Farmland financing with Claire Mesesan and Raya Carr of Iroquois Valley

This week, we spoke to Claire Mesesan and Raya Carr of Iroquois Valley REIT, an organic farmland finance company that provides farmer-friendly leases and mortgages to the next generation of organic farmers. Over the last 15 years, Iroquois Valley has helped transition thousands of acres of conventionally farmed land to sustainable agriculture. Their farmer-first philosophy ensures that every parcel they work with is stewarded by someone who is committed to its prosperity and has access to the resources and support they need. We hope you are as excited as we are to learn more about this pioneering organization.

Can you start by talking about what the mission at Iroquois Valley is?

Claire: We work with mission driven investors who are part of the impact investing space to fund organic farmers across the country with land security. We offer leases and mortgages, and we recently began offering operating lines of credit. We cover 17 states and touch almost 30,000 acres. I always like to say we touch every angle of the food system — whether it's people who are growing large amounts of grain or beans in a crop rotation and are selling wholesale, or much smaller farmers who are selling direct to consumers and who you might find at a farmers market or through a CSA model. We do all of that and everything in between.

How did you each get involved at Iroquois Valley and what are your roles?

Raya: I actually first got involved when Iroquois Valley invested in my family's farm. That's when I met Claire and some of the team members initially. A few years later, when I was no longer working for the farm full time, Iroquois Valley’s CEO reached out and asked me if I was interested in joining the team. It's taken my life and career for a turn that hits close to home because I came from the farmer perspective. Now I'm the Relationship Manager so I work with farmers all across the country.

Claire and I work together on fielding inquiries from prospective farmers and taking those inquiries through the pipeline to investment and beyond. I work with farmers that are already in the portfolio on any new needs that come up and on our annual visits and check ins, and I also work with new intakes.

Claire: My current title is VP of Farmer Relations. I came to this kind of haphazardly after studying philosophy and French in college. Within philosophy I got interested in agricultural and environmental ethics, and different ways that food sovereignty and land security could be supported. I took a job in Madison, Wisconsin doing AmeriCorps Farm to School work immediately after college, and I applied for an office manager position at Iroquois Valley after that year. The company was a lot smaller back then, we were in fewer than 10 states and had a very small staff, so I feel like I've seen us grow in a lot of interesting ways. I moved from office manager into communications for the company, and eventually that led to farmer relations as a byproduct of the fact that most of our communications are farmers-centric stories. I’ve been building out the pipeline process of the farmer experience from initial conversation to long term investment relationship. It’s all continuously evolving in exciting ways.

How does Iroquois Valley balance these different pools of people that you're working with — the investors and the farmers?

Claire: We have an investor relations department and a farmer relations department, and we often collaborate. Investors want to know what kinds of practices farmers have and who they are investing in.

Raya: I think that balance is a really important subject because one couldn't exist without the other. Iroquois Valley wouldn't have impact if it was just farmers, that doesn't solve the issue of farmers needing capital. And conversely, investors can't have their impact without farmers, especially in Iroquois Valley’s model, where our process of investing in land starts with a farmer. We're not out there shopping classifieds for land. We're making ourselves available to active farmers when they find opportunities of land that they want to farm. So having good communication, equity, and bits of focus between those two departments is crucial. We're continuing to hone in on how to do right by our investors and our farmers, and give them all the recognition they deserve. It's a group effort.

Something specific that comes to mind is the way we communicate with the investors. The fact that there is a whole team that answers questions that the investors have about farms. Iroquois Valley plays an important role in educating our investors about what our farmers are doing and why. Having been on the farming side I think it's great to have Iroquois Valley fielding those questions.

Iroquois Valley plays an important role in educating our investors about what our farmers are doing and why.

Claire: A lot of the content that we deal with is nuanced and complicated. Many of our stories aim to paint a picture of who these people are and why they're making certain choices on their land. We might get questions like, “why is this in their rotation?” or “why do they have this kind of operation?” — And a lot of it really depends on the land and the farmers' relationship to it.

When we started in 2007, many of our initial investments were in farmers that were among the first, if not the first, in their counties to transition to organic. In these Midwestern communities, that can involve a good amount of social stigma. So what we do is buy land to help young farmers who are trying to do something differently, even if it’s just a small step in that direction. We also work with people doing prairie restoration or any kind of ecosystem restoration. We made an investment that Raya and I got to visit together in Arizona that involves zero planting. It's just working with a natural, though highly degraded, grassland ecosystem, to bring it back to functional health through raising a heritage breed of cattle. That’s one example that’s a little bit more complex, but you can see how all these people have very unique, place-based stories.

I think our portfolio skews pretty young. And increasingly, we're getting outreach from Gen Z farmers, which I find really cool. It's been great to see the ways people are pushing the envelope.

You said that your process of investing starts with the farmer. Can you tell us more about what that means?

Raya: Yeah, when we are assessing different opportunities, we specifically ask, “Is this farmer rooted in place?” That's the question that is on our investment reports.

When land owners that haven’t identified a farmer to sell the property to yet reach out to us, we like to tell them how our process works. We have an interview with a farmer and find out more about their plans — where they are now, their experience, their needs in the new property, have they already identified it or are they still looking? And we talk about our commitment to organics, making sure we have shared values there. So we tell landowners and folks selling properties about that as an FYI, and sometimes we can end up working together, but our focus is more on the process of the farmer.

So what we do is buy land to help young farmers who are trying to do something differently, even if it’s just a small step in that direction.

A farmer will come to us and say they have land that they want to farm. Either it's changing hands in the family or it's a brand new purchase. And they want to know how they can ultimately get to work on it. It's a big obstacle for farmers as they first get going. We work with them on financial planning — over the years we've honed in on looking at the next three years of their cash flow to make sure that in both best and worst case scenarios, it will work out.

Claire: We are really underwriting the farmer. We don't move to make an investment unless we have a ready, willing, and able farmer in place. And I think a lot of that stems from our ideology that the farmer is independent and we're not telling them how to run their business. They're coming to us with a business that's in place. We're looking at the viability of their business and we trust that the land that they're bringing to us is a good fit. We can't tell a farmer who has their own business plan why one parcel is better than another parcel. So our underwriting process is much less about the specific piece of farmland than it is about it being workable by that person. There are certain things that we'll look at, but usually, the farmer knows exactly what they want in terms of land. And so if they're at the point where they’ve found it, then that makes it easy for us to do the rest.

What are your dreams for the future of Iroquois Valley?

Raya: One of mine is to get more and more feedback from farmers — telling us what’s working for them, what they want to repeat, and what they might want to change. That this is working for me. I would feel we are achieving our goals if farmers are telling us that terms and arrangement for this loan understands where they’re coming from and works for they’re business, that they’re getting the customization they need when things don't go as expected, and they feel they have a trusted partner in us.

Additionally, looking at who we serve and making sure that we're doing our best to provide tools that are accessible not just for a specific cross section of farmers, but to be as inclusive as possible. Reaching out to Indigenous farmers, and Black farmers, and all different communities. It has to be a continual questioning, because we are surely making assumptions that we don’t even realize we have.

Claire: And to zoom out further, one of the things that we've been saying since 2007, is that only 1% of farmland in the U.S. is certified organic. So one big dream is changing that number by getting more folks on the land and then doing really well by them and making sure they’re having a great experience.

Another one of the cool things about Iroquois Valley is our focus on accessibility, especially in the investor space. So with impact investing, it's definitely a growing world, but it's also a somewhat limited world. It tends to be for a lot of high net worth individuals who already have access and are working with a financial advisor. Folks with less wealth might be able to get involved through a 401k plan or mutual funds, but it's pretty difficult to find a one off impact investment for a non accredited person. And a few years ago we created our equity offering, so our minimum is just over $10,000. That’s still a lot for a lot of people, but it does provide opportunities for different kinds of investors to get involved, and now over a quarter of our equity investors are non accredited.

It has to be a continual questioning, because we are surely making assumptions that we don’t even realize we have.

Raya: So much of this space is funded by so few investors, so I am extremely proud that we have over 600 investors and we’re supporting farmers securely.

We never want to be in a position where we'd have to sell a farm to pay back an investor, so keeping farmers on the land is entirely central to the way investors are able to engage with us. Our waiting period, our dividends, all of it is in service of keeping our promise to the farmer that they can be on that land indefinitely if they want to. If they want to buy it from us after their vesting period, then they can do that and it's not going to cause huge ripples in our investor space.

Thank you, Raya and Claire! Your work inspires us to keep pushing this movement forward.