Tim Biello learned to farm by working on other people’s land. It was at the Essex Farm, a sustainable operation in New York powered by solar panels and draft horses that he fell in love with farming with horses. “I feel much more connected with horses than with tractors,” Biello says. He fell so much in love that he bought his own team.
In 2011 Biello began looking for a place where he, his now-wife Jamie Lynn and their horses, Bear and Duke could lay roots. “I wanted to have a place of our own that we could start a farm and a family on,” he says, “We wanted the security of ownership.”
Unfortunately Biello was up against a huge obstacle that is very common for farmers today. There was little access to land where he could begin his farm. A survey of young farmers by the National Young Farmer’s Coalition in 2011 showed that 68% cited the lack of land as their biggest hurdle. “I wasn’t going to qualify with a bank on my farm manager’s income,” says Biello. “I needed to find someone who would work with me.”
Local Farms Fund, a new investment fund put in place to help sustainably minded farmers like Biello gain access to land, was able to help. The fund purchases farmland in the New York City foodshed—covering New York, New Jersey, Conneticut, and Pennsylvania. They work to set up lease-to-own arrangements with matching farmers.
The idea began as conversations were held between Slow Money NYC investors and Working Farms Capital (and organization that manages and develops farmland ventures.) The fund is farmer driven and works with farmers that have a clear plan for a specific plot of land. The land is borrowed from Iroquois Valley Farms, which is a pioneering investment effort in sustainable farming.
The Local Farm Fund cofounders put up the initial money and launched the fund in October 2014. All they needed was a farmer.
In early 2015, Biello was at a conference when he met Kevin Egolf, an investor who manages the Local Farm fund. For Egolf, the conditions were ideal for the fund’s first deal. “Time came to use with great experience in farming, a thorough business plan, and land he identified for his farm,” Egolf says.
In May, the Biellos moved onto a 63-acre farm near Saratoga Sptings with a mix of land, forest and wetlands, and a 1790s farmhouse. The Local Farm Funds purchased the $415,000 property and the Biellos were provided with a 20-year lease. “We’re hoping they can purchase the land from the fund in 5 to 10 years,” says Egolf.
The purchase also included an agricultural easement on the land, which means the farm will forever be restricted from suburban development.
Biello is living a dream. He spent several years finding the perfect land. He even helped setting up the Hudson Valley Farmland Finder, which connects farmers to land in their area with owner looking to sell. Without financial support, land ownership remains a mere dream. “We got a partner in our farm,” he says of the Local Farms Fund. “Yes, this is an investor group, and they have targets. But it’s a relationship.”
In a world where sustainable financing options are hard to come by for food and agriculture ventures, the Local Farm Fund is a welcome addition. This goes for investors as well as farmers. The fund is one of few that is open to ordinary investors. Iroquois Valley Farms is only available to institutional investors and wealthy individuals who qualify as accredited investors.
The Local Farms Fund relies on the Regulation D, Rule 504 securities exemption, which allows for unaccredited investors. The minimum investment is $10,000, a number determined by the board as the lowest amount needed to cover administrative costs.
To date, the Local Farms Fund has raised $250,000—a quarter of the way towards its goal of $1 million by year end. It currently has about fifteen investors, with more conversations underway. The fund’s cofounders anticipate a 3% annual return on the investments— 2% paid in cash annually, and 1% accumulated over the course of the investment to be paid out in full in the end, says Egolf.
Derek Denckla, one of the founders of Slow Money NYC and a Local Farms Fund cofounder, says the group worked hard to create a program that “solves both sides of the problem.” Young farmers need low-interest, flexible capital to buy land, he says, while investors need “some assurance that the financial risk is mitigated.”
By working with skilled farmers who have identified land, Denckla says, “We’re able to support the higher risk investment in a farmer through the low risk investment of land as an stable asset.”
The fund currently has 3 or 4 farmers in the pipeline for future lease-to-own arrangements. In the meantime, the Biellos are settling into their new home. They plan to develop a vegetable CSA first, and over time expand into meat and eggs for local restaurants and grocery outlets. They’re also considering educational programming and tours for the future.