...............................................................................................................................................
The rain has stopped for the moment on this overcast spring morning, but it’s threatening to come back any time now. Janet Russell, a slim, grey-haired woman, has slipped on a pair of high rubber boots and a big straw hat to venture out in the muddy pasture with a handful of bovine treats.
Calpurnia, a bold Jersey cross-breed heifer ambles up to eat from Janet’s hand. The milk cow’s shy offspring, steers Janet has affectionately christened Bulwinkle and Meatball, forgo the treats for the shelter of the fir trees they've been browsing under.
It’s too early and cold to plant yet, so the beds in her sprawling organic garden are mostly empty, save for some hardy winter greens and perennials waiting for warmer weather to bloom. A multi-hued flock of chickens, guinea fowl and ducks flutter about the yard closer to the house, scratching for scattered grain.
The modest, single-story ranch house on seven acres of farmland just east of Fern Ridge Reservoir that Janet and her husband Jerry Russell share is a picture-perfect slice of Americana. People across the country aspire to a lifestyle like the Russells’, living quietly in the country and growing enough food to fill the pantry and share with friends and neighbors. According to the 2007 Census of Agriculture, retirement farms make up 21 percent of the county’s total farms, with so-called lifestyle farms accounting for another 36 percent.
“I read the Mother Earth News and other publications back when I was a teenager and always wanted to have a small farm,” says Janet. But when she came into an inheritance, Janet and her husband realized they could do more than just buy a snug little place in the country. What sets the Russells apart from other retiree and hobby farmers is the depth to which they have invested in the local agriculture community.
When Jerry and Janet Russell started divesting from the stock market in 2008, they weren't just perceptively saving their finances from the coming crash. They were on the cutting edge of a new trend: agricultural investment.
For the past several years, investors with deep Wall Street roots have been setting up farm-specific investment vehicles. Ceres Partners LLC of Indiana, for example, claims $187 million in assets and manages over 30,400 acres of Midwestern farmland. In 2012, New York-based financial services conglomerate TIAA-CREF, with well over $400 Billion in assets, launched a separate company to manage its $2 billion agricultural investment business.
Farm investment has become an attractive option for investors looking to diversify their portfolios and take advantage of rising crop prices and a concurrent boost in the value of agricultural real estate. But the Russells aren't taking their financial cues from Wall Street.
While heavyweight investors like TIAA-CREF snap up farmland to reap the returns of skyrocketing commodities prices, the Russell have a different goal: supporting the local food web by investing in the dreams of innovative young farmers. Their investment goals mirror those former Investors’ Circle chairman Woody Tasch outlines in his book Slow Money.
The Slow Money concept, sparked by the international Slow Food movement, centers around the idea that the massive accumulation of investment capital on Wall Street, and other financial centers harms local economies. Instead of investing in global funds or corporate stocks, “slow money” builds communities by channeling local dollars into healthy food, small farms and soil fertility.
In 2008, Tasch founded a national nonprofit organization with support from sustainable farming luminaries like organic growing guru Eliot Coleman. Since 2010 Slow Money has channeled over $25 million worth of investments into more than 210 small food enterprises across the globe. The nonprofit has 13 local chapters across the country, including the Washington State-based Slow Money Northwest, and international outposts in France and Switzerland.
The Russells agree with Slow Money’s community-centered agricultural philosophy but are not affiliated with the group. They say that investing in the local food web – the regional network of growers, processors, suppliers and food retailers – is more important to them than chasing the most lucrative investments possible. Taking account of the pressure high profit expectations put on farmers, the couple say a down-to-earth return of around three percent is more reasonable than the inflated returns of up to 15 percent that many Wall Street-backed firms trumpet.
In 2007, Janet became the beneficiary of a trust fund set up by her great grandparents, adding to the couple’s existing stock market portfolio. By 2008, motivated by a shaky stock market and a desire to pursue socially responsible investing, the couple started selling off stocks. “The first thing we did was to get rid of tobacco stocks, then Proctor and Gamble,” says Jerry Russell, an electronics engineer who retired in 2009 from Eugene-based neuroscience firm Electrical Geodesics, Inc.
Noting that the stock market has recovered more quickly from the 2008 downturn than he expected, Jerry says he would still pull his money out of Wall Street if given the opportunity to revisit the choice. “I had been in the market for a long time with money from my career,” says Jerry, a tall, soft-spoken man with wavy brown hair. “I feel that it’s better to own real things."
Informed by Janet’s long interest in sustainable agriculture, the Russells put their money to work addressing two key problems confronting Oregon’s farm community: an aging population of growers and the difficulty young farmers face getting the financing necessary to go into business. According to a 2011 report by the Oregon Department of Agriculture, the average age of those “most responsible for the day-to-day decisions and management of the farm is at an all-time high of 57.5 years old.”
At the same time, according to written testimony Oregon State Treasury Policy Director Michael Selvaggio provided to the Oregon House Committee on Agriculture and Natural Resources this February, “(T)he economic downturn and the credit crisis have erected new barriers for those seeking to purchase or refinance farmland.”
Open Oak Farm
At the time, the couple worked for Hayhurst Valley Organic Farm and Nursery in Yoncalla while farming their own small garden on the side, managing a seed-selling business and running the Seed Ambassadors Project, an organization dedicated to promoting biodiversity by cultivating and distributing heirloom seeds.
“It was perfect timing,” says Still, explaining that he and Kleeger were ready to found their own farm in order to develop their seed business. “We had been working for other farmers for many years and always had the intention to have our own farm.”
“It was kind of love at first sight,” says Jerry. “We were really excited about what they were doing, especially the Seed Ambassadors Project.”
Luckily, says Jerry, Still and Kleeger liked the Brownsville property and agreed to lease it. In order to support Still and Kleeger’s Open Oak Farm, the Russells provided a loan to remodel buildings on the property and purchase farm equipment.
“They have a big investment in making sure this farm is successful,” says Still, adding that the investor couple bought a 40 percent stake in Open Oak as a good will gesture. “They are really supportive that way.”
In addition to a range of summer and winter vegetables, Still and Kleeger and their partner, Cooper Boydston, grow staple crops like hard red and soft white wheat, rye, barley, buckwheat, dry corn and beans that, though once grown throughout the Willamette Valley, had become rare in the region. Their stand-alone seed business, Adaptive Seeds, leases three acres of the property.
Lonesome Whistle Farm
When it came time for Lonesome Whistle to put down permanent roots after farming at three different properties, Broadie and White “hit the jackpot” in meeting the Russells. Though the now-experienced farmers had the skills to run a successful agriculture business, they did not have the income records banks demanded for farm loans.
The Russells, however, spent a year get to know White and Broadie, meeting often to discuss each couples’ visions of an ideal farm. Finally, the two couple went farm hunting together, settling on a 26 acre property on River Rd. between Santa Clara and Junction City with a run-down house and barn.
The investors bought the property and gave the couple a twenty year lease with an option to buy, advancing the farmers an equipment loan. Then the Russells invested additional money to help renovate the house and barn and purchase a contiguous 18 acre parcel.
“They are just really humble people, really kind,” says White. “They’re really down to earth and excited about helping their community become more self-sufficient.”
Broadie and White now grow beans, grains and vegetables on 32 acres of the 44 acre farm, which is transitioning to certified organic cultivation. The couple is active in the Southern Willamette Valley Bean, Grain and Edible Seed Project, a consortium of farmers, non-profit organizations and businesses dedicated to cultivating and marketing organic grains, dry beans, and edible seeds in the Willamette Valley. The project’s goal is to ensure a year-round supply of locally grown staple crops in one of the country’s most fertile agricultural regions.
Branch Road Farm
Before meeting the Russells, Reyna had found a 73 acre farm west of Cottage Grove that seemed perfect for her and House’s plans. “But we knew we had none of the means to buy a place,” she says.
After the investor couple decided to work with Reyna and House, they found that the farm was still available and took a look. “I think we all fell in love with it,” says Reyna of the tour.
With a loan from the Russells, Reyna and House established Branch Road Farm, building barns on the property and establishing a licensed commercial kitchen to produce cheese and other dairy products and process the some of the crops grown on the farm into value added products for sale locally. Reyna says the kitchen, which can be rented, also fills a local need for commercial kitchen space.
Besides their herd of dairy goats, the pair raise annual crops including beans and grains. They maintain a fruit orchard and olive trees as well.
Working with the Russells has allowed Reyna and House to devote themselves to full time farming instead of relying on outside work to support themselves. “Their investment has allowed us to re-create a lot of what we've been doing,” says Reyna, “but stay at home and farm instead of (having to) take off and work outside for somebody else.”
A blossoming investment
Since the 1980s, when many valley farmers went into the grass seed business, local wheat cultivation has shriveled to about 30,000 acres from 270,000. The southern Willamette Valley went from producing more than half the food its communities consumed to about 5 percent. Farms like Open Oak, Lonesome Whistle and Branch Road are reversing that worrisome trend.
Slow Money Northwest – established in 2010 to cover Washington, Oregon, Idaho and Montana – has been part of that change as well. The group, headquartered in Mt. Vernon with an office in Seattle, has placed $5.25 million in investments with about 40 businesses.
$4 million of that money, says Slow Money Northwest Director Tim Crosby, has gone to Oregon businesses, including several Portland-based food producers and Community by Design – an experimental 58 acre farm, agricultural co-op and multi-family community located south of Sherwood. The nonprofit also works with Corvallis-based private equity firm Farmland LP, which manages an investment fund that buys and converts Oregon farmland to organic production, in order to profit from the growing popularity and profitability of organics.
Crosby says Slow Money Northwest connects farms and food producers who need capital with SEC-accredited investors, individuals with $200,000 or more in annual income or $1 million or more in total assets. The nonprofit – which researches the farms and businesses it works with to ensure that they have solid business plans and stable operations – holds events in Seattle, Portland and Eugene to educate the public about their work and attract new investors.
The Russells’ personal, hands-on style of farm investment goes beyond even the Slow Money movement’s approach to small scale investment. Lonesome Whistle’s Kasey White say the Russells are as concerned about the success of her farm as they are about turning a profit on their money. According to Fessenden, whose work with WFFC gives her an unparalleled knowledge of the local agricultural community, the Russells have been very savvy in choosing the growers they have partnered with.
“I think that Sara and Andrew at Open Oak are just incredibly smart and knowledgeable,” says Fessenden, adding that the seed farmers grow more than 300 different plants, including rare heirloom varieties, and have mastered open source pollination. “The amount of knowledge in their minds about different plants just blows me away, because they are so young.”
Broadie and White, she adds, have caught the attention of more experienced farmers in the Bean and Grain Project because of their dedication to growing staple crops. “They’re so committed and they’re so passionate,” Fessenden says, adding that investing in farmers like the Lonesome Whistle couple can have a noticeable impact on the amount of food produced locally. “Investing in these small farms growing crops that we no longer have is very tangible and I hope it will encourage more people do get involved.”
Jerry Russell says that he and Janet have turned their attention from investing in new land towards developing the farms they have partnered with. But there is room for other local investors to make the same kind of impact they have on the local food web.
“A lot of people have a lot of money and it doesn't seem like they know what to do with it,” says realtor Nicola Calvert, who helped the Russells with some of their farm investing. Calvert says that careful study of the local real estate market can turn up good agricultural investments.
While farm prices were affected by the same real estate trends that slowed the housing market, she says, investors from outside of Oregon have been showing new interest in local agricultural real estate. Now is a good time to invest, while interest rates remain low.
The Russells’ investment plan, Jerry says, was helped by the fact that small farms are undervalued, for the time being. “We feel that through organic management of the land it’s going to gain in value,” he says, adding that promoting food production and ending the monoculture of grass seed production that has dominated the valley for decades is of even greater value. “Restoring some food production to the Willamette Valley is important.”
No comments:
Post a Comment