
An Airbnb for farmland hits a snag, as farmers raise data privacy concerns - jessaustin
https://www.npr.org/sections/thesalt/2020/02/24/808764422/data-privacy-concerns-are-raised-after-startup-tries-to-rent-farmland
======
jelliclesfarm
There is actually more to this than is visible on the surface. And I can’t
talk about some of it.

But here it is:

1\. Climate Corp was part of Monsanto before it became Bayer. It was acquired
by Monsanto. 2\. John Deere wanted to buy Climate as well as Monsanto but that
was struck down by US courts and Bayer bought Monsanto. 3\. What was Climate
Corp doing before? They had something called Field View where they charged
farmers to collect and collate data. 4\. All precision Ag, Ag robotics and
farm data collections have two big industry ‘partners’: Wall Street and Farm
input companies. 5\. Now add farmland to Precision Ag/Ag robotics. 6\. This is
a kind of consolidation of land, inputs, data and machinery. 6\. Eventually,
all land will be owned by farm machinery companies and input companies. There
won’t be any more farmers in the future but only farming corporations. 7\. It
goes back to Wall Street because big Ag is commodities.

I am a small scale farmer interested in small acreage Ag robotics to save
labour. But no one was interested even though food is important and Ag is a
big deal in the USA.

No investors, no traction, no interest and I have no qualms about cold
calling...and down that rabbit hole, I found out that diff between food
farming and commodity crop farming.

In reality, there is no agtech for food farming. In the USA anyways. Agtech is
about land, inputs and mostly commodity crops. And speculation markets.

I don’t have an opinion. Maybe this is more efficient. Maybe it’s not a good
idea. And this kind of Ag isn’t even what I am interested in and I just
stumbled upon this while trying to figure why Agtech is such a big deal but I
can’t find interest in automating food production.

It is pretty fascinating how Big Ag has managed to consolidate and rein in
together. The players are still the same and it’s a few big corporations that
will control this sector.

Many of the players and VC companies and start ups are well known but it’s not
really necessary to drop those names. But anyone can connect the dots if they
invested some time. It is literally a web ..six degrees and all that.

Back to the article, expect ‘family farmers’ to be separated from their land
in the near and near-distant future. Already a lot of American farmland is
owned by foreign countries/investors, pension funds, insurance companies,
university wealth funds and hedge funds.

~~~
kitotik
Thanks for the extremely insightful context.

With so much first-hand knowledge of this situation, I’m having a hard time
processing how you don’t have an opinion on it. It seems that this is
exceedingly detrimental to the well being of literally everyone and everything
involved except for those that profit from it.

~~~
wjnc
This is somewhat for discussion purposes. Farmers make a profit, a farmer
retiring can liquidate his assets by selling his land to a pension fund where
in the olden days he 'needed a son', the lessee of the land usually wouldn't
start farming there is there isn't a profit involved. The produce gets sold to
a middle man and an end user, again for a profit.

The company I work for is in finance (non-US) and has a pretty large
investment in farmland, which we lease out up to very, very long contracts. As
far as I can tell people are quite happy with our stewardship. We provide
liquidity and give farmers the optionality to choose a different time horizon
for their firm. We lease out lands for biological farming, sometimes have
historical properties we maintain and lease out, do solar parks. It's like
real estate but with a different time horizon.

Re the 'long game' discussion for finance and machinisation. The firm has
literally been doing this for a few centuries so this hasn't been the original
goal. I don't think it's come up yet as a current goal, although in all
honesty I can see the appeal from a finance perspective. The farmer is the
middleman we can cut out and replace by machines. First thought then is - what
does it matter what the background of the owner doing the machinisation is?

~~~
jdc
_> Re the 'long game' discussion for finance and machinisation. The firm has
literally been doing this for a few centuries so this hasn't been the original
goal. I don't think it's come up yet as a current goal, although in all
honesty I can see the appeal from a finance perspective. The farmer is the
middleman we can cut out and replace by machines. First thought then is - what
does it matter what the background of the owner doing the machinisation is?_

Sounds an awful lot like deskilling, so hopefully the labour concerned has an
exit strategy.

~~~
wjnc
I don't want to sound totally econofuturoptimistic, but No, it's not de-
skilling in my book. I'd venture robotisation is actually re-skilling or up-
skilling. Or in other words: the average education level of the employees
after more and more capital flows in, goes up. And automisation / robotisation
is nothing new in agriculture. You need a lot less labour, that's true. But
that's the trend in agriculture for about 150 years (as far as I understand
rice is one of the few crops that's pretty constant in hours per bushel).
Modern day large farms are run by a handful of people (and an enormous supply
chain on both sides). An example: The Netherlands is a substantial exporter of
food, and farming is about 1.5% of GDP. That's astonishing.

------
rmason
Long term the Tillable idea won't fly. I worked with farmers as a fertilizer
company agronomist for twenty years. If I understand it correctly Tillable is
trying to insert themselves in the middle, acquire the right to sublease large
amounts of land and mark it up.

Say you own a farm and lease it out. The family you lease your land to might
be a neighbor. In the winter they might plow your driveway gratis. They add
fertilizer and lime as needed. I've known farmers to even add small amounts of
drainage tile at the beginning of a lease.

Now consider I'm a super large farmer who has rented your land through
Tillable. Farming is a super thin margin business. I live two counties over so
I am not going to plow out your driveway or look after your farm for you. I
will pay top dollar, I will in effect mine your land to make a profit.

I won't put on fertilizer if levels are high and skip the lime. I will make a
nice profit for a few years and then when yields drop I will drop the lease.
Over time the price of the lease will drop sharply. So in effect the landlord
will gain a few bucks short term but lose big time over the long term.

On a small scale I've seen this happen. When the landlord offers it back to
the original renter he will be shocked and angry when he either refuses or
offers a pittance.

The landlord either has to invest his own money on lime and fertilizer
building the farm back up or have a series of short time renters from outside
the county who take a chance on the land.

~~~
jefftk
It sounds to me like you're making two points:

1\. Tenant farmers often pay their landlord partially in kind, with things
like driveway plowing. Outsider tenants wouldn't do this.

2\. The tenant farmer has a wide range of options for how well to take care of
the land, which affects its long-term value. Outsider tenants would optimize
to maximize production during their lease at minimum cost, hurting long-term
value.

I don't think (1) is a major issue: landlords can consider the in-kind
benefits they get just as well as cash compensation. But (2) seems very
serious to me. Market rates for land are much lower than they would be without
the issue that the landlord needs to trust the tenant to be a good long-term
steward. Whether Tillable can succeed long-term depends on whether they can
solve this.

------
ISL
This is the first I've heard of Tillable. As described, it's not really AirBnB
for farmland, it's a growing-rights exchange.

The counterparty risk for landowners is substantial if it isn't mitigated
somehow. A long-term relationship with the land is essential to keeping it
healthy.

The relationships between farmers and landowners often span generations --
that makes them ripe for disruption, but the many practices that have emerged
to safeguard those relationships have good reasons to exist. So many deals of
substantial value are made in in-kind exchanges between neighbors who have
worked side by side for decades. Rapidly-changing tenants would change
everything.

~~~
onionisafruit
As somebody who manages some family land, I wholeheartedly agree. Going back
to 1830, there are only three other families we have trusted to lease our
land. Some generations we lease their land. Other generations they lease ours.
I’ve seen a cousin’s land destroyed for years by outside farmers. I know I
could make some good money by leasing to an outsider for a few seasons, but
they will use and abandon it, and it will take several seasons to recover.
What’s the point in that?

~~~
ISL
One could imagine sufficient contracts to preserve the land's value/health,
but they would be difficult to write and add friction.

A lot of conservation/preservation is easier if you know you're going to be
leasing it for years and the landlord is your neighbor.

~~~
jessaustin
No contract enforces anything against a corporation who is willing to waste
your time in court. They have employees who waste the time of poor farmers in
court every day. They use what they learn in court to write progressively more
evil contracts. When is the last time any of these farmers hired a lawyer so
skilled at contract law? Is such a lawyer available in their state? In any
neighboring state?

------
joezydeco
Kull’s previous startup, 640Labs, was purchased by Climate Corporation.

 _Smith had to wonder: Did Tillable target specific landlords because it got
access to data about how productive and profitable their land is?_

Climate Corp is a division of Monsanto. Wanna bet they have their own data
about crop yields?

------
kyle_morris_
I hope this doesn’t discourage farmers from using technology to improve
efficiency, yields, profits, etc.

I can’t imagine how tough it is to farm for your livelihood. The pressure on
farmers must be brutal - from John Deere making it impossible to fix/own your
own tractor[0] to climate change, and now your landlord might not renew your
lease.

At that point, why put so much effort into something with so little upside and
so much downside for the farmer.

[0] [https://www.wired.com/2015/04/dmca-ownership-john-
deere/](https://www.wired.com/2015/04/dmca-ownership-john-deere/)

~~~
est31
> I hope this doesn’t discourage farmers from using technology to improve
> efficiency, yields, profits, etc.

Throughout history of settled humans, Farmers have always been at the brink of
technological progress. The wheel, the plow, and all sorts of machines. It's a
common theme to depict them as technologically backwards, but nothing could be
further from the truth.

Another common but misguided theme is to depict them as stupid, which they
aren't in any form or fashion. They know when something is harmful to them,
and this is an instance.

~~~
CloudHelix
> Farmers have always been at the brink of technological progress.

You would think we would see more automation and fewer cows being milked by
hand were this true.

~~~
gamblor956
The primary method of milking cows in the US has been by machine for
decades...

And most farms in the US are highly automated: automated sprinklers, automated
tractors, automated planters, automated harvesters (of crops that are amenable
to machine harvesting).

It's simply that there are a lot of food crops that are trivial for humans to
harvest by hand that would require very expensive machinery and technology to
accomplish with a machine.

~~~
bingerman
This. The supply of cheap human labor tends to make technological progress
slower.

------
econcon
In India big farmers rent their land to big corporations and sit back relax
and collect rent dollars.

Many have become millionaire overnight by doing this.

Government started taxing farmers for this reason. Untill recently, all farm
income was tax free.

The case in point being that MNCs are producing the kind of output, no farmer
here ever could dream of producing.

And the con? All they need is a huge piece of land.

Very little labor if any is used in this.

Most small farms are not profitable as overhead of bringing machine or labor
to small farm is just too high.

I know a few farmers who sold their few hectares land in Punjab and brought
several thousands of hectare land in Australia.

So you can how inflated the price of farm land is in India.

Now after making enough money in Australia, they are buying back their
ancestral lands and this is sending the price of farm land in Punjab through
the roof.

------
peterwwillis
Family farming in Pennsylvania died years ago from land competition.

The first general category of threat came from industrial farming. Large
corporations started acquiring land in order to optimize profits for their
monocultures. Over time, much of the land that was historically family farms
became mega-farms that out compete any new family farms.

The second general category of threat was real estate developers. They would
buy up land, often from the people who used to rent to farmers. At first they
might not raise rents at all. But later when the market was agreeable, they'd
raise rents until farmers couldn't afford to farm it, and then develop it for
more profitable commercial or residential use. (interestingly, many plots that
weren't being developed sat empty, and so some farmers would actually
guerilla-farm it for years/decades)

A third general category was non-developers (usually the inheritor of older
farms or land owners) who owned lots of land and rented it to farmers. They
would "suggest" that the most profitable crop be placed and that they receive
a cut, or they'd rent the land to someone else when the lease was up. So over
time most land went to farming corn even if the farmer wanted to grow real
food, and eventually that land would get sold to one of the two above.

------
sk5t
Is is too uncharitable of me to think of Tillable as a VC-funded vehicle to
make sharecropping even worse than it already was?

~~~
haram_masala
Agreed, it seems like yet another iteration of a company that starts off by
disrupting a market to make it more liquid, but whose endgame is becoming the
dominant or sole rentier in that space.

~~~
EdwardDiego
Exactly, they sound like an unnecessary middle man that disrupts established
relationships with promises of higher rents, which will end up killing the
smaller farmers in favour of the large corporate farmers.

~~~
randomdata
On the other hand, as a small farmer, I am small because it is _very
difficult_ to find land that isn't already tied up in established
relationships, often to those large corporate farmers. If something like this
can give me an in with a landowner that I currently don't have, it helps my
small farming business.

------
yalogin
If the farmers have decades long relationship with the landowners this looks
like a power play by tillable/VCs to get in there and take a recurring cut.
They know the farmers have no option but to rent land and the VCs know it. So
they are using their money to pay cash to landowners and get them on the site.
Probability wise there is a 90% chance that the land will be rented by the
same farmer as before because of land proximity issues. So it’s just free
money for tillable.

~~~
creddit
So, why would the farmer use it then?

~~~
luckylion
Because he needs land to farm on, or he stops being a farmer and has to shut
down his business.

He will now pay e.g. $1000. Tillable will offer $1100 upfront to the land
owner and then "offer" it to the farmer for the low price of $1200. Since he
can't just farm on some piece of land 500 miles away, he can either pay the
new price, or stop farming.

Tillable offers no significant service here. It's not that there's a lot of
land sitting idle because farmers and land owners have no way to come in
contact, they are not solving a problem, they are just injecting themselves to
extract rent with VC money.

~~~
PeterisP
If the farmer is willing to accept a $1200 price, then what prevents the land
owner from charging $1200 right now? All the factors you list which push the
price up apply just as well for the current owner-renter negotiations.

The scenario you describe is possible only if there is a lot of land that's
severely mispriced / underpriced - in which case the price should and would
get corrected, and after that the arbitrage opportunity disappears because, as
you say, the land owner can come in contact directly with the farmer and make
arrangements.

~~~
TeMPOraL
> _If the farmer is willing to accept a $1200 price, then what prevents the
> land owner from charging $1200 right now?_

 _Basic human decency_? These are often long-term relationships between
neighbours, whose families lived next to each other for decades or hundreds of
years.

~~~
randomdata
But those with such decency wouldn't turn to Tillable to capture an extra
buck, so it remains unclear where you think Tillable fits.

~~~
luckylion
Apparently nobody turns to Tillable. It's Tillable that's turning to land
owners and tries to convince them to not renew their contracts with farmers so
Tillable can negotiate new contracts with higher prices, likely with the same
farmers (as farming is very much a local thing, you can't farm a piece of land
from a thousand miles away).

~~~
randomdata
That only brings us back to the question of why landowners wouldn't go
directly to the farmer and ask for the hypothetical $1,200 that Tillable would
also ask of them? It is not exactly difficult to figure out who the farmers
are in your local area, and it is especially not very difficult to figure out
which ones are the hungry ones willing to pay top dollar, if that is your
goal. Chances are they have already been hounding you for years. Exactly
because people don't normally seek farmland a thousand miles away, where there
could potentially be a benefit in new introductions, it remains unclear where
Tillable fits.

~~~
luckylion
I believe it's similar to smart phones being produced by humans at the other
end of the world who live in bunk beds, have 10-12 hour shifts and barred
windows + nets below so they don't jump out trying to kill themselves. Most
people at this end of the world are not okay with those conditions and do not
tolerate them if they know about them. But put a suit at Apple and another
suit at Foxconn between the consumer and the producer and they don't know
about it. When it comes out, people are appalled and Apple & Foxconn have to
shift strategies or face consumers shunning them. Tillable are those suits.

Land owners are not in the business of maximizing profits at any cost, but if
you approach them with a much better offer for their land, they don't see the
ways how you're able to afford that offer, much like the smart phone buyer
does not know why it doesn't cost $100 more. When people profit from
something, they are usually not too concerned with the details and accept that
things happen that they wouldn't allow if they knew about it, by turning a
blind eye (blinded by the profit, you might say).

~~~
randomdata
People are willing to pay more to Apple than to Foxconn for an iPhone simply
because intellectual property law prevents Foxconn from realistically selling
the iPhone at a lower price. When one decides the iPhone is the device for
them, they have little choice but to buy it from Apple at whatever price Apple
has decided to charge. If there were no such IP encumberments, Foxconn would
sell an identical device for a lower price and people would quickly forget who
Apple even is.

Farmers approach landowners with better offers all the time with no qualms
about paying top dollar to get it. Being a farmer myself, I can tell you first
hand that competition for land if _fierce_. Sometimes the approaching farmer
is taken up on the offer, sometimes not. But I see no real indication of pent
up demand that isn't being satisfied because people cannot figure out who the
landowners are. There is literally a land registry, if all else fails. But
rural communities are small. You already know who owns what, and conversely
who farms what.

It remains: Where does Tillable fit?

------
jackfoxy
The Fed's response to the pandemic has been essentially to bail-out every
financial instrument. Today we are seeing deflationary pressures. But this is
only in the short term. Eventually this unprecedentedly massive _printing_ of
money will turn inflationary. We have possibly (I don't know) run the course
of inventing new financial instruments to turn money into more money. Or maybe
the Fed will continue to exceed its charter and and encourage moral hazard.

One thing is for sure, smart capitalists are searching for real assets to
acquire. There is a tsunami of capital looking for preservation in the face of
coming inflation. Look for consolidation of small residential leases,
productive farmland, productive forestry and mineral land and leases in a big
way.

------
User23
This sounds an awful lot like tortious interference.

------
Normal_gaussian
What else would such a partnership be used for?

~~~
wrkronmiller
Possibly: trying to ensure that the renters do not use up the land they are
renting.

------
CloudHelix
Any heredity industry is going to be kinda backward.

