The Best is Yet to Come

Looking Back

Sustainable Farm Partners began to take seed when I was eleven. That was my first summer working with my Uncle Jack on our family farms in N.W. Iowa. I took great satisfaction knowing I was on a tractor cultivating corn while my friends back in Sioux City were riding their bicycles. But more important than my eleven-year-old ego was the work and responsibility handed to me leaving me with a love for farming and most importantly, a deep respect for farmers. That respect came home later that fall when my father came to me and asked how much I made last summer. At a dollar-an-hour I was proud to report that I made $385. He had just finished the books from the harvest when he told me that I made more money that summer than my Uncle Jack made all year.

Fast forward when my extended family told me it was my turn to run the family side of the farm business, as had my father for 30 years. I accepted under the condition that we agreed to begin farming organically. It was unanimous. What I learned over the following years making the successful transition from conventional chemical-based GMO farming to organic brought my understanding of the world of agriculture into clear view and that view was disturbing.

Iowa soils were eroding at an alarming rate under tillage practices that left the soil bare. Iowa groundwater was being contaminated by chemicals causing lawsuits between neighbors. Today, conventional GMO commodity grain prices are at or below the cost of production and, under the push to corporatize agriculture, our current farming system has forced smaller family farmers to get out. This condition is being repeated across the grain belt of this country.

Banking Today

Banks are a critical resource to farmers for both mortgages and operating loans. This year, banks have begun pulling back from making loans to farmers unless they can pledge enough equity to secure the loan. According to RaboBank, many farmland mortgages are at risk of default such that many banks can now only lend to the top 20 percent of farmers who have enough equity. That leaves 80 percent of our farmers and our country’s food security at risk. This is all because of pervasive low conventional grain prices and the growing demand by consumers for healthier food.

Organic Farming Today – It looks good on paper, but will it work on the ground?

The answer is a clear YES. With each harvest I’ve had the opportunity to track the progress of each of our farms. Harvest begins early.

Looking back comparing 2008 conventional GMO crops to 2017 organic crops … the results were stunning.

2017 organic corn yields increased 25 percent.

Organic soybean yields increased 26 percent.

And our organic oats yields increased 69 percent.

While weather events can and do impact yields, the trajectory is clear. Each year as the soil grew healthier so did our yields and their capacity to withstand weather events while increasing nutritional value.

At the same time, the prices we received for our organic grains versus our conventional grains were as dramatic. Comparing 2008 with 2017 after only 6 years in organic production, organic corn prices per bushel increased by 170 percent, organic soybeans increased by 126 percent and our organic oats increased by 125 percent.

Investors with the capacity to think longer-term will find organic grain farming a proven safe haven in agriculture. With yield and prices combined, the net operating income (NOI) on our farms increased by nearly 300 percent. Add to that, over the past 70 years the value of our Iowa farmland has continued to appreciate at a rate that surpasses the S&P 500.

 

The Wealth Pyramid – understanding the roots of all wealth

In a balanced portfolio, organic farmland is a hard asset that is uncorrelated to the stock market and a counterbalance to market gyrations. Farmland is the foundation for all wealth. The Wealth Pyramid exemplifies the three main ways we invest.

Primary Wealth is farmland and agriculture, all that grows above, within and below our soil. Everything we need to survive and thrive comes from Primary Wealth. History is littered with entire cultures that collapsed and disappeared when their agriculture failed. The industrial revolution owes its entire success to the energy released from hydrocarbons that are below our soil because of the relationship between plants, animals and soil over 300 million years ago.

Secondary Wealth represents how human ingenuity went to work harvesting Primary Wealth: from food to fiber to timber and to the energy needed to grow our economy. Secondary Wealth created the middle class causing the greatest economic expansion in human history. All because of soil.

At about the same time Secondary Wealth got established, Tertiary Wealth began to evolve which allows us to invest in Secondary and Primary Wealth increasing our personal treasure and opportunity.

Primary Wealth, the foundation of all wealth, will balance investments in Secondary and Tertiary Wealth.

Sustainable Farm Partners (SFP) and Risk Management

Farming, like all investments, carries some degree of risk. How SFP mitigates these risks is unique and key to the opportunity. Market demand for organic food is the fastest growing section in the grocery store isles. Geographically, SFP’s established farm operating network is spread out to minimize the impact of local weather events. Our distributed farm network is focused on areas with the best available soil. Linking our farming network provides the opportunity to negotiate better offtake agreements and to negotiate greater discounts on inputs. And in the event of any crop damage due to a weather event that diminishes our yields, we have crop insurance covering up to 85 percent of our crop loss paid at our higher organic prices.

We find ourselves at a time in this uncertain world economy and political climate when old patterns of thinking about food and laissez-faire attitudes towards environmental stewardship are no longer sustainable. It is a time when we must rely less on government to set the farming agenda and more on ourselves as individuals to support sustainable organic agriculture. The solution is simple as long as we adhere to the three principles of sustainability: people, planet and profit. If one of these three legs that uphold a sustainable world are missing, it all falls over.

From that first seed planted in me when I was eleven to the success I’ve experienced in how to transform a conventional farm to organic, Sustainable Farm Partners has come to fruition. This spring SFP has three immediate organic farms in our purchase pipeline with more farm purchase opportunities coming in from both our farm teams and from young farmers and existing conventional farmers who want to join our organic farming network. But we can’t do it alone. We need a much bigger team of investment partners to achieve our goal of $50,000,000 to transition 7,000 acres to organic. For details on how to join our investment group, please contact us at- www.SustainableFarmPartners.com or call us directly.

If you are uncertain about organic farmland as an investment, ask famous investor Warren Buffett who stated, “I would rather own all the farmland in the US than all the gold in the world.”

Let me close with the good news that “the best is yet to come.”

 

SFP Contacts:
Fred Richardson, Director of Investor Relations
(505) 663-6034 or Email – fred@sustainablefarmpartners.com

Harn Soper, Director of Farm Management
(650) 804-0198 or Email – harn@sustainablefarmpartners.com

Harn Soper is CEO and general partner in Sustainable Farm Partners (www.SustainableFarmPartners.com) and on the board of the Organic Farming Research Foundation (www.ofrf.org), consults with the Sustainable Iowa Land Trust (www.SILT.org) and a passionate supporter and board member of Vida Verde Nature Education (www.vveducation.org)

Mr. Soper is past president and board member of Soper Farms Inc. Soper Farms is an 800-acre family century farm in northwest Iowa. Under his guidance Soper Farms has transitioned their farms from conventional GM-based chemical farming to organic specializing in row crops. This perspective gives Harn a unique side-by-side understanding of multiple farming systems, their advantages and disadvantages. Today, Soper Farms has three farms in organic production, one in organic transition and one remaining in conventional production.Seeking further farm efficiencies, Harn was instrumental in conducting on-farm energy research including grants from the University of Northern Iowa Farm Energy Working Group. Teaming with Rich Schuler, MS Physics, and lecturer at the Iowa State University, they developed a prototype small-scale energy extracting system from an integrated aerobic and anaerobic compost system.

Harn graduated from Colorado College with a Bachelor of Arts degree in music. As an entrepreneur in Silicon Valley, he was an early adopter in digital recording. He expanded his focus towards digital audio/video technology and Internet asset security with Pinnacle Systems, Avid Technology, Harris Broadcast and numerous broadcasters worldwide including US broadcast and cable companies NBC, ABC, CNN and international media companies including TVB Hong Kong, the Australia Broadcast Corporation, and the BBC and ITN in the United Kingdom.

Upon leaving the technology field Harn returned to the fields of Iowa focusing on his family farms and starting Sustainable Farm Partners. He now serves on the board of the Organic Farming Research Foundation (OFRF), is on the advisory board for Sustainable Iowa Land Trust (SILT) and, through Green America, worked with industry groups developing solutions to increase the availability of non-GMO and organic grains across the supply chain.