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AcreTrader 101

February 27, 2019

Five Ways AcreTrader Helps Farmers

While the value AcreTrader provides to investors is clear, we are often asked "what do you do for the farmers?" The answer is: a lot! Our management team has historically been involved with farming before founding and working at AcreTrader, and we understand many of the challenges today's farmers face. While we don't have a magic wand to solve every farm problem, we do help farmers in a variety of ways.

Ability to Expand Operations

Perhaps most obvious is AcreTrader's ability to offer farmers access to capital.

For example, there are times when a farmer wants to expand his farming operations onto a neighboring parcel of farmland but doesn't have the funds to purchase it. This farmer can present the land to AcreTrader's investors. The investors would then purchase the land and rent it back to the farmer, providing him something he might not otherwise have gotten - economies of scale. He can now use his existing farm equipment and labor on the newly-leased neighboring farm, helping him to grow his business and his bottom line.

Another avenue for expansion would be for a farmer to sell a portion of their ownership in some land in order to purchase additional land. Where traditionally farmers would go to a bank and get debt (backed by their owned-land), they could instead just sell some portion of that parcel on AcreTrader and use the funds for expansion.

AcreTrader can provide another tool for farmers who hope to grow their businesses. It's one of the qualities of our business about which we are most excited. With more financing options, farmers can choose a solution that helps them reach both their financial and personal goals.

Quick Access To Capital For Improvements

Almost 40% of U.S. farmland is owned by absentee owners that rent the land to farmers. In many of these relationships, the farmer pays a cash rent that is typically up-front before planting season.

While some owners will reserve cash for potential capital improvements, others do not or are unable to. This can result in serious problems.

For example, the farmer may have the water pump on an electric well break in the middle of the hot summer. If the owner is unavailable, or does not have cash on hand, this can put the farmer in a very difficult situation. The farmer will either have to pay for the well himself (if he has the cash at hand) or risk his crop dying in the field from lack of water.

When working with AcreTrader and its management partners, our farmers have support when improvements are needed. Making enhancements and maintaining a farm’s drainage, ditches, and roads not only helps the farmer, it improves the resale value of the farm.

In addition to having capital available for on-farm improvements, we move fast. We are always here to answer the call and take action in partnership with our farmers.

Independent Valuation and Information

We work with farms of all sizes and many types of complex situations. From small conservation-focused farms to mega farms, wholly owned parcels to complex family dynamics and ownership structures, we have seen it all.

Importantly, we help farm owners and farmers understand their land value and the options available to them as sellers. While we don't always engage in a commercial relationship with these farmers and owners, we are happy to share our thoughts regarding the value a farm and work through the potential opportunities and options.

Understanding the value of a farm and the process of selling can be complicated and stressful; having someone walk you through it can be an invaluable source of both relief and information.

Respectful Farming and Technology Expertise

Farmers know their own business and their land, and we don't pretend to know better than they do. However, having operational experience over tens-of-thousands of acres has provided us the opportunity to see a lot of problems and solutions.

For example, all the new technology offerings from planters and seed solutions to financial software and satellite mapping can, at times, be overwhelming. We have evaluated a myriad of products, and we have seen a lot that are a waste of time and money - the proverbial "solution in search of a problem."

However, we have also seen some true technological advances and products that can immediately help farmers with their business. Here’s an example recent conversation:

Farmer: “Have you guys seen XYZ’s new software for planting season?”

AcreTrader Farming Operations Team: “Yes, but we noticed they were unable to complete their fundraising round, and they have recently gone through layoffs. It’s likely their product functionality and support will suffer. Have you considered solution ABC instead?”

A farmer's localized history and knowledge of the land is irreplaceable. We help our farm partners through our nation-wide knowledge of the agtech industry as well as the nuances of the legal, land improvement, and farm valuation pieces of the business.

In short, we let farmers do what they do best and support them wherever we can.

National Presence and Brokerage

As mentioned above, we work with farms of all types and sizes. Farmers usually know their local market dynamics better than anyone around, but our national footprint and years of cumulative regulatory, valuation, and brokerage work help us present additional thoughts and assistance that might otherwise not be available.

In addition, we maintain an incredibly unique and large set of relationships with individual and institutional farmland investors alongside a nationwide footprint of partners.

Conclusion

The above are just a few of the ways we work with farmers to make their lives easier and their businesses more profitable. However, every farm is unique, and so are the solutions for its situational improvements.

If you are a farmer or farm owner, or someone interested in learning more about investing in farmland, please don’t hesitate to contact us anytime.