We would like to thank the many investors who reached out to inquire about the impact the devastating fires in the West are having on our operations. Thankfully, our farms have not been damaged directly by the fires, nor have any of our employees’ homes. As long-term stewards of the land, we believe it will be a challenge to argue against climate change after 4.6 million acres have burned on the West Coast; the smoke blotting out the sun and leaving a Martian-red twilight at noon.
While our farms are safe, the smoke has created some issues. Tractor work has continued in air-conditioned and filtered cabs, but some of our farm workers reduced their hours or were encouraged to go home early. The vast majority of the crops are not affected or have already been harvested. The notable exception is the wine grape crop. There is a general concern that the intensity and duration of the smoke will cause “smoke taint” and make the grapes unusable. We do have federally subsidized crop insurance to offset this potential loss. Financially, we’ll be okay, although we will be disappointed by the crop damage from the smoke. It’s a good time to stock up on Oregon Pinot Noir
The map below shows how far our farms are from the fires. Note that the fires are in forests or, in a few cases, spread to tightly packed housing that borders the forests. Our farmland is generally in flat, wide-open areas with few buildings. Most of our properties also border rivers, and while some have lovely trees along the borders, these are not dense, hilly forests of dry trees, but rather, lush, green riparian zones. At the closest, our farms are 50 miles away from the nearest forest fires. Some may recall the fires in Napa two years and again this summer. Most vineyards were unharmed, and the damaged ones were often just singed at the borders, or they were in a steep valley that acted as a fire chimney. The vast majority of our assets are in flat farmland, and most of that is in row crops. Even if there was a fire, the ashes would simply add to soil health for the following year. There is very little burnable infrastructure in the funds.
Overall, the funds continue to perform well in this challenging year. In general, the pandemic has been positive for us from a top-line basis as the demand for organic food and organic farmland has increased significantly. The most recent example is from Fund I, in which our organic vegetable acres rented out at $700/acre (vs $250/acre for non-organic) are increasing from 750 acres in 2020 to over 1,400 acres in 2021.
There have been some negatives. We have seen reduced prices and sales to other farmers for grass seed crops, reflecting reduced demand and lower prices for milk and cover crops due to tariffs on corn and soy. Most farms are completely stuck in these commodity markets, and in times like these, the three-year organic conversion period is a large barrier for them to quickly pivot to what we have been doing for over 10 years.
The shocks of 2020 continue to support our investing thesis of converting land from conventional to organic and committing to higher-value crops. We feel fortunate to have largely escaped the traumas endured by many around the world, and like you, we can’t wait for a new year to turn the page!
Please do contact us with any additional questions.