Farmland LP

Farmland LP proves investing in organic farmland can yield dividends

December 28, 2023
Prefer a shortened version with key takeaways?
We’ve got you covered.

Across the United States, individuals saving for retirement now consider more than just their own long-term financial health.

Across the United States, individuals saving for retirement now consider more than just their own long-term financial health. For many, these investments must also speak to the environment’s health. In fact, over one-third of individuals across all generations saving for retirement are concerned climate change will threaten their long-term financial security by driving up living expenses, taxes, and insurance costs.

Fortunately, one investment fund is on a mission to make agriculture healthier for the planet — and it could very well pay off for its investors financially. Meet Farmland LP.

According to Craig Wichner, Founder and Managing Partner at Farmland LP, individuals regularly invest in Farmland multiple times. Why? Because Farmland’s track record indicates that this firm doesn’t just yield financial returns for the near future. Instead, investing in Farmland LP offers wins for investors, farmers, and the environment alike — for decades to come.

For 14 years, Farmland LP has worked toward returns for investors, farmers, and the environment

According to the USDA, the wealth of the farmland sector is expected to hit $3.57 trillion in 2023 — and only 1% of that farmland is organic. Yet, even as most farms operate conventionally, organic farming drives more value:

Within this nearly $4-trillion sector, Farmland LP is a leading investment fund in organic, regenerative agriculture. Since 2009, the firm has helped individuals invest in sustainable farmland and delivered enticing financial returns.

Today, Farmland LP manages over 15,000 acres of farmland (totaling roughly $250 million in assets under management) across Northern California, Oregon, and Washington. Even better, its team of 50+ fund and farmland management experts has observed large-scale sustainable agriculture to be more profitable than conventional. Their numbers also go toe-to-toe with mainstream forms of commercial real estate (more on this below).

“Fourteen years ago, Farmland LP didn’t have a track record as a high-yield investment. Today, we do. We’ve proven that we buy high-quality farmland, convert it to organic processes over a three-year period, and significantly increase the cash flow and rent income per acre on that land — from $300 to $750 per acre."

Craig Wichner,
Founder and Managing Partner at Farmland LP

3 reasons people invest in farmland as an alternative asset

While real estate is a thriving alternative asset class, few know farmland is an investment opportunity within it. Let’s fix that.

Farmland is largely non-correlated to public markets,

making it a prime alternative asset class for building diverse portfolios. Compare this to multi-family homes, office buildings, and industrial facilities, which are primarily tied to either macroeconomic cycles or the debt markets.

As an asset class, farmland yields steady returns.

US farmland has offered an average annual return of 12.24% over 20 years. While the S&P 500 tends to produce both peaks and downdrafts, farmland is a slow but steady source of long-term financial growth.

Due to simple supply and demand, farmland is a smarter investment than ever.

Unlike apartments or commercial buildings, farmland produces a non-negotiable human need: food. However, the US has lost about 1.5 million acres of viable farmland each year for 30 years, while the United Nations expects a 70% increase in food consumption by 2050.

“The demand for food keeps rising. The supply of farmland keeps falling, due to urban development, poor 
institutional farming practices, and climate change. From a supply and demand lens, farmland is the industry 
you want to be in for the long run.”

Tom Sullivan,
Managing Director of Capital Markets & Investor Relations at Farmland LP

As a result, farmland (particularly eco-friendly farming) as an alternative asset is both an economically sound investment and a dire need in the face of climate change. Here, Farmland LP enters the picture as an especially timely investment.

Looking to invest in farmland? 
Here are 4 reasons to go with Farmland LP.

With various institutional managers and investment options to select in farmland, what differentiates Farmland LP? It ultimately comes down to four factors that make Farmland LP a high-ROI opportunity for investors, farmers, and the environment.

1. Farmland LP actively adds value to farmland, which bolsters ROI.

In 2022, commodity crops (namely, corn and soybeans) comprised more than 50% of all US crop cash receipts — meaning little-to-no economic diversification for that bulk of farmland. Simultaneously, many institutional farmland managers rely on a sales-leaseback model. Together, these two factors actually drive down the land’s value due to poor farming practices and passive land management.

In comparison, Farmland LP leverages a unique model for farmland management that actively adds value to its farmland. This happens in five steps:

1. Buy high-quality farmland

Farmland LP finds the highest-quality farmland (i.e., excellent water rights, growing climates, and soil quality) that is also projected to be in an area that will withstand climate change. Most investor capital goes toward purchasing this land.

2. Convert farmland to organic models

Farmland LP secures USDA Organic certification for every acre by converting commodity crops to higher-value specialty crops (i.e., wine grapes or organic fruits and nuts for grocery distribution).

3. Invest in value-add infrastructure

Farmland LP focuses on capital expenditures like adding water rights to properties, installing drip irrigation systems, and upgrading large farm equipment.

4. Increase crop diversity

Farmland LP develops long-term crop rotation plans to increase soil fertility and resilience and, ultimately, to extend the land’s productivity and yield (both financial and agricultural).

5. Actively manage farmland

Farmland LP strategically purchases at least $50 million of farmland within a tight geographic area to ensure active, on-site property management. This model enables solid economies of scale, which increases revenue and reduces risk over the life of the investment.

While location determines value for most forms of real estate, the value of farmland is tied to the crops grown on that land. With that in mind, Farmland LP spends three years converting fields of low-value commodity crops into organic, higher-value crops. According to Farmland LP’s founder and Managing Partner Craig Wichner, this strategy more than doubles the value of the land from, on average, $300 per acre to $750 per acre in rent.

From there, potential results include:

“Large institutional farmland managers primarily buy 
land to lease it back to farmers without adding value. 
You get the reliable beta but no alpha. With Farmland LP, you still see that minimal risk but with much more crop diversity and economic productivity on top.”

Craig Wichner,
Founder and Managing Partner at Farmland LP

2. Farmland LP helps independent farmers access organic acreage and new profits.

Farmland LP actively farms one-third of its organic acreage (higher risk, higher profit) and leases out the remaining two-thirds to independent farmers (stable, secure cash flow) to manage risk. With this mixed model, Farmland LP has become a solutions provider to dozens of independent farmers.

At a glance:

  • In 2021, the median household income for all farm households was $92,239. That same year, the average US farm household held roughly $2.1 million in wealth. As a result, the financial barrier to converting conventional farming practices to organic is often infeasible.
  • Even if a farmer can swing the cost of this three-year process, only some have the expertise to convert their farmland to organic and maintain that land with proper crop rotations.

That’s where Farmland LP comes in, empowering independent farmers to access anywhere from 100 to 1,000 acres of healthy, readily available land and break into the organic market. Farmland LP functions as these tenant farmers’ property manager and even advisor on how best to farm highly profitable crops on a rotation, the New York Times reports.

This makes the investment a financial win for Farmland’s tenant farmers as well as their investors. John Dwelly, a fourth-generation farmer, tells Time: “For my sake, I hope to be farming until I’m a ripe old age, so I want to make sure that we’re setting ourselves up for long-term success.” That’s why he leases hundreds of acres from Farmland LP and leans on their team’s expertise.

“Farmland LP is raising our next fund to expand 
and serve our existing customers. We do this so we can make more organic land available, so that farmers 
who operate conventionally today can economically 
make the switch to organic”

Craig Wichner,
Founder and Managing Partner at Farmland LP

3. Farmland LP is based in science and research, powering an innovative, high-return farming model.

To build Farmland LP, Founder Craig Wichner utilized his successful track record in real estate management and private equity, years of firsthand experience in farmland management, and (perhaps most importantly) his background in biochemistry and microbiology.

With this foundation, Farmland LP pioneers an innovative biology-driven approach to agriculture, grounded in research and data rather than chemical-based farming models. Traditional methods of farmland management center on large-scale monocropping, the practice of growing only one crop on a piece of land year after year.

  • Monocropping is the dominant food production system in the United States due to its operational efficiency. However, it’s also very chemical-dependent.
  • For instance, glyphosate — a cancerous chemical commonly used as an herbicide — is found in the urine of 80% of the US population despite only 1.3% of all US employees working directly on farms.

In response, Farmland LP’s agricultural model focuses on cultivating crop diversity and the health and productivity of the soil itself through crop rotations — no herbicides or pesticides involved. Farmland LP currently grows 40 unique crops across roughly 16,000 acres of land.

By developing the ideal 10-year crop rotation for each field to achieve healthy soil biology, Farmland LP spearheads organic, regenerative farming that’s good for investors as well as the earth (more on this below).

4. Farmland LP brings a track record of positive environmental impact.

Mary McMahon, Capital Markets & Investor Relations Associate at Farmland LP, joined the firm due to one rare differentiator: Farmland LP proves impact investing and ESG do not have to be concessionary or sacrifice financial returns.

Seven in 10 investors believe companies should report on the environmental sustainability of their business strategy. Yet, 87% also believe corporate reporting contains unsupported sustainability claims — better known as “greenwashing.”

As nearly half of investors are interested in sustainable investing, many institutional farmland managers claim climate-friendly practices — while maintaining decades-old techniques. Conversely, Farmland LP assures financial returns alongside climate-positive agriculture, delivers on those promises and provides the long-term, USDA-sponsored data to back them up.

“The other side of Farmland LP is our focus on benefiting the planet. We want to give you better financial returns and a stronger environmental impact. That's we set out to prove that our strategy benefits the land, water, 
or communities.”

Tom Sullivan,
Managing Director of Capital Markets & Investor Relations at Farmland LP

Farmland LP delivers this positive impact by swapping monocropping for crop rotations, which boost cash flow and environmental benefits.

More specifically:

Crop rotations are environmentally sustainable.

By simply growing at least four crops in the ground each year and rotating them over time, Farmland LP maximizes the longevity and productivity of the soil — zero glyphosate involved.

Crop rotations typically generate far greater revenue per acre.

Monocropping, especially of commodity crops, tends to go toward producing ethanol or feedlots. In comparison, leveraging crop rotations to farm organic produce generates far more profits and cash flow for the land’s managers, farmers, and investors.

“Farmland LP is more profitable, so our investors benefit. The environment also benefits, which means we as humans benefit because we don’t have all of this glyphosate in our blood.”

Craig Wichner,
Founder and Managing Partner at Farmland LP

Farmland LP offers healthy, high-ROI farmland in the face of a changing climate.

Unlike most institutional farmland managers, Farmland LP isn’t focused on closing deals in the short term. This firm is focused on the long-term in almost every way:

  • Driving returns for investors that only continue growing slowly but steadily
  • Cultivating a portfolio of high-quality, high-return farmland that will be around for decades (if not longer) in the face of climate change
  • Running an investor-first fee structure, meaning a 6% preferred return for the investor (giving 100% of their money back) followed by 80% to the investors and 20% to the GP

Whether you seek a fund that appears stable for decades to come or an investment that matches your dedication to mitigating climate change, Farmland LP seems poised to deliver.

Prefer a shortened version with key takeaways?
We’ve got you covered.

To explore ways Alto can help you find your entry point into fine wine and rare spirits, open an account today.

Take control of your portfolio and your future

Invest in venture capital and similar alternative assets using tax-advantaged retirement funds.