California Real Estate Company Creates Organic Farmland With Unique Business Model
March 12, 2014 | Noelle Swan
In 2009, the pair took a road trip from Northern California to Oregon with a couple of friends eager to scout out land for their new farm. It quickly became clear, however, that the kind of farming they were interested in, where livestock and crops utilized the same land, was more than a little beyond their reach.
“We realized that if we were going to be driving the tractors and managing the livestock ourselves, we would need $10 million worth of farmland and that didn’t fit in our credit limits,” Wichner says.
That’s when they realized they would need a different kind of business model.
As they rode home, the pair relegated their friends to the back seat while they hatched a new plan, one that drew from Wichner’s experience in real estate and managing capital-intensive assets and Bradford’s expertise in ecological resilience and agricultural systems. They realized that what they really wanted to do was facilitate the transition of conventional mono-crop farmland to organic, holistically–rotated pasture for livestock and cropland. There were already plenty of organic farmers and holistic ranchers out there ready to work, but many of them needed access to land.
That’s where the idea for Farmland LP came in.
Farmland LP is a real estate fund that buys conventional farmland, frequently from landowners who never worked the land themselves, and converts it into highly productive, certified-organic land by enlisting plants, animals, and microbes to do much of the work. With the exception of a bit of lime to balance the soil pH, their process involves very few soil amendments. Instead, Wichner and Bradford focus on replenishing the soil’s microbial content, restoring the soil’s chemical balance, and closing the nutrient cycle loop.
For each parcel of land, Farmland LP tests the soil to determine the existing nutrient content.
“We’re fundamentally scientists,” says Wichner, who holds a bachelor’s degree in biochemistry and molecular biology. “We want to know what the soil chemistry is so that we can understand how to best support and enhance the soil biology.”
Bradford, the land manager of the business, uses that data to design a custom pasture mix designed to generate maximum forage and replenish the soil’s beneficial nutrients. Where a conventional farmer might add nitrogen fertilizer, Bradford plants nitrogen-fixing forage crops.
Farmland LP then partners with tenant farmers and ranchers to rotate cattle, sheep, and poultry onto the land. Each farmer’s relationship with the company is different, depending on the land and the farmer’s needs. One farmer’s sheep may live out their entire lives on Farmland LP pasture. Another farmer’s animals might spend the winter on rangeland in the hills and hit the Farmland LP pasture in the spring and summer.
While the land can be certified organic by the USDA just three years after the last application of synthetic fertilizers or pesticides, Wichner and Bradford look to the soil for cues about when it’s ready to support vegetable production. That can take anywhere from 3-7 years, Wichner says. Wichner and Bradford then work with other tenant farmers to grow organic vegetables on the land for a period of 2-3 years before rotating in grain farmers and beginning the cycle all over again with pasture and livestock.
Wichner and Bradford consider their tenant farmers to be partners. Farmland LP establishes a profit-sharing relationship whenever possible.
“We try to align our interests with the farmers’,” Wichner says. “If they have a bad year, we want to have a worse year,” he says.
While rent is a vital source of cash flow for the company, Wichner says profits strongly hinge on increasing the value of the land through better management.
“Instead of growing corn which goes to feedlots as feed for cows, we can actually put the cows directly on the land and produce just as much, if not more, meat per acre than if we were growing just corn, so it ends up being a more valuable product,” Wichner says.
Since buying their first 145 acres in 2009, Farmland LP now manages a portfolio of 6,750 acres of farmland in Oregon and Northern California valued at $50 million. The land belongs to the company’s 100 investors. More than 750 acres of that has already been certified as organic, the rest is in the transition process. This year, Farmland LP expects to celebrate a new milestone as their first parcel of land makes the transition from pasture to organic vegetables.
In the years to come, Wichner and Bradford hope to expand around the country.
“Our long term goal is to establish a publicly traded vehicle so anyone can invest in helping convert conventional farmland to organic sustainable farmland, whether they are farmers or just people in the community,” Wichner says.