Farmland Investor Gladstone Land Acquires Two Nebraska Farms for $14.7M With Intention to Transition

Gladstone Land announced it has expanded its portfolio into a new farming geography, having acquired 3,850 acres of farmland across two farms in Hayes and Hitchcock counties in Nebraska for $14.7 million.

This deal brings Gladstone’s farm portfolio to 85,000 acres across 10 different U.S. states, valued at $836 million. After a long string of permanent crop acquisitions, Gladstone’s crops include almonds, apples, figs, olives, pistachios, blueberries, and vineyards, in addition to annual row crops such as berries and vegetables, as well as high-protein hay.

Upon closing of the deal, Gladstone entered into 10-year, triple-net lease agreements on each of the properties with Granstrom Farms, one of the leading organic growers in Nebraska.

“Having a presence in this area will not only give us a great new relationship with one of the top growers in the state but will also give us exposure to potential new crop types for our farmland portfolio,” said Bill Hughes, managing director, Gladstone Land.

Both farms currently grow corn, soybeans, and edible beans, and one aspect setting this deal apart from Gladstone’s previous transactions, is that the company will be assisting their tenant farmers in transitioning each of the farms to organic grain production by 2021.

“In addition to the 17 new irrigated circles, we will be constructing a state-of-the-art grain drying and storage facility to safely handle and protect the integrity of the organic grain on the farms,” said Hughes.”The Company is making a concerted effort to acquire or develop more organic crops within its farmland holdings, and it believes these acquisitions demonstrate its commitment to farms growing healthy foods.”

Organic Growth

Organic U.S. sales reached nearly $48 billion in 2018, with organic food sales jumping by 5.9 percent, according to the 2019 Organic Industry Survey released May 17.

“Organic is now considered mainstream, but the attitudes surrounding organic are anything but status quo,” said Laura Batcha, CEO and executive director of the Organic Trade Association. “In 2018, there was a notable shift in the mindset of those working in organic toward collaboration and activism to move the needle on the role organic can play in sustainability and tackling environmental initiatives.”

The role of organic farming in environmental initiatives was reinforced in September 2017

when a new breakthrough study directed by Northeastern University in collaboration with The Organic Center found that soils on organic farms stored significantly larger amounts of carbon for longer periods of time compared to soils on traditional farms. On average, soils from organic farms were found to have 44 percent higher levels of humic acid – the soil component that stores carbon in the long term.

Although, as demand for organic foods has continued to grow, and its environmental benefits began being quantified, the necessary infrastructure needed to support growth hasn’t historically been as quick to keep pace with a rapidly expanding industry. However, in recent years this has also taken a turn with the advent of Pipeline Foods.

Launched in 2017 through a partnership between AMERRA Capital Management and Pipeline Opportunity Partners, Pipeline is the first U.S.-based food supply chain company focused solely on establishing sustainable global supply chains for organic and non-GMO food and feed. And with the company’s plans to invest between $300 million and $500 million within its first three to five years, the resulting North American infrastructure will mitigate risks for projects such as the one being undertaken by Gladstone in Nebraska.

“The organic certification is expected to result in the farmer receiving premium prices for the crops, which will, in turn, make the farm more valuable to the Company,” said David Gladstone, president and CEO, Gladstone Land. “The Company seeks to own farms growing healthy foods, and with the demand for organic food continuing to grow, the acquisition of these farms is evidence of its continued focus on this investment strategy.”