2. IROQUOIS VALLEY FARMS
Table of Contents
I.
EXECUTIVE SUMMARY
II. COMPANY OVERVIEW
III. WHY WE ARE DIFFERENT
IV. COMMITMENT TO THE LAND
V. INVESTING IN AGRICULTURE
VI. GOING ORGANIC
VII. DELIVERING RESULTS
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4. EXECUTIVE SUMMARY
Why Agriculture?
• Farmland is an highly stable investment with a long-term
trend of steady value appreciation
• Macro global trends are enhancing the economics of farming
through higher crop prices, which in turn leads to
appreciating farmland value
– World population expected to increase 30% over 2000
levels to nearly 8 billion people by 2025
– Arable land in developed nations forecasted to decline 3%
between 2005 and 2030
– Developing countries are shifting to a protein-heavy
western diet which requires more agricultural land to
support
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5. EXECUTIVE SUMMARY
Why Organic & Sustainable Agriculture?
• Conventional agriculture is unsustainable and less profitable
than organic
– Chemical fertilizers and other synthetic inputs are
dependent upon and subject to price swings of finite
natural resources
– Herbicide and pesticide resistant plants, insects, and
diseases are appearing with higher frequency
• Changes in consumer food preferences, driven by health and
environmental awareness, support and increase the need for
organic and sustainable farming
– The organic food market in the U.S. has grown by over 15%
per year in the last eleven years compared to the total
food market which grew 3% per year
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6. EXECUTIVE SUMMARY
Why Iroquois Valley?
• Iroquois Valley Farms has a six-year track record of successful
sustainable organic farmland investing
– Started in 2007, Iroquois Valley was the first company to
connect socially responsible investors to local and organic
farmland (grown from 10 investors to nearly 100)
– Original members have seen investment value increase
2.5x the initial amount, reflecting a 20% internal rate of
return
• Investing in Iroquois Valley Farms provides immediate access
to a diversified portfolio of revenue-producing farms
• Iroquois Valley Farms supports local and organic family
farmers by providing indefinite land tenure through a unique
board-governed corporate structure
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7. COMPANY OVERVIEW
In every deliberation we must consider the impact on the seventh generation –
Great Law of the Iroquois
8. COMPANY OVERVIEW
Business Mission
Iroquois Valley Farms connects local, organic,
sustainable farmers to farmland
The mission is to operate a for-profit farmland
company that positively impacts local, organic, and
sustainable agriculture – focusing on the mid-size
family farmer
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9. COMPANY OVERVIEW
Business Model – It Starts With the Farmers
• The Company partners with local and organic
farmers looking to expand their existing businesses
– Iroquois Valley and the farmer develop the land
opportunities together (no speculative purchases)
• As a farmland company, Iroquois Valley Farms buys
the farmland and leases to the farming partner
• Iroquois Valley provides unique long-term leases,
allowing the farmer to view profit as recurring and
think generationally rather than make year-to-year
decisions
– All farmers obtain organic certification or will exclusively
follow organic practices
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10. COMPANY OVERVIEW
Making an Impact
Impact investments are investments made with the
intention to generate positive social and environmental
impact alongside a financial return
Social
• Expanding and supporting the local farming business
of family farmers through long-term land tenure rights
• Enhancing food security and local economies
Environmental
• Improving the soil, protecting water quality, and
increasing food nutrition through sustainable and
organic farming practices
Financial
• Building a new class of investor capital with a nextgeneration focus by combining economic returns
with social and ecological impacts
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11. COMPANY OVERVIEW
Farm Summary
Farm
Acq.
Year
Acres
Status
County
Hoekstra
2007
81
Organic
Iroquois, IL
Martin
2008
160
Organic
Iroquois, IL
Denker
2011
225
Organic - 2013
Livingston, IL
Pleasant Ridge
2011
76
Organic
Livingston, IL
Old Oak
2012
121
Transitional
Huntington, IN
Rock Creek
2012
80
Transitional
Will, IL
Hedge Creek
2012
80
Transitional
Will, IL
Red Oak
2013
115
Transitional
Boone, IN
Jackman
2013
71
Transitional
Boone, IN
Mooday
2013
59
Transitional
Montgomery, IN
Shiawassee
2013
238
Transitional
Shiawassee, MI
Mary Ellen’s
2013
115
Transitional
Iroquois, IL
One Bottom
Pending
40
Transitional
Iroquois, IL
Taconic Ridge
Pending
163
Pending
Washington, NY
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12. COMPANY OVERVIEW
Long Term Focus For the Next Generation
Investor Base (% of invested capital)
Young Farmer Land Access Program
• Approximately 80 investors
• Investors have a long term
focus as evidenced by 40% of
the capital from retirement
accounts
• The Company generally
partners with younger farmers
that have limited access to
capital and that otherwise
would not be able to obtain
tenure on additional farmland
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13. WHY WE ARE DIFFERENT
Our favorite holding period is forever. – Warren Buffett
14. WHY WE ARE DIFFERENT
Unique Company Structure
Iroquois Valley Farms LLC is a company - not a fund,
limited partnership, angel investor network, or
farmland broker
• The Company takes a multi-generational view of farmland
ownership and encourages members to think long-term
(40% of investments from retirement accounts)
Long-Term
• The company structure allows indefinite ownership so the
View
farmer will not be displaced (no investment termination
date) – only the farmer can purchase the land
Board
Managed
• Seven member board of managers elected by voting
members
• Voting structure reflects long-term vision
• Board protects, enhances, and evolves the triple bottom
line focus
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15. WHY WE ARE DIFFERENT
Socially Responsible Investment
Triple bottom line focused with a mission to provide
opportunities to local and organic family farmer
Sustainability
Proven
Impacts
Young
Farmers
• The unique company structure ensures the farmer will not
be displaced, unlike other funds or partnerships which
eventually need to wind-down or terminate
• Local and organic agriculture reduces environmental
impacts and enhances crop diversity
• Obtained B Corporation certification and was
internationally recognized for positive impacts with a
selection to the 2012 Impact50 (1)
• The successful Young Farmer Land Access program reflects
the Company’s “next generation” focus
• Acquired over $6,000,000 of farmland for young farmers in
the last 12 months
(1) Third-party public database of experienced private debt and equity impact investment fund managers
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16. WHY WE ARE DIFFERENT
•
•
•
•
•
Access to Diversified Portfolio at Net Asset Value
Immediate ownership of existing portfolio of
working revenue-producing farms (not buying into a
blind pool)
Available to accredited investors with low minimum
entry
Buy-in at net asset value (membership unit price
based on appraised value)
No fee for buying membership unit
Asset productivity increases over time (10 years to
return soil to its natural fertile state)
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17. COMMITMENT TO THE LAND
What I stand for is what I stand on. – Wendell Berry
18. COMMITMENT TO THE LAND
Sustainability is Indefinite
Iroquois Valley is the sustainable solution to farmer land access
• Built a corporate entity committed to holding the land for
generations
• Investment capital is open ended and democratically
governed
• Farmland is not treated as a trade
• Farm tenants earn the option to purchase the farm
• Voting structure reflects long-term vision
• Transitioning the next generation of sustainable farmland
investors
The care of the Earth is our most ancient and most worthy, and after all our most
pleasing responsibility. To cherish what remains of it and to foster its renewal is our
only hope. – Wendell Berry
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19. COMMITMENT TO THE LAND
Matching the Farmer Commitment
Farmer Commitment
One generation
Pass to Next Generation?
Iroquois Valley Commitment
Indefinite ownership
Support Multi-Generational Tenure
Traditional Wall Street Commitment
10 years
Well Hopefully…
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20. COMMITMENT TO THE LAND
Aligning with the Farmer’s Interest
Time Frame for Farmer to Restore Soil Fertility
10 – 12 years
Full benefits of organic achieved
Iroquois Valley Next Generation Structure
Indefinite renewal options
5 years
Five-year initial term with evergreen renewal options
supports generational tenure
Traditional Wall Street “Exit” Model
10 years
Well Hopefully…
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22. INVESTING IN AGRICULTURE
Strong Historical Appreciation
• Since 1990, agricultural land has steadily grown in value reflecting a
constant annual growth rate of 6.3% over the 22 years
Value of U.S. Agriculture Land ($ per acre)
Source: United States Department of Agriculture, National Agricultural Statistics Service.
Reflects value of all agricultural land (cropland and pastureland) including buildings.
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23. INVESTING IN AGRICULTURE
Highly Stable Investment
• Since 1960, a 52 year time-span, the value of farmland has increased
in 47 of the 52 years
Year-Over-Year Change in Farmland Value
Source: United States Department of Agriculture, National Agricultural Statistics Service.
Reflects value of all agricultural land (cropland and pastureland) including buildings.
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24. INVESTING IN AGRICULTURE
Rising Global and Domestic Food Prices
• Food prices have been steadily rising both globally and within the
U.S. since 2002
Global and U.S. Crop Price Indices (Indexed to 100 in 2000)
Source: Food and Agriculture Organization of the United Nations and United States Department of Agriculture,
National Agricultural Statistics Service.
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25. INVESTING IN AGRICULTURE
Farm Prosperity is on the Rise
• Since 2005, the prices farmers are receiving for crops is growing
faster than the cost to grow those crops providing more cash flow to
the farmers
Ratio of Crop Prices to Farm Input Cost Indices (Indexed to 1.0 in 2000)
Source: United States Department of Agriculture, National Agricultural Statistics Service.
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26. INVESTING IN AGRICULTURE
Population Growth and Arable Land
• The growth in projected arable land in use is significantly less then the projected
growth in the world population
• Pressures for alternate uses on farmland in developed countries will reduce the
arable land in those regions
World Population Projections (billions)
Arable Land Projections (million hectares)
Source: United Nations Department of Economic
and Social Affairs / Population Division, World
Population to 2300.
Source: Food and Agriculture Organization of the
United Nations, Looking Ahead in World Food and
Agriculture.
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28. GOING ORGANIC
High Growth Organic Food Market
• The organic food market has grown 15.3% per year since 2000,
significantly faster than the total food market which grew 3.2% over
the same period
Value of Organic Food Market ($ in billions)
Organic as % of
Total Market
2000:
1.2%
2011:
4.2%
Source: Organic Trade Association.
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29. GOING ORGANIC
Organic Delivers Better Profits
• Productivity from organic fields increases over time as it takes over
10 years to return soil health to it’s natural fertile state
• Multiple research studies, including reports from independent third
parties, academic institutions, and the USDA, have proven that
organic farming is more profitable than conventional
• The Rodale Institute’s research Profit Per Acre
finds that organic farming is
nearly 3x more profitable than
conventional
– These outsized profits for
organic farms go along with
equivalent yields and better
performance during drought
conditions compared to
conventional systems
Source: Rodale Institute Farm System Trials.
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30. GOING ORGANIC
Organic Provides Social & Environmental Impacts
• In addition to economic benefits for the farmers,
organic farms provide numerous social and
environmental benefits when compared to
conventional agriculture
– Higher labor costs and no synthetic input expenses assist
local economies rather than corporate profits
– No herbicides, pesticides, or synthetic fertilizers
– More nutrients in organic foods for end consumer
– Build rather than deplete soil organic matter
– Use 45% less energy
– Conventional systems produce 40% more greenhouse gases
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31. GOING ORGANIC
Conventional Agriculture is Unsustainable
• Chemical fertilizers used in conventional agriculture are
dependent on limited natural resources, including oil,
phosphate, and potash
– Rising costs of finite resources will directly increase prices of
conventional inputs
• Due to soil degradation from years conventional farming,
more chemical fertilizers are required to maintain the
same yields on conventional farms
• Water shortages and weather instability have greater
impacts on conventional agriculture compared to organic
• Consistent use of herbicides and pesticides are creating
chemical resistant species
• Plant diseases dormant for decades are returning to
attack unhealthy conventional crops
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32. DELIVERING RESULTS
It will never rain roses: when we want to have more roses, we must plant more
roses. – George Eliot
33. DELIVERING RESULTS
Six Year Track Record
• Iroquois Valley Farms has a six-year track record of successfully
acquiring organic and transitional farmland
– Purchased over
1,400 acres of
farmland (200
Owned Acres
additional acres
contracted)
– Over 600 acres of
certified organic
land by end of the
2013 crop season
(includes 61 acres sold
to farming partner)
Note: 2013 transitional acres reflects year-to-date acquisitions.
2013 organic acres includes the Denker Farm (225 acres)
scheduled for organic certification during the year.
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34. DELIVERING RESULTS
Disciplined Investment Strategy
• Waited three years to transition original farmland to organic
certification and prove business model before raising expansion
capital
Acres by State (including contracted farms)
• Find the farmers first –
no speculative
857 238 366
purchases
• Partner with
experienced farmers
with local knowledge
163
• Focused target markets
with steady, stable
expansion
Target
States
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35. DELIVERING RESULTS
Providing Opportunities
• Consistent with the Company’s mission, Iroquois Valley Farms has
connected local and organic farmers with over 1,600 acres
– Of the 1,600 acres, 1,082
have gone to young farmers Acres to Young Farmers
in the last two years
– Farmers immediately adopt
sustainable organic
practices, eliminating the
use of chemicals
– All existing land will obtain
organic certification by
2015
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36. DELIVERING RESULTS
Strong Historical Returns
• A $10,000 investment in the initial private offering in 2007 would be
valued at $24,816 as of the end of 2012 (represents a 2.5x multiple
of capital invested and 19.9% internal rate of return)
Value of $10,000 Investment ($ in thousands)
Note: No revaluation was performed in 2008. The 2008 valuation is estimated based on change in Illinois
cropland value as per the United States Department of Agriculture, National Agricultural Statistics Service.
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37. DELIVERING RESULTS
Growing Investor Base
• After successful private offerings in both 2011 and 2012 the number
of investors grew from 10 investors in 2010 to 70 at the end of 2012
• Iroquois Valley Farms expects to double in size with its current
offering
Number of Investors
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