A slight majority of farmland on Tillable’s online rental platform is owned by institutions, according to the company’s chief executive.
Speaking with Agri Investor on the launch of its “Hassle-Free Lease”, Corbett Kull said Tillable’s platform provides both institutional and individual landowners the ability to solicit blind offers from growers to rent their farmland.
Properties on the platform are largely devoted to row crops and located in the Midwest, with rents ranging from the high $100 per acre range to others in the high $300 per acre range, according to Kull.
Tillable’s platform has land in 26 states, which Kull declined to identify beyond saying Illinois, Iowa, and Minnesota have the most farms listed on the platform and the most farmers signed up on the platform. He declined to disclose transactions or total acreage.
“From what I’ve seen from institutional leases, the leases are typically fairly strict and I think there’s a lot of commonality between the institutional leases that I’ve seen so far and the retail lease we are using for our smaller landowner customers,” he said.
“Over the years, [institutions] have managed to make their leases more thorough. What we are trying to do is help the average individual landowner also have more thorough leases.”
In March, Tillable secured $8.25 million in Series A funding from a group of investors that included Philadelphia-headquartered seed stage venture fund First Round Capital and food and agtech focused incubator The Production Board.
Under the terms of the standard lease Tillable announced in early May, the company pays landowners one or three-year rental rates up-front and in full. In addition to information derived from its own platform, Kull said, Tillable uses a mixture of public and private data to determine predicted rent and takes a percentage of the transaction as rent is processed through the platform.
In some instances, Tillable will work with the property’s existing tenants, while in others, the company will locate a more suitable tenant.
“A lot of times when land comes to us, there is a discontinuity in the relationship with the grower,” Kull said. “A farmer has retired or gone out of business or there’s been a dispute between the landowner and the farmer where the farmer thinks prices should be lower and the landowner thinks those prices should stay the same or go higher.”
It typically takes about a week for Tillable to check an existing tenant’s references, experience and equipment to determine whether they will remain a suitable fit for the property, Kull said.
Tillable’s leases include provisions requiring growers to share planting, fertilization and harvest data with landowners, said Kull, adding landowners also have the option of additional requirements, such as influencing crop rotations on leased farmland.
Producers must also meet performance and sustainable farming standards that are increasingly expressed numerically, according to Kull. Soil testing is typically contracted by the grower with a local retailer or soil-testing lab with the tests then sent on to Tillable to function as a check and balance.
“It has to do with fertility management and following of best practices around university take-off rates,” Kull said. “Corn at a certain productivity level would require a certain amount of nutrients be put back into the soil at the end of the season.”
Corbet said Tillable already has a few farms on platform with plans for growing hemp in 2019 and the company has been approached by landowners inquiring about whether the crop might help them fetch higher rent.
Though there is much interest in the crop in the market right now, said Kull, there are important factors to consider, such as distance to processing centers and varying enthusiasm among landowners for the crop.
“Hemp is like the bitcoin of farming right now,” he said. “There are people who are trying to move really, really fast in this area and I think there is an information lag on the part of a lot of people who are not exactly sure what to think of it yet.”