By Lynda Kiernan-Stone, Global AgInvesting Media
Ontario-based farmland investment fund AGinvest takes a unique “farm side approach” originating from its founder and president Ken Willmore’s extensive background working on his family farm since childhood.
This grassroots strategy, born of boots-on-the-ground owning and operating farmland, places an emphasis on forming strong relationships with Canadian farming families, providing them with sensible succession planning solutions, value-add strategies, and active agronomy management with an eye toward long-term sustainability of the land.
Over the past five years, AGinvest has had a successful track record of launching four funds – recently releasing a five-year CAGR of 18.03 percent on their first fund and a three-year CAGR of 17.74 percent on their second fund, outpacing the Canadian Index.
“We are here to serve both investors and farm families alike in a manner that benefits all parties. By paving the way to success for the next generation of farmers, productivity will improve, and food security issues can be addressed,” said Kent Willmore, president, AGinvest.
Continuing the momentum, AGinvest announced its ambitious plan to launch its next fund – a CAD300 million (US$223 million) initiative that will allow institutional investors, family offices, endowments, and high-net-worth accredited investors to gain access to the premium Canadian farmland market, rich in water resources, healthy soils, and with the benefits of a warming climate and access to export markets via the Great Lakes St. Lawrence seaway system.
AGinvest stated that this fundraise is designed for investors seeking real returns and greater purchasing power for their portfolio while investing in sustainable farmland initiatives.
The fund will have a closed-end structure, requiring investors to commit their capital for a fixed period of eight years with a clear exit date, but also will include some liquidity options during the life of the fund.
“With our extensive experience and expertise in farmland investment, we aim to provide a risk-adjusted sustainable return for our investors,” said Willmore. “Our investment model is working well, and it has been a pleasure helping the next generation of farmers experience success.”
“Providing our current investors with a quality investment that has performed well has also been satisfying,” Willmore continued. “Lastly, investing in farmland is becoming increasingly important, especially when we are losing vast amounts of productive farmland at unprecedented levels.”
AGinvest went on to explain that this fund offers investors a superior diversification strategy with very low correlation to the majority of other asset classes, a stable and proven hedge against inflation, and a track record that has outperformed most global indices.
The benefits of this low correlation diversification have been expanded upon by Stephen Johnston, director, Veripath Partners, in his article Canadian Farmland Portfolio Construction – Adjusting for Provincial Variations in Sharpe Ratios, published by GAI News in August 2021.
“Given the diversifying (low correlation) features of Canadian row crop farmland investments, advisors tasked with portfolio construction for clients may want to consider the Canadian farmland asset class simply based on its ability to increase aggregate (countrywide) Sharpe ratio numbers – even without considering the other potential real return in the form of the productivity pricing discounts present in the prairies,” stated Johnston. “We believe that such discounts are mean reverting and can be the source of incremental returns over and above how farmland has been performing generally in the Canadian market, and in other developed markets.”
Additionally, strong demand combined with limited inventory have resulted in farmland being able to dodge the fallout from rising interest rates, according to Farm Credit Canada, which noted it has reported consecutive increases in average farmland values in the country for 30 years, and that farm income in the country is expected to reach $98.8 billion this year – an increase of nearly 20 percent over 2021 levels.
~ 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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