Sharing risks and rewards | Saskatchewan-based business links landowners who don’t want to farm with producers who want to work more acres but can’t afford the land
Bryce Thompson has a stake in more than 50,000 acres but doesn’t own a single one of them.
Instead, the president of groPartners Inc. matches landowners and farmers to form partnerships that benefit all three parties.
They all share the risks and rewards through the model that Thompson, an agrologist and certified crop adviser, established two years ago with vice-president Earl Smith, former Royal Bank prairie division agriculture manager.
Regina-based groPartners operates differently than investor-based mega-farms, Thompson said.
Most investor-owners either cash rent their land, forcing the farmer to take all the risk, or farm it themselves, taking the risk themselves but also removing the benefits from the community.
“What we’ve tried to do is provide a way that the landowner can do something in between,” Thompson said.
Under groPartners agreements, the landowner contributes the land and the farmer contributes the equipment and labour. The landowner pays groPartners’ management fees.Input costs and proceeds from the sale of crops are usually split, but agreements differ.
The farmer makes all the agronomic management decisions, although Thompson approves them on behalf of the landowner. Thompson handpicks the farmers to get the right production philosophy and skills.
“We lean toward zero till and higher levels of inputs,” he said. “We want to see the farms improved.”
However, he also carefully selects the landowners.
“We’ve probably turned away 80 percent of the money that’s approached us.”
He said groPartners isn’t interested in foreign money, and many investors don’t understand agriculture.
“We’re looking at 10-year plus investment horizons,” Thompson said.
“We had one fund approach us and the long-term horizon was four years. That’s not what we want.”
His vision is for young or expanding farmers to be able to build their operations, and many of his landlords share that philosophy.
One farmer partner was working 3,000 acres on his own and held an off-farm job.
“We added 3,000 acres and his ability to become a full-time farmer,” Thompson said.
In some cases, landowners don’t want to sell. People who inherit land may want to hang on to it for emotional reasons but can’t or don’t want to farm it themselves.
More people on both sides are becoming comfortable with the idea of renting.
Logan Grant is one of them.
He and his wife, Avery, bought a grain farm near Aylesbury, Sask. in 2008, helped in part by a now-defunct company similar to groPartners.
They had machinery capable of farming more land and had been looking for opportunities when Thompson approached them on behalf of an out-of-province landowner.
“I was so excited about it I wanted to make a 20-year deal,” Grant said.
That was a little further out than the landowner was interested in, but a deal was struck and Grant, who employs a full-time hired man, added 35 percent more land to the operation last year.
“With our current set-up it was a really good increase for us because it put us closer to the max of our machinery and labour capabilities,” Grant said while waiting at a Viterra elevator last week.
“If we were to make a jump in the future, it would be more of a management jump, not just more dirt.”
The Grants like the fact that they are less reliant on cash renting.
He said some landlords have be-come greedy and aren’t willing to recognize the value that farmers bring to their land through improvements to soil quality.
He attributes that to demand for land, higher land prices and the need to obtain more from the land to make the economics work.
His groPartners contract is structured to adjust the rent depending on the crop yield and quality.
“It’s way more adapted to the risks that we take all the time as producers,” Grant said.
He has no problem sharing his management plans with Thompson, and said he hasn’t met his landowner partner but expects that will happen someday because there actually is someone to meet. He isn’t farming for a company of shareholders.
“There’s a really high level of trust,” Grant said.
“The landowner has to trust groPartners that the producer they’re getting involved with is honest. That is extremely important in this kind of thing.”
Thompson agreed, saying intermediaries are a good idea for absentee landowners who don’t know anything about farming or which local farmers can best do the job for them.
He said 40 percent of Saskatchewan farmland is now rented, and the time was right for a company to offer different leasing arrangements.
Most of the farmers he works with are in their 30s, but the range is late 20s to mid-50s.
Most of the 50,000 acres is grain land in Saskatchewan and Alberta, but there is some grassland.
Ranchers are also interested in different leasing models, but investor interest is low, Thompson said.