Community Financing for Farmland

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Neil Thapar:

"There is no question that one of the biggest challenges to implementing a just transition in farmland ownership is identifying sources of financing. In traditional real estate transactions, financing tends to greatly influence the ownership structure. A common principle is that the person who invests the most money gets to own most of the land and make most of the decisions. While this may appeal to the investor in each of us, such a model perpetuates the myth that because wealth is generated based solely on merit, those with wealth ought to be in control. It also erases the history of unjust enrichment of White people in the United States at the expense of Native Peoples, Black farmers, and waves of immigrants of color.

If we are to truly develop an equitable food system, then we must envision a new relationship between money, land, and ownership.

Nonprofit lenders focused on supporting farmers already exist, and have been providing low-interest operating loans to farms for decades. California Farmlink and Northern California Community Loan Fund are great examples of the role nonprofit lenders can play in extending beyond operational support to finance equitable farmland acquisition. Both are Community Development Financial Institutions, or CDFIs, which allows them to access a larger pool of federal funding that they redirect to supporting economic development in low-income communities. As nonprofits, they may also have an easier path to aggregating investment capital because of exemptions from federal securities laws for charitable organizations.

There is also the example of a cooperative twist on REITs, called a Real Estate Investment Cooperative (REIC). REICs sell membership shares to community members, specifically targeting non-accredited investors (those who are not very wealthy), to aggregate capital to finance projects that benefit specific communities. Examples of this model include the Northeast Investment Cooperative and NYC Real Estate Investment Cooperative. Black Land Matters is using the REIC model to finance, among other things, farmland acquisition to rebuild Black land ownership in the United States.

At the Law Center, we are interested in supporting these models as well as exploring other less developed, yet potentially impactful, financing strategies to secure an equitable future in farmland ownership. These include unlocking people’s retirement incomes (like an IRA or 401k) from Wall Street and allowing people to self-direct their investments into local farm enterprises and farmland ownership. This could directly counter the current use of similar funds by pension fund managers that promote domestic land grabs. We also see potential in expanding crowdfunding laws to promote broad-based community investment in local agricultural enterprises, including supporting farmers in acquiring land. Or, how about creating pathways for advanced investment in cemetery plots to fund pasture land preservation and promote green burials?

Our guiding principle in exploring these possibilities is that the democratization of land ownership requires the democratization of capital. To reach this goal, it’s likely that all of the strategies discussed above - community control of land, worker ownership, and non-extractive finance - will need to work together in order to ensure an equitable and sustainable future for farmland." (