Real estate investors, there is vast sub-market that should be of great interest to you.
Over 40% of America’s farmland is owned and rented by non-farming landowners creating a $32 Billion a year rental market. However due to an acute lack of information , slow adoption rates of technology in rural america and lack of a marketplace for farmland, it is estimated that landowners undervalue their land rental leaving $8 billion on the table every year.
Jim Pines, former Executive Vice President of Sales and Operations at Great Dane Trailers, and Corbett Kull, Co-Founder of 640 Labs (acquired by Climate Corporation), have created a business that features an online web platform called Tillable.com that is focused on solving this $8 billion dollar problem for landowners.
The primary objective of the Tillable platform is to create a marketplace between landowners and farmers allowing supply and demand to determine fair rental value for farmland rather than speculation and stories at the local coffee shop. Additionally, farmers are granted access to new land opportunities to rent and farmland owners are finally provided with the information that they require to manage the asset for long term profitability. There are few, if any, financial assets that suffer the information deprivation that surrounds farmland today.
“I am a big believer in farmland as an asset class” states Pines in a recent interview. “When you look at the positive diversification attributes that it brings to a portfolio such as negative beta, a strong hedge against inflation, total returns over time and expansion of the ‘efficient frontier’, it’s hard to argue that it should not be 10%-15% of every portfolio. But what’s most exciting to me are all of the arbitrage opportunities that exists in different segments of agriculture today which are simply a function of inefficiencies that are embedded in these marketplaces. Tillable addresses and solves an incredibly large problem”.
It may be hard to believe but less than 1% of all the farmland in America has institutional ownership. Local independent families who own and operate their own properties control the vast majority of our countries farmland. However, this is changing. While the domestic economy in the United States has been booming, the agricultural sector has experienced many challenges primarily due to an extended period of low commodity prices. The result is that net farm income is expected to drop to a twelve year low of $59.5B in 2018 from a high of $123B in 2013. Farmland prices however have remained stable. Farmers now struggle to service existing debt and new land acquisitions to expand their operations are out of reach.
Mr. Kull commented on the role that he sees Tillable playing in this changing landscape. “By creating a rental marketplace for landowners and farmers, the poor farm economy has highlighted the platforms capabilities of matching (landowner) capital surpluses with (farmer) capital needs. Identification of undervalued properties coupled with the assurance of getting market or above market rents creates an attractive value proposition for both existing farmland owners as well as investors who are contemplating land purchases.”
Tillable.com, located in the tech-hub of Chicago, has just completed its first year of existence and already has experienced great results. Over 4000 accounts have been created with close to 30,000 acres listed on the platform for the 2019 growing season. Mr. Kull adds “Remote landowners such as family offices owning multiple farms are a large part of our early success. We simply provide a more efficient and less expensive way to manage properties relative to the traditional alternatives.”
Tillable is a member of the Family Office Networks and is accepting one-on-one farmland management consultations for any members interested in learning more. To schedule a meeting please call (833) 845-5225. You can visit their website at Tillable.com.