Denver-based real estate company works to help farmers in business, on the land
May 11, 2016
Paul Pitman makes a job out of investing in farmers across the country.
His company has purchased thousands of acres of farm and ranch land in hopes of keeping it in agriculture production.
Pitman started Farmland Partners, Inc., a publicly owned Denver-based real estate investment trust.
Since its 2014 start, his team has purchased nearly 110,000 acres of farm land in 12 states across the U.S., but they aren't trying to put farmers out of commission. In fact, Pitman said, they are there to help.
"About a third of the farmland out there is actually owned and farmed by the same person," Pitman said. "The other two thirds is already owned by remote owners."
Most of those remote owners are older, wealthy people who now live in cities. Normally they're at least a generation removed from the farm, and sometimes even two or three generations out.
Recommended Stories For You
And here's the kicker:
"The average age of owners is 66," Pitman said. "So there is a huge amount of farmland that is going to turn over in the next decades."
That's where Pitman comes in.
"When a farm comes up for sale in a community, the local farmers are going to buy up every piece of land they can possibly afford," he said. "We're going to be there to buy the lands that's up for sale and needs to get sold but nobody else has the capital to invest in it."
He said he doesn't want to compete with local farmers who want the land. He wants to be there to help. He said of the almost 300 farms he's purchased, he's only resold two of them.
"We lease it all back to farmers. We rent it all to farm families," he said. "We're giving a constant and steady source of capital underneath the farm communities across rural America.
The company held 258 farms at the beginning of April in Arkansas, Colorado, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, Texas and Virginia, according to AgProfessionals.
The company announced in April an agreement with Metropolitan Life Insurance Company a $127 million deal that will help Farmland Partners continue to finance farmland acquisitions.
Pitman said the Colorado land they hold is mostly near Burlington and Yuma. They are looking to break into the Weld County market, but recent urban development has made ag land a very coveted commodity in Weld. Most importantly, Pitman said they want to be partners and not take over completely.
"We don't want to displace the local guys. We should be an additional capital source, not a replacement," he said. "We just view ourselves from the farmer's prospective as a good long term landlord and a source of capital."
So far they have 77 separate tenants that lease land from Farmland Partners. Those farmers normally also own some land or lease from others, bringing the total number of acres they farm to about 500,000, Pitman said.
He said they try to put money back into the land, too, so they do require farmers to do a few things when leasing Farmland's land.
"We require that our tenants farm it in the appropriate ways from an agronomic and sustainability standpoint," he said. "That's not ever a problem."
Pitman, who grew up on a farm in the Midwest, said he's really just trying to help maintain the industry in the U.S.
"One of the problems we have is I don't think most Americans think much about where their food comes from beyond the grocery store," he said.
It's important for the U.S. to continue investing in the agriculture industry.
"There's just not many places in the world that help feed the other places in the world," he said. "We're one of the few major countries in the world — Brazil would be the other — that's a consistent net exporter of lots and lots of food." ❖