WEBVTT - Betting (on) the Farm 0:00:13.840 --> 0:00:17.439 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:17.840 --> 0:00:20.919 My name is Mike Reagan. I'm a senior editor at Bloomberg. 0:00:21.120 --> 0:00:24.520 And I'm Bildona Hire, a cross asset reporter with Bloomberg, and. 0:00:24.520 --> 0:00:26.680 This week on the show, Veldana. I don't know if 0:00:26.680 --> 0:00:30.920 I've ever told you about this, but sometimes I literally 0:00:31.080 --> 0:00:35.159 have daydreams that I own a farm and I'm like 0:00:35.560 --> 0:00:37.640 off in retirement as a farmer. 0:00:38.040 --> 0:00:42.120 I think everybody has those dreams. No, I don't know, 0:00:42.400 --> 0:00:44.720 did I, especially if you live in the city. You 0:00:44.760 --> 0:00:49.040 want a sort of more nature. 0:00:48.760 --> 0:00:51.280 Filled life, more nature filled life, I guess. 0:00:51.159 --> 0:00:53.159 That makes it, yes, Or you want a garden or 0:00:53.159 --> 0:00:53.559 something like. 0:00:53.600 --> 0:00:55.840 Don't get me wrong, I don't want a giant, five 0:00:55.880 --> 0:00:57.880 hundred acre farm that I actually have to work at. 0:00:57.920 --> 0:00:59.279 I want a cup a few acres. 0:01:00.800 --> 0:01:02.440 You don't want to have to do any work. 0:01:02.600 --> 0:01:05.360 I'll plant some raspberries, maybe get some sheep. 0:01:05.880 --> 0:01:07.920 I think sheep would require a lot of work. 0:01:08.560 --> 0:01:10.720 Do you think? I think you just spring amongst let 0:01:10.760 --> 0:01:13.120 them meet through grass, and shave them down once a year. 0:01:14.480 --> 0:01:16.200 More to it than that? What else do you need 0:01:16.240 --> 0:01:16.520 to do? 0:01:18.440 --> 0:01:20.800 Feed them? I don't know them. 0:01:20.880 --> 0:01:23.959 That's what the grass is for. But anyway, look, it's 0:01:24.000 --> 0:01:27.360 a good week to daydream about being a farmer, because 0:01:27.920 --> 0:01:32.600 let's be honest, if today's Wednesday, May twenty fourth, if 0:01:32.640 --> 0:01:35.800 we tried to cover the market right now, with the 0:01:35.880 --> 0:01:40.520 debt ceiling issue going on and that being so fast 0:01:40.600 --> 0:01:44.200 moving and such a unpredictable thing, I feel like by 0:01:44.280 --> 0:01:46.760 the time we got done, everything would have changed and 0:01:47.080 --> 0:01:49.440 the news would be so different. So I think for 0:01:49.520 --> 0:01:53.720 this week, let's all daydream about owning a farm. If 0:01:53.760 --> 0:01:55.320 I let you on to my farm, I know you 0:01:55.440 --> 0:01:59.280 refuse to join my professional network on LinkedIn for I 0:01:59.280 --> 0:02:01.480 don't know, But if I were to allow you onto 0:02:01.560 --> 0:02:05.880 my imaginary farm network, would what would you grow on 0:02:06.000 --> 0:02:06.640 my farm? 0:02:06.640 --> 0:02:07.280 Tomatoes? 0:02:07.560 --> 0:02:08.120 Just tomatoes. 0:02:08.160 --> 0:02:09.480 We can use them to feed your sheep. 0:02:10.320 --> 0:02:12.079 I don't think sheep eat tomatoes. I think they just 0:02:12.120 --> 0:02:12.840 eat the grass. 0:02:13.360 --> 0:02:14.120 I really don't know. 0:02:14.360 --> 0:02:18.079 Cauliflower. You wouldn't grow cauliflower. You're a city slicker. Yeah, 0:02:18.080 --> 0:02:19.400 I don't know. If I don't know, if I'm gonna 0:02:19.440 --> 0:02:21.720 let you on my farm, on my imaginary. 0:02:21.200 --> 0:02:25.120 Farm, fine, I won't let you on my imaginary firm. Fine, 0:02:25.440 --> 0:02:27.320 But our guests might have a farm. I want to 0:02:27.360 --> 0:02:30.320 bring him in. It's Carter molloy, CEO and founder of 0:02:30.440 --> 0:02:33.280 acre Trader. Carter, I'm so happy to have you on 0:02:33.320 --> 0:02:34.919 the podcast and talk about your company. 0:02:35.200 --> 0:02:36.119 Thanks for having me here. 0:02:36.720 --> 0:02:37.920 First of all, are you on a farm? 0:02:39.320 --> 0:02:42.000 Not today, though many days I am. I also, while 0:02:42.000 --> 0:02:43.600 I would love to invite you guys to my farm, 0:02:43.680 --> 0:02:45.840 I'm also not really sure I want to join. 0:02:45.720 --> 0:02:47.600 The There you go, I'm not the only one. 0:02:47.960 --> 0:02:51.640 Fine, fine, I'm alone on my farm with my raspberry 0:02:51.720 --> 0:02:55.560 and sheep tomato eating sheep. But Carter, tell us about 0:02:55.680 --> 0:02:59.120 acre Trader. Really a fascinating platform you've started here that 0:02:59.200 --> 0:03:05.840 actually lets people and I suppose institutions invest in fractional 0:03:05.840 --> 0:03:09.520 ownerships of farms. Tell us a little bit how it started, 0:03:09.600 --> 0:03:12.640 how it works, and what's going on with acre Trader. 0:03:12.840 --> 0:03:15.000 For the quick background of the business, We've been here 0:03:15.000 --> 0:03:17.519 for five or six years working on this simple mission 0:03:17.520 --> 0:03:19.760 of connecting farmers that want to grow their business to 0:03:19.919 --> 0:03:23.080 investors that want exposure to farm land in their portfolio. 0:03:23.240 --> 0:03:25.359 I grew up in a farming family here in Arkansas. 0:03:25.680 --> 0:03:28.680 I's spit a dozen years in professional equity investing, but 0:03:28.760 --> 0:03:31.000 in the background, I've been buying and selling farmland it's 0:03:31.040 --> 0:03:32.720 a big passion of mine. Come to find out, there 0:03:32.720 --> 0:03:35.000 are a lot of other people that also want exposure. 0:03:35.240 --> 0:03:36.720 The reality is you may have to go put down 0:03:36.760 --> 0:03:39.640 a million dollars and then manage a business, and that's 0:03:39.640 --> 0:03:42.040 a non starter for most people. So we design an acre 0:03:41.960 --> 0:03:44.480 Trader very simply to be a place where an investor 0:03:44.520 --> 0:03:47.080 can come online, create an account, and within a few 0:03:47.080 --> 0:03:51.000 minutes and a few clicks actually invest directly in entities 0:03:51.000 --> 0:03:53.280 that own farmland. So each week we put up a 0:03:53.320 --> 0:03:56.400 farmer too that's owned by a unique entity. You, the 0:03:56.440 --> 0:03:59.080 investor can come on and invest ten twenty thousand dollars 0:03:59.200 --> 0:04:01.680 or millions of dollars and have exposure and build a 0:04:01.680 --> 0:04:04.640 portfolio of farmland through our website and through our technology. 0:04:05.560 --> 0:04:07.680 Okay, so tell us more about how it works and 0:04:07.760 --> 0:04:12.160 like who the investor base is. So, is it accredited 0:04:12.200 --> 0:04:16.160 investors who are really interested in diversifying their portfolios or 0:04:16.160 --> 0:04:18.320 what does the makeup of the client base look like. 0:04:18.760 --> 0:04:21.120 That's correct, It is a credited investors on the platform 0:04:21.240 --> 0:04:25.040 now that ranges from folks in cities to farmers and 0:04:25.120 --> 0:04:28.440 rural areas and folks that live near farming to institutions 0:04:28.480 --> 0:04:31.080 as well. Family offices, et cetera. The goal for most 0:04:31.080 --> 0:04:34.280 folks is to find some stability and some diversification. That's 0:04:34.360 --> 0:04:36.880 often why we see folks with real interest in farmland 0:04:36.920 --> 0:04:39.440 is that slow, in steady compounding that it can offer 0:04:39.520 --> 0:04:40.200 to investors. 0:04:40.720 --> 0:04:43.640 So if I'm a farmer, I own a farm, I 0:04:43.760 --> 0:04:46.600 sell it to one of these entities, I guess they 0:04:46.640 --> 0:04:49.720 serve sort of as the manager of this investment. They 0:04:49.839 --> 0:04:52.840 collect the rent and distributed among the investors. Is that 0:04:52.880 --> 0:04:53.400 basically it. 0:04:54.480 --> 0:04:56.720 Most often the farmer comes to us, actually, and it's 0:04:56.760 --> 0:04:58.520 usually a farmer that wants to grow. If you think 0:04:58.520 --> 0:05:01.159 about this from the farmer's standpoint, many farmers are in 0:05:01.200 --> 0:05:03.760 growth mode. They have lots of fixed costs, right, very 0:05:03.800 --> 0:05:07.640 expensive equipment, more inputs, seed and fertilizer as an example, 0:05:07.680 --> 0:05:10.000 that they buy the better discounts they get with that 0:05:10.080 --> 0:05:12.839 type of economy of scale and that business. Many farmers 0:05:12.839 --> 0:05:15.320 are actively in growth mode. So they'll come to us 0:05:15.320 --> 0:05:18.000 and say, hey, my neighbors retiring or for whatever reason, 0:05:18.040 --> 0:05:20.280 the farm's being sold. There's upwards of one hundred billion 0:05:20.320 --> 0:05:22.480 dollars of farmland that is bought and sold every year 0:05:22.520 --> 0:05:25.200 in the US. So these farmers that are our partners 0:05:25.440 --> 0:05:28.280 are out actively helping source and find farm lay where 0:05:28.279 --> 0:05:30.520 they want to grow their business. And then you're exactly right. 0:05:30.520 --> 0:05:32.359 We set that up where they often will have a 0:05:32.400 --> 0:05:35.480 financial interest in that entity, and then they will either 0:05:35.640 --> 0:05:38.480 share their revenue or pay a simple rent to that entity, 0:05:38.720 --> 0:05:41.680 which then can be a cash distribution out to those investors. 0:05:41.720 --> 0:05:44.960 So the investors from their angle, they can make money 0:05:45.040 --> 0:05:47.280 from those cash rents coming in as well as through 0:05:47.279 --> 0:05:48.640 appreciation of land over time. 0:05:49.200 --> 0:05:51.440 And then tell us more about your background and the 0:05:51.480 --> 0:05:53.680 inputus for starting the company. 0:05:54.800 --> 0:05:57.680 My dad's a farmer. I've been around it my whole life. 0:05:57.680 --> 0:05:59.560 It's just in my line. I think it's in all 0:05:59.600 --> 0:06:01.320 of our life, right. You guys say you have this 0:06:01.400 --> 0:06:03.680 dream of living in agrarian life, it's because we all 0:06:03.680 --> 0:06:06.320 did at some point in generations. Back I spent my 0:06:06.360 --> 0:06:09.679 life grinding out alpha in public markets and working really 0:06:09.720 --> 0:06:13.400 long days on Bloomberg terminal looking for alpha, and in 0:06:13.440 --> 0:06:16.520 the background buying and selling land. And realize that here's 0:06:16.520 --> 0:06:19.720 this multi trillion dollar asset that's been incredibly productive and 0:06:19.760 --> 0:06:23.320 stable over time. There was no real mechanism for most 0:06:23.320 --> 0:06:25.960 folks to get exposure to it, and so that was 0:06:26.000 --> 0:06:28.600 really the genesis the business was frankly visiting with my 0:06:28.680 --> 0:06:31.080 dad and telling him that this is in like twenty seventeen, 0:06:31.160 --> 0:06:33.880 I thought bitcoin was a terrible investment idea. Really that 0:06:34.240 --> 0:06:37.200 sparked this conversation of can we fractionalize farmland? Is there 0:06:37.200 --> 0:06:40.440 a way where common investors can gain exposure to farmland 0:06:40.440 --> 0:06:41.080 their portfolio. 0:06:41.839 --> 0:06:46.279 What's fascinating is the returns are pretty attractive. There is 0:06:46.320 --> 0:06:51.839 actually a farmland index that tracks the notional value of 0:06:51.920 --> 0:06:54.120 farm land. I guess around the country, but talk to 0:06:54.200 --> 0:06:56.880 us a little bit about sort of that return profile. 0:06:57.279 --> 0:07:01.040 My understanding, it's got a pretty good track record. It's 0:07:01.160 --> 0:07:05.720 not really correlated with risk assets or even treasuries. It 0:07:05.760 --> 0:07:08.440 is correlated with inflation to some degree. Talk to us 0:07:08.440 --> 0:07:11.680 about kind of what you can expect from that return 0:07:11.760 --> 0:07:16.840 profile and the volatility and whatnot. As an investor in farmland. 0:07:16.440 --> 0:07:19.560 First is important to consider what farmland is not. Farmland 0:07:19.600 --> 0:07:22.320 is not a good risk quick scheme. You rarely hear 0:07:22.400 --> 0:07:24.800 people saying, oh my gosh, I doubled my money on 0:07:24.800 --> 0:07:27.600 my farmland investment this year. Inversely, you also don't hear 0:07:27.600 --> 0:07:29.680 people saying, oh my gosh, I've lost all my money 0:07:29.680 --> 0:07:32.640 on farmland this year. What investors often I'm looking for 0:07:32.720 --> 0:07:35.280 is that's slow, in steady compounding of capital. And you're right, 0:07:35.360 --> 0:07:38.080 those returns nay Grief is the index that puts out 0:07:38.080 --> 0:07:41.080 those returns for farmland and timberland. Over the last twenty 0:07:41.200 --> 0:07:44.280 or thirty years, it's been a fairly consistent low double 0:07:44.320 --> 0:07:47.440 digit return eleven or twelve percent nothing, oh my goodness. 0:07:47.440 --> 0:07:50.040 But when you compare it to other mainstream asset classes, 0:07:50.240 --> 0:07:53.000 that return profile is pretty similar over long periods of time. 0:07:53.520 --> 0:07:57.480 What's more fascinating is the consistency of those returns. You 0:07:57.520 --> 0:07:59.960 don't have big, huge up years and huge down here 0:08:00.160 --> 0:08:02.920 that you do across so many other mainstream asset classes. 0:08:03.000 --> 0:08:06.160 So again, the consistency of the returns and that relative 0:08:06.280 --> 0:08:09.280 lack of volatility an investor's speak, means that the sharp 0:08:09.360 --> 0:08:12.320 ratio of farmland can be very very attractive the risk 0:08:12.360 --> 0:08:15.480 adjusted returns there. And then in addition to that, you've 0:08:15.480 --> 0:08:18.160 also called out a couple of key themes. What is 0:08:18.200 --> 0:08:20.680 it can be inflation linked. It's actually shown to be 0:08:20.720 --> 0:08:23.800 more inflation linked than gold, in that in times of 0:08:23.880 --> 0:08:28.080 high inflation or persistent inflation, it tends to outperform and 0:08:28.160 --> 0:08:30.400 also that it just doesn't have a lot of correlation 0:08:30.480 --> 0:08:33.680 to other asset classes, like it's almost exactly zero in 0:08:33.720 --> 0:08:35.880 its correlation to the S and P. So from a 0:08:35.920 --> 0:08:39.040 diversification standpoint as well, we see folks adding farmland in 0:08:39.080 --> 0:08:41.560 their portfolio to have that sort of set in and 0:08:41.559 --> 0:08:43.680 forget it part of their portfolio where they're looking for 0:08:44.040 --> 0:08:45.960 company a capital or wealth preservation. 0:08:46.600 --> 0:08:49.080 I was curious about the correlation aspect as well, because 0:08:49.120 --> 0:08:53.280 I was wondering what PUSH's price is higher or lower, 0:08:53.640 --> 0:08:56.640 and whether or not, you know, maybe you can tie 0:08:56.720 --> 0:08:59.120 to the housing market in some way, or what market 0:08:59.160 --> 0:09:02.840 it would be similar to, or where those some of 0:09:02.840 --> 0:09:04.160 those correlations might lie. 0:09:04.280 --> 0:09:07.239 So as a general sense, we don't really see correlations 0:09:07.240 --> 0:09:11.960 to things like housing market or primary asset classes. Where 0:09:12.000 --> 0:09:15.040 we do see some correlation again over longer periods of time, 0:09:15.679 --> 0:09:18.800 is commodities, Right, so you think about we grow food, fuel, 0:09:18.840 --> 0:09:23.120 and fiber on farmland, that tends to be those tend 0:09:23.120 --> 0:09:26.560 to be a core component of commodity CPI PPI type 0:09:26.600 --> 0:09:30.199 of indicators, and so as a result, we do tend 0:09:30.240 --> 0:09:33.199 to be linked to that inflation and price over time. 0:09:33.480 --> 0:09:35.480 And as you can imagine in the world of supply 0:09:35.520 --> 0:09:37.600 and demand for farmland commodities. 0:09:37.600 --> 0:09:38.600 It's fairly straightforward. 0:09:38.800 --> 0:09:40.840 We have more and more mouths to feed every year 0:09:40.960 --> 0:09:44.520 and to provide clothing and fuel to, and frankly like 0:09:44.600 --> 0:09:48.760 less and less actual physical farmland. We lose like staggering 0:09:48.800 --> 0:09:51.559 amounts of farm land every minute and every day here 0:09:51.559 --> 0:09:55.440 in the US to development, to growth onto other now 0:09:55.960 --> 0:09:59.720 larger solar developments, things like that. So finite supply, it's physical, 0:09:59.720 --> 0:10:02.679 and it's limited and is shrinking and growing demand over 0:10:02.720 --> 0:10:04.160 time with the products that we produce. 0:10:11.160 --> 0:10:15.079 So I'm curious about sort of the risk management or 0:10:15.160 --> 0:10:19.200 potential downside of this type of investment. Say, you know, 0:10:19.400 --> 0:10:22.640 I buy a fractional ownership in a farm in a 0:10:22.679 --> 0:10:25.200 state where there's a bad drought or I don't know, 0:10:25.400 --> 0:10:29.400 a bull weavile outbreak or something that really impacts the 0:10:29.440 --> 0:10:32.800 production of whatever they're growing on that farm that year 0:10:33.120 --> 0:10:36.560 so much so that the farmer can't pay his rent 0:10:36.640 --> 0:10:40.000 and maybe even you know, his defaults on his tracker 0:10:40.240 --> 0:10:43.200 lease or equipment or whatever, and it's kind of has 0:10:43.400 --> 0:10:45.720 a net loss for that year. How does that play 0:10:45.760 --> 0:10:47.760 out in an investment like this? 0:10:48.320 --> 0:10:50.640 So we tend to think of the world generally speaking, 0:10:50.679 --> 0:10:53.280 as OpCo and propco. Right, your operating company is the 0:10:53.320 --> 0:10:57.480 farming business. Your property company is owning the underlying land, 0:10:57.880 --> 0:11:00.200 and so we tend to look more to be the 0:11:00.240 --> 0:11:03.200 property company in that scenario. Whereas the farmer is the 0:11:03.200 --> 0:11:06.559 operating company. They often have insurance to help backstop them. 0:11:06.679 --> 0:11:10.640 Often government subsidize insurance at that so as a tenant 0:11:10.679 --> 0:11:13.120 and as a partner, farmers tend to be very stable 0:11:13.120 --> 0:11:15.480 over time, and as a result we see we do 0:11:15.520 --> 0:11:19.439 see very low default into our vacancy rates throughout the ecosystem. 0:11:19.760 --> 0:11:22.120 As an example of that, in the world of row crops, 0:11:22.120 --> 0:11:26.840 so thinking about growing important commodities like corn, soybeans, farmer 0:11:26.920 --> 0:11:30.440 often pays rent once a year before they plant. It's 0:11:30.440 --> 0:11:35.280 an incredibly stable across the larger world of farmland. For 0:11:35.320 --> 0:11:38.520 that reason, there are certainly risks in there, and one 0:11:38.520 --> 0:11:41.040 of the greatest ones is just underwriting risk, making sure 0:11:41.040 --> 0:11:43.880 that you are actually in fact buying farmland well. And 0:11:43.920 --> 0:11:46.240 it's really hard to do because there's such a lack 0:11:46.240 --> 0:11:48.959 of information in our world. So we've invested heavily. We've 0:11:49.000 --> 0:11:51.679 got a large data science and engineering crew here as 0:11:51.679 --> 0:11:56.199 an example, helping to build underlying geospatial analytics and data 0:11:56.240 --> 0:11:58.960 for us just to help inform these underwriting decisions. And 0:11:59.000 --> 0:12:02.200 we've got a great team well outbuilding partnerships with farmers. 0:12:02.360 --> 0:12:04.280 What actually makes it through that that very very tight 0:12:04.360 --> 0:12:05.640 filter that team employees. 0:12:06.200 --> 0:12:07.960 I do want to ask you more about that, because 0:12:08.720 --> 0:12:11.440 when I was talking to some of your employees before 0:12:11.600 --> 0:12:14.160 the podcast, when I met them a couple of weeks ago, 0:12:14.200 --> 0:12:16.920 I think somebody said, it's like, you can almost think 0:12:16.960 --> 0:12:19.600 of it as like the Bloomberg terminal, but for farmland 0:12:19.960 --> 0:12:23.000 statistics and for farmland data. First, I want to ask 0:12:23.040 --> 0:12:27.080 you how is farmland performing of late? And I'm also 0:12:27.200 --> 0:12:31.240 curious how it fared like what prices did during the pandemic, 0:12:31.280 --> 0:12:33.040 for instance, and what it's been like over the last 0:12:33.080 --> 0:12:33.959 couple of years. 0:12:34.600 --> 0:12:38.440 So, as a general statement, on the appreciation side, of 0:12:38.280 --> 0:12:41.960 the years before the pandemic, the five or six years 0:12:41.960 --> 0:12:45.720 before then, we saw relatively muted appreciation. We have seen 0:12:45.840 --> 0:12:48.319 some catch up in that long term call it mean 0:12:48.400 --> 0:12:51.320 reversion in terms of appreciation the last few years so 0:12:51.320 --> 0:12:54.360 we've seen more meaningful, call it double digit versus your 0:12:54.360 --> 0:12:57.560 typical single digit type of growth in the underlying asset. 0:12:58.080 --> 0:13:00.360 The rents themselves are the income coming off the farm 0:13:00.760 --> 0:13:03.120 generally speaking, has also grown over that same time period. 0:13:03.760 --> 0:13:07.360 I'm curious if there's any sort of shareholder democracy type 0:13:07.400 --> 0:13:09.960 of components of this. You know, if I end up owning, 0:13:10.880 --> 0:13:13.480 say fifty one percent of a farm, or you know, 0:13:13.520 --> 0:13:16.800 I own thirty percent and of like mind with someone 0:13:16.800 --> 0:13:20.680 that owns another thirty percent and we have that majority stake, 0:13:21.600 --> 0:13:24.360 is there sort of an option to say, oh, you know, 0:13:25.080 --> 0:13:28.199 I think we need to start growing corn instead of soybeans, 0:13:28.440 --> 0:13:30.240 or I think it's time to sell. Is there any 0:13:30.280 --> 0:13:34.040 sort of equity democracy at action as far as ownership? 0:13:34.080 --> 0:13:37.160 You know, where is it all the the property companies 0:13:37.360 --> 0:13:40.600 and the operating companies that control that? It tends to 0:13:40.600 --> 0:13:41.080 be the latter. 0:13:41.160 --> 0:13:43.880 So we have an investment committee that works on behalf 0:13:43.920 --> 0:13:46.920 of the investors to consider what the best outcomes are 0:13:46.960 --> 0:13:50.079 for those investors on an entity by entity basis. And 0:13:50.320 --> 0:13:52.800 the reason for that is is we and then aside 0:13:52.800 --> 0:13:56.520 from that, we also have common standardized corporate wraps and 0:13:56.559 --> 0:14:00.280 government wraps around these entities for obvious reasons, to be 0:14:00.280 --> 0:14:03.320 pretty standardized across our business. And what we want to 0:14:03.320 --> 0:14:06.600 avoid is a fifty one percent layer coming in and bullying, right, 0:14:06.600 --> 0:14:10.000 and actually making decisions that are averse to the best 0:14:10.000 --> 0:14:12.200 outcome for the rest of that majority or best that 0:14:12.280 --> 0:14:15.040 minority investor pool. So as a whole, that tends to 0:14:15.080 --> 0:14:17.959 be more of the investment committee. Now, look, we speak 0:14:17.960 --> 0:14:20.640 to investors. We've got to investor relations team here. We 0:14:20.680 --> 0:14:23.840 hear their input every day and we certainly take that 0:14:23.680 --> 0:14:26.000 that means a lot to each of these individual investments. 0:14:26.240 --> 0:14:29.360 But again we have to consider the greater hole of 0:14:29.440 --> 0:14:33.440 investment fooled capital there rather than one individual's desires. 0:14:33.840 --> 0:14:37.960 And so carter to go back to the data mining question, 0:14:38.120 --> 0:14:42.120 like how do you guys go about gathering your data 0:14:42.320 --> 0:14:46.680 what actually makes good farmland when you are evaluating it? 0:14:47.280 --> 0:14:50.480 And then where in the US or even internationally are 0:14:50.520 --> 0:14:51.640 you guys operating. 0:14:52.400 --> 0:14:54.640 So in the US we're in I think eighteen or 0:14:54.680 --> 0:14:58.640 nineteen states plus Australia, so we're well o our forty 0:14:58.680 --> 0:15:03.320 thousand acres invested through platform. In terms of what considerations 0:15:03.360 --> 0:15:06.640 go into underwriting, you've got to consider soil profile, so 0:15:06.720 --> 0:15:11.120 the health of that soil water availability is absolutely crucial, 0:15:11.120 --> 0:15:13.960 and or places like the Midwest, actually getting water off 0:15:14.000 --> 0:15:16.360 of the farm is just as important as it is 0:15:16.400 --> 0:15:19.760 finding water. So water is a really intense consideration the 0:15:19.840 --> 0:15:21.960 climate in that area, what is it good to grow? 0:15:22.240 --> 0:15:25.360 And then the financial profile, right, so you're underwriting the 0:15:25.400 --> 0:15:29.000 farmer themselves and that's an entire separate process. And then 0:15:29.160 --> 0:15:31.800 the actual bones of that farm, the structure of it. 0:15:31.840 --> 0:15:34.240 And this is where the data analytics really comes in 0:15:34.280 --> 0:15:37.200 and is helpful. That can be government data sets that 0:15:37.240 --> 0:15:40.280 we're processing and bringing in, satellite data sets as well 0:15:40.280 --> 0:15:43.320 that we're bringing to our tools, and then importantly things 0:15:43.360 --> 0:15:46.000 like comparable sales. I know this sounds ridiculous, but if 0:15:46.040 --> 0:15:47.720 you're buying a home, you've got a pretty good sense 0:15:47.760 --> 0:15:50.120 of value on price per square foot in that neighborhood 0:15:50.520 --> 0:15:53.160 in farmland. Not only do we not have that data, 0:15:53.400 --> 0:15:56.040 but the idiosyncrasies and quality from one partial to the 0:15:56.080 --> 0:15:59.240 next can be pretty dramatic. So as a result for 0:15:59.280 --> 0:16:01.800 gathering data they as an example, we're in with data 0:16:01.800 --> 0:16:04.680 from thousands of courthouses around the US. We also have 0:16:04.720 --> 0:16:08.160 a team of people who are literally going and attending 0:16:08.200 --> 0:16:12.160 auctions virtually or going online and finding information and manually 0:16:12.160 --> 0:16:14.680 and putting into that system. But that's the reality of 0:16:14.960 --> 0:16:16.800 this older industry you work in, is there is a 0:16:16.840 --> 0:16:21.800 real manual data gathering and filtering and analysis process that 0:16:21.920 --> 0:16:25.680 goes into helping us understand and inform each investment decision. 0:16:26.200 --> 0:16:30.240 I was clicking around on the website and for a 0:16:30.320 --> 0:16:33.360 day dream farmer like myself, it's the pictures that are 0:16:33.400 --> 0:16:35.920 just awesome. You know. You get these big aerial views 0:16:35.920 --> 0:16:40.080 of the farms, and there's videos sometimes, and I think 0:16:40.600 --> 0:16:43.320 you've now got me daydreaming about owning a vineyard instead 0:16:43.360 --> 0:16:45.560 of a farm Ville dona. I think I might want 0:16:45.560 --> 0:16:46.040 a vineyard. 0:16:46.080 --> 0:16:48.320 There's a it sounds like you're ready to move. 0:16:50.320 --> 0:16:54.200 California vineyard I've got my eye on after clicking around 0:16:54.200 --> 0:16:57.360 acre Trator. But these daydreams are all adjacent to my 0:16:57.440 --> 0:16:59.720 daydream of winning the lottery, by the way, that that's 0:17:00.160 --> 0:17:01.160 race this is all going to do. 0:17:01.280 --> 0:17:03.040 We even play the lottery. 0:17:04.320 --> 0:17:08.360 When it's over a billion in pay out, A group 0:17:08.440 --> 0:17:11.399 of friends of mine springs in action and we all 0:17:11.880 --> 0:17:13.240 buy a share. 0:17:14.119 --> 0:17:15.919 I don't eyone want to know what the most is 0:17:15.960 --> 0:17:19.560 that you've ever won, like twelve twelve cents. 0:17:19.680 --> 0:17:22.280 Isn't this a podcast about logical and reasonable investing? 0:17:22.680 --> 0:17:28.480 Yes, it's supposed to be, Yes, yes, fair enough, fair enough, 0:17:28.840 --> 0:17:31.560 But Carter, I'm curious what you know sort of the 0:17:31.640 --> 0:17:34.720 regulatory regime is for you. 0:17:34.720 --> 0:17:37.919 You know, are you are you registered investment advisor? Like, 0:17:37.960 --> 0:17:40.439 how does this company exist in the eyes of the 0:17:40.480 --> 0:17:43.080 regulators and what process do you have to go to 0:17:43.960 --> 0:17:48.320 both federally and state by state to launch a product 0:17:48.359 --> 0:17:48.600 like this. 0:17:49.119 --> 0:17:51.280 We've actually gone quite a bit further and stood up 0:17:51.280 --> 0:17:53.880 our own broker dealer, so acri Trader has a wholly 0:17:53.920 --> 0:17:56.800 owned broker dealer in order to make sure that we're 0:17:57.200 --> 0:18:00.680 always compliant with the letter and this period of the law. 0:18:00.800 --> 0:18:03.800 And it extends beyond securities regulation as well. Right there 0:18:03.840 --> 0:18:07.400 are farming regulations you must take into account, ownership regulations, 0:18:07.600 --> 0:18:10.240 a real estate regulation state by state. Suffice to say, 0:18:10.240 --> 0:18:12.639 we have an incredible general counsel and team of attorneys 0:18:12.880 --> 0:18:15.280 that work with her to help us navigate and make 0:18:15.280 --> 0:18:19.120 sure that we're continuously presenting ourselves and the investment offerings 0:18:19.119 --> 0:18:20.840 and the appropriate way and. 0:18:20.840 --> 0:18:24.320 Gard I'm also curious about how liquid the market is. 0:18:24.400 --> 0:18:27.280 I would imagine it's pretty ill liquid, but maybe you 0:18:27.280 --> 0:18:28.119 can tell us more. 0:18:28.840 --> 0:18:32.200 That's correct, So the market as a whole, the percent 0:18:32.280 --> 0:18:36.080 turnover within farmland is lower than comparative assets. There's still 0:18:36.440 --> 0:18:38.879 fifty upwards of one hundred billion dollars of this stuff 0:18:38.920 --> 0:18:41.359 that trades hands every year in the United States alone, 0:18:41.440 --> 0:18:43.880 So there's still quite a bit of There's a ton 0:18:43.920 --> 0:18:46.919 of reasons why folks would buy or sell farmland, right, 0:18:46.920 --> 0:18:49.119 So there is a decent amount of turnover out there. 0:18:49.359 --> 0:18:51.359 We obviously as a company want to help improve that 0:18:51.400 --> 0:18:54.640 liquidity within the market and then within our specific business. 0:18:54.920 --> 0:18:57.440 We've been working on a secondary marketplace for a long 0:18:57.480 --> 0:19:00.119 time where we would hope to allow investors to and 0:19:00.560 --> 0:19:03.639 exchange in individual units or shares of those bums. 0:19:04.119 --> 0:19:05.960 Yeah, I was going to say, I imagine a platform 0:19:06.119 --> 0:19:09.199 like yours would bring a lot more liquidity potentially in 0:19:09.280 --> 0:19:12.200 theory to this market. But as of now, so if 0:19:12.200 --> 0:19:14.199 I put a click around the website, it looks like 0:19:14.240 --> 0:19:16.960 fifteen thousand is tends to be the minimum investment. Is 0:19:17.280 --> 0:19:17.840 that about right? 0:19:18.000 --> 0:19:19.240 Give or take? That's usually right? 0:19:19.320 --> 0:19:23.320 Yeah, So, and I'm locked in for at least a year, 0:19:23.359 --> 0:19:26.160 I think, Right, what's the liquidity event for me? If 0:19:26.160 --> 0:19:28.040 I do want to get out of that investment? How 0:19:28.040 --> 0:19:28.600 does that work? 0:19:28.920 --> 0:19:31.119 So the vehicles usually have a five to ten year 0:19:31.200 --> 0:19:33.560 life on them, sometimes it can be longer, and this 0:19:33.600 --> 0:19:35.840 is explicitly stated on the website. Sometimes it can be 0:19:35.880 --> 0:19:38.439 shorter than that. So there's the duration of the vehicle 0:19:38.480 --> 0:19:40.879 itself that the investor must take into account and the 0:19:40.880 --> 0:19:43.600 illiquidity that comes along with that, and we are looking 0:19:43.640 --> 0:19:46.760 for again this is sort of like your patient investing capital. 0:19:47.119 --> 0:19:49.360 So setting over on the side a little bit, so 0:19:49.600 --> 0:19:52.920 there is a real liquidity consideration in investing in farmland, 0:19:53.280 --> 0:19:56.199 not just your platform, in the asset in general. And 0:19:56.240 --> 0:19:59.080 then again I think you nail the specific point. There's 0:19:59.080 --> 0:20:01.840