Farmers and Sustainability Come First for Land Fund, Clear Frontier
We caught up with Adele Durfey of Clear Frontier to talk about the growth of their company, reducing barriers for regenerative and organic production, and their growing network of successful, young farmers.
How and why was Clear Frontier founded?
Clear Frontier is a land fund that invests in organic row crop agriculture and young farmers. The company was founded in 2019 with the goal of addressing three major challenges in the agricultural industry: the unsustainability of conventional agriculture, the growing demand for organic food, and the aging farmer population.
The first issue that was becoming increasingly apparent – is that agriculture has a large footprint on climate and the environment and has the potential to influence these factors both positively and negatively, and conventional agriculture unfortunately is not making a positive impact on either of these fronts. And we wanted to invest into agriculture with a positive impact approach in mind.
In addition to this, the demand for organics is skyrocketing, but that demand is not being met, so much so that we (the US) are importing products of questionable certification or even fraudulent organic certification from abroad. This puts both organic growers at a disadvantage and is not what consumers are paying for.
Both issues present an opportunity for growth in organic agriculture. But there is a social aspect that also needs to be considered. Organic production is a different production system when compared to conventional production and can be risky getting through the three-year transition period. When you consider the average age of the Midwest row grower at close to 60, the learning curve and the risk are typically more than what these growers are comfortable tackling. The ag space is not currently optimal for large scale changes, and the piece we wanted to focus upon was bringing those that are willing and wanting to make changes into the mix, which includes the younger generation.
So Clear Frontier was founded on the idea that through long-term partnerships, transition, and knowledge support, and investing into those that also want to make a change, we can begin to make an impact in the industrial agricultural space.
How does Clear Frontier work?
On a high level, operating as a land fund, we invest, we buy farmland, and then we lease it back to growers. That's what a lot of farmland funds do. Where we differentiate ourselves is that we buy conventional land and we work to find valuable talent who understand organic and regenerative systems, or are willing and wanting to learn, and we partner with them for the long-term to convert that conventional land into regenerative and organic production.
Farmers who want to transition to organic or regenerative practices face barriers such as crop insurance limitations or lack of access to capital. It can take time to be profitable with regenerative ag and the transition to organics. How does Clear Frontier solve these barriers?
To reach organic conversion it takes three years to become certified. So where Clear Frontier comes in is both to offer technical support, as well as lease structures that are suitable for organic growers both in risk sharing and lease length.
One- to two-year leases predominantly make up the share of leases out there today. Meaning, after the lease is up, there is a possibility they may not be farming that land the following year. It is difficult to ask someone to take a risk on making a change when they may not be around to reap the benefits of those changes. We alleviate that barrier by doing long-term leases.
We also participate in the risk, particularly through the transition period by how we structure our leases. During this period, yield expectations can be lower, yet the grower is not yet able to sell at organic pricing. In the past this has been called ‘the financial valley of death’, although we don’t see it always as this extreme. It is something that is still very relevant and remains an important piece while supporting the grower financially through this period. We’ve done this through various structures that give both us and the grower some level of comfort.
What are the other challenges for producers that want to transition to regenerative, organic, or even just specialty crops instead of conventional row crop production?
One issue is the social element. Discouragement or judgement can be passed in many of these communities for those going organic. We’ve picked that up from our own tenants to varying degrees. This can make it a little harder because no one really wants to be judged for doing something different .But times are changing, and our tenants are comfortable with what they are doing and why and tend to let it roll off their shoulders.
Access to land is another issue. As I mentioned earlier, you need to not only get through the three-year transition period but also be able to reap the benefits in the subsequent years, so you’d need access to land in which you can do that. Farmers typically rent a larger portion of the land they farm, so if you can’t find an amenable landlord, your option limited to conversion on your own land or not at all.
One challenge that is not specific to producers looking to organic or regenerative, is the barrier to entry for farming in general. You don't just go to college and get a four-year degree and say, “OK, tomorrow I'm going to apply to be a farmer.” It requires land access, and a lot of capital, and often someone as a partner willing to help you out. It can be very difficult. Many young farmers won’t have the funds to buy their own land at today’s prices and obtaining operating or equipment lines of credit can also be challenging. Where we help is giving them opportunity and some security in knowing that we want to see them succeed and are in it for the long haul. Additionally, lenders tend to view longer leases as more credible when evaluating operating or equipment lines of credit.
We have one young gentleman farmer who was nineteen when he approached us and was looking for land to rent as a beginning farmer. We took a risk on him, and he is proving to be worth his grit. He even bought a trailer and parked it on the farm so he could continually monitor what's going on the property. Part of his agreement was that he would work very closely with our agroecologist, and he's done very well. That type of dedication to the farm and willingness to learn proves that it’s worth it to take a risk on someone who is willing to take a risk on themselves. He’s now 21 and we’ve already leased more acreage with him.
How does Clear Frontier partner with farmers, other than funding?
We offer a lot of support, not just funding. We upgrade all the equipment. We bring in technology in terms of monitoring water use, tillage, soil compaction, soil testing, and carbon monitoring. We have two agroecologists with 15-plus years in working in organic systems that work with our partner-growers and are on the fields all the time. If a grower wants to obtain a Regenerative certification, we’ll help in the process as well. We’ve already assisted one grower in achieving Regenerative Organic Certification.
We’re also in consistent communication which goes in both directions. We strive to be more than a landlord that appears once a year to collect a rent check. It’s not uncommon for a tenant to call anyone of us to chat through various topics “Hey, what do you think about this? What can I do about that?” and vice versa about anything that is happening in organic space.
Lastly, we’ve created a bit of an organic grower community. We don’t claim to be experts in organic and can see the value of bringing likeminded people together to knowledge share and learn from each other. We hold grower meetings annually, and throughout the year everyone is included in a communication forum where they post pictures or notifications, progress on the season, and can trade questions or advice on anything organic related. We’re quite pleased with this and are excited to see it grow.
So how does your solution help diversify our food system and make it more resilient?
When farmers are working on a year-to-year basis, it forces them to focus on “how profitable can I be this year”. When they have the capacity of six or seven years to plan out crop rotations, it allows them to experiment with different practices, take advantage of market opportunities, and lowers their risk. When paired with the ability to cycle in cover crops and other technology driven strategies –the result is a positive feedback loop on soil health and yield outcomes.
How has Clear Frontier grown since 2019?
We’ve grown a lot in terms of investment strategy and overall comfort with our organic strategy. In 2019 Clear Frontier started with an idea, and by the end of 2024 we expect our fund to be fully invested.
What other things are ahead for Clear Frontier?
Beyond the heavy focus we’re putting upon soil health and the regenerative aspects of our farms, we’ve got plans to work begin working with local and regional conservation groups to begin support in specific habitat buffers and water ways, and developing out those area that are in non-productive land. We plan on growing our network of organic growers and as we near the finish line of investing, we’ll have a bit of time to assess our internal processes and begin getting ready to launch into our next fund.
Learn more about Clear Frontier at their website. This conversation was edited for length and clarity.