Converting Conventional Farmland to Organic, …slowmoneynorcal.org/wp-content/uploads/2011/06/Farmland-LP-Slow...Acquires Conventional Farmland and Converts it to Organic, Sustainable

Converting Conventional Farmland to Organic, Sustainable Farmland

Confidential © 2010 Vital Farmland Partners LLC

OVERVIEW – FARMLAND LP Acquires Conventional Farmland and Converts it to Organic, Sustainable Farmland for Long-Term Cash Flow and Capital Appreciation

» Vital Farmland LP Acquires and Manages Farmland for Investment

– Appreciating, inflation-protected asset

– Cash flow in perpetuity

» Converting to Organic Adds Value

» U.S. Farmland Only

» Fund Structure Provides Management, Alignment and Liquidity

– Up to $100 million fund; 2/20 fee structure; $50K minimum investment

Our investors are helping build a sustainable, healthy, local food system for our future.

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Confidential © 2010 Vital Farmland Partners LLC 2

CRAIG WICHNER

» Manages the farmland investment program, including overseeing property acquisitions, leases and sales, and oversees the financial and legal affairs

» 20 years experience in private equity, venture capital, corporate finance, M&A and restructuring, and long term experience managing family real estate

» Senior operating executive for three successful companies

JASON BRADFORD, Ph.D.

» Runs farmland management, including organic certification, sustainability planning, cropping programs, and tenant and operations management

» 20 year career as a highly-regarded expert in ecology, sustainability, and relocalization » Founded, ran certified organic farm and CSA

JOHN CUMMINGS

» Directs business development and investor relations » 20 year career in finance and operations

SERVICE PROVIDERS& ADVISORS

» Third-Party Fund Administrator: Apex Fund Services, 15 offices, $13 billion AUM » World-class network of formal and informal advisors includes experts in agriculture,

organic production, real estate, farmland management, sustainability, law, finance, and more.

FARMERS » Farmland LP leases land to organic farmers, such as:

» Cody Wood – Sheep, 7 years » Chris Hansen – Hogs/poultry, 3 yrs.

» Craig Thomas – Crops, ~30 years » John Eveland – CSA, ~30 years

FARMLAND LP TEAM Over 60 Years Experience Building Companies and Creating Value


LONG-TERM STABLE RETURNS Historically, farmland has delivered positive, uncorrelated returns over long periods of time

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Source: NCREIF Farmland and Real Estate indexes; Standard and Poor’s; U.S. Federal Reserve.

GROWTH OF INITIAL $1000 (VAMI) Conventional

farmland has delivered attractive returns over the long run. The NCREIF Farmland Index Generated 14.8% IRR Since 1992. The consistent and increasing demand for food, fiber and biofuels makes farmland an attractive buy-and-hold investment.

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Farmland S&P 500 Real Estate 10yrYield


U.S. FARMLAND ENTERING THIRD STAGE Frontier Expansion, Then Green Revolution, Now Shrinking

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Source: USDA data; Analysis by Farmland LP

» Homestead Acts privatized 270 million acres from 1862 to 1934

» Population doubled since 1950, while crop acres flat

» 49 million acres, 11% of U.S. cropland, was lost between 1997 and 2007

» One acre feeds one person 113

538

455

406

23

310

0

100

200

300

400

500

600

1850 1870 1890 1910 1930 1950 1970 1990 2010

Mill

ions

U.S. Cropland Acreage

U.S. Cropland Acres

U.S. Population


ORGANIC CROPLAND SUPPLY SHORTAGE

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Lack of Supply Ensures Persistent Price Premiums For Organic Food

Source: Organic Trade Association; USDA

The demand for organic food far exceeds the supply, resulting in price premiums of 50% to 200% or more for many organic products. Sustainable farming practices also improve profitability by reducing both input costs and production volatility. Farmland LP, as the land owner, benefits from these premiums via profit-sharing leases with organic farmers.

3.7%

0.7%

0%

1%

2%

3%

4%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Mar

ket S

hare

U.S. Organic Cropland Growing at 8.5% per year

ORGANIC MARKET GROWTH EXCEEDS FARMLAND CONVERSION RATE

Organic Market Share Growing at ~20% Per Year


COSTS AND BENEFITS

» Barriers to Conversion / Costs • Average farmer is 57 years old; 30% over 65 years old • 3-year Conversion Period • Management Complexity / New Methods / Additional Labor • New Distribution Infrastructure

» Increased Revenue / Benefits • Organic Premiums of 50% to 200% • Higher Value Crops (e.g. Wheat to Vegetables) • Active, Intensive Farm Management Maximizing Sustainable Agriculture

» Reduced Expenses • Reduced Input Costs (Fertilizers, Pesticides, Fuel, Water)

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Converting to Organic Farmland Enhances Medium- and Long-Term Economics


» Organic Conversion » Farm and Soil Management » Crop Rotation Plans » Production and Distribution

Agreements » Financial Management

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Farmland LP Adds Value After Land Acquisition

Farmland LP leases land to existing, organic farmers wanting to expand their business or experienced conventional farmers converting to organic, or may perform direct or custom farming.

The Fund adds value through:

ORGANIC CONVERSION AND MANAGEMENT


FARM AT FERN ROAD – NOVEMBER 4TH, 2010

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COMING SOON TO PREMIER RESTAURANTS NEAR YOU


CONVERTING DELIVERS PREMIUM PROFITS Superior Discounted Cash Flow at 5 years

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$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

Net to Farmer (less rent)

Land Rent as Profit Share

Financials for Converting Farmland By optimizing land use and converting to organic, sustainable farm management we generate: • 6x increase in revenue

from farmland • 2.3x increase in rent


FARMLAND LP INVESTMENT FUND A Private Equity Fund Open to Institutional and Accredited Private Investors

» Fund Structure Provides Long Term Alignment of Interests • 30+ year fund; Investors can exit after three years • Cash distributions quarterly (as available) • $50K minimum investment; $1M for institutions

» U.S. Assets Only – 3 Geographies in Initial Fund • More than $2.2 million invested • Acquired and operating 254 acres in the Willamette Valley, Oregon • Increased revenue generated on land 40% in first year, using 1/6th capacity • Over 1,200 additional acres of farmland currently in acquisition process

• California Sustainable Farmland Fund • Ask us about this fund dedicated to preserving and converting California’s

farmland to local, organic, sustainable farmland

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Converting Conventional Farmland to Organic, Sustainable Farmland

Craig Wichner Managing Partner

One Market Spear Tower, Suite 3600 San Francisco, CA 94105

T 1.415.465.2400 F 1.415.634.3205

[email protected]

Confidential © 2010 Vital Farmland Partners LLC 14

THIS IS NOT AN OFFER TO SELL SECURITIES OR A SOLICITATION OF AN OFFER TO PURCHASE SECURITIES. This presentation and the information contained herein is confidential and proprietary to Vital Farmland Partners, LLC (“GP” or the “General Partner”) and its affiliates and is hereby being provided to the recipient, in confidence, on the understanding that the recipient will observe and comply with the terms and conditions set forth herein. By having access to this material, the recipient agrees to treat the material as such and to not use the material, either directly or indirectly, for any purpose other than to determine the recipient’s interest in learning more about the fund and eligibility to receive offering documents. This presentation may not be reproduced, provided or disclosed to others without the written authorization of the GP, and shall be returned to the GP upon request.

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