge. Farmland provides investors with a hedge against inflation. The value of farmland is underpinned by its critical role in our economy: people need to eat, no matter the economic environment.
The data speaks for itself.
But after telling my friends to invest in farmland, I was surprised to find that the asset was widely underutilized. Moreover, it was widely unheard of.
There’s no Bloomberg or Redfin or MLS for farmland. Additionally, for those who can’t afford to buy a property outright, there were virtually no options to invest.
This lack of a marketplace, along with several other barriers, had kept farmland out of reach for most.
Even more surprising, only around 2% of the dollar value of all U.S. farmland is financially backed by institutional investors, despite boasting a total US value of $2.7 trillion ($10 trillion globally).
This was a massive missed opportunity.
At this time, we were witnessing alternative investment platforms rise to the scene. Investors were able to take advantage of previously inaccessible asset classes for the first time. You could invest in a sports car or Banksy painting at a fraction of the price.
It seemed every asset class was now available — every asset class except for farmland.
I set out to change this.
In 2017, FarmTogether was born to radically democratize farmland investing.
Fast forward to today and we’re ending a year of remarkable growth: we reached $150M AUM in October, we’ve expanded into 6 states within the U.S., we’ve closed 30+ investments to date, and we count more than 1,000 investors on our platform.
We’re at the forefront of a global climate emergency.
As we set off to open a vital asset class for all investors, the opportunity our team and our investors have to make a meaningful impact has become a pivotal focus of ours.
This is the why that gets me out of bed each day motivated to begin working.
Agriculture is under threat from the climate emergency.
Rising temperatures threaten crop yields. More frequent floods and droughts are devastating agricultural production. Extreme weather conditions impact the long-term health of soils and farm ecosystems.
Our food system is threatened.
At the same time, the global population continues to rise, with expectations of reaching 9.7 billion by 2050. Farmers will need to produce nearly 70% more food than is consumed today.
The farms of the future need to maximize the productivity of each acre of land in order to sustain our growing population, and climate-smart farming practices are crucial.
That’s where FarmTogether comes in.
It’s crucial to take action now.
Research shows that climate-smart farming methods, like drip irrigation, crop rotation, and minimized tillage, can be used to mitigate the adverse impacts of a changing climate while actively restoring the health of soils.
Over time, these methods also have the potential to sequester carbon into the soil, making farmland a major solution in the fight against the climate emergency.
But while these methods give us a hopeful outlook for the future, the transitional start-up costs can be steep and difficult for small farmers to implement.
This has presented a massive barrier for most farmers.
The solution? Investors.
By directly investing in farmland, investors can provide the initial capital for a property to make the sustainable switch. Farmers can leverage technological and agronomic innovations to make their farms more efficient, in turn, sustaining our future food supply.
At FarmTogether, our team recognizes the enormous potential of sustainable farmland practices. That’s why we’ve partnered with leading organizations to ensure our commitment to sustainability.
In January, we enrolled 100% of our acres in Leading Harvest’s certification program, enabling investors to positively impact the planet and future communities.
We’ve also launched properties that will be transitioning to organic, for example, Galaxy Apple Orchard and Garcia Mandarin Grove, with more on the horizon.
Through these key partnerships, we’re able to provide our investors the opportunity to drive agriculture toward sustainability on a massive scale.
We’re enabling investors to drive impact beyond returns.
A Look Ahead
While we’re excited by the growth we’ve witnessed on our platform, we know there’s still work to be done to catalyze real change.
Earlier this year, we partnered with Backstage Capital, an investment firm focused on startups founded by people of color, women, and members of the LGBTQ community, to make investing more inclusive and diverse.
Looking toward the future, we know that farmland is just one natural asset feeling the impacts of the climate emergency. There’s roughly a $700 billion market for natural assets each year such as water and timber, yet no financial rails exist today to help drive this capital at scale.
We’re creating the infrastructure to build these rails and we plan to introduce new natural asset classes beside farmland within the next 5–10 years.
Investments in natural assets are both timely and vital.
We’re starting with farmland and we’re just in the beginning.
I look forward to unveiling what’s in store for 2022.
