Luke Stronach outlines why agricultural investors choose revenue-sharing models over fixed per-acre cash rent for permanent tree crops.
Insight
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.”
Assertion Not checkable as stated
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…”
Insight
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…”
Assertion Partly supported
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…”
Assertion Supported
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.”
Disclosure
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.”