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Bridging the Gap between Farmers and Capital
An Interview with Luca Fabbri, CFO of Farmland Partners Inc. and New GHI Board Member
Q: Luca, how did you come to be involved in agriculture and Farmland Partners Inc. (FPI), what is your role in the company, and what potential do you see in the future of agriculture?
A: FPI is the culmination for me of a growing interest in, and involvement with, agriculture in general and farmland as an asset class in particular, starting a decade and a half ago. I grew up in a semi-rural area at the outskirts of Naples (Italy), but I didn’t really start looking at agriculture with a business lens until I was exposed to it through Paul Pittman, Farmland Partners’ CEO and a longtime friend and colleague.
Even though Paul and I have worked together first in investment banking and then in technology before agriculture, he grew up on a farm, has an agriculture degree, invested in farmland and operated a large farming operation – in other words, he is a real farmer. My initial curiosity about agriculture and farmland became quickly a passion once I started to understand their fundamentals, especially with an eye to the future.
Agriculture may often just be an afterthought in the broader economic context, and is often plagued by misperceptions in the public’s eye, yet it is faced with the tremendous challenge of feeding a growing world population with shrinking resources. One facet of that challenge is access to capital, and I was struck by the fact that farmland, as an asset class, was virtually completely absent from the public capital markets. Paul and I made a first attempt at building a farmland investment vehicle in 2003, but the time was not right. In 2011 we felt the circumstances were different, and we began work on what eventually became Farmland Partners Inc., whose IPO took place in April 2014.
I am the company’s Chief Financial Officer. Besides overseeing finance, administration and legal, I am involved in investor relations and strategic development alongside Paul.
Q: What does Farmland Partners do?
A: We see ourselves as the bridge between farmers and the public capital markets. We offer investors a liquid vehicle to invest in farmland, and farmers (our tenants) a way to access capital to grow their operations. While farming is often risky and volatile, farmland is generally a much safer investment well suited to the needs of many institutions and retail investors.
Many new farmers and those wishing to grow their operations in North America find it challenging to purchase land or to access more credit to bolster their businesses. We partner with farmers to help them expand and improve their operations, allowing them to grow and receive a better return on their production.
Q: Where do you operate now and what crops are being grown?
A: Currently we own or have under contract over 250 farms totaling over 100,000 acres in Arkansas, Colorado, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, Texas and Virginia.
The crops most commonly grown by our farmer partners are primary crops – corn, soybeans, wheat, cotton and rice. Some of our acreage is used for specialty crops, such as blueberries and edible beans.
Q: What do you provide for your investors?
A: Our role in the public capital markets is facilitating access to an asset class with low volatility and strong fundamentals. In the effort to produce more food with fewer resources in the decades to come, farmland is the ultimate scarce resource.
Q: The demand for food and energy will rapidly rise in the future as a result of the world’s growing cities and booming middle class. How is Farmland Partners helping to meet these needs?
A: Our primary role is facilitating access to capital. As we keep growing, we are also helping the industry become more efficient by helping farmers achieve better economies of scale and improving their access to technology. We are also focused on making sure that farmland – an increasingly scarce resource – is used to its fullest, sustainable extent, with clean energy projects such as solar and wind farms.
Q: GHI is committed to improving agricultural productivity along the entire value chain, and advocates for the right enabling policy environment. What are areas that you think need to be addressed in the policy and regulatory environment that often are overlooked?
A: We join the other GHI member companies and consultative partners to achieve a more favorable economic, financial and regulatory environment for farmers and the entire agricultural value chain. Farmland Partners has recently partnered with other agribusinesses to identify efficiencies in the supply chain and to lower input costs of Farmland Partners’ tenant base, helping these growers achieve higher profitability.
Farmland Partners is also concerned with the regulatory environment surrounding global trade and capital flows in general, and land ownership in particular.