Investing in Regenerative Agriculture
For decades, federal subsidies in the U.S. incentivized farmers to specialize and grow only one or two crops a year. This leaves the soil depleted of nutrients and susceptible to flooding and runoff. In an attempt to improve soil, heavy pesticides and fertilizers are applied which, unfortunately, end up in rivers, lakes, oceans, and drinking water.
There are farmers who are doing things differently and highlighting just how successful simple solutions can be. Steps such as practicing no-till farming, using cover crops (rather than letting the ground go bare in the winter), integrating trees and animals on the farm versus solely growing vegetables, or adding even just one additional crop for diversification. All of these changes lead to healthier soil which sequesters more carbon and is less susceptible to flooding and erosion. It can also lead to more profitable farms.
So why aren't all farmers implementing the necessary steps? Pivoting to a new way of farming requires time and money. New skills need to be learned, new equipment needs to be purchased, and losses need to be absorbed in the short term. Farms can’t use the “organic” label until 3 years after the last application of the prohibited fertilizers and pesticides. Most farmers simply don’t have a big enough financial cushion to weather the transition.
Land security is another, related factor. Many farmers don’t have enough money for a down payment so they end up renting a plot of land. Their land can be sold at any time. The renters don’t have an incentive to improve long-term soil health if they aren’t sure they will be farming in the same spot next year.
Government funding, philanthropic dollars, and investment capital recognize the disconnect and are contributing to help tackle these issues. Here is an overview of options for investors looking to allocate a portion of their portfolio to regenerative agriculture.
Farmland REITs
Iroquois Valley Farmland REIT
Iroquois Valley Farmland REIT is a private REIT that provides organic and regenerative farmers land security through long-term leases and mortgages. They buy farmland, mostly in the Midwest, where the soil has been depleted, and work with experienced farmers to help them transition the land to organic, regenerative farming practices. They have been around since 2007 and have directed $85M towards organic agriculture.
all information from their website as of 9/19/2023
REIT Equity Shares
The equity shares allow you to own a piece of their organic farmland portfolio. Both accredited and non-accredited investors can invest pending availability. Non-accredited investors cannot invest more than 10% of their net worth or annual income. There is a $10,413 minimum investment that is subject to a 5-year lockup. Read more about the details.
Rooted in Regeneration Notes
With these notes, you lend money to Iroquois Valley to help fund farmland ownership for Black, indigenous, and people of color (BIPOC). This is available to Accredited Investors only and is subject to a $25,000 minimum. 3, 5, and 7-year terms are available. Check the website for current rates. Read more about the details.
Gladstone Land REIT
This is a publicly traded REIT, ticker symbol "LAND", that invests in farmland across the U.S. Most of the farms are located in California, Michigan, and Florida. As of December 31, 2022, about 40% of the acreage in their portfolio used to grow annual fresh produce was either certified organic or in transition to become organic. Read more about the details.
Impact Notes that include exposure to Sustainable Agriculture
Calvert Community Investment Note®
This is a private note that invests in a wide variety of impact investments from affordable housing, renewable energy, health, and education. About 9% is also invested in sustainable agriculture. You can sort the portfolio holdings by “Sustainable Agriculture” to see the type of investments they have made in this category. For example, Partner Community Capital is a portfolio holding and a CDFI that financed a loan and provided technical support to Firefly Farms, a small farm in Maryland that makes award-winning handmade cheeses.
Banks that use your Deposits to Support Local Farms
Walden Mutual
Banks make money by lending your deposits out to their members in the form of loans. Walden Mutual is unique in that its lending is 100% mission-aligned to farms, food businesses, non-profits, and other sustainable businesses. You can read about one such business, Clyde Farms, that used Walden Mutual to consolidate various outstanding loans to help them continue growing their sustainable farm.
all information from their website as of 9/26/2023
Check out the website to see current CD rates ranging from 3 months to 10 years. There are also ‘partner perks’ such as 10% cash back from participating local farms, bakeries, coffee shops, and more when using the Walden Mutual debit card and meeting other minimum requirements. Read more here.
Crowdfunding Sites Supporting Regenerative Agriculture
Steward
You are likely familiar with crowdfunding sites such as Republic or Kickstarter. Steward is unique in its mission to promote environmental and economic stewardship through regenerative agriculture. They provide flexible loans to human-scale farms, ranches, fisheries, and food producers looking to propel their operations forward.
all information from their website as of 9/19/2023
Note
The note supports a diverse collection of short-term bridge loans made to regenerative farms and food producers. This is available to retail investors. The minimum investment is $100 with a 5.75% rate (subject to change) and a 9-month term.
Individual Campaigns
Check the website or sign up for the newsletter to be notified as they offer new campaigns on their platform.
What am I Missing?
How do you invest in regenerative agriculture? Email me to share your experience. To learn more about this topic, listen to an episode on the Investing Forward podcast where I interview Iroquois Valley Farmland REIT.
As always, the investments listed on this site are not recommendations but a starting point to help you begin the conversation with your trusted advisors. All investments involve risk and require you to conduct your own due diligence.
Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients nationwide and is based in San Diego. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.
Planning Within Reach, LLC (PWR) is a virtual fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning and ongoing impact-focused investment management. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and its advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.