Impact & Income - Building The First Sustainable Farmland Investing Company with Artem Milinchuk: An EOFire Classic from 2021

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Content is Profit. Today, we're pulling a classic episode from the archives, and we'll be breaking down impact and income, building the first sustainable farmland investing company. To drop these value bombs, I brought to Artem, Milinchuk, and EO Fire Studios. Artem has over 10 years of finance experience in food, agriculture, and farmland. Prior to founding Farm Together, Our team was a number one employee and CFO slash VP of operations at full harvest technologies.

0:39In today's value bombs, Fire Nation, investing in farmland is investing into the planet, the future, and the one thing that is unchangeable in our lives, eating and drinking water. And investing in farmland helps farming families and entrepreneurs expand to cutting edge agriculture, which is key, and so much more. And a big thank you for sponsoring today's episode goes to our team and our sponsors. Imperfect Action, hosted by Steph Taylor, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Imperfect Action is a bite-sized online marketing podcast for business owners who want to get straight to the point.

1:12Join Steph Taylor as she answers all your business marketing questions. Recent episodes include five must-knows to sell your online course, program, or membership, and four steps to grow your email list for your next launch. Listen to Imperfect Action wherever you get your podcasts. Ever thought about giving a TEDx talk? It's one of the most powerful ways to share your message with the world. And four-time TEDx speaker, Taylor Conroy from Thought Leader can help you get there. Visit thought-leader.com slash fire to join Taylor's free training, where he teaches you how to land a TEDx talk and spread your message to millions.

1:46Artem, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Yeah, so John, I would say it's flexibility. I think a lot of people agree with things like you need to persevere, you need to be relentless, you need to be smart, you need to execute, and all those things are very much true. But I think if you, in that pursuit, people forget that they need to really kind of be very nimble. And the thing about doing a startup is that you have no idea kind of what people truly want, they truly care about. So you need to like really be receptive and very flexible as well.

2:25And I think that oftentimes gets missed in this like beating your chest, you know, success at all costs, you know, no matter what, keep going. And so people glaze over that. And I think that's really important. I think flexibility is huge, Fire Nation. That's why I always encourage people to ask their audience, what is your biggest struggle right now? And listen to their biggest struggles, and then you provide the solution. And you may need to be flexible on that, because you don't know what they're going to say, and that's how you can win. And as I talked about during the introduction, Artem, we're talking all about impact and income today, about building the first sustainable farmland investing company.

3:02So this is a very unique topic, but very important to talk about because why the heck, Artem, would anybody want to invest in farmland? Yeah, that's a great, somewhat loaded question because I kind of want to turn it back to you and say like, why would anyone think about investing into anything but farmland? Ooh, I like it. Tell me more. Because when you think about it, you know, farming and farmland is the oldest asset class. Our whole civilization, right, we as people have emerged once agriculture emerged. And so when you're building a portfolio that needs to represent the actual underlying reality, I know sometimes we forget that finance is supposed to represent the real world.

3:43The first thing that comes to mind is food and water, and that's what farmland is. So really, it's the bedrock of civilization. We think it should be the bedrock, kind of the number one addition to people's portfolios. Bedrock, Fire Nation, the absolute bedrock. And I like that kind of multi-use of the word. and we're going to be talking more about exactly what that impact looks like and what the income could be looking like in the investors' pockets. But first off, what exactly is farmland investing? Let's get specific on this. And then how does farm together actually work? Absolutely. So farmland investing is very much a real estate investing, but it does have some unique qualities.

4:27Real estate investing means that when you buy a property, you typically expect its price to appreciate either through just long-term trends or through improvements. And then you expect some sort of income from a rental income or some other revenue streams. And farmland is very similar. So something that a lot of people don't know is that 40 % of farmland today is rented already. So farmers are very comfortable renting and renting out land. When you invest in farmland, you buy a piece of an existing farm, that farm is typically rented out or contracted out to an experienced farmer, and you as an investor receive cash flows from that land and participate in price appreciation.

5:09And farmland has appreciated by almost 6 % in the last 50 years annually. Fire Nation, these are the kind of numbers and the type of opportunities you need to be thinking to be outside of the box? Because that's kind of my next question, Artem, is how exactly does this, and by this I mean farmlands, compare to traditional investments? We're talking like stocks and bonds, which would be kind of considered the more traditional investments that, you know, of course, these days with things like GameStop and all these other crazy things going on in the world, are stocks really that traditional? Like who knows what the future is going to hold?

5:42But how does farmland compare? Absolutely. And when we talk about returns, we also want to talk about risk. So investing is two-sided coin. Since 1992, farmland has delivered on average annual total returns, which is price appreciation plus income of more than 10 % annually. And that actually compares really favorably with stocks, with bonds, even with real estate, with infrastructure, timber, other asset classes. Farmland actually outperformed almost all of them. And then on a risk basis, which, you know, another way to think about is volatility, farmland volatility is only about 7 % in that period, which was much better than stocks, and very comparable to real estate and bonds.

6:26So listen, we have a lot that I want to get to after we take a little break here. But before we do, I mean, let's really kind of dive more into how farm together works. Like what is farm together? How does it specifically work? Like, any examples you can give to kind of, you help myself and Fire Nation really understand this process? Yeah, absolutely. So Farm Together is a platform that makes it easy for people to invest in farmland because unlike stocks, unlike bonds, unlike crypto, there's actually very few vehicles for people to get exposure to invest in this asset class. So it's online platform.

7:00Right now, it's mostly accredited investors, but we're working towards making it accessible to non-accredited investors as well. And the way it works is that we have an in-house farmland investment team that looks through hundreds, thousands of opportunities, selects the best ones, and then buys the land outright. And the reason that the land is typically for sale is due to a very tectonic shift in ownership happening. Farmers are approaching age of 60. They're all retiring. Kids don't want to farm. So a lot of land is actually coming to the market anyway. So we're just acting as another buyer.

7:33Then we find another farm or farming family to farm it and then that farm is put into a separate vehicle at Delaware LLC and then we put a package around it explaining why we think it's a good deal we put it online on the platform you as an investor go online you read through the materials very simple easy to understand you can listen to webinar and ask questions and then you can go online and invest in a matter of minutes through integrations with you know online signing platforms with banks so You can literally become a farmland owner of an almond orchard in California in three minutes. An almond orchard in California.

8:11I mean, I eat almonds every day. I would kind of be cool knowing that as I'm eating almonds, I'm like, maybe I'm eating my own almonds for my own investment. And I love how you just use the phrases bedrock, Teutonic shift. I mean, you've really committed, Artem, to this whole idea of land, farmland, the world that we live on, the ground beneath our feet. And Fire Nation, we're going to be talking about some more specifics along these lines. when we get back from thanking our sponsors. If you're a startup with big goals, then it's important to find a CRM that can keep up, but I get it. When you're in startup mode, it can be tough to know which platform is right for you and your business.

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11:12You're going to love this product, but if for any reason you don't, they're offering a 100 % money-back guarantee, plus I got you 15 % off your first order and free rush shipping. Visit fieldofgreens.com and use promo code FIRE. That's promo code FIRE at fieldofgreens.com Fieldofgreens.com Artan, we're back and let's get real about how farmland can fit into the universe with other assets, with other alternatives. We're talking traditional real estate or maybe even like real assets like gold, silver, et cetera. Break this down for us. I like that you use the word alternatives because that's actually one of the defining trends of investing in 21st century.

11:55the traditional stocks and bonds have been you know over overbought a little bit I would say but more so that there is a lot of other asset classes that are uncorrelated and so people are really looking to get into alternatives real estate farmland art crypto exotic cars you know you name it and so farmland I think when we look at this sort of portfolio composition and you know to get a little technical and you look at you know the what's called the sharp ratio the risk to return or we look at the total contribution of the portfolio, then adding farmland to your portfolio increases that sharp ratio, meaning the returns to risk.

12:34So another way that farmland improves your kind of total portfolio composition. We're not arguing that you should replace your whole portfolio with farmland, we still think stocks and bonds should be kind of the core of your portfolio. But adding alternatives can really sort of introduce that uncorrelated nature to your portfolio as well as enhanced returns. Pharma is also great protect against inflation, has done really well in periods of high inflation and in periods of recession. So we think it kind of fits in almost anyone's portfolio. And I really want to hone in on the words uncorrelated investments, Fire Nation.

13:13I mean, he mentioned exotic cars. He mentioned, I mean, well, he didn't mention, but I'll mention shoes, Pokemon. I mean, these are all like, you know, kind of crazy things that people are investing in now because maybe they love it or they have a passion for it. They want to really dive deep into it. And this is like another example of an uncorrelated investment. So your whole portfolio doesn't just all go up together, you know, when everything's going great, like in the corn and corn stock market, and then all crash together when the stock market inevitably crashes. Because of course, you know, we have the ups and the downs and the recessions and the, you know, even depressions that all are going to be part of our futures.

13:47That's just the world that we live in if we live long enough. So uncorrelated investments can be super meaningful. And you recently had a partnership signing with Leading Harvest as well as some others. So talk about that partnership, what it means and why Fire Nation needs to know about it. Yes, Leading Harvest is a new standard that was created last year. And it is a sustainability standard for investing in and managing farmland. When you think about farmland and farming overall, it actually touches on so many key themes around sustainability and broadly the UN Sustainable Development Goals, which is kind of the overarching global framework that, you know, companies that want to do good in the space follow.

14:28And those goals are very simple, things like decrease hunger, improve the quality of our food, improve the quality of water, things like that. And so the leading harvest standard is a third party, verifiable, auditable standard that is very action oriented and very measurable. So it's a number of metrics such as have we started using less fertilizer to grow the same amount of food? Have we started using water more efficiently to really measure ourselves, the industry on how well we use farmland? And so we're excited to join that standard as one of kind of the first, you know, emerging growing online platforms and investment companies.

15:10Most of the players that are really big, kind of some of the largest players in the space. So we're excited to be there and to also help them democratize that standard as well, just like we're democratizing access to farmland. And that's what it's all about, Fire Nation. It's all about coming together and improving everything we do. I mean, wow, if we can decrease the amount of toxins that are being used to grow our foods, et cetera, and just have better standards and democratizing things, it's going to be better for everybody. And that's kind of how I want to bring this home, Artem. I want to talk about impact.

15:40I want to talk about income. how is what you are doing going to actually benefit both investors' pockets and just the world as a whole? Yeah, that's a great question. So first, I will say that a lot of people don't know this, but we're actually losing farmland every year. In the United States alone, we lost about 15 million acres from 2012 to 2017, which to put it in perspective is twice the size of the state of Massachusetts. Furthermore, we, especially around the world, people are actually clearing forests and burning them for very low intensity agriculture because we need more and more food.

16:17And we need to actually grow double the amount of food that we grew in 2009 to feed the increasing population. And how do you do this at the same time, you know, without further impacting climate change for the kind of using up more resources and more land? And, you know, part of the answer to that is smart and sustainable agriculture. So when you invest with us, every farm that we have will be on the leading harvest standards. We actually committed 100 % of our farms to that standard. And that alone, I think, should make you feel really good that we'll never do wrong by the lad or by the farmer as well, which is really the most important part of this equation, I would argue.

17:00Secondly, right now, the farmland industry and farming overall, it's a little bit behind areas like real estate, like other industries where finance is much more developed. In farming, there's not enough creative capital solutions. So for farmers looking to transition to organic or regenerative agriculture, you can't just go to a bank and get a loan like you do to buy a house. And so more and more of our investments and our partners are structured around that either transition or expansion of great farmers that are looking to expand their business. So really when you invest with us, you're helping farming families, farming entrepreneurs expand cutting edge agriculture.

17:41We're talking drones. We're talking regenerative. We're talking new varieties. We just closed a deal with Stimilt, which is the second largest apple grower in the United States that introduced this new apple variety called Cosmic Crisp. Oh, wow. And the Cosmic Crisp uses also this coating that essentially prolongs the shelf life of the apple without impacting the taste or the quality of it. So it means less food waste as well. So we're really excited to have those kinds of partnerships. I mean, Fire Nation, if this is the kind of stuff that excites you, if this is the kind of world that you want to have a hand in creating, these are the type of investments you can make.

18:21And again, Artem's not saying, hey, put your entire 401k into this because he thinks you should have a well-balanced portfolio. But that's the point. This is potentially part of a well-balanced portfolio and especially one that you can feel good about because of all these fantastic things that they're doing. So Artem, bring this home for us. What is the one thing you really want to make sure Fire Nation gets from everything that we talked about here today? How can we connect with you more to learn more about everything that you have going on and maybe become a part of what you have going on. And then we'll say goodbye.

18:53Absolutely. So one, I think that investing in farmland is investing into the planet, investing into the future. But at the same time, it's investing into what is a one kind of unchangeable thing about our lives. We need to eat and we need to drink water. Secondly, when you invest in farmland, especially in sustainable kind of farms, you're doing better for the planet and for the farmers. And it's good returns. It's low volatility, low correlation. And the way to kind of learn more about it is to go to farmtogether.com. We have a lot of great educational materials, white papers, one-on-ones, webinars.

19:32Sign up, follow our deals. We do webinars and you can ask a lot of questions before you feel comfortable investing. Once you feel comfortable, take the plunge and sort of follow your investment. And I think you'll learn even more. We're looking to introduce annual and quarterly reporting, reports from the field. If we can afford it logistically, you even will be able to actually receive those California almonds every year. Oh, so cool. Fire Nation, come on. This is some cool stuff. I mean, you can invest in almonds and you can eat the almonds that you've invested in. And you know you're making the world a better place.

20:05And you also know that you are the average of the five people you spend the most time with. You've been hanging out with AR and JLD today. So let's keep up that heat. and head over to eofire.com. Type Artem, A-R-T-E-M in the search bar. His show notes page will pop up with everything we've been talking about here today. Best show notes in the biz. And again, your direct call to action if you want to learn more Fire Nation, farmtogether.com. Artem, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Thank you so much, John.

20:42Hey, Fire Nation. Today's value bomb content was brought to you by RTEM. And one thing that I've identified over the years, successful entrepreneurs are disciplined, are productive, are focused, which is why I created The Mastery Journal. It is a gorgeous faux leather journal that will ensure that you master productivity, discipline, and focus in 100 days. It is one of my best works ever. Visit themasteryjournal.com. Use promo code podcast for a$15 discount. And thank you for listening to my podcast. and I'll catch you there or I'll catch you on the flip side. Imperfect Action, hosted by Steph Taylor, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

21:22Imperfect Action is a bite-sized online marketing podcast for business owners who want to get straight to the point. Join Steph Taylor as she answers all your business marketing questions. Recent episodes include five must-knows to sell your online course, program, or membership, and four steps to grow your email list for your next launch. Listen to Imperfect Action wherever you get your podcast. Ever thought about giving a TEDx talk? It's one of the most powerful ways to share your message with the world. And four-time TEDx speaker Taylor Conroy from Thought Leader can help you get there. Visit thought-leader.com slash fire to join Taylor's free training where he teaches you how to land a TEDx talk and spread your message to millions.