Veripath Partners: Our farmland vertical invests in non-operated row crop farmland with productivity pricing discounts, positive productivity trends and low productivity volatility. Veripath provides consistent returns with infrequent drawdowns, low return volatility and can be an effective public equity replacement in traditional portfolios. The AUM in our farmland vertical is ~$500M+.
With the edge provided by a unique portfolio construction and investment screening model we have identified farmland markets with material productivity adjusted pricing discounts, positive yield trends and low historic yield volatility. This has enabled us to outperform our benchmark since inception, with no down quarters and low return volatility.
We have been investing in farmland since 2007 with consistent outperformance against our benchmark. We seek to provide superior absolute and risk adjusted returns linked to farmland price disparities and overall agriculture commodity demand. Farmland has demonstrated compelling financial characteristics – low volatility, consistent nominal rates of returns, and low correlation to many traditional investments. We have built a proprietary portfolio construction, investment screening, monitoring and reporting platform – TerraFIRST.
Population growth, emerging market socio-economic growth & dietary changes, land losses, regional water scarcity and inflation/stagflation are farmland’s high level macro drivers. Global crop production must double by 2050, farmland in exporting markets is an investible proxy for water scarcity and farmland generates high real rates of return, particularly in stagflation market conditions.
Our proprietary investment screening models have identified a number of developed markets with material productivity adjusted pricing discounts. Locations where crop growing capacity can be acquired at material discounts to global market averages.
Robust diversification, volatility reduction, capital preservation, high real return consistency, recession and inflation hedging, aggregate portfolio leverage reductions and increased liquidity are the key benefits that farmland allocations bring to traditional portfolio construction. Farmland is a unique non-depreciating real asset that is discounting the production of an infinite series of crops with inelastic demand curves.
The management team has consistently beaten farmland benchmarks since 2007 without a material in the risk behavior of the portfolios. Returns were generated with very limited leverage. Net returns to investors for the last 5 years have consistently exceeded 10%. Portfolios are valued quarterly by independent, third-party appraisers.
We have built a complete investment screening, portfolio construction and monitoring platform – TerraFIRST. TerraFIRST includes a highly scalable monitoring system using satellites, AI, online farmer reporting and recurring agrology. All data electronically is channeled into a central data repository with a business intelligence layer containing over 200 KPIs and millions of data records with verified ground truth.
We do not operate farms, and we do not invest in permanent crops. Operations introduce short term commodity price volatility into returns for which investors are not typically compensated reducing Sharpe ratios. Permanent crops come with excess CAPEX intensity, weather risk, water dependency and labor requirements. We have tools and processes to measure and mitigate weather risk, valuation risk and farming practices risk using online farmer reporting, verified with highly accurate satellite, AI and agrology monitoring. We aim for a portfolio with the deepest productivity discounts, the most positive production trend, the lowest historical production volatility with operator and geographic diversification.