How Do Farmland Investors Earn Annual Income? (Video)

December 27, 2019
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This article was edited to meet broker-dealer compliance guidelines in April of 2023.

Video Transcript

I've got a question here about lease payments. Does the leasee pay a portion of the crop proceeds to AcreTrader owners?

So, that's a little bit of a complicated question, we'll go through two different scenarios.

The first is our permanent crop offerings. With those, you are actually investing in the ongoing concerns of that farm itself. So, you do receive a portion of the profits in most cases from the land and operations; so that's scenario one.

Scenario two are our row crop offerings.

Now, row crop offerings have three different types of leases primarily. You'll have a crop share, which is a revenue share agreement. Next, you have a cash agreement, and then you have a flex lease, which is a combination of the first two.

In most cases, we are doing a cash lease because of its simplicity. In a very rare scenario we may do a flex lease that of the combination but that would be structured so that it would have a lower floor and then have some upside for the AcreTrader investors.

And that's advantageous both to the farmer, because his absolute number can be lower in times that are not as profitable, and the investor because then he shares in his upside with the AcreTrader investors if it's a good year.

For more on how landowners earn income, please read this article on how farmland owners earn income in our Learning Center.

The above content is not intended to be a comparison between products, but is intended for general, educational and informational purposes only. Any performance noted is historical and there is no guarantee any trends will continue. All investing involves risks, including the complete loss of principal. Diversification does not guarantee a profit or protect against loss in a declining market. It is important for each investor to review their investment objectives, risk tolerance, tax liability and liquidity needs before investing. Investment vehicles have differences in fee structure, risk factors and objectives. Investments are considered speculative, involve a high degree of risk and therefore are not suitable for all investors.

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