Iroquois Valley Farms: Keeping Family Farms Going for the Next Generation

Currently, 60% of midsize farm operators lease some or all of their land.  Over the next two decades, approximately 70% of the nation’s farmland – their landlords, essentially — will change hands. This means a high level of uncertainty for farmers who lease, as “their” land may end up rented to others, converted to real estate, or in the hands of Big Agriculture. Iroquois Valley Farms’ mission is to address exactly this issue.

Founded in 2007, Iroquois Valley Farms was the first private company in the United States to connect investors and organic farmland. The idea to form Iroquois Valley came to cofounder David Miller when he returned home to Iroquois County, Illinois after 30 years in Chicago and acquired ten acres of land that had been in his family since 1875.  His reconnection with land and family prompted Miller to apply his 30 years’ experience in structuring alternative real estate investments “to form a sustainable farmland company with generational impact for the family farmer.”

Because healthy soil is key to sustainable farmland, all the land purchased by Iroquois Valley Farms is either organic or being transitioned to organic. Iroquois’ long-term and “evergreen” lease strategy allows farmers to renew their contracts indefinitely (as long as they remain in good standing), while building equity in the land through soil improvement.  The farmers also get the right to purchase after seven years, which enables them to transition to higher-margin, higher-risk specialty crops.

While many researchers tackle drought through the development of drought-resistant seeds, soil health is being looked at increasingly as a highly effective solution. Organic farmers build up the microbial life of their soil through application of natural fertilizers (manure & compost) and crop rotation. Over time the soil composition changes and the organic matter generated acts like a sponge, absorbing and holding water, and the soil is also fed replenishing nutrients. For these reasons, investing in healthy soil is a form of building equity.  Chemical fertilizers can provide a quick fix, but they become addictive. The more they are used, the more soil microbes disappear, leaving “dead” soil.

Two thousand twelve was a year of record drought in many farmland states, including Illinois where Iroquois Valley Farms’ first purchase, Hoekstra Farm, is located. While their neighbors’ corn was stunted, Harold and Ross Wilken of Hoekstra Farm (fourth- and fifth-generation farmers, respectively) had a successful harvest as a result of their investment in soil fertility.  In addition to traditional commodity crops of corn, wheat and oats, the Wilkens also plant higher-value niche products like edible black beans and pumpkins, which are sold to Chipotle and Libby Foods.

Iroquois Valley Farms’ ultimate goal is to sell the land back to the farmers. This year it made its first 61-acre farmland sale to Ross Wilken.

Most farmers in the US are over 65, and within the next 10 years the majority of American farmers will retire. Therefore, young farmers like Wilken form the backbone of Iroquois Valley Farms and represent the future of the company. All ten of the company’s last farmland purchases (totaling more than $7 million) were through its Young Farmers Land Access Program. Dan and Erin Richards (fourth- and first-generation farmers respectively) are other beneficiaries of this program. They lease the Taconic Ridge Farm in upstate New York, purchased by Iroquois Valley Farms in October 2013. The Richards have a herd of 75 Holsteins for organic milk production and have won numerous milk quality awards. (If you drink Horizon Organic, you might be swigging some of their yield.) The security provided by the lease will allow them to expand their herd to 120 cows.

One of the ways that Iroquois Valley Farms finds farmland to purchase is by working with companies such as Horizon Organic to identify mid- and small-size family farmers already practicing organic (or pre-certified organic) farming, and who — like the Richards – stand to lose the land they currently lease. The 163-acre Taconic Ridge farm purchase in Washington County, New York, brings Iroquois Valley Farms’ total landholdings to 1,685 acres in Illinois, Indiana, Michigan and New York and marks the first step in the company’s push to diversify its landholdings into the Northeast (including Vermont).

Iroquois Valley Farms represents a unique opportunity for Clean Yield clients as it is one of a limited number of organizations solely focused on investing in organic farmland. This high risk private placement investment is only suitable for accredited investors who are interested in a high impact investment and comfortable with an illiquid investment, zero distributions and no fixed maturity due to lack of an exit strategy built into the offering. Iroquois Valley Farms is a young company with a growing investor base and a goal of becoming listed on a private or public exchange. It was certified as a B Corporation in 2012.

 

Andy Ambriole: Iroquois Valley Farm Investor, Board Member & Farmer

Andy Ambriole was raised on a conventional hog and grain farm in Indiana. He got his start in organic farming when his family shifted to raising earth worms for fish bait and worm castings for organic fertilizer. In high school Andy purchased his first greenhouse to grow organic tomatoes and later expanded to organic row crops. Today he works 700 acres of land, 250 acres of which he owns with the remaining leased from Iroquois Valley Farms and others.

Five years ago, Andy read an article about Iroquois Valley Farms and was delighted to find that it shared his dream of keeping the family farm alive and well.  Prior to leasing 250 acres from Iroquois Valley Farms, Andy invested in the organization and in 2012 was elected to its Board of Directors. “Iroquois Valley Farms frees up capital that would be tied up in land for farmers to invest in other areas of their business.” Transitioning organic land takes time and money. Andy found Iroquois Valley Farms’ lease rates to be competitive and structured in a way that supports farmer’s investment in the soil, which is expensive the first three years. “Once the land is transitioned then yields go up and you can sell organic at a premium. And the long term control term is an added benefit versus the conventional market.” Andy views Iroquois Valley Farms as a partner rather than a company focused solely on maximizing profit. “The leases are very farmer friendly and geared toward long-term productivity of the land.”