August 29, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

U.S.-based Fractal Agriculture is launching a unique agricultural investment platform that takes a novel approach to address the pervasive challenge of gaps existing in farm financing. 

More than 40 percent of U.S. farmland is owned by people 65 and older. And as this population continues to age, it is estimated that 370 million acres will change hands over the next 20 years. 

This transfer puts significant pressure on farmers needing access to the necessary capital to secure their rented acres and expand their operations amid climate uncertainty, higher borrowing costs, and competition. 

The financing gap in acquiring farmland is a challenge that requires strategic interventions to ensure the continued vibrancy and sustainability of agriculture, the vitality of rural communities, food security, and the preservation of agriculture and our food systems. 

“Having capital ready to buy the must-have farms that come across my desk is very intensive. Many farms become available at an inopportune time,” said Kyle Mehmen, MBS Family Farms, an Iowa-based 5th generation family farming operation.

“Access to equity capital gives us the flexibility to plan for growth to support the next generation, and Fractal has become a trusted tool to help me capitalize on land opportunities when they arise to ensure that growth.”

Launched in 2023, Fractal Agriculture aligns its interests with those of the farmer, taking passive, minority stakes in land that farmers already own. The farmer then receives the capital needed to expand their operation while investors access high-quality farmland that is managed by farmers intent on driving higher returns. Fractal also provides discounts for approved regenerative practices that result in healthier soil and boost the long-term financial wellbeing of the farmland. 

To carry this out, Fractal is launching its equity financing platform to serve U.S. row crop farmers following a successful pilot period during which time it raised more than $5 million in capital from proven agricultural and climate investors Trailhead Capital, Serra Ventures, Groove Capital, and Virta Ventures. 

Through this fund, Fractal accesses land appreciation or depreciation, charges flexible annual premiums, and invests over a 10-year period, while the farmers remain in control of their land by staying on the title, directing the farm management, and having the ability to buy-out Fractal at any point after two years, or to roll over the investment at the 10-year term. 

“We strongly believe farmland investment can be a force for good by aligning farmers with capital,” shared Ben Gordon, CEO and co-founder, Fractal. “We believe farmers are best positioned to manage the land and that investors can drive the greatest impact and returns by supporting strong farm businesses.”

“By aligning with farmers, we believe there are nearly 25 times more deals available on the market versus traditional models, allowing us to scale our returns and impact significantly.”

Fractal is also backed by industrial partners including UnCommon Farms, a group helping North American producers build profitable and stable operations as a means of positioning them for multi-generational success. 

“Access to capital and competition for farmland are two top concerns for US farmers,” said Matt Ronken, CEO, UnCommon Farms. “Our organization is laser-focused on helping farmers find solutions to their greatest business challenges and building a community that is second to no one in the industry. Partnering with the Fractal team is in line with our core principles of prioritizing long-term value for future farming generations.”

~ 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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