Going Long: Legacy Investing with Agroforestry

Investing can be characterized by a variety of metrics including risk, return, time, and costs. Yet, “inter-generational cohesion” or "legacy" is not often a metric that appears in an investment prospectus. How investments perform over the long run, and how they can help connect a family across multiple generations, may be an important factor to individuals and family offices making investments that deliver longer term returns.

Searching for Opportunity

In 2016, Joe Tatelbaum returned to the United States after a successful expatriate career in China where he led a series of investments and business opportunities during a period of sustained growth. Seeking investment opportunities for his portfolio, and eager to enjoy closer proximity to his children and their growing families, Joe and his wife researched a variety of traditional and emerging investment vehicles.

"They helped connect me back with that I learned in China. There was a profit motive, and good ideas can be scalable."

Among his many experiences in China, Joe had met a conservation forestry group focused on restoring land in Mongolia that had been devastated by over-farming. The group developed a program of large-scale tree-planting, known as the Million Tree Project, not only arrested the desertification of the formerly fertile farmland, but also stabilized the environment and helped local communities return to a stable, sustainable agricultural economy. Having seen the positive impact of combining forestry with agriculture first hand, Joe knew that the team at Propagate was on to something big. Joe asked them to develop a detailed process for evaluating potential land parcels for combining forestry and agriculture. "They helped connect me back with that I learned in China. There was a profit motive, and good ideas can be scalable".

Land Analysis

Most investors in agriculture tend to evaluate the farmland value based on land appreciation and current or historical crop yields & revenues.

Propagate’s offers a different approach. By using agronomic tools, local climate and economic models, as well as a a powerful database on how annual crops and tree crops can best be combined, the Propagate team can evaluate each parcel not only on the basis of how much revenue it has generated in the past, but on how much revenue it has the potential to reliably generate in the future.

Better still, the Propagate team can take parcels purchased for investment and execute the complete planting and cultivation strategy, delivering a landowner a farm with complete, functional, operations & maintenance that delivers defined revenue expectations for the future.

Creating a System: Agroforestry Analysis

“We initially wanted a land-bank. My wife and I had a vague discussion. The Propagate guys showed me it could be profitable and good for the earth.”

After evaluating a number of properties in the Hudson River Valley of New York, Joe and his family created GreatWonder an ideal 127-acre farm, with 50-acres formerly in grain and hay production, to feed dairy cattle. "We initially wanted a land-bank. My wife and I had a vague discussion. The Propagate guys showed me it could be profitable and good for the earth."

Using Propagate's platform, a fruit & nut alley-cropping system of Blackcurrant, Chestnuts, and Black Locust was planted with profitability and long-term value as core tenants at the center of this operation.

From planting in 2020 through 2027, the space in between the tree rows will be seeded with cover crops for in-situ grass mulch, hay production, and chicken (broiler) production. After 2027, the trees will have grown tall enough to be above browse height, so that cattle can rotate through the farm as a managed grazing system. Joe recalls "they had an idea of what to do, and they described it to me. This is the soil, the slopes, the water. The plan that we’ve now executed is pretty close to what they first presented to me."

The site is designed with Keyline geometry where the ridges, valleys, and slope of the land dictate the placement of roads, water features, and the contour-dependent pattern of the tree rows. Crop location was selected based on soil quality, slope, and wetness.

“They had an idea of what to do, and they described it to me. This is the soil, the slopes, the water. The plan that we’ve now executed is pretty close to what they first presented to me.”

Propagate’s Role

Created sub-centimeter accurate crop design
Surveyed for sub-centimeter accurate planting
Analyzed site soils and wells for quality assurance
Built project economics for long term value proposition
Provided customer service for any questions and knowledge requests from Joe
Built Local Vendor network for labor, inputs, and capital improvements
Sourced all genetic stock
Acted as site supervisor to ensure proper planting and maintenance

This agroforestry system is built to deliver the most effective combination of capital & operational expenditures and long-term income. The farm will breakeven in 2031, with annual revenues between $250,000 and $350,000. The farm's first crops, Blackcurrants, will be harvested in 2024.

Planting to Specification: Project Development

After the analysis and building the project development resources the Propagate team broke ground on Joe's farm in August 2019. He notes that “The closest I have ever come to farming is developing solar farms,” notes Joe. “But in those projects, the life of the solar assets was expected to be no more than 25 years. In the case of my farm, the assets will continue to grow in value for years beyond.”

With 2,500 trees planted in spring 2020 and 15,000+ more trees planted in spring 2021, Joe's first farm investment will be operational by 2021. “And that’s great,” notes Joe, “because we have located a second parcel of land that we are looking to have purchased to combine operations and increase the economies of scale.”