Area One Farms establishes 28 farm partnerships with its investment fund.
By Andrew Joseph, Farms.com, Photo via Pixabay.com
Area One Farms, a Canadian investment firm seeking equity partnerships with Canadian farmers, has closed its Fund V after garnering commitments of $310-million, raising its total funds raised to $480-million since the fund was introduced.
Along with the equity raised and promised, Area One has established a partnership with 28 farmers/farms across Northern Ontario, Manitoba and Alberta, who own about 150,000 acres and have invested around $300-million.
With plans to deploy an additional $200 million of investment capital, Area One Farms said plans for the investment fund include: irrigation development; tile drainage; equipment upgrades and upgrades to grain storage; farm expansion; and land purchases.
The investment approach, said Area One Farms, is matched to the needs of the individual investing farm, and is structured as an equity partnership between the firm and the famers.
“We’re the only farm investment group that isn’t buying farmland and just leasing it back to farmers,” noted Joelle Faulkner, founder and CEO of Area One Farms. “Instead, we partner in all of the farm purchases and operations, and then share part of our financial appreciation of the farm with the farmer.”
Now in its ninth year of operation, the involvement of Area One Farms includes farm oversight and mentorship to help less experienced and/or less financially stable farmers improve their operation, as the company can use its network to share best practices and financial insights.
Each partnership also comes with an end date, meaning after a pre-determined period of time, the farmer has the option to buy out the share held by Area One and walk away with improved operations and capacity.
Area One believes farmland ownership should remain with farmers and not investment companies.
“In years of poor returns, it can be difficult to make payments if expanding the farm through rental agreements or debt financing,” stated Faulkner, a multi-generation Canadian farmer. “Plus, rental agreements do not typically allow long-term certainty for the farmer.”
Equity investments from Area One Farms have been deployed for many different situations:
- Farm expansions when members of the next generation want to farm;
- Buying out retiring parents and off-farm siblings;
- Replacing rented land with owned land;
- Achieving the scale needed to be financially viable;
- Farmland improvement that takes time and doesn’t cashflow well for debt financing.
Although not selecting farm partnerships willy-nilly when money is offered, Area One Farms will examine each potential opportunity with producers across the country.
“Canada has a great opportunity to help satisfy the growing worldwide demand for food, but it will require innovation and investment,” said Faulkner. “At the same time, consumers want to know their food is produced with sustainable production practices. That includes knowing that farmers will own their land over time.”
Area One Farms currently has farm partnerships in Alberta, Saskatchewan, Manitoba and Ontario. As each farm is unique, partnerships are designed as joint ventures to suit and support the financial and operational goals of each operation. Learn more about Area One Farms at https://areaonefarms.ca/.