Feb 18, 2017 · 23m · top-founders
EP 574: Buying $2m 600 Acre Pecan Farm, $450/acre/mo, Literally Shaking Money From Trees with Investor Luke Stronach
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Host Nathan Latka interviews farmland investor Luke Stronach, exploring the financial returns, leasing models, water rights valuation, and operational realities of managing dedicated agricultural funds and Georgia pecan orchards.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 35.5% of the talking time here. How this is scored →
Nathan as informed peer 3.3 Guest teaching 4.8 Guest disagreement 1.0 Nathan pushing back 2.2
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 9:05 Reframing farmland value beyond cash yield
Luke directly dismisses the premise of investors entering farmland purely chasing immediate cash flow yield, asserting that volatility reduction and inflation hedging are the true objectives.
Hardest push from Nathan ▶ 2:00 Host pushes past non-disclosure on fund sizeWhen Luke tries to demur on how much capital he has raised, Nathan refuses the deflection and demands at least a range.
Biggest teaching moment ▶ 10:58 Masterclass on 1970s inflation protectionLuke compares historical macro returns to prove farmland gained 500% to 600% in the 1970s while equities lost purchasing power to inflation.
Nathan holds their own ▶ 18:59 Citing AgFunder metrics and platform deal flowNathan demonstrates domain knowledge by citing his previous interview with AgFunder's founder and quoting precise stats on capital raised across agriculture startups.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing Luke Stronach and Farmland Fund Raising | 2 | 5 | 2 | 4 | Nathan presses Luke to reveal his fund size after Luke initially hesitates, forcing him to give a broad range. Luke explains how farmland valuation is fundamentally driven by water rights and irrigation infrastructure. | |
| Farmland Revenue Models: Cash Rent vs. Revenue Sharing | 3 | 6 | 1 | 3 | Luke breaks down the mechanics of the 2.5 trillion dollar farmland leasing market, contrasting fixed cash rents on annual row crops with revenue-sharing agreements on permanent tree crops like pecans. | |
| Investment Returns, Asset Appreciation, and Inflation Hedging | 4 | 7 | 1 | 3 | Nathan probes for realistic annualized cash returns and asks about inflation hedges compared to TIPS. Luke delivers a detailed history lesson on how farmland outperformed equities during 1970s inflation and the 2008 recession. | |
| Sourcing Farmland Deals and Building Farmer Relationships | 2 | 4 | 1 | 1 | Luke explains the relationship-driven grind of sourcing farmland deals off-market from engineers turned farmers. Nathan eagerly pitches joining Luke on-site to shake pecan trees for content in his upcoming book. | |
| Senior Water Rights and Emerging AgTech Innovations | 5 | 6 | 1 | 1 | Luke illustrates how senior water rights and emerging agtech drones create equity value, while Nathan shows his industry familiarity by referencing AgFunder's fundraising metrics from a prior episode. | |
| The Famous Five Questions with Luke Stronach | 4 | 1 | 0 | 1 | Nathan executes his rapid-fire Famous Five format, chiming in with context about Stuart and Linda Resnick's brands like Fiji Water and POM Wonderful. |
Statements from this episode (13)
Stronach: Farmland investors are fundamentally water investors
“Most farmland investors beneath the surface, they're water investors. When you go out to the farm, you're looking at the, you know, you're looking at the earth, you're looking at the trees, but what you're really looking for is water.”
Stronach: Irrigated pecan orchards cost $8,000 to $10,000 per acre
“So for that type of orchard, you know, you're going to pay eight, nine, 10,000 dollars an acre, and it adds up.”
Luke Stronach is developing a 1,000-acre pecan orchard for $7 million
“So the first orchard is going to be right around two million. The next orchard is going to be a couple million and then developing the thousand acre orchard all told that'll be about seven million.”
Stronach: 40% of North American farmland is leased
“So 40% of the farmland in North America is leased to farmers.”
Stronach: North American farmland is a $2.5T vertical
“This is a two and a half trillion dollar vertical.”
Stronach: Permanent tree crops predominantly use revenue sharing leases
“With other crops that are what we call permanent crops. So these are going to be things during the ground year long, they grow on trees. So these would be almonds. These would be cherries. These would be pecans more frequently. You're going to see that revenue…”
Stronach: Permanent Crop Farmland Can Yield Up to 18% Annually
“So you can get that combined yield with permanence up to 16, 17, 18% when things are going really, really, really well with your annual crops, with your things that have to be replanted every year, that's going to be corn, potatoes, onions, your yields are goi…”
Stronach: Farmland's Main Purpose Is Volatility Reduction and Inflation Hedging
“If somebody told me that their main interest in farmland investing was to just make tons of cashflow every year, I would tell them that that is not the main purpose of it. It's main purpose is to reduce the volatility that you see in other investments, like th…”
Stronach: Farmland Returned 500% to 600% During 1970s Inflation
“If you go back to the 19 seventies, if you go back to that, that decade, if you were invested in the stock market, okay, over the decade, you would have gotten, you know, give or take about You know, 16, 17%, but you would have lost so much of your money to in…”
Stronach: Farmland deals require in-person rural persistence, not office work
“This is why the farmland space is not as big as commercial property in other sectors is it's hard. This is a hard space. You can't operate in it, sitting in an office, pushing buttons, and, you know, spending your afternoons playing golf. You have to be able t…”