January 20, 2014

Written by: Aaron Niederhelman, Managing Director, Entrepreneur Agrarian Fund

The Northeast currently sources only 5% of its food from local farms, yet New England and New York sit on millions of acres of fallow prime farmland (abundantly fertile after decades of underutilization) with unparalleled access to clean water. As consumers increasingly demand better quality foods, and have become more connected to local production, the Northeast is poised to return to profitable farming. Establishing economies of scale through supply of meat to a market gasping for more consistency and volume of high-quality local foods can create a breadth of profitable farms built on diversified crop outputs suitable to the Northeast climate. The results = cash-flow, risk mitigation and increased enterprise valuation.

For the 34 Million in the populous Northeast receiving only 1% of their meat from local production, demand for a consistent supply of local Grass-fed, Organic & Antibiotic/Hormone free meats represents a $3.5 Billion regional market. (Currently, the vast majority of high-quality proteins purchased in the region are produced on international soils.) One way to address this evolving market demand is through holistically raising livestock on local farmland. The educated and affluent locavore consumer base in the Northeast has established it as the ideal region to marry proper sustainable farming practice with annual per capita beef and swine consumption totaling 100lbs.

In recent history, consumers have too often been driven by cost over food value. Reverting to poor nutrition of cheap food so prevalent in the Western diet, the majority are finding themselves continually fatter and chronically more ill. Organic and Natural foods have proven a growing market share where health conscious consumers demand more from their food, and are willing to pay premiums for cleaner sustenance. But what of the 95% not yet paying ultra-premiums or for those who do, but aren’t happy with the blind-faith employed by industrial agriculture? Many of these consumers have begun to explore “local” food production to attain higher quality food and better connect with their family’s food chain, but find themselves hindered by sufficient supply at fair costs. With an estimated 10X market capacity over the current $30B Organics marketplace, this allegiance to a trusted local food source focused first on sustenance is still in its infancy. Capital markets are required to fulfill market demand. Utilizing equity to access favorable debt capital, sustainable agriculture in the Northeast can begin to tap into the potential. Best yet, this recipe for profitable Northeast food production is built on providing investors strong and stable returns that can be replicated in regions with similar consumer demand.

For more: http://entrepreneuragrarian.com

The opinions expressed in this editorial are the author's own and do not reflect the view of Global AgInvesting.