When Slow Money founder Woody Tasch asked me in June 2014 why the Sustainable Iowa Land Trust (SILT) hadn’t applied to the entrepreneur’s showcase yet, I used my best deadpan voice.
“Because we’re not entrepreneurs, Woody. We’re a nonprofit.”
I soon learned that we can and must bridge that gap. That was the day SILT rocked the house with our story and 800 Slow Money supporters voted to give us an interest-free loan in the “Beetcoin” campaign.
“We want to invest in SILT!” people said as they patted me on the back.
“The money’s going to come…soon, you’ll see!”
But it didn’t. And it couldn’t. These folks weren’t interested in giving their money away, so how could they invest in our 501c3 nonprofit? In this massive land transfer race, could impact investors provide the tailwind we need to protect Iowa land to grow healthy food?
My husband, Paul, and I retired back to Iowa in 2010. We were acquainting ourselves with 80 acres we’d bought years before, learning how to restore prairie and improve neglected timber. But when we looked beyond our little slice of heaven, we saw that feed corn and soybeans blanketed the countryside and “hog barns” now housed up to 13,000 porkers at a time.
Soon no one would remember growing up among family farms, helping each other out, watching their community evolve and grow. My husband and I don’t have those kinds of roots, but we witness the benefits of them every day in the small towns that are still hanging on. I often envy them.
We joined Worldwide Opportunities on Organic Farms (WWOOF) and Practical Farmers of Iowa. We hosted dozens of aspiring farmers every summer. Almost every one of them was talented, hardworking and smart. And not one of them would ever own land. Their chances of finding a retiring farmer who’d pass on his land affordably to them was just that – random chance. Even Iowa farm kids were expected to buy out their non-farming siblings at market rates.
Next generation farmers, Ed and Tricia Jackson are transitioning 32 acres of conventional corn to organic hay through a SILT program. (pictured with their rolling hen house)
Inspired, we decided to purchase some land to preserve and we’d get a second bite of the apple by putting a beginning sustainable food farmer on it. Iowa grows ethanol, feed and corn syrup, but imports 90 percent of its food, so this kind of farming is uncommon here. We found a guy who wanted to grow fruit, nuts and livestock in a way that mimicked nature. We bought him a farm he’ll buy from us for the same price when he can pull together $1 million of credit. Still, four years into it, $31,000 each year goes just to interest on 65 acres’ worth of debt, an annual income well beyond most beginning farmers.
He wanted this land because it was close to a university town, but that meant it’s slated for development. So we planned to put a conservation easement on it while we still owned it, to keep our “young farmer” from cashing out in 30 years. This was our legacy after all. We didn’t want 30,000 fruit trees, and fertile land that had nurtured happy animals getting paved over for one person’s very sweet retirement. Protection meant the next farmer wouldn’t need the sheer luck our guy had struck finding us. Random chance would drop out of the equation. The easement would reduce the cost and require food production. Anyone willing and able to farm it could. Permanent protection takes land speculation off the table. This and the mortgage interest puzzle were the strings we started to pull.
Coming Across a Crisis
I knew one quick call to Iowa’s biggest land trust and we’d be done. “Hello? I’d like to talk to someone about permanently protecting a farm….Yes, we want it to stay in farming, but, well…it’s not your normal … Yes, as a farm. We’ll donate the easement…But it’s like a giant orchard ….You don’t? But…well…OK. Do you know anyone who does?”
I called every conservation and farm group in the country I could find. No one would protect the land and the food-producing perennials on it. We couldn’t find any basic market streams of money flowing into family-scale farmland ventures. No one would finance our loan, for example, when we admitted it was for food. Not corn and bean? They’d hang up. Zooming out, we saw the farm to fork movement growing exponentially, but no one cared what happened when a retiring market farmer sold his land to developers, forcing the next farmer to travel that much farther to her market. No one appreciated that this local food movement they loved starts with land, ends with waste and needs access to capital to survive. If we didn’t wake up soon, the local food movement would become just another fad, and everyone would wonder why their farmers market had shriveled up.
That began two years of conversations with farm and food advocates, planners, legislators, academics, environmentalists, young farmers, businesspeople, lawyers, and developers. We explored LLCs, LLPs, LLLPs, family trusts, bank trusts and restrictive covenants. We concluded that a nonprofit land trust was the only way to create a permanent, structural solution to serious structural problems – land speculation’s devastating effects on Iowa’s healthy food supply, environment and opportunities for young people and mortgage interest that sucks those farmers dry from Day 1. The Sustainable Iowa Land Trust was born, and there we were, the belle of the ball at the Slow Money National Gathering.
The Investor Puzzle
Leaving the Slow Money gathering, Paul and I now imagined new possibilities. The clock’s ticking. An estimated $150 billion of Iowa land is going to change hands in the next 20 years, leading the trend of the 60 percent of all farmers retiring by 2020. But Iowa has one billionaire and a handful of millionaires and we didn’t know any of them. We couldn’t protect all the land we needed to with the little money we had. We needed to get innovative fast.
Two years into it, my education had just begun. The gathering introduced me to a veritable business brain trust. From E.F. Schumacher, I learned about nonprofit, wholly owned title holding companies. (This model also allows us to spin off Community Land Trusts later.) RSF Social Finance taught me about interrelated c3s, c2s and for-profits. Sustainable Farm Partners warned me about Iowa’s anti-corporate farming law limiting land ownership by private investors. Iroquois Valley Partners and others said not to underestimate the challenge of matching farmers with farms. Talking to Villicus while driving Iowa’s backroads, we came upon the idea of a related for-profit farm management company. That was it!
During our first year, the solution evolved as SILT accumulated experience – 40 landowners are now discussing donating more than 4,000 acres of land or easements to grow healthy food. Another 3,000 acres of organic corn are in the queue. We’ve already acquired two farms and matched one with next generation farmers. We’re building a solid, statewide organization that’s turning heads with a model Iowans have never seen. But altruism only goes so far, and landowners have questions. Where will their rent come from if they cancel the lease with their corn farmer? What else could their land grow? Who will help them? They hesitate for good reason. We needed to reduce their risk and monetize their benefits. SILT is in the perfect position to do so.
Our Ground Game
This year, we plan to launch SILT Farm Management, designed to:
• manage farm income and outflows,
• promote SILT farms nationally to sustainable food farmers,
• partner with private contractors to provide landowner services on SILT-eased land,
• purchase, protect and sell land to sustainable food farmers. With enough resources we could strategically target purchases that help build SILT farm communities.
• build a trademarked SILT farm brand of products with royalties,
• help build cooperative enterprises,
• offer private-sector solutions to Iowa’s water quality challenge.
Why invest in SILT Farm Management?
• We’ve identified a market. Scores of Iowans already have already volunteered to reduce the value of their land just to make fresh, natural food a permanent part of the landscape, yet foundations and governments have not caught up or caught on.
• Profitable models exist. Farm management is a successful industry, so why not a company dedicated solely to SILT properties?
• SILT marries conservation with food farming to produce opportunity. Impact investors know the power of patient capital in both. When we secure land for this kind of farming, we create a permanent solution that provides multiple community benefit returns on investment (CBROI)
• increases the supply of fresh food, improving public health,
• improves water and soil quality through diverse, job-creating, food producing buffers,
• offers a community-based alternative to our current agribusiness model, right in the belly of the industrial ag beast
• supports generations of food farmers locked out by land prices,
• rebuilds rural communities,
• builds a system from the ground up that grows tomatoes instead of Twinkies,
• creates a replicable model.
Ground-truthing: How much, for how long, for what Return on Investment (ROI) or (CBROI)?
Start-up capital will allow us to hire a small staff and provide overhead for 5 years: a land specialist with real estate license, a marketer and an administrative assistant, bringing legal in house as soon as feasible. It’s economies of scale: The sooner our footprint grows, the faster we access steadily increasing consulting, marketing and land transaction revenue streams with a visibility byproduct that aids our 501c3. By year seven we expect to service enough farmland to turn a profit and begin repaying investors ending in year 15. By year 16, profits begin supporting the 501c3. Meanwhile, our 501c3 will continue educating the public and receiving land and easement donations. We must generate enthusiasm to seed our endowment. “In perpetuity” is a long time, but it’s the promise we make. This plan brings investors and philanthropists together to fulfill that promise.SILT leadership includes farming, nonprofit, real estate and legal expertise, but we lack the business, finance and Slow Money investor minds that can help us create the best model to accomplish this work. Contact us at email@example.com or (319) 480-4241 and let’s talk about how we can put healthy food farming back into the landscape of the best soils in the world – Iowa.