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Peoples expands into Mississippi Delta region ‘where institutional capital plays’

Steve Bruere says covid-19 has highlighted the advantages of owning operations in the region which typically have controlled water systems that allow investors to grow different crops according to demand.

Peoples Company expanded into a Mississippi Delta region that its president said attracts institutional investors due to its reliable access to water and potential for large-scale transactions.

“This is where a lot of institutional capital plays,” Peoples Company president Steve Bruere told Agri Investor soon after the firm hired Joel King to assume the newly-created position of Mississippi Delta regional broker manager in late May.

King will continue to be based in Jonesboro, Arkansas and joins Clive, Iowa-headquartered Peoples Company after serving as principal broker at family-owned King Real Estate. In his new position, King will oversee Peoples Company’s provision of farmland brokerage, management, appraisal and auction services in Alabama, Arkansas, Louisiana and Mississippi.

Farmland services provider Peoples Company has been active in the Delta region for several years and had reached a point where it needed a physical presence in the area, Bruere said. He added that King’s location in Jonesboro will allow Peoples Company to continue servicing institutional investors that have long been drawn to the region’s large tracts and lack of restrictions on corporate or foreign ownership.

King told Agri Investor that much of the in-state institutional investor interest he is aware of is currently concentrated in areas of Arkansas to the south of Jonesboro, such as Saint Francis, Monroe and Lee Counties. Regarding the supply of farmland in local markets, he said local farmers have, in recent months, been forced to sell properties acquired as part of efforts to re-align debt ratios with lenders; a trend he expects will continue.

“The key is trying to find the farmer that is probably going to be the last generation to be farming and to match up their pride with the rate of return that institutional buyers want,” King explained. “Typically, you are looking at anywhere from a half to three-quarters discount as far as the yield on the price you [the seller] are offering, so we are just trying to match that up.”

The next California?

A food markets-focused initiative of the non-profit World Wildlife Fund explored the future of mid-Mississippi Delta region agriculture in a February report titled The Next California.

Drawing on research carried out in collaboration with non-profit AgLaunch and others, the report highlighted that while about 75 percent of the area in cultivation in the Delta region is currently devoted to commodity crops like rice, corn and soybeans, areas of eastern Arkansas, western Tennessee, southeast Missouri and northwest Mississippi have potential to grow many of the specialty crops that currently come largely from California.

WWF’s report explores the environmental challenges that have increased uncertainty regarding the future of food production in California, and the policy and infrastructure challenges facing any effort to increase crop diversity in the Mississippi Delta. It identifies more than 20 crops with potential to be grown profitably and sustainably in the region, including strawberries, walnuts, kale and sweet potatoes, among others.

Bruere said there are already six or seven different crops currently in rotation on assets Peoples Company is managing for clients in the region. The potential for crop conversions is also part of what has attracted investors to the Mississippi Delta.

Whereas Midwest properties typically rely on rainwater, Bruere explained, farmland properties in the Delta region often have controlled water systems that give producers a greater degree of flexibility with regard to what crops are gown by allowing them to save water during winter and spring.

“When you get into this covid type of environment with some of the swings you see in commodity markets, having that optionality to be able to switch crops is a really big deal,” he said.

In addition to helping provide for a wider diversity of crops, Bruere added, the presence of controlled water structures on Delta properties can help investors capitalize on strong regional demand for hunting and recreational activities. In one instance he described, Peoples Company was able to derive an additional $25 per acre of income on a property it was managing by allowing hunting to take place near a 30-acre reservoir.