September 2013

0
IROQUOIS VALLEY FARMS
Table of Contents
I.

EXECUTIVE SUMMARY

II. COMPANY OVERVIEW
III. WHY WE ARE DIFFERENT
IV. COMMITME...
EXECUTIVE SUMMARY
Iroquois Valley Farms connecting investors with organic farmland and family
farmers since 2007.
EXECUTIVE SUMMARY
Why Agriculture?
• Farmland is an highly stable investment with a long-term
trend of steady value apprec...
EXECUTIVE SUMMARY
Why Organic & Sustainable Agriculture?
• Conventional agriculture is unsustainable and less profitable
t...
EXECUTIVE SUMMARY
Why Iroquois Valley?
• Iroquois Valley Farms has a six-year track record of successful
sustainable organ...
COMPANY OVERVIEW
In every deliberation we must consider the impact on the seventh generation –
Great Law of the Iroquois
COMPANY OVERVIEW
Business Mission
Iroquois Valley Farms connects local, organic,
sustainable farmers to farmland
The missi...
COMPANY OVERVIEW
Business Model – It Starts With the Farmers
• The Company partners with local and organic
farmers looking...
COMPANY OVERVIEW
Making an Impact
Impact investments are investments made with the
intention to generate positive social a...
COMPANY OVERVIEW
Farm Summary
Farm

Acq.
Year

Acres

Status

County

Hoekstra

2007

81

Organic

Iroquois, IL

Martin

2...
COMPANY OVERVIEW
Long Term Focus For the Next Generation
Investor Base (% of invested capital)

Young Farmer Land Access P...
WHY WE ARE DIFFERENT
Our favorite holding period is forever. – Warren Buffett
WHY WE ARE DIFFERENT
Unique Company Structure
Iroquois Valley Farms LLC is a company - not a fund,
limited partnership, an...
WHY WE ARE DIFFERENT
Socially Responsible Investment
Triple bottom line focused with a mission to provide
opportunities to...
WHY WE ARE DIFFERENT
•

•
•
•
•

Access to Diversified Portfolio at Net Asset Value
Immediate ownership of existing portfo...
COMMITMENT TO THE LAND
What I stand for is what I stand on. – Wendell Berry
COMMITMENT TO THE LAND
Sustainability is Indefinite
Iroquois Valley is the sustainable solution to farmer land access
• Bu...
COMMITMENT TO THE LAND
Matching the Farmer Commitment
Farmer Commitment
One generation
Pass to Next Generation?
Iroquois V...
COMMITMENT TO THE LAND
Aligning with the Farmer’s Interest
Time Frame for Farmer to Restore Soil Fertility
10 – 12 years
F...
INVESTING IN AGRICULTURE
Buy land. They ain't making any more of the stuff. – Will Rogers
INVESTING IN AGRICULTURE
Strong Historical Appreciation
• Since 1990, agricultural land has steadily grown in value reflec...
INVESTING IN AGRICULTURE
Highly Stable Investment
• Since 1960, a 52 year time-span, the value of farmland has increased
i...
INVESTING IN AGRICULTURE
Rising Global and Domestic Food Prices
• Food prices have been steadily rising both globally and ...
INVESTING IN AGRICULTURE
Farm Prosperity is on the Rise
• Since 2005, the prices farmers are receiving for crops is growin...
INVESTING IN AGRICULTURE
Population Growth and Arable Land
• The growth in projected arable land in use is significantly l...
GOING ORGANIC
Eating is an agricultural act. – Wendell Berry
GOING ORGANIC
High Growth Organic Food Market
• The organic food market has grown 15.3% per year since 2000,
significantly...
GOING ORGANIC
Organic Delivers Better Profits
• Productivity from organic fields increases over time as it takes over
10 y...
GOING ORGANIC
Organic Provides Social & Environmental Impacts
• In addition to economic benefits for the farmers,
organic ...
GOING ORGANIC
Conventional Agriculture is Unsustainable
• Chemical fertilizers used in conventional agriculture are
depend...
DELIVERING RESULTS
It will never rain roses: when we want to have more roses, we must plant more
roses. – George Eliot
DELIVERING RESULTS
Six Year Track Record
• Iroquois Valley Farms has a six-year track record of successfully
acquiring org...
DELIVERING RESULTS
Disciplined Investment Strategy
• Waited three years to transition original farmland to organic
certifi...
DELIVERING RESULTS
Providing Opportunities
• Consistent with the Company’s mission, Iroquois Valley Farms has
connected lo...
DELIVERING RESULTS
Strong Historical Returns
• A $10,000 investment in the initial private offering in 2007 would be
value...
DELIVERING RESULTS
Growing Investor Base
• After successful private offerings in both 2011 and 2012 the number
of investor...
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Iroquois valley farms introductory presentation 2013 09-23

  1. 1. September 2013 0
  2. 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 1
  3. 3. EXECUTIVE SUMMARY Iroquois Valley Farms connecting investors with organic farmland and family farmers since 2007.
  4. 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 3
  5. 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 4
  6. 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 5
  7. 7. COMPANY OVERVIEW In every deliberation we must consider the impact on the seventh generation – Great Law of the Iroquois
  8. 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 7
  9. 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 8
  10. 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 9
  11. 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 10
  12. 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 11
  13. 13. WHY WE ARE DIFFERENT Our favorite holding period is forever. – Warren Buffett
  14. 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 13
  15. 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 14
  16. 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) 15
  17. 17. COMMITMENT TO THE LAND What I stand for is what I stand on. – Wendell Berry
  18. 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 17
  19. 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… 18
  20. 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… 19
  21. 21. INVESTING IN AGRICULTURE Buy land. They ain't making any more of the stuff. – Will Rogers
  22. 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. 21
  23. 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. 22
  24. 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. 23
  25. 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. 24
  26. 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. 25
  27. 27. GOING ORGANIC Eating is an agricultural act. – Wendell Berry
  28. 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. 27
  29. 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. 28
  30. 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 29
  31. 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 30
  32. 32. DELIVERING RESULTS It will never rain roses: when we want to have more roses, we must plant more roses. – George Eliot
  33. 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. 32
  34. 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 33
  35. 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 34
  36. 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. 35
  37. 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 36
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