April 1, 2022

By Michelle Pelletier Marshall, Global AgInvesting Media

From its very inception, the FarmTogether mission was steadfast and simply put: to radically democratize farmland investing. And its shared common vision – to ensure long-term environmental and economic prosperity for all – was the fibrous thread weaving the founders of the company together. Five years later, under the direction of CEO Artem Milinchuk, the company has $175 million assets under management, 40 deals funded across seven U.S. states and 12 crops, and target net returns of 6-14 percent.

On paper, FarmTogether is a tech-driven, online investment marketplace that enables individuals to invest in U.S. farmland, but in person with Milinchuk, you get the feeling that it’s something much more revolutionary. The company is making strides and taking risks such as its partnership with Backstage Capital, an investment firm focused on backing startups founded by people of color, women, and members of the LGBTQ community. Or its commitment in January 2022 to place 100 percent of its acres under management with Leading Harvest – a non-profit organization that provides the first scalable, industry-wide universal sustainability standard that can be applied across all crops and geographies.

Milinchuk and his team, now 40-plus members strong, focused on the missed opportunity that the agricultural asset class was not reachable by many, evidenced by the fact that despite U.S. farmland boasting a total U.S. market value of $2.7 trillion ($10 trillion globally), only around 2 percent of that dollar value is financially backed by institutional investors.

We took some time with Milinchuk to drill down on that thought.

1). You speak passionately of removing the barriers that have historically prevented investors from accessing the trillion-dollar asset class that is agriculture. What are your top three achievements along this line? 

Over the last several decades, farmland’s performance as an investment has been remarkable – outperforming returns from the stock market, bonds, and even real estate. Even more impressive, farmland has produced a positive return every year since 1991 and is one of the best stores of real value during inflationary periods.

Yet, even today, farmland remains a largely untapped market. And that’s really why we set out to found FarmTogether in 2017.

In 2019, we broke new ground in enabling retail investors to take advantage of U.S. farmland when we launched our first crowdfunded offering, El Nido. Now, accredited investors can browse and invest in a range of commodities and geographies through our online marketplace – for just a fraction of the price of purchasing a farm outright. With the average cost per acre in California nearing $40,000, for example, and the average farm roughly 350 acres in size, this low minimum is significant.

Since the launch of our crowdfunding product, we’ve since expanded the ways in which accredited investors can add institutional-quality farmland to their portfolios, including sole ownership bespoke offerings and, most recently, our Sustainable Farmland Fund. For investors who prefer a more hands-off approach, the Fund enables investors to delegate the choice of investment properties to the FarmTogether team through a single upfront capital allocation.

No matter the product, investors can now reap the benefits of farmland without needing extensive knowledge of agriculture to choose the right deals or the scale to buy an entire farm – and at a time when demand for safe-haven assets reaches new levels. To me, that’s a major accomplishment in itself.

2). Your platform seeks to simplify investing in ag. How does it do this?

FarmTogether does all the heavy-lifting, from sourcing to due diligence to operations, to make the investment process seamless and straightforward.

Through our proprietary sourcing technology and strategic partnerships, our team reviews a mix of on-market and off-market opportunities across the United States to bring only the top investment properties to our platform. Investment properties are then put through a rigorous screening process; our team analyzes end-market access, soil quality, water rights, on-farm equipment, and the farm’s potential for capital improvements, such as adding a secondary water source or transitioning a property to organic. Roughly 2 percent of deals that enter our pipeline are eventually offered on our platform. We then monitor long-term risks by having a comprehensive and conservative due diligence process and partnering with highly experienced operators.

Once a deal is live on our platform, our clients have complete control over where their investment goes, whether it’s a Nebraska corn farm through our crowdfund product, or a wide range of U.S. properties through our Fund products. Our investors also have visibility into their investment through their online portal on FarmTogether.com, so they can closely monitor how their returns are performing within their portfolio.

3). What has been the response? Have you seen evidence of new investors being attracted to the sector, and more opportunities being made available and taken advantage of?

Now more than ever, investors are shifting their portfolios to include more safe-haven assets as inflation reaches historic levels. However, with record-low bond yields, an unpredictable real estate market, and fluctuating gold prices, we’re quickly learning the pitfalls of many popular safe-havens options. This has left many turning to farmland.

Historically, farmland has been one of the most inflation- and recession-resistant asset classes. This performance is driven by the population’s need to eat – no matter the economic environment. In turn, the underlying value of farmland tends to remain stable, presenting a solid option for those looking to safeguard their portfolios against risk. The increasing scarcity of farmland, a result of both real estate development and a changing climate, should only make the asset that much more valuable over time. And, because the value of farmland isn’t often impacted by events that might send markets tumbling, farmland has been historically uncorrelated with most other asset classes, making it a strong diversifier for almost any portfolio.

These factors and more have created the perfect storm for FarmTogether.

Farmland’s inherent value is hard to beat, and we’re witnessing firsthand a growing attraction toward the sector. We’re approaching $200 million in assets under management with the closure of Vista Luna Organic Vineyard, our first wine property. This milestone comes on the heels of the 164 percent growth in registrants we saw in 2021, as more investors look for uncorrelated, high-yielding opportunities.

Beyond our own products, we’ve seen a range of opportunities rise to the scene over the last decade or so, including agricultural ETFs and land REITs. This is only further proof that the sector is gaining mainstream attention.

4). Tell us more about FarmTogether’s commitment to sustainability in agriculture, particularly the importance of it to your just-launched Sustainable Farmland Fund. 

Long-term sustainability and food security are core to our mission of bringing creative and transformative capital to this vital asset class.

In order to continue feeding the growing global population amidst increasingly scarce natural resources, more farmers are turning toward sustainable farming practices. Research shows that through sustainable approaches, farmers can not only preserve their land for generations to come, but they can also magnify their current yields. However, for most farmers, the lack of capital for these upgrades and transitions presents a massive barrier.

This is where our mission comes in.

Sustainability is central to each step of our business, from sourcing to on-farm management to selecting operators who align with our interest in sustainable values. Across each property, we work with our operators to implement climate-smart farming methods, such as micro-drip irrigation technology, cover crops, crop rotations, and more, to make farms both more efficient and more resilient. When applicable, we’ll also work with farmers to transition properties to organic operations. We’re actively looking too for regenerative deals to bring to our platform.

Earlier this year, we announced that 100 percent of our acres had been certified through Leading Harvest’s Farmland Management Standard, an innovative, outcomes-based certification aimed at driving agriculture toward sustainable practices at a large scale across the U.S. and globally. This certification verifies that our land is being managed sustainably across several principles, ranging from soil health and water resources, to endangered species, climate change resilience, community engagement, local governance, etc.

By directly investing in farmland through FarmTogether – whether it’s through our crowdfunding product or our new Sustainable Farmland Fund – investors have the opportunity to help fund sustainable agriculture on a massive scale.

5). Where does FarmTogether go from here in its efforts to keep moving the needle? 

We don’t expect the demand for financially stable, ESG-centric investment opportunities to slow any time soon, and FarmTogether is well-positioned to help meet this gap. We will continue to seek out opportunities that allow us to deliver a pipeline of expanded offerings through a variety of investment vehicles beyond our current products to meet the evolving needs of our investors and enable further accessibility.

A large component of FarmTogether’s innovation in accessibility comes on the sourcing side. Over the next 20 years, 70 percent of farmland is expected to change hands. But as these properties enter the market, the lack of platforms like Redfin or Zillow for farmland makes it difficult to find information and structure and analyze deals. Through our proprietary sourcing technology, Terra, we’re able to identify these newly available properties, underwrite, and execute deals across the country. We’re already leveraging Terra to analyze international properties, and we will continue to scale the technology over the next several years.

Finally, the FarmTogether platform is positioned to deliver and scale a range of new and innovative financial products and services. There is a roughly $700 billion market for natural assets yet no financial rail exists today to help drive this capital at-scale. FarmTogether has the infrastructure to build this rail. We plan to house new natural asset classes, like water, within the next 5-10 years.

ABOUT ARTEM MILINCHUK

Artem Milinchuk, CEO and founding member of FarmTogether, has over 10 years of finance experience in food, agriculture, and farmland. He holds an MBA from The Wharton School, and a BA and MA in Economics from the Higher School of Economics. Prior to founding FarmTogether, Milinchuk was employee #1 and CFO/VP of Operations at Full Harvest Technologies, a now post-Series A B2B platform for buying and selling produce. He previously worked at Ontario Teachers’ Pension Plan, Sprott Resource Holdings, E&Y, and PwC.

*The content put forth by GAI News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. GAI and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.

– Michelle Pelletier Marshall is contributing editor and author for HighQuest Partners’ GAI News and Unconventional Ag, and managing editor for its WIA Today blog. Additionally, she is the company’s Senior PR/Media Manager. She can be reached at marshall@highquestpartners.com.