Crowdfunding for farms
Dan Miller’s motivation to make a difference in agriculture not only stems from his mother’s family farm in the Chesapeake Bay, but also an unconventional source: Washington, D.C., real estate.
While renovating properties and leasing buildings to young chefs in the city, Miller began to meet the local farmers those chefs were buying product from. He noticed a problem.
“I was amazed that the farmers selling to the chefs really had trouble accessing capital. Smaller-scale diversified sustainable operations don’t fit the normal, large-commodity model. The traditional roots of finance weren’t available to them, so it seemed that even though people really wanted their products, there was a gap with funding,” Miller recalls.
Steward, launched in 2016, is Miller’s solution to fill the gap. The Steward Farm Trust is considered a “crowdfarming” platform. Any U.S. resident can invest as little as $100 to the trust, which helps a farmer get the capital needed to grow. Steward also services loans for individual, accredited investors to contribute to and receive monthly interest payments from the farms they choose.
The platform has had over 2,000 applications in the past two years from farmers all over the country. “We started with two urban farms in Detroit and thought we would work best in the smaller niches that are ignored by the traditional agricultural system. We soon found out that most smaller-scale, diversified farms have trouble with financing,” Miller says.
They have now funded 16 operations, including a livestock farm in Louisiana, a hemp farm in southern Oregon, and a grain and dairy farm in Pennsylvania. Even with such diversity, there is a common thread among all of the farmers: They love what they do, take care of the land, and take pride in their products.
How It Works
Steward’s website, GoSteward.com, hosts an online application with questions about the applicant’s background, products, land, and infrastructure needs. Applications are reviewed by a team of experienced farmers who will conduct phone interviews and site visits for serious candidates.
Qualifications vary depending on the farmer. Steward’s goal is to be adaptable to a variety of needs, but one key requirement is for the farm to be operated with regenerative and sustainable practices.
“We’re talking about ecology of soil and watersheds, sequestering carbon, and sustainability in the business model. That may be by reducing the use of chemicals, inputs, pesticides, and reusing waste,” Miller says. “It may be selling directly to create a smaller economic loop, which is more resilient to market changes.”
Steward prepares a term sheet based on mortgage loans secured by land, which often start at $25,000 and go upwards of $1 million. It also offers short-term unsecured loans for immediate needs as part of a long-term plan. The funding can be used for land, equipment, and other operations.
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East Fork Cultivars
East Fork Cultivars received investment in 2018. The family-owned cannabis farm worked with Steward to acquire 24 acres of land in southern Oregon to expand its hemp production.
Mason Walker, CEO of East Fork Cultivars, recalls the struggle to secure financing for expansion. “From a farming perspective, the price per acre for the land was pretty high, so we couldn’t get any traditional financing. Also, because of our industry, there weren’t lenders willing to lend to a new hemp farm. We reached out to our friends at Steward whom we met in 2017,” Walker says.
Steward provided $640,000 of financing against the project’s value, set at $800,000. That total included the purchase of the land and infrastructure build-out for irrigation, drying systems, and a new storage facility. In 2019, East Fork Cultivars completed the build-out, expanded its cultivated acreage to 12 acres, and became USDA organic-certified, one of the first in the country to do so.
East Fork Cultivars operates as a living laboratory for sustainable agriculture with three pillars of values: social responsibility, environmental responsibility, and science-based education. That translates to advocating for small family farms, lobbying for cannabis legalization, providing a minimum wage at $20 per hour for seasonal help or $40,000 per year for permanent staff, health insurance and retirement plans for employees, and employing natural farming principles.
The company focuses on carbon sequestration, soil health, generating inputs, and supporting research projects on natural pest management and the impact of cannabis and hemp farming on wildlife habitats.
Walker comments that everything is difficult in the cannabis and hemp business. Yet, due to Steward, the growing hemp market, and their organic certification, the company anticipates $800,000 in revenue from its first hemp crop.
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Investing with Values
Steward started out supporting farmers with capital only, but the trust has since expanded to offer resources like bookkeeping, marketing, and online lead generation. Miller says this is because farmers are undercapitalized and understaffed.
“Normally, it’s maybe two partners and some seasonal laborers. For them to do everything for their business and farm, too, it’s a big challenge,” he says.
That’s also the reason for Steward’s network of farmers across the country. By connecting experienced farmers with young or new operators, the company creates a mentor relationship in which a partner helps think about the business differently to design a funding structure that works.
“Our goal is to make a simple platform that helps support farmers and brings investors online. I feel like there is a lot of negative news about agriculture that challenges conventional farming. But every day we also see the farmers who are making positive impacts and succeeding in the face of adversity,” Miller says.