August 25, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

“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,” Artem Milinchuk, founder and head of strategy, FarmTogether, told GAI News in an interview published in April 2022. “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.”

Milinchuk explained, “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 two 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.”

And as farmland marketplace FarmTogether continues to work to democratize agricultural investing by opening the window of opportunity for participation in the asset class, the platform has acquired the 102-acre Hidden Oaks Organic Vineyard located outside Clements, in San Joaquin Valley, California for $3.2 million. 

“With the value of farmland as an asset class continuing to perform well, we’re seeing more investors looking for opportunities in the sector and the newer trend of crowdfunding of farmland investors has really been taking off,” said Quinn Mulrooney, agricultural specialist with Land Advisors Organization, the representative for the seller in this transaction. “In this case, a surge in demand for premium organic grapes and the fertile San Joaquin Valley farm drove pricing and interest from numerous interested buyers.”

Representing FarmTogether’s second wine grape deal, this turn-key, high-cash-flowing asset is situated in the Clements Hills AVA (American Viticultural Area), a sub-appellation of the wider Lodi AVA – one of California’s growing wine regions. 

Comprising 88 planted acres of mature Cabernet Sauvignon vines planted in 2015, the rolling hill terroir of Hidden Oaks is ideal for the production of this most popular variety. 

“Hidden Oaks presented our investors with a rare opportunity to invest in a high-cash-flow, turn-key vineyard, and an asset with historically attractive risk-adjusted returns,” said Gretchen Montague, asset manager, FarmTogether. “FarmTogether saw growth opportunities in the organic wine sector and utilized existing relationships within the industry to find top-tier organic vineyard management which included existing relationships with winery clients in Lodi.” 

Historical data shows that over the past five decades, ROI on farmland investments have outperformed the CPI by 7.74 percent on average, while generating both attractive absolute and risk-adjusted returns and providing a hedge against inflation and economic downturns. It is this market, valued at $2.7 trillion, that FarmTogether is tapping into to open unparalleled access to institutional-quality farmland assets through a variety of products, having funded over $170 million in AUM through crowdfunding offerings, 1031 exchange, sole ownership bespoke offerings, and its Sustainable Farmland Fund launched in March 2022.

“The current economic environment highlights why now is an attractive time to diversify into assets with historically strong risk-adjusted return profiles,” stated FarmTogether in their article, An Update on FarmTogether’s Sustainable Farmland Fund – Diversified Access to a Resilient Asset published by GAI News in June of this year. “Meanwhile, as the world grapples with the pressing challenges of food security, the demand for innovative financial solutions in agriculture has never been more evident.”

Transparency, regenerative production, and ESG have also become increasingly important considerations for investors when committing capital. Through this acquisition, FarmTogether has gained an asset with pre-existing USDA Organic certification that was assessed by California Certified Organic Farmers (CCOF) while managed by the previous owner and operator.

There also is the potential for further certification with LODI RULES, a regional sustainable label that is increasingly growing in popularity among the state’s winemakers that encompasses environmental, social, and economic sustainability factors in grape growing.

Additionally, as with all FarmTogether properties, Hidden Oaks will be managed within the scope of FarmTogether’s Leading Harvest Certification – a non-profit organization consisting of stakeholders across the agricultural value chain – companies that farm, own, and/or manage farmland, along with environmental groups that together have created an entity providing the first scalable, industry-wide universal sustainability standard that can be applied across all crops and geographies to address issues from climate change to biodiversity, and the resilience of cropland and communities.

“The acquisition of Hidden Oaks aligned with our investment philosophy around sustainability and our commitment to investing in sustainable agriculture,” said Boyd Corkins, head of asset management, FarmTogether. 

“The property is certified against both the USDA Organic and LODI RULES standards, lending significant value-added potential to the grapes harvested.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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