Farmland LP creatively strategizes to meet organic demand

The challenge is clear and only intensifying with the rising demand for organic products: more organic farmers and more organic land are needed. 

At the same time, older farmers are selling farmland, fueling a farmland real estate market that continues to grow. For investors, this has averaged a return rate of 12 percent the last 20 years, according to the National Council of Real Estate Investment Fiduciaries.

A company called Farmland LP is using these market dynamics to offer a creative solution. Launched in 2009 and based in San Francisco, Farmland LP owns over 7,000 acres of farmland in California and Oregon. More than 1,000 acres of them are now certified organic, with the rest in transition.

The farms are professionally managed by Farmland LP, while 20 tenant farmers and ranchers lease cropland, livestock forage and on-farm facilities. One of these is Garret Mussi, a third-generation farmer in the Delta area east of San Francisco. For 50 years, his family had leased land that was recently sold to Farmland LP. The company worked out an agreement where he farmed a portion last year while the land transitioned to organic.

“I had been skeptical about organic but they asked us if we wanted to grow organic this year,” said Mussi. He said yes and now his family is one of first to farm organically in the Delta area, growing durum wheat, tomatoes and silage crops.

The vision

Jason Bradford co-launched the company with his business partner Craig Wichner, a private equity investment manager long interested in agriculture. Bradford grew up in Silicon Valley where he witnessed the conversion of orchards in Santa Clara Valley to tract housing. Always a biology nut, he was fascinated by agriculture. After obtaining his doctorate, he launched his career. This included co-founding the certified organic Brookside Farm in Willits, CA, and research with the Missouri Botanical Gardens, where he began the Andes Biodiversity and Ecosystem Research Group (ABERG)—which studies biodiversity distribution and how ecosystems work in a South American area that harbors Earth’s highest biodiversity and is also the area most threatened by climate change.

It was the ABERG experience that molded Bradford’s thinking in the global need for a sustainable farming model. “And Brookside Farm gave me a perspective on farming and the food system that allowed me to think about the need to manage land and partner with farmers the way we do,” Bradford said.

Farmland LP is a B corporation, also called B Corps. B Corps are profit corporations certified by the non-profit B Lab, which demonstrate that they meet rigorous standards of social and environmental performance, accountability, and transparency in addition to making a profit.

Farmland LP was named to B Corp’s “Best for the World” top 100 list the past two years. Farmland LP also made Fast Company’s list of the “World’s 50 most Innovative Companies.” Open to accredited investors, Farmland LP has two funds. The first was established in 2009 as a limited partnership with a 30-year term. The second fund, launched in late 2014, is a Real Estate Investment Trust (REIT) that functions like a mutual fund for farmland.

Transitioning to organic

The company’s primary mission is to acquire and manage farmland near high demand organic markets.

“Many of our farmers sell to restaurants or through small distributors going to regional grocery chains and food coops. For example, in Oregon, Cattail Creek Lamb buys nearly all the lambs from our farms. Mosaic Farms is a small grower of pastured hogs that sells regionally,” explained Bradford, who is also the company’s manager overseeing farm operations.

Delta farmer Mussi said the biggest benefit for him was having someone else deal with the three-year transition of the land to organic, which Bradford and his advisors accomplished during the pasturing phase.

The company’s early acreage near Corvallis, purchased from retiring farmers, made a quick organic transition, primarily by putting it into pasture for livestock grazing. “Now some of those early pastures are rotating into vegetables (winter squash, spinach, kale), which is very exciting for me as it fulfills a long-term plan,” said Bradford.

While continuing to add acreage, Bradford said the company’s biggest challenge is continuing to transition the larger acreage farmland, especially in California, which came with legacy tenants, such as Mussi, who were farming conventionally. “It is a process to phase out conventional leases and bring in new tenants. In some cases, legacy tenants such as Mussi will convert to organic with us,” he said, adding that much time is spent building relationships and ensuring that expectations are clear on all sides.

Vital partnerships

Within an area, Farmland LP prefers to buy land in significant blocks so that a diverse set of farmers can rotate from field to field to grow their specialized crop. Some of the Oregon farms have less than 100 acres, but are managed along nearby farms with 1,700 acres.

“A farmer growing grain and other seed crops may want a couple hundred acres or more within a few miles of each other. If we are bringing on livestock, we need enough pasture to make it cost-effective for them to manage their stock,” said Bradford. A small number of tenants need only five to ten acres to expand vegetable acres or raise pastured hogs.

Working with stakeholders to make the farmland offer positive environmental assets is another mission. For example, they’re working with the Oregon Watershed Enhancement Board to restore riparian forest and with U.S. Fish and Wildlife on endangered species recovery. As part of that effort, pollinator hedgerows are being planted with a grant from the National Resources Conservation Service.

Future goals

Bradford can’t say enough about the perseverance and dedication of his staff. “This is exciting but very challenging work with a blend of high creativity and diligent follow-through,” he said.

In three years, Bradford hopes to complete all land purchases for the REIT fund. “In five years we plan to be well on our way towards organic transition on those lands. In ten years, he forecasts, Farmland LP will be the top organic farmland manager in the country.

“Personally I am always seeking to learn and improve my ability to manage farmland with the agroecological principles I adhere to. I want to see the farmland become more vibrant and productive with higher biodiversity, both native and domesticated, and stewarded by a host of talented farmers and ranchers earning right livelihoods,” Bradford said.  //