Crowdfunding platforms have helped bring to life millions of ideas over the last few years, from tech products making life easier for the lazy through to the more noble charity or community-minded initiatives. A new Australian equity crowdfunding platform hopes to fund the latter, looking to address the inability of young Australians to buy farms and in turn stem the flow of young people from regional areas.
Cultivate Farms is simply described by its cofounders Sam Marwood and Tim and Tegan Hicks as a new financial model for the purchasing of farms. The startup will scout suitable farms and young farming families and connect them to investors, who will help fund the purchase of the farm. As well as taking an equity stake in the farm themselves of up to 20 percent, the family will operate the farm and be paid a wage.
Marwood said the idea came from a chat he had with Tim Hicks, a “frustrated aspiring farmer.” The Hicks’ own Hicks Country Beef, operating the business across seven lots of land around Albury-Wodonga. While the it produces a return, the lack of easy access to land makes running the business difficult.
“We were catching up 18 months ago, and he knows that he and thousands of other young people can’t afford to buy a farm. He said, ‘what if there’s something like crowdfunding so I could own a farm, that’s all I want to do,’” Marwood said.
Marwood, who grew up on a dairy farm himself and has been working for the Victorian Government for over a decade in the environmental policy space, said he was instantly captivated by the idea, and so they began working on it. The cofounders were buoyed by the fact that the concept has worked overseas: a French initiative called Terre de Liens has established 120 farms across France through over 30 million euros in investment and donations.
Marwood said, “We know regional communities are struggling and young people don’t want to live in the country and be a farmer because they know it’s a hard life, so the idea that I could do something that helps regional Victoria and regional Australia, as well as lots of young people realise their dreams and connect city people back to the country, is brilliant.”
Marwood believes this idea of connecting city people back to the country can be a strong driver.
“There’s a big movement of people wanting to buy local, and wanting to buy healthy, fresh food from farmer’s markets and we thought, why not take it to the next step, why not buy a farm and connect with the farm even more?” Marwood said. “Without farmers you don’t eat and now you have a chance to directly support them.”
The model Cultivate Farms has developed will see the startups scout farms and families, provide strategic advice to the farmers, report back to investors, conduct risk management, and help the farmers sell their produce.
Investors will have funds locked in for at least 10 years; with their stake they will be able to vote on big decisions regarding the farm at an annual general meeting and visit the farm to facilitate the deeper connection to the land. Meanwhile, the farming family will operate the farm according to plans developed in conjunction with Cultivate Farms and its agronomists, reporting back to investors on operations. The farm’s produce would be sold direct to consumers, to further ensure the connection with the land.
Marwood said Cultivate Farms has put these guidelines in place to ensure that the farming families feel in charge of the farm’s operation.
“It would be unviable if we have investors calling up the farmer every day telling them to plant whatever in the back paddock. We’re trying to set some expectations, so the reason why they’re investing is because of Cultivate Farms and the fact we know what we’re doing with farm purchasing and ownership and we’ve selected the best farming family for this farm,” he said.
“Farmers are used to having their farm by themselves, so it’s important to keep that control for them so they can keep their ownership and the want to strive for their best. I think that’s best done through them calling the shots.”
Joking that the startup could do a farm version of The Block to choose its farming families, Marwood said the team is currently putting together some criteria around what it would expect from farmers, but has already seen some interest.
“They need to be able to be comfortable with this new arrangement where they probably won’t ever own the farm outright, but I think most of the focus will be on their passions, like do they really want to be farmers? It’s not the most glamorous job in the world and it would be tough work, so we want to filter these farmers to make sure they’re in it for the long term and not just a romantic idea of it, it has to be a passion and they have to have an understanding the realities of it,” he said.
Marwood believes there are thousands of young people qualified to take on the job, and thousands more who love the idea but don’t yet have the skills to do it. He likes the thought of Cultivate Farms later on providing these aspiring farmers with the necessary training to get them ready for the farm when an opportunity arises.
When it comes to investors, Cultivate Farms will be looking to target a range. It hopes to have the retiring farmers from which the farms will be bought retain a stake in the properties, while mum and dad investors and high net worth individuals will also be targeted. Cultivate Farms will also take a five percent stake in each farm, and establish a fund to allow investors to invest into a number of farms.
The startup is currently going through all its paperwork, waiting for its Australian Financial Services license and changes to equity crowdfunding regulations to come through to enable a wider range of investors to buy in. It is also putting together its first arrangement, or prototype farm, with the farming family to be Tim and Tegan Hicks; Marwood said it will most likely be a lease to buy.
“That’s been the hardest part for us, finding those retiring farmers now at the very start who are willing to let us lease for a little bit and make some profit and then purchase once we’ve got all the legal paperwork sorted in the next year,” he said.
The size and in turn value of farms will vary, however the proposal put forward for the prototype farm has $5 million required for land and operations, with returns at 4 percent.
Cultivate Farms will be running an initial crowdfunding campaign to help fund its development launch over the next few months. The five year goal is to have 20 farms running across Victoria and NSW.
Image: Sam Marwood, Tegan Hicks and Tim Hicks with their daughters Rosie and Belle. Source: The Weekly Times.