Although demand for organic food continues to creep higher in the United States, there isn’t a lot of farmland dedicated explicitly to organic farming. Certified organic acreage accounts for less than 2% of overall U.S. farmland, according to a 2020 study from Purdue University.
One reason that percentage is so low is that the number of conventional farms transitioning to organic has been on a steep decline in recent years. Data from the U.S. Department of Agriculture found that the number of traditional farms newly transitioning to organic production dropped by about 70% from 2008 to 2019.
Photo Courtesy FarmLand LP
Part of the reason has to do with cost. As the Purdue study noted, organic crop production often involves much higher manure, machinery, and labor costs than conventional farming. Overcoming this challenge means giving organic farmers access to more capital and more significant markets. The USDA is doing its part by investing $300 million in an Organic Transition Initiative to help build new and better markets and income streams for farmers and producers.
The private sector can play an important role as well. There still aren’t a lot of investment firms putting money into organic farming. Still, one that does is Farmland L.P., a Larkspur, California-based company that converts conventional commercial farmland to sustainable and organic farms.
Farmland was founded in 2009 and now manages over 15,000 acres and over $200 million in assets. Part of its money goes into state-of-the-art technologies that can increase efficiency and drive profitability, such as satellite imaging, electronic monitoring, and automated harvesting.
Farmland provides a much-needed service because of the hurdles organic farmers face. As the company notes, becoming certified organic typically takes three years before you start considering profits. Access to capital is necessary. Farmland addresses the problem by investing in four key areas:
- Converting farmland to organic.
- Upgrading infrastructure such as irrigation systems, water rights, fencing, large farm equipment, and other assets.
- Increasing crop diversity by replacing commodity crops with specialty and permanent crops like grapes and blueberries that command higher prices.
- Actively managing farmland in numerous areas, including business management, legal matters, farm management, livestock production, and crop specialization.
Farmland founder and Managing Partner Craig Wichner oversees the company’s day-to-day management, as well as business strategy and investment activity. Wichner grew up in a family that owned and managed apartment buildings and learned about buying them, upgrading them, and enhancing their market value. He brings a similar mindset to organic and sustainable farm investments.
Photo Courtesy FarmLand LP
“At a very simple level, our business model is based on taking high-quality land that’s growing low-value crops and converting it to higher-value crops,” Wichner told The New York Times in an interview.
An example is the company’s 2015 purchase of Willamette Valley farmland in Oregon. Its management team began by reducing the use of synthetic pesticides and fertilizers. It then rebuilt the soil with organic matter, removing carbon dioxide from the air. It improved irrigation systems, upgraded farming equipment, and used aerial imagery to improve decision-making.
Three years after taking ownership, more than half of the land produced certified organic products. Meanwhile, Farmland increased revenue per acre by 18% in 2018 and 34% in 2019.
Photo Courtesy FarmLand LP
Like other farm investment firms, Farmland invites tenant farmers to operate the farms. A Farmland subsidiary, Green Spring Farms, advises farmers on how to farm organically and grow high-value crops they aren’t familiar with.
One hope is that more young people will be interested in organic farming as investment firms like Farmland smooth the way financially. As Wichner told The New York Times, you could look at it the same way you might look at a tech startup having to buy its office building before going into business. Similarly, Farmland supplies people with the land and equipment they need to become successful organic farmers.
