The Land Company

I've spoken with people all over the place who dream of starting their own farm.  Sometimes they want to operate a farm as a business, sometimes it's an attractive way of life for raising their family.  There are some folks who are sick of the struggle in the city and all the hassles and pressures that go with it.  Looking for a solution to the problem of funding resulted in the creation of the Farmland Fund.  With the concept of the Farmland Fund in place came the need for reducing risk and getting those new farmers the experience needed to make their dreams a successful reality.  A farming cooperative can reduce that risk, as well as serve as center of learning.  It can also go further than just a farm and provide opportunity, savings, and contribute tremendously to the community involved.

The single biggest obstacle in this enterprise is The Money.  We need it, plenty of it, and it has to come from somewhere.  It's an elephant.  The best way to eat an elephant is one bite at a time.  The biggest bite is the property.  The co-op company and all it's equipment is a smaller hurdle.  Operating expenses is considereably smaller and more manageable.  Getting the money in place can be done with the right combination of strategies.

Even in my area, a property suited to the needs of the group will run $50-100k just for starters.  We would need $1000 from each member of the co-op to get the enterprise started, and once the $500 threshold is crossed, the population of candidates starts to quickly thin.  Let's be an organized group in search of a home and a means of financing that home.

We need a Land Company

The Land Company is a property management company.  It buys properties and sells them to buyers or rents them to tenants.  There are existing property management companies all over the world.  There are probably several in the area where the co-op wishes to set up shop.  If we can rent the property we need,  we don't need that huge initial investment.  The problem with rent is that it tends to go up.  Im my experience, if the tenant is operating a successful business, the rent tends to go WAY up.  We don't need a landlord reaching into our pocket a little deeper every year.  

Another problem with paying rent is the simple fact that we gain nothing other than temporary use.  The difference between an owner and a renter is a downpayment and financing.  One of our primary objectives is to get more value for the dollar we are already spending.  Rather than spend money on rent, we should spend that money on a mortgage.  If we found a suitable property for sale, we'd still have to come up with the downpayment which can send us over the top and start pushing people out of the co-op with too high of an initial investment.

What we need is a land company we control.  Establishing the Land Company as a separate and distinct entity removes the single largest portion of the investment needed.  In a more traditional business, the amount invested by each investor determines the share of ownership and subsequently the share of profits.  Part of the purpose of the co-op is to change that pardigm such that the greater rewards go to the people making the contribution.  The Land Company buys the property, not everyones effort.   

An effort must be made to get the word out as to our intentions and seek out investors.  Entrepreneurs call these people Angels.  We'll need these Angels to look at our plan and determine if we are a worthy investment.  There will be some members of the co-op with the means of investing in the Land Company-we ay find our own Angels right at home.  The land company can sell shares to raise funds in the same way as any other corporation out there.  The Land Company is controlled by it's investors.  It is in our interest to raise as much as we can amongst ourselves before turning to private investors.  The land company can borrow from private investors, offering a fair rate of interest on the loan.  

Initially, all we want from the land company is to finance the sale of the land to the co-op.  Those temporary private investors making loans is a means of raising capital and paying off debt.  Anyone can get involved in this manner, for any amount up to our need.  It's an investment opportunity.  Over time, we pay off those investors.  While we can invest our own money to create the land company, all we really need is a shell company which can borrow as needed.  We take on debt as needed, pay it off according to schedule.  We can also take on debt at a lower rate to pay off existing debt.  In effect, we have our own investment company.  Down the road, should the co-op decide an orchard is a project to pursue, we can turn to the Land Company.  Perhaps another co-op group forms in the next county seeking to emulate our enterprise.  The Land Company could take on a life of it's own, helping farms and co-ops get started well beyond the scope of our little group.  This is a project that can make a difference to a great many lives.

 

 

Cooperative Enterprise, Plan Outline