March 16, 2021

By Lynda Kiernan, Global AgInvesting Media

Tech-driven online farmland investment marketplace FarmTogether announced that it has closed on the largest single-asset crowdfunding farmland investment to-date – $22 million for Galaxy Organic Apple Orchards –  a 201-acre organic redevelopment property in Franklin County, Washington.

Through its end-to-end platform, FarmTogether allows individual investors to view carefully vetted farmland investments, review due diligence material, make investments, and securely sign documents, all online – something that FarmTogether founder and CEO Artem Milinchuk sees as an enduring and democratizing force in ag investment. 

“As we look ahead to the next five years, our mission will remain the same,” Milinchuk told GAI News, “to fund the future of sustainable agriculture by removing the barriers that have historically prevented investors from accessing this trillion dollar asset class.”

In January of this year, the company partnered with Leading Harvest – a non-profit organization consisting of stakeholders across the agricultural value chain – companies that farm, own, and/or manage farmland, along with two environmental groups that together have created a new 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.

With this partnership in place, $14.1 million of the deal size for Galaxy is dedicated to development costs to bring the property to maturing and transition it into a sustainable operation, advancing FarmTogether’s commitment to regenerative agriculture. 

Galaxy Orchard will be replanted with two premium organic apple varieties – Cosmic Crisp® and SweeTango® – and will be operated by Stemilt Growers, a leading tree fruit grower, packer, and shipper in Washington State.

Stemilt has also partnered with Apeel, an agtech company familiar to GAI News that has developed a method for extracting molecules from organic agricultural waste and byproducts, such as grape skins that remain after wine production processing or banana peels, leaves, or stems left over after harvesting, to create undetectable edible barriers derived from natural plant extracts.

These barriers significantly slow the process of decay of fresh produce, making each piece of fruit its own microclimate, and extending shelf life without refrigeration, a controlled atmosphere, or preservatives. Under the terms of the agreement, Stemilt will use this secondary skin on the apples produced on the orchard.

Eyeing the Trajectory

Over the course of 2020 FarmTogether experienced 178 percent growth in its user base for its platform, and 3,000 percent growth in investments. And this unparalleled deal reflects how interest in farmland continues to climb as investors increasingly seek out alternative assets that not only carry ESG and sustainability potential, but also present a hedge against market volatility, depressed performance from bonds, and inflation.  

“The continued growth we’ve witnessed validates our mission to provide investors with greater access to farmland investment opportunities while simultaneously channeling funding for the transitions necessary to support sustainable and profitable farming. Through our offerings, we’re able to leave a lasting and positive impact in more ways than one,” said Milinchuk.

“Looking across real estate segments for the last 10 years, farmland has outperformed most segments,” wrote Milinchuk in partnership with Catherine Bowlus, business strategy associate, FarmTogether, in a piece published by GAI News in February of this year. “According to the USDA’s reporting, farmland acreage has fallen by more than 1.5 percent in the last decade while land values and rents continue to rise.  With population growth continuing to drive demand for crops, we’d expect farmland returns from both appreciation and rental income to continue on an upward trajectory.”

This trajectory is apparent in Galaxy Organic Apple Orchard’s target net IRR of 15 percent and a targeted net average cash yield of 19.6 percent, signaling the promise of expected returns for investors and large growers upon exit.

“The growth we experienced over the last year is validation of the market, and that we’re building something very special,” said Milinchuk. “I’m proud of our successes to date, but we’re only getting started. We’re already in the process of building liquidity into our offerings, there’s a lot more to come.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.