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One Investment Firm's Bold Experiment to Finance the Future of American Farming

April 15, 2022

By Maria Gallucci

The Dwelley family has farmed the fields of Brentwood, Calif., for a century, growing organic sweet corn, cherry trees, and low, leafy green beans some 50 miles east of San Francisco.

During every harvest, the Dwelleys deliver their bounty to grocery stores and wholesale markets throughout the western U.S. With rich soils fed by the Sacramento and San Joaquin rivers, and hot days capped by cool, breezy nights, the region is ideal for growing produce. In recent decades, though, much of the neighboring farmland has disappeared. Strip malls and suburban tract housing have sprouted up as the Bay Area’s population explodes and more farmers leave the business behind. For the Dwelleys, who lease most of their acreage from other families, the pool of available farms in Brentwood is drying up. So, since 2017, they’ve started leasing land slightly farther afield, from a different type of farm owner: a private investment fund known as Farmland LP.

The fund’s managers acquire conventional farmland and convert it to organic operations; they then lease land to farmers growing specialty crops such as berries, vegetables, and wine grapes. Since launching in 2009, Farmland LP has snapped up 5,800 acres across Northern California, including the fertile fields just east of Brentwood, near the city of Stockton. The fund is among a handful of U.S.-based firms, including Iroquois Valley, Dirt Capital Partners, and Grasslands LLC, that are using their financial and farming expertise to remake the American agricultural landscape. All told, Farmland LP owns and manages 15,000 acres in Northern California, Washington State, and Oregon, with total assets valued at nearly $200 million.

John Dwelley, a fourth-generation farmer, grew up selling sweet corn and stone fruit from his family’s tin-roof produce stand on the side of a dusty two-lane highway. Expanding to Farmland LP’s nearby terrain is part of a larger plan to keep the family legacy going, he says, even as Brentwood transforms from an agricultural hub to a suburban boomtown.

“For my sake, I hope to be farming until I’m a ripe old age,” says the 36-year-old, “so I want to make sure that we’re setting ourselves up for long-term success.” Today the family leases hundreds of acres from Farmland LP on top of the other acreage it owns or leases. Farmland LP, based near San Francisco, says it is working to make more organic acreage available at a time when land for farming and ranching is vanishing nationwide and rising temperatures threaten to disrupt the world’s food supply.

Tens of millions of acres of farmland have given way to warehouses, big-box stores, and sprawling subdivisions in the past three decades. Small farmers and ranchers—facing mounting debt, rising property taxes, and unstable commodity prices—are losing or leaving their property. With fewer young people following in their parents’ footsteps, older generations are retiring and selling family fields. The nation lost nearly 120,000 farms between 2011 and 2021, according to data from the U.S. Department of Agriculture (USDA).

At the same time, many remaining farms are consolidating into large industrial operations growing a single commodity crop like soy or corn, often using chemical-heavy and water-intensive methods. In some states, excessive fertilizer use is polluting drinking water and contributing to toxic algal blooms, while the large-scale spraying of pesticides has stripped away habitats for bees and butterflies. Overworked soil and thirsty crops are especially vulnerable to drought, heavy rainfall, and other events made worse by climate change.

Farmland LP aims to both preserve existing farms and spare them from industrial monocropping, says Craig Wichner, the firm’s founder and managing partner. Instead, the fund promotes “regenerative agriculture,” an umbrella term for practices that help build healthy soils, improve water quality, and restore local biodiversity. The idea is that healthier plants will produce greater yields of higher-quality crops, so more money flows to farmers—who pay significantly higher rent on organic farmland—and to investors backing Farmland LP’s fund. “Our mission is to demonstrate that regeneratively managed farmland is more profitable than commodity farmland,” Wichner tells TIME.

Federal agencies and universities are similarly investing in the shift. In February, the USDA launched a $1 billion “climate-smart commodities” initiative to help food producers and forest owners adopt new practices and track carbon emissions.

Farmland LP is far from the only private firm betting on America’s fields and pastures. Despite the financial precariousness farmers face, land itself is an increasingly attractive asset. Prominent billionaires like Bill Gates and Ted Turner are among the largest owners of U.S. farmland. Institutional investors, wealth advisory firms, and individuals are claiming shares of arable land. Unlike the U.S. stock market and housing sector, agricultural land has consistently delivered positive annual returns over the past few decades through rent from farmers, rising land values, and federal subsidies.

Even so, the growing number of investor-farmers is raising concerns about who gets to participate in the agricultural sector, and how. Wealthier enterprises can stomach rising land values, higher rents, and market forces that favor large-scale production. But other would-be farmers are struggling to gain a foothold. That includes young farmers—many of whom are people of color—eager to produce food sustainably to serve their communities, says Holly Rippon-Butler, land campaign director for the National Young Farmers Coalition.

Such barriers are perpetuating long-standing disparities in U.S. farming, she says. More than 95% of the nation’s 3.4 million agricultural producers identify as white, according to 2017 USDA Census data. Explicit federal policies and practices over centuries barred anyone but white men from owning land, the consequences of which are clear in the current demographics. Black farmers in particular still face discrimination when applying for loans and accessing land, though social impact startups like the Black Farmer Fund are working to remove those barriers.

“We need to start addressing that inequity if we’re going to have a viable future for agriculture in this country,” Rippon-Butler says.

The investment boom is also accelerating the cultural shift in farming communities away from hands-on, small-scale producers toward digitally managed farm systems with faraway landlords, whose priority is generating returns quickly, says Anuradha Mittal, founder and executive director of the Oakland Institute, a think tank in California. Along with environmental impacts, she says, the push for profits can create a “race to the bottom” in wages and working conditions for farm laborers.