This blog has been around for more than two years and I thought it might be good to bring back some old posts that are still relevant. The one below appeared in Nov., 2010 on the blog Big Picture Agriculture and I’ve been given permission to re-post here. Although some of the details have changed since it was published, it does provide a great overview of our philosophy and methods.
A Socially Conscious Way to Invest in Farmland: An Interview with Dr. Jason Bradford about Farmland LP
The following post is an interview with Dr. Jason Bradford, who answers questions about his business, Farmland LP, which is an investment vehicle that allows its investors to own farmland which is farmed using organic and sustainable practices.
There are many people interested in investing in farmland who visit my blog, and I hope they share my own enthusiasm about what this LP is doing and trying to achieve. As you can see from the interview, Dr. Bradford is a truly unique and special forward thinker, a leader, in fact, in the area of agriculture. Even if you are not interested in farmland investing, the sharing of his “big picture” knowledge here makes this a very valuable and fascinating interview, not to be missed.
Kalpa: Please start by giving us a small background on Farmland LP. What is it, what are its goals, and who might be interested in investing in it?
Jason: We are an investment fund that buys conventional farmland and converts it to certified organic, sustainably managed farmland. Historically, farmland has been an excellent, inflation-hedged investment. Our firm, Farmland LP, adds value to farmland by converting it to organic farmland and managing it ongoing. Our goal is to play a role in the transformation of the food system while benefiting the environment, people, and our investors.
Potential investors include any accredited individual investors (an SEC requirement) and institutions such as pension funds, university and charity endowments. They are often interested in holding tangible, inflation protected, cash flowing assets, and farmland meets those criteria. Also, since we are an environmentally and socially responsible management company, we attract those interested in making sure their money is doing good work.
Kalpa: Is Farmland LP your personal brainchild? Please tell us how it came to be.
Jason: It was co-created with my business partner, Craig Wichner. I had the basic agroecological model in my head and was looking for a way to make it happen, knowing that it required financial capital. Craig’s expertise is in building companies, and he came up with the specific financial structure that makes this work.
Kalpa: Jason, when I first became aware of you was from your agricultural related posts over at The Oil Drum. To some readers here, that is perhaps how they know of you. When did you become a contributor there and how did you become involved in energy issues and The Oil Drum?
Jason: I have been following The Oil Drum for about five years, started posting guest articles four years ago, and have been a staff contributor for the past two years.
My interest in energy issues stemmed from a National Science Foundation grant I managed. I led a team of researchers to set up long-term monitoring of ecosystems and species in Manu National Park in Peru. We set up a series of plots that began at the high elevation tree line and went down to the Amazon basin lowlands.
Biodiversity is being stressed by human impacts, whether from direct takeover of land or changing climate. All this connects to energy because economic activity is almost exclusively fossil-fueled. I started studying economics so I could understand what the threats were to the habitats we were researching.
Ultimately, our future, as human beings and all species on the planet, are deeply intertwined with the future of energy.
Kalpa: Did you grow up on a farm, and if so, where and what type of farm was it? If not, what made you become interested in agriculture?
Jason: I grew up in suburban California, the part of the San Francisco Bay Area now called Silicon Valley. I saw the last bits of Santa Clara Valley orchards convert to condos and tract houses while I was in grade school. But I was always nuts about biology and had a lot of freedom to explore my neighborhood.
I became interested in agriculture because I see it as central to the way humans relate to the planet. Through our food systems we literally dominate the landscape, and we consume and waste huge amounts of non-renewable resources. From an ecological perspective we are horribly inefficient and clumsy. Almost none of the bad stuff we know of in agriculture is necessary to provide plenty of food for people. It is quite possible to feed the world while also improving water and air quality, and while restoring soil fertility and building soil carbon. In fact, I am quite confident that in the long run only an agriculture that benefits the broader environment will persist.
So I consciously switched careers and started training as a farmer, eventually founding and operating an organic vegetable CSA. My background in biology made this a relatively smooth transition–in addition to great support from my wife and many others who were members of the CSA.
Kalpa: Are you a hands-on farmer for your land? Describe your role in the operations and which aspects you enjoy the most.
Jason: Modern farms are generally highly specialized in what they produce, and the people who work on them are also usually specialized, such as a full time equipment maintenance person. My job is to enhance and protect the value of the land while working with partner farmers to achieve production and economic goals.
For example, this year I coordinated the establishment of pasture on 150 acres. This had me working with businesses doing the soil testing, the application of lime and other inputs, three different farmers with equipment to prepare the land and sow the seeds, the seed company to purchase and mix the seeds, and a few different businesses for irrigation equipment.
Because I did all this work, a young rancher is gladly running his sheep on the land. He is a full time rancher that doesn’t own any land. Not only couldn’t he have come up with the funds to buy land, but the money to get pasture established would have blown his budget. Instead, he can focus on buying animals and specialized equipment to manage them, and this is doable.
I do get a lot of exposure to the day-to-day experiences of farmers, helping them move or feed livestock, set up fencing, repair equipment, and manage irrigation systems. This is pretty enjoyable and we get to talk through issues while working together, which is the best way to just get it done and quickly resolve any potential conflicts.
There’s also much that needs to be done that the renting farmers just don’t have the direct incentive to do. Arranging grants or work parties to restore riparian forest along the river and planting hedgerows is something I am taking on. Common infrastructure such as gravel for roads or irrigation pipe for a particular field is my responsibility because it adds value to the whole property over the long-term.
Kalpa: How many farm workers does Farmland LP have employed at this time?
Jason: To be clear: We don’t employ farmers. We make land available for lease to self-employed farmers. At this time we are leasing to three different operators. Several others have been paid to do custom farming and some of them may lease from us in the future. These are the seed farmers that will benefit primarily after we are certified organic.
Kalpa: I saw on your website that your first property, Fern Rd Farm, is 150 acres and came under your ownership in February of this year. Do you expect to own more farms for the 2011 growing season? Do you plan to only own land in Oregon, or are you considering other states, as well?
Jason: We buy farmland as investment capital comes in. We will be buying more land this winter as our fundraising is proceeding nicely. The fund will target three regions in the U.S. Oregon’s Willamette Valley is where we are starting, but after the first $10-$20 million or so we will expand elsewhere.
Kalpa: From what I read on your Farmland LP blog, it appears that this year was dedicated to get soils prepared for eventual production. Please name some of the crops you hope to produce on your farm/s.
Jason: The organic transition period is three years, but part of our job and role is to generate revenue during the transition period while also building soil fertility. Pasture for livestock is one great way of doing this. The best time to plant pasture is in the fall, so most of the land was prepared this summer for fall planting. It won’t be ready to graze intensively until the summer of 2011, though we did have one field sown in a pasture mix in May and were able to run livestock from July until mid-November. And hogs were produced on a few acres of another field, which is going to be a very fertile for the next few years.
The same is true for vegetable production, which is the most intensive and so benefits the most from enhancing soil fertility during conversion. Imagine it is the spring of 2011 and we know that next year a vegetable farmer will be on a 20 acre field that is currently in pasture. We will not only run sheep on that field, but also poultry and perhaps hogs. This will give the vegetable farmer plenty of fertility to work with, and a field clean of common soil borne pathogens that plague producers without access to fresh ground.
What’s great about this system is that the farmers are very excited about it and are already making connections among themselves. The neighbor runs a large CSA, restaurant, farmers market and wholesale vegetable operation and his waste veggies are going to the hog producer. In turn, the hog producer needs to be in the barn during the winter months and will gladly let the vegetable operator scoop out the manure-laden straw to be composted. In fact, the veggie farmer bought the straw. Next year the hogs are going onto a field most attractive for future lease to the vegetable farmer.
Furthermore, since we had a number of custom seed crop farmers help us sow pasture, the hog producer is bypassing the feed store for some of his major inputs and getting them direct from local farmers. Everybody’s costs go down and their profits go up, and they feel really good about working with each other.
Kalpa: Who do you plan to market your organic crops and livestock to? Are you planning to work with your local grocery stores or farmer’s markets and CSA’s, or larger distributors?
Jason: As the land manager, we won’t really be doing the marketing. Our farmers typically have pre-existing distribution channels, and we’re just helping them scale up production. However, we do talk about marketing together, and the fact that this whole farming system deserves to be showcased. Everybody in the social network markets for everybody else, to some extent.
Sales outlets range from CSA and farmers markets all the way up to large distributors. Our neighbors include local-only vegetable operations that manage 60 acres, to large food processing and distribution companies that draw on 10,000 acres of land for fruits and vegetables, are vertically integrated, and ship anywhere. Most seed crops sales will be dominated by large buyers. If you plant just one acre of soft white wheat around here you may harvest 10,000 lbs of seed. Bulk sales to millers and bakers are needed to clear a hundred acres of wheat.
Kalpa: In reading your progress reports, I assess that your land is raising sheep, goats, and hogs now. Is that correct? How soon will any of these animals be “processed” and do you know of small meat processors in your locality?
Jason: That’s right, and many have already left the premises. We are fortunate to have a few small, USDA inspected, processors in the Willamette Valley. Folks are working on mobile facilities too, for poultry, hogs and ruminants. The Oregon Department of Agriculture also licenses small poultry processing facilities on farms. These are limited to 20,000 animals per year, however, which under-utilizes the infrastructure quite a bit.
Jason: I met Wes Jackson at a 3-day workshop for Fellows of the Post Carbon Institute (I am on the board). We are not using any perennial grain yet, but would like to. I am trying to get a local wheat geneticist interested. Local farmers and seed companies certainly are. I’d like to put the pieces together and collaborate with the right people to get breeds developed that are adapted to this region. The genetics really needs to be correct for each place and this takes a lot of time and expertise.
When I spoke to Wes about this, I asked him about rotation between harvesting for seed, grazing and haying because if you let a plant produce seed each year it can wear down. He said that this was the right way to manage perennial grains, but they aren’t doing any research on forage quality. What I’d like to do then is include some tests on the palatability of the leaves and responses to managed grazing. Therefore, selection for cultivars can include both seed and leaf traits. The forage specialists at Oregon State University in Corvallis, which is where I live, would be ideal partners in all this.
Kalpa: Are you aware of anyone else out there doing what you are doing, that is, making it possible to invest in organic farm ownership?
Jason: We are unique as far as I know. A number of other entities are offering investments in farmland through investment funds, but they all appear to be for conventional agriculture. This means that your income is typically tied to GMO seeds, herbicide and fertilizer costs, and commodity crop prices. And those aren’t trends to which we want to hitch our wagon.
My belief is that if you are going to buy farmland you will want the value of that land preserved, and enhanced, over time, all while generating premium cash flows. This is possible by using management practices that improve the soil and biological resources. Organic farming is scientifically documented to enrich soil biology, build soil carbon, and reduce agricultural disease and pest problems by providing good habitat for a diversity of species. This reduces input costs, while the organic price premium increases revenues. And there is plenty of research shows that organic practices increase the profits to farmers and farm owners. What we’re doing at Farmland LP is showing that this can be done at a large scale, and that working smartly with nature provides a better outcome for all.
Kalpa: I understand that Oregon’s Willamette Valley farms have been hit very hard financially due to the financial crisis because many grew grass seed and that market has dried up. Does this help you acquire farmland there at more reasonable prices for this time being?
Jason: That’s a possibility. During the good times the grass seed farmers bought up a lot of land, and due to the troubles in the housing market the sales of seed for lawns has significantly declined. We do see some opportunities to convert some of that land to organic, food-producing farmland, and price is a factor when we look at regions and properties to invest in.
That said, I do not think we will see prices of farmland drop as much as they did in the 1980s after a debt boom and bust. About 70% of farms are unleveraged today, so they learned their lesson about debt and haven’t gone back, so fewer are going to be forced to sell. On the other hand, because credit is tight and commodities volatile, I don’t expect many farmers to be aggressively expanding their operations. So, buying opportunities exist for those with cash.
Kalpa: How do people usually find out about your fund? Are you advertising?
Jason: We are not permitted to advertise since our fund is only open to qualified investors. Our website attracts a lot of requests for investment materials and my partner Craig has presented at several investment conferences. For example, the head of theSlow Money due diligence committee recently called us the “Quintessential Slow Money investment”. We were also just selected to speak at Investor’s Circle, a prestigious investment group. In a B-Corp survey by Investors Circle we possibly had the highest score they’ve ever recorded. Our name is getting out there, and we’re on the radar of some large investors. But it is important to us to have individual investors in the fund, since ultimately part of the joy of what we do is that farmland is very personal, and it re-connects people to things that really matter.
Kalpa: One of my primary reasons for blogging about agriculture (although it is not obvious on some days) is my concern for its transition off fossil fuels, or ratcheting down, in an optimal way. That is, a way in which we continue to feed everybody during and after energy costs become expensive. It fascinates me that you are already making that happen, or at least planning on making that happen. Do you have any comments about your vision to farm using fewer fossil fuel inputs?
Jason: Ha! How long is this interview?
Part of the fund strategy is buy farmland close to cities, as a way to reduce dependence on fossil fuels. We are keenly aware of the dependence of “conventional” agriculture on oil…and the risks to supporting a very large (and growing) population on a depleting resource such as oil.
Let me try to be brief. I view this in stages.
The first is transitioning the land to organic. This gets the soil weaned off fossil-fuel derived pesticides and fertilizers. It also redevelops soil organic matter and soil biology—both of which improve disease resistance, water holding capacity, resilience to weather extremes, enhance nutrient cycling and promote high yields. With this one step we cut out about a third of the fossil fuels that go into on farm production, and the resulting carbon sequestration may make the farm carbon neutral.
The second part is the development of on-farm synergies among producers to dramatically reduce waste. In nature the waste of one organism is the food of another. Most contemporary farms have waste problems that become costs, whereas we won’t see anything as waste, simply another input that doesn’t need to be brought in from the outside and purchased. You already have a feel for this from my description of the hog-vegetable-grain connections being made. I’d love an expert in Life Cycle Analysis to tell me how much energy this saves. I am sure it is substantial.
Third is the use of renewable energy on the farm. The biggest nut to crack is liquid fuels for tractors. Fortunately a lot has already been done in the Willamette Valley on this, mostly related to straight vegetable oil or biodiesel from local oil seed crops. These work well in crop rotations because oil seed species are usually in the Brassicaceae family, which inhibits nematodes that feed on the roots of grasses. With reduced tillage methods, probably only about 10% of the cropland would need to be set aside for tractor fuel.
The design of the farm itself can reduce the need for inputs. Livestock may not need de-worming agents, for example, if they have access to shrubs like willow and the pasture is rich in herbs such as chicory. Hedgerows create windbreaks to reduce animal stress, and habitats for beneficial species, such as raptors, pollinators and predatory insects that mitigate pest outbreaks. I am trained as an ecologist and could go on and on here, but the gist is that diversity and smart design prevent problems in the first place.
A lot needs to happen off the farm too. Producers are keen on developing local and regional markets. The farmers I know believe whole-heartedly in the local food movement and are sorting out ways to cut out transportation distances. Many are upgrading storage facilities, adding processing equipment, and connecting to the local populace in multiple ways—not just farmers markets, but also the major grocery chains.
Ultimately, we can’t have a viable agricultural system that is a linear. Right now we mine the inputs to farm, spread them on the land, harvest the crops, transport the food to cities, and flush the waste out to the ocean. We like to think of ourselves as being so advanced and knowledgeable, but this is one case where Chinese peasants of 2000 BC understood something we are still clueless about.
Kalpa: Is your farm’s windmill working for you? How old is it and does it require much maintenance? Are parts available?
Jason: Yes, it works great. It is an Aermotor Windmill. It needed some minor repairs, but only required a trip to a local store. We use it to fill up a 1200 gallon tank for livestock drinking water. I don’t know how old ours is but it is in very good condition so not that old. Needs a replacement quart of oil twice a year and the well pump packing wears out eventually. The technology is 19th century but very functional. The company is still in business and sells replacement parts.
Kalpa: There was a photo of a white cat with large black spots lying in the grass near your irrigation equipment. Does Farmland LP also own a farm cat?
Jason: What a great cat. She showed up in early spring, a bit shy, following me around like a puppy dog for a week but not getting too close. Now she will approach anybody and demand attention. My son named her Fluff, but that belies her predatory nature. Twice I have seen her devour a vole within a minute of capture. A totally self-sufficient animal and the best mascot a farm could ask for.
Jason: Yes, we have a great model. And you have identified one of the hurdles we face—the false perception that organic methods are more costly and decrease yields. I ask people to go look at the research being done by major universities in the Midwest, Iowa State for example, that falsify agribusiness propaganda. And we go well beyond the simplistic “replace conventional grains with organic grains” model by creating a holistic farming system that indeed dramatically lowers the cost of production and will be much more resilient to volatile and generally rising input costs. Ultimately, if we’re going to create a sustainable future for humanity quickly, which I think we need to do, it’s got to be aligned with the systems of both nature and capitalism. And we’ll be spending the next 30+ years scaling it up.
Kalpa: As a final note, I’ll add that I suspect your model will be studied and achieve at minimum, the level of fame that Polyface Farm has reached. Might I be on to something here? If so, am I one of the first to cast a spotlight on you, or have you already received a bit of publicity?
Jason: Joel Salatin is amazing and we definitely stand on his shoulders. Our publicity thus far has been minor, such as a few investment newsletters that give a couple hundred word summary. As you know, the story here is truly rich, complex, and potentially transformative. Blogs like yours are very much appreciated because of the depth of coverage and insightful analysis that connects the dots and sees the “big picture” context. I’ve been a reader from the beginning so thanks for your work and helping others understand mine.