Fractal Agriculture Expands Farmer-Aligned Equity Investment Product Amid Turbulent Ag Economy
August 31, 2024 Fractal, a US-based company helping to solve a key gap in farmer financing, has announced an expansion of their farmland co-investment product. Fractal has raised more than $15MM of capital and has deployed $8MM to leading farmers across the Midwest.
This expansion comes at a time when American farmers are facing some of the greatest strains since the 1980s with rapidly falling farm income, shrinking cash reserves, and higher interest rates. The USDA projects net farm income and working capital will fall by 37% and 21% from 2022 levels¹ while interest rates on farm loans reach up to 8-9%². Despite this, farm competition is increasing with continued farm consolidation and the threat of outside investors waiting to take advantage of lower land values.
“We’ve seen one of the largest declines in working capital and farm incomes over the past year that I’ve seen in my 30+ years in agriculture,” says Chris Barron, a 4th generation farmer in Iowa and farm financial consultant with Ag View Solutions. “Rates are higher and banks aren’t lending as much so this doesn’t look like 2014. This also presents a unique opportunity for the best positioned farmers to make strategic investments with lower competition.”
Fractal helps family farms access capital they need to invest in business critical opportunities. This capital comes with lower and more flexible annual payments than traditional debt in return for equally sharing in the upside or downside of farmland appreciation. Fractal works with the farmer and their banker to inject new equity capital into the operation by taking passive, minority investments in farmer-owned land. Farmers remain in full ownership of their land, maintain agronomic control, and receive a 10-year investor commitment.
“Capital is quickly becoming farmers’ biggest need on the farm. For many farmers, it may be the difference between buying out a landlord versus losing acres or making key investments versus pushing them off another year,” says Fractal CEO, Ben Gordon. “Putting capital alongside farmers while keeping them in control not only strengthens farm businesses and keeps money in rural communities, we believe it also drives better returns for investors and better stewardship of the land.”
After deploying $8MM in investments across five midwestern states over 12 deals, Fractal is rapidly expanding its footprint to meet this critical farmer need.
“Growing family-owned farms requires significant cash for the capital needed for land, improvements, and equipment,” says Jesse Hough, a multi-generational farmer and Fractal customer in David City, Nebraska. “We need products like Fractal to help fill the gaps and provide opportunities for cash capital other than debt, which is the conventional way in agriculture to get cash.”
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