Ep #09: Regenerative Agriculture: A Game-Changer for Farming & Finance with Wayne Ebersole
How can regenerative agriculture transform both the environment and farmland investments? In this episode of The Land Ledger, we’re joined by Wayne Ebersole to explore the powerful intersection of sustainable farming and smart investing. Sharing his insights from years as a consultant helping farmers transition to more sustainable practices, Wayne highlights the biggest obstacles farmers face—and how these challenges inspired him to launch an investment fund designed to purchase farmland from retiring farmers, implement regenerative practices, and ultimately sell the improved land at a premium.
Listen in to hear about the investor perspective on farmland as an asset class, comparing it to traditional real estate investments. You’ll learn why farmland offers a stable, long-term hedge against inflation, as well as the broader implications of regenerative agriculture for environmental sustainability.
Listen to the Full Episode:
What You’ll Hear About in This Episode:
The benefits and challenges of regenerative agriculture.
Why farmland is a unique and valuable asset.
The role of livestock in soil restoration.
The challenges of reintegrating cattle into large-scale farming operations.
How regenerative farming supports local economies.
Ideas Worth Sharing:
“We tell people from finance sides, 'Diversify your investments, diversify your investments.' Well, the same is true for farmers. Diversify your investments.” - Wayne Ebersole
“It's amazing what regenerative ag can do for you, for your soil, and for your bottom line.” - Wayne Ebersole
“The biggest thing is the operation. People can farm that land if they continue the regeneration process and know that they can make better money doing it with that. That's the biggest selling point.” - Wayne Ebersole
Resources:
Wayne Ebersole: LinkedIn
Dirt to Soil: One Family’s Journey into Regenerative Agriculture by Gabe Brown
The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else by Hernando De Soto
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Read the Transcript:
Wayne Ebersole: If you're an ag graduate, get into studying biology, especially soil biology. There is so much power in soil biology. Just the microbiome profile makeup of what bacterias and funguses are available on any given farm is as unique as fingerprints. Study biology, study the conditions that biology thrives in and produces a diverse, balanced environmental benefit.
Welcome to The Land Ledger podcast, where investing in farmland meets the future of finance. I’m your host, Brian Kearney, here to guide you through the untapped potential of farmland as an asset.
Whether you’re already investing in farmland, want to invest in farmland, or you’re just curious about safe alternatives to stocks and bonds, this is your space to learn, explore, and be inspired.
Your journey to farmland investing starts now.
Brian Kearney: All right, welcome to The Land Ledger. Today, we have Wayne Ebersole on the podcast, really excited to dive into his experience in the farm management space and the asset management space, I should say, particularly on the regenerative side. So it'll be interesting to get his view. Wayne, welcome to the show.
Wayne Ebersole: Hi, Brian. Thank you for having me. It's a pleasure to be here.
Brian Kearney: Yeah, thanks. I'm excited. We were just talking before that this is one of the few times. Well, Wayne, where are you based again so our audience knows?
Wayne Ebersole: So I live in Montana. I'm originally born and raised in Pennsylvania. I grew up helping farmers as a kid. I threw hay bales, stacked hay in barns and all that good stuff, had some beef cow pairs as a kid and into my teen years. And then I got busy with life and my background is actually in accounting information systems.
So I've been like an IT director. I've been a CFO for a number of companies, but got back to my farming roots by working for a company called Cover Crop Solutions. And that's where we got into the whole soil health thing and regenerative agriculture. It was probably before regenerative agriculture was even a term.
Back then we talked about soil health and cover crops, using cover crops to build soil health, and things like that. And that eventually led to a consulting business called Future Generation Ag, which helps farmers transition to better soil health practices, using regenerative ag to improve their bottom line. And so I guess I'm kind of uniquely positioned of being a CFO for a number of ag companies and other companies to be bottom-line focused for farms and ranches. And it's not all about yield, it's really how much money do you take home at the end of the year.
Brian Kearney: Yes, yeah, absolutely. That can be hard to hear sometimes, particularly here in the Midwest where we're pushing some pretty good corn yields, but–
Wayne Ebersole: Yeah. The coffee shop peer pressure is very real.
Brian Kearney: It sure is. It sure is. Yeah, and we were talking before the show, this might be one of the few times per year where Central Illinois is actually a lot colder than Montana. We had a weird negative 12-degree day today. So that was fun. And we were talking about that before, but, yeah, I want to dive into the regenerative side and the financing behind it because our audience is kind of split between farmers and investors.
And I would say investors think that regenerative is the holy grail and farmers are often on the opposite side, and truth is probably somewhere in the middle. So let's dive in a little bit there and tell me about how you did get started and what you started to see when you started working with cover crops and looking at the soil.
Wayne Ebersole: Yeah. So, we, like I said, we started, I started working with cover crop solutions. I started in sales for them, eventually became their CFO. And one of the things that we noticed is that as farmers started building their soil health, their need for input started to decline. So they had more plant soluble nitrogen available, a lot of areas that had high manure input, their phosphates were too high, started coming down, stuff like that. And we were focused back then primarily on the, most of our work was done in the Mid-Atlantic region. And that area, I think today is probably close to 80% cover cropped and regenerative ag managed.
Brian Kearney: Oh, wow. Didn’t know it was that high.
Wayne Ebersole: And it has made a huge difference in the Chesapeake Bay, which there's, the states around the Chesapeake Bay like Maryland, Virginia, Pennsylvania, New York, and some of the watershed, like the Susquehanna River watershed, and some of that were pretty big on incentivizing farmers to transition to regenerative ag.
And so that was kind of a good test bed, a good experiment on what are the values of regenerative agriculture. What do they provide? And I had the privilege of visiting the Tangier Island, which is a small island in the middle of the Chesapeake Bay. And if you talk to those, and also my business–he was my boss back then, Steve Groff, he's now my business partner.
They had a number of meetings down there, and the fishermen talk about how regenerative agriculture has improved the water quality of the Chesapeake Bay. They're starting to see grasses grow back. They're starting to see crab populations come back, fish populations come back because we're not putting all those nutrients into the water, creating these huge algae blooms that then create oxygen dead zones.
And so what we do as farmers or investors or as ranchers or whatever has an effect on other people that we don't know. And so you see those kinds of environmental benefits. Now, there's still the old cities of Baltimore and Philadelphia occasionally dumping raw sewage into the Chesapeake Bay, which doesn't help with the nutrient load, but farmers have made a difference.
Their management practices of their soil have made a difference. And so we used to talk about, you know, in the wintertime you would see snert, it's that snow and dirt in the road ditch from tilled fields that were tilled in the fall and left uncovered over the winter. Well, most of that has gone away in that region.
And so one of the side effects that we started to notice as these guys were getting into five, seven, ten years of managing regeneratively, producing some of their own nitrogen with fall cover crops, legumes, and things like that is the available nitrogen in their soil profile and the available nutrients in the soil profile went up.
And so that means they didn't have to put as much nitrogen on in the spring. They didn't have, they stopped tilling the soil, which started improving their soil profile, which means in a wet spring, they could get in a little earlier. Their soil with covers on it tended to warm up because of the bioactivity that was going on in the soil.
And in dry years, you tended to, you keep a mulch there with your cover crop residue, which trapped more moisture in there in wet years. If you let the cover crop grow a little longer, a lot of guys went to planting green. So they're planting their cash crop right into their standing cover crop.
And maybe rolling it first, or then terminating or after planting, things like that. And so these guys started to see the effects and the benefit, and it started to affect their bottom line because their input costs, they just didn't have to put as much input in. They had healthier plants, cash crops, which means their insecticides and their herbicide profile reduced, head could be reduced.
The nutrient profile could, the inputs could be reduced. And so we started to see this affect the bottom line and we've been in it now. I've been in this, going on my 12th year, I guess, and the data is pretty much conclusive. Managing regeneratively will improve your bottom line.
It's not going to do it the first year. We used to tell guys, “You need to treat cat cover crops, just like your cash crop. You got to do it every year, whether it's dry, whether it's wet, whether it's cold, whatever.” You're only going to hit it square on two out of five years. Maybe three.
The two years you're going to cover crops are just gonna not do much for you, but that overall management practice produces dividends to the bottom line in the long run and we worked with a guy actually in Southern Illinois and Southern Indiana, 20,000 acre farmer. He was gonna lose his farm. He really was and so he started managing this way, went to no-till, went to using cover crops, and it actually saved his farm because it improved his bottom line. And, now I think his–
Brian Kearney: He did that on the whole farm? What did that transition look like–
Wayne Ebersole: Well, I think it was a transition over a period of three years, but he changed his cabin, he got rid of his big tillage equipment, all that kind of stuff, went to no-till planters, went to some rollers and things like that. And it paid off for him. It really did.
And I had the privilege also of working with a farmer, a rancher actually in western Colorado who bought a ranch. It was basically scrub ground. It was sage on it and Canadian thistle, six foot high. And he was able in 15 years to take that soil which had anywhere from a half to 1% organic matter to a soil profile that had over 7% organic matter.
Brian Kearney: Wow. In 10 years, you said?
Wayne Ebersole: And all he does is grow grass hay on it. That's all he does. It actually has, it's a number of species, a number of grass species, has a little bit of alfalfa in it. He still seeds no tills cover crop on it every fall. He'll put like maybe cereal rye or annual rye grass or triticale or something like that on it.
He'll mix a little radish in there to aerate the soil and things like that. And his soil profile, he actually now, the way he sells his hay is he publishes his forage sample in the local paper, and ranchers pay him a 30, over a 30% premium for his hay simply because he literally has micronutrients showing up in his hay profile now.
And what used to be a whole field of Canadian thistles, his neighbor hasn't done anything with his land. It's still sage and six-foot Canadian thistles. Their seeds blow across his ranch and he might get two or three Canadian thistles that grow maybe two, three feet high. He goes out with 20% vinegar sprayer, hits them by hand on his four-wheeler and they die and he has no issue.
And the reason is because he raises magnesium profile, the amount of magnesium in a soil profile. And so Canadian thistles thrive in a low magnesium environment. So it's amazing what regenerative ag can do for you, for your soil and for your bottom line.
Brian Kearney: Yeah, there's a couple of questions I have there. The one, so we just had a farmer on the show, episode hasn't been released yet, but he does no till actually. So he's a big fan of no-till, for other reasons on top of it. And it's that he has an off-farm job, so it saves him passes.
It saves him a lot of time. But what he said is that an issue he can have sometimes with corn, particularly in this area, is that it actually doesn't let the ground warm up quite as quickly here, and that insulation can cause a little bit of a hit. It's still pencils out for him. He still does it, but it causes a little bit of a hit on the corn yield. Is that based on geography or what, or is that just with corn it's an issue? And to be fair, with beans he said there's no yield drop at all so.
Wayne Ebersole: It varies. So context is one of the six principles of regenerative agriculture. If you look at the Noble Research Institute out of Ardmore, Oklahoma and their publication on what is regenerative ag, their definition, that's the definition I like to use. Context matters. Your soil type, your temperatures, your weather and your rainfall amounts, moisture amounts, all that matters. And so regenerative ag, while there are core principles of it, it has to be adapted to your farm, not just your region, to your farm. And so some of the things we've seen, and I know that's the case, I've worked with farmers, some of that, some of the reasons for that is sometimes the microbiome is not as active as we'd like it to be.
Therefore, it's not consuming carbohydrates, sugars, it's not creating the heat that it needs. Sometimes it's the type of, you know, you have a high humidity environment and a very cold environment. That helps too. Here in Montana, one of the big arguments we hear against regenerative ag is, “Well, I have to till the soil so the sun warms it up so I can plant.” But I also tell you, there's farmers that I know that are farming over 10,000, 15,000 acres out here that are completely no-till and their yields are probably double, sometimes triple, almost triple of what other farmers yields are that are not practicing regenerative ag. So there's trade-offs. Yes, maybe your soil doesn't warm up, but then are you planting species that can still tolerate that. Can still work for that?
Corn is one that is really hit or miss. The hybridization, the DNA makeup of corn today, almost all your newest, latest varieties do not host microbiome, fungis and micro fungis in the soil anymore. It's because they're basically lab-created plants that have been bred out the ability to do that.
So with corn, for farmers, if you want to build your microbiome with corn, and corn is a great carbon-sequestration plant. But it has to be able to host a mycorrhizae and so that basically means you go back to the old non-GMO varieties, the open-pollinated varieties, things like that. And it's becoming harder and harder for farmers to build soil, I mean corn is a great plant to do that, but it has to be–you have to get away from some of the later varieties, which no longer can host the funguses. So there's a lot of things that could factor into that, into his soil warming up, into what's going on there. My thing is Well, I like to take soil samples that test for organic matter, which test for microbiome activity.
I would highly recommend tracking your microbiome activity year after year, and seeing what the correlation might be with those years where it doesn't warm up. What's going on is, are we losing microbiome? What’s happening? So.
Brian Kearney: Yeah, that makes sense. That's interesting. And then what would you say to a farmer who's thinking about this. Because if we're talking about our investor audience, most are already pretty bought in on regenerative or organic, and at the end of the day, they're getting a crop share, so there's a higher premium.
They make more money anyways. But when you are talking to the farmers, where would you recommend they get started? Is this something that really, if you look at those principles you were talking about, you have to look at each individual farm and you should bring someone in to help you make those decisions, or is this something you can research on your own?
Wayne Ebersole: You can research it on your own. There's tons of information out there. Gabe Brown has a book, I think, was it called Dirt to Soil? I forget what the title of that book is, but–
Brian Kearney: Oh, yeah. I think that’s it.
Wayne Ebersole: Gabe Brown has a book on it. Noble Research Institute has published information on that. The six principles of regenerative ag, like to distill down is number one, stop tilling your soil because every time you till your soil, you're destroying soil structure, and you're destroying your mycorrhizal fungus networks. that feed your plants, that bring the plant's soluble nutrients to your plant.
You have to stop treating your dirt like a medium. Start treating it as a crop in and of itself. Actually, treat it as a herd. The amount of living life below the surface is greater than the amount of life above the surface. And so you've got to feed that life. It's a bank account. You've got to make deposits before you can make withdrawals. And so that's the first thing you got to look at.
So stop tilling your soil. Start rotating your cash crops. You should at least have three different cash crops in a three-year rotation. I know here, working with some guys in Eastern Colorado, they do a four-year crop with two warm-season crops and then two cool-season crops. Things like that.
So, there's things like, and basically cool season stuff is like winter wheat planted in the fall. Warm season stuff would be like spring barley or spring oats or something like that. Whatever it is, but rotate it. That does several things for you. Number one, it starts giving you more diversity in your soil.
It starts giving you more diversity in your microbiome. It breaks disease cycles, which reduces your insecticide, herbicide costs, things like that. There's just tons of things like that. So crop rotation is critical. In the Midwest there in Illinois, a very popular rotation is corn one year or actually, soybeans and then followed by corn, followed by wheat or something like that, winter wheat, things like that. But there's tons of other things that can be done. There's guys that are experimenting with dry land rice and things like that in Colorado. There's sorghum sudangrass that's being used for sustainable aviation fuel.
There's all kinds of unique crops. So that's the first thing. Cover crops, that's the second thing, no-till cover crops. And the third thing is you've got to have some kind of re-inoculation of the soil. And this includes incorporating livestock of some kind, grazing cover crops. So if you, let's just say you, I don't know, let's just say you plant wheat one year and your wheat comes off in July or beginning of August, then you go in with a fall cover crop mix. It doesn't have to be 20-way species like some of these guys are doing. It can be as simple as three-way. My favorite cover crop mix is oats, crimson, clover and radish. The oats will usually win or kill.
The crimson clover will probably survive and the radish will win or kill. And that mix, you can graze it. You can graze some of these mixes. You can mix in a little triticale with it as well if you want to, and then graze it for like 6, 8 weeks in the fall. It doesn't take much, but that regular grazing in the fall has been proven by Jay Fuhrer out of the University of North Dakota to grow your organic matter the fastest. And that's what I tell guys. No-till, cover crops, crop rotation, and incorporation of some kind of livestock is the way we know today to build organic matter fast. Now there's a lot of other, there's microbiome products out there, inoculants and all that kind of stuff. Some of it works, some of it's foo-foo dust, who knows.
A lot of it is determined by how well it's handled and how well it's stored, but using those basic principles is the fastest way to build it.
Brian Kearney: That's interesting. For the livestock side, that adds another expense. So where do people look, or do they look for partnerships? What have you seen work the best there?
Wayne Ebersole: The Midwest is especially bad for this. All the fence rows have been ripped out. All the fences have been ripped out. It's all been–
Brian Kearney: Yep.
Wayne Ebersole: And yeah, you got to look at, you say, how can I incorporate it? Again, it's going to depend on the context. Do you have a dairy farmer nearby that's happy to put some dry cows on it for you in the fall or put some heifers on it for you to fall?
Do you have a cattle, a beef guy that can graze it with some yearlings or something like that. A lot of these guys, though, have boosted their bottom line by putting their own cattle and putting their own fences in, putting their own cattle in, fattening them up or raising them or whatever, selling them off, adding another source of income to it.
I like to see that diversification of income sources instead of just relying on one corn crop or one soybean crop, diversify a little bit. And eventually a lot of these guys go straight to market with it, which gives them even a premium on the product that they're growing. And that's a little further down the road.
But I would just look for partnerships. Maybe you put the fence in, and the neighbor brings his dry cows over to graze it for the fall. And they'll graze on wheat stubble, wheat straw, with the cover crops, all that kind of stuff. Again, it depends on your context. What do you have available, readily available to you in your area?
Brian Kearney: Yeah, that makes sense and, thinking about it, logically, if we look at this year, corn and bean farmers had a rough year, but if you had some cattle, you had a really good year this year to be selling, maybe not to buy, but to be selling. So that's interesting. That might have evened it out a a little bit.
Wayne Ebersole: Yeah, and it's just another, it's a diversification, we tell people from finance sides, “Diversify your investments. Diversify your investments.” Well, the same is true for farmers. Diversify your investments and they say, you know, and here's the classic, “Well, I don't want to be tied down with cattle. I want to go to Arizona for the winter.” Well, do you want to make some more money or don't you? I mean, at the end of the day, what are you willing to do to bring diversification and to increase your bottom line?
Brian Kearney: Yeah, absolutely. I was talking to a farmer that was making that kind of decision. He lives somewhere a little bit warmer, and his wife wanted to move. He's like, “I could have more acres. I can maybe have a slightly more profitable operation.” He's like, “But my wife wants the warm weather.” It's like, well, fair enough. That's probably a good trade-off.
Wayne Ebersole: Yep.
Brian Kearney: But, no, that's interesting. Then let's dive into the investor side, and talk a little bit more about what you all do there so the audience knows.
Wayne Ebersole: Yeah. So just a little background on how we got into the investing side. So like I said, I was a consultant for about 10 years helping farmers transition and the two biggest hurdles that we ran to, and you're probably very familiar with these, is number one is the age of the farmer in North America and I think the age is almost 60 years old now. Most guys are looking to retire in the next couple years, five years or whatever and they're like, “Yeah,I'm not gonna change now. I've been doing it this way for 30, 40 years. I'm not gonna make the change to transition. I mean, yeah, I farmed my farm to death.” A lot of them already admit that. “I've depleted my soil, mined it to death, but I'm not changing now.” The other hurdle that we run into is a lot of guys are not even profitable enough to make the transition.
We've seen guys that can transition and right out of the gate year one, they start seeing improvement and keeps improving for them. Other guys see yield drops, they see disease or insect pressure hits them the first couple of years. And they take reduced yields, reduced profit, and they can't afford to make that transition.
They just don't have the money and the capital and the profit and the cash flow to do it. So, those were the two biggest hurdles we have. And so, kind of out of that was born the idea, well, what if we start an investment fund? And we're a straight-up, GPLP structure, taking a credit in investors.
And we would buy the farms from these guys that want to retire. We transition them using either a leasing to a local farmer that is already doing regenerative ag, or putting our own manager on it, make that transition. On average, we know from our data that it takes 7 years to fully make that transition.
We hold the farm for 7 8 years. Maybe as little as 5 years. And then we sell it off ideally to one of our managers that's managing it or to somebody that can keep going and then in that process We get that land certified by a third party certified certification company as regenerative ag land and so that gives us a little premium on that land because people know that it's now a healthier soil. It's now a more productive soil. We get you know, it's a value-added play for us really is what it is.
It's just like buying a multifamily property, a class B or C multifamily property, and improving it and selling it maybe as a class B or class A property, or B plus property. And so it's the same idea. That's really what we're doing. We're doing a value-added play. But the whole idea is we're focusing our investment on the Midwest, east of the Continental Divide in the Rockies, west of the Appalachians because we want to start seeing an impact on the Gulf of, I guess it's Gulf of America now, not Gulf of Mexico.
Brian Kearney: As of yesterday.
Wayne Ebersole: Yeah, we want to start seeing an impact on reducing the dead, the algae dead zones in the Gulf of Mexico, just like we saw in the Chesapeake Bay.
Brian Kearney: Yup. That makes sense. And then I can hear the farmers already asking. It's like, “Well, isn't that just pushing up the price on the farmers who want to buy this?” So what does it look like for them after they buy something that's transitioned like this? Do you have any metrics there where it still works out or?
Wayne Ebersole: On average, we see a double, about a 50, a double, 100 percent increase in net profit on transitioned operations. The value of the land varies depending on the area that it's at, depending on how productive it is. In Illinois and Indiana, there's significant premiums, 10, 15% premiums.
If you go to Nebraska, Kansas, it can vary. Sometimes Iowa can go as high as 25%. So it varies by area, depends on who's available and who wants it, and how many people want it. That's another thing too. But the biggest thing is the operation people can farm that land if they continue the regeneration process and know that they can make better money doing it with that.
That's the biggest selling point. And so that's what we're shooting at. We're shooting at making that operation a cohesive operation, a diversified operation that somebody can just step in and take over it.
Brian Kearney: Got it. And then if you're, we don't have to talk about a specific farm, but I'd like to talk like specific numbers just so I can help my brain get wrapped around it. So talk about like Illinois, really good dirt, A class like good soils. I see you got a good deal. It's 14,000 when you bought it.
Wayne Ebersole: Good soils are actually harder to see an improvement on because you're already starting at three to 5% organic matter. So you're not going to take it to six to 10% in five years. That's not going to happen. Yeah. You can probably take it to maybe 8% in 15 years, but where we see the biggest benefit is taking the stuff that's half percent, 1% organic matter and taking it to 3%. That's the bigger play for us.
So we're not looking to buy 20,000-dollar an acre Illinois farm ground. We're looking for stuff, the cheaper stuff in Nebraska under, that's $1,000 to $5,000 an acre, that type of stuff, Eastern Kansas.
Brian Kearney: That makes sense.
Wayne Ebersole: Minnesota, Oklahoma. To me, the ideal farm for me is that depleted cotton farm in Arkansas.
That's just been farmed to death with cotton on cotton year after year. And it's at a point where it's almost to the point where it only grow mesquite anymore, I mean, that's pretty far gone there. That takes a little more work and we don't like them quite that far gone, but that's more our play is we're looking for that stuff.
We're not looking for the premium stuff. And, but we see the same thing probably that you see, that Bill Gates sees, that Warren Buffett sees. There's a pinch point coming in farmland. And, at some point, it's going to turn around. And, I think, Bill Gates, with his environmental activity and stuff like that, he should be one really pushing the regenerative ag thing.
But, so far, to my knowledge, he hasn't. He doesn't seem to be doing that. And so that's where, we're making the same play that he's making, that you're making, that everybody else is making, but we want to add on the regenerative ag because it improves the cashflow operation of that real estate piece.
Brian Kearney: Yeah. Yeah, that makes sense. I wonder if, you might not be able to improve the organic matter, but I would be interested to see, again, in this area, any studies on how the different cover crops can help reduce inputs ‘cause that, I mean, that's such a huge portion of it right now.
Wayne Ebersole: In your area specifically, well, I shouldn't say in your, you're in Northern Illinois, but Southern Illinois, Southern Indiana, I know that no-till improves the bottom line, cover crops improve the bottom line, but it is hard to build organic matter rapidly without cattle incorporated. And we've, you know, talking about the guy that was 20,000 acres earlier, his organic matter improved some, but he's looking to get to 6, 8% with what he's doing.
And I told him, I said, “If you really want to get there as quickly as possible, you've got to include cattle.” And he said, “Well, how do I put cattle in 20,000 acres?” And that's true. It's difficult. You can't run, you're going to start with 100 acres in that operation and start rebuilding it that way and test it and then figure out a way to scale it.
And there's not a lot of ranching going on in the Midwest anymore. There's not a lot of big dairies, I mean, there's some big dairies going on there, but cattle and livestock have largely been eliminated from the profile of a large swath of the Midwest, and so getting cattle back into the system is a difficult process. It definitely is.
Brian Kearney: Yeah. Yeah. That makes sense. That's interesting. And then on the investor side, how are you explaining to them the point of investing in farmland or where it fits in their portfolio?
Wayne Ebersole: Well, it's the standard thing. You have a lot of the benefits of real estate investing, but you don't have the bubbles in farming commodities like you do in other areas. So there's a lot of money chasing, say, multifamily, rental homes, short-term rentals, all that kind of stuff.
There's not a lot of money chasing commodities, and there's not a lot of money chasing farmland yet and so it's a great inflation hedge. It's very steady. Farmland almost never goes down in value. It fluctuates a little bit, but over long term, it never goes down in value. We're losing, if I remember right, it's kind of like a million acres a year, something like that that's being taken out of production.
So, like the old guy back in Pennsylvania told me, he said, “It hit me one day, they ain't making any more of this stuff.” And he went on a buying spree, buying farmland, And that's what Bill Gates is seeing, that's what Warren Buffett's seeing. And at some point, there's going to be a premium on this land.
it's a longer-term play. You get some cash flow off of it, you guys are doing crop sharing. There's things like that, that it's just a very steady, pretty secure investment, yeah, your subject, your risk are the weather, and that's the big risk that you're taking, but we also know in some of these areas, like some of the ranchers in Mexico, Chihuahua Desert, Mexico, as you start transitioning, you start noticing that you get more rainfall in your land.
You're now, instead of seeding the clouds with dust and dirt, you're seeding it with bio salt, bioaerosols and things that the grasses are producing. And this cools your hot air faster and condenses water at a higher temperature. And, yeah, you've got a 30% or 24% increase in rainfall after you've been doing this for six years.
And that's the benefits, that's what we're seeing. We're taking that energy of sunlight, we're taking that energy of weather. We're rebuilding the soil with it and it becomes a cycle that snowballs on itself. It becomes more profitable.
Brian Kearney: Yeah, that's fascinating and that dives into kind of the science of microclimates, which can sway the whole climate change one way or the other. But microclimates, I think, are something people don't think about very often that, yeah, you have the macro climate and then you have microclimates, which is more important to each individual farm, really.
Wayne Ebersole: Yeah, it is. And from that, we've tried to tell that story, particularly to people who have indicated that their impact investors or they have ESG dollars that they want to deploy. Here is a practical way that you can make a difference and we can show you that you're making a difference with these dollars. Social governance, social and governance and things like that, that's a little more intangible. That's a little more fickle to political wins, but the environmental side, investing in farm and ranch land, you know, Ted Turner has been on this road for many years and what he's done with bison to rebuild the soils of his ranches is incredible. It's a tangible, measurable result for what your dollars are doing.
Brian Kearney: Yeah. That makes sense. And that's similar conversation that we have with investors. We don't dive into–‘cause we're not solely regenerative and organic. We're also conventional. We'll do all of them, but our conversation is about like, “Look, if you're looking at long-term stability, land is one of the best investments.
If you're looking at where you want to invest,” because that's usually the second conversation for really high net worth. And they're like, “Well, I can get slightly better return if I'm investing in Brazil.” Maybe, maybe. But our politics and our property rights are so much more secure than anywhere else in the world that has similar quality soil.
You look at similar quality soil, it's Ukraine, but I mean, a little bit of risk there. You look at better returns and it's South America where property rights are circumspect, I guess.
Wayne Ebersole: Yeah. I had a friend that invested in Brazil. And he got scammed out of his investment. I mean, the manager he had down there just literally stole money from him and the products from him and stuff. So, you have to think about the ability to prosecute crime.
Africa is a great play right now too, but again, do you have infrastructure? Do you have governance to provide security? It's just a whole lot more risk of factors come into play that are indirectly related to that that just, yeah, just become a problem.
Brian Kearney: I agree completely. We'll put in the show notes a book that, it's been really formative on my view on investing in U.S. farm ground, but it's called, The Mystery of Capital. Phenomenal book and it talks about exactly what you're saying. It's why does it seem like capitalism works in some countries and it seems to fail in other countries and the heart of it, it gets down to property rights and legal structure. Like that is what makes the difference. So yeah, that's interesting.
Wayne Ebersole: Property rights and morality. You have to have some code of morality in order for true capitalism, true free enterprise to work because it depends on keeping people’s corruption impulses in check. What motivates them? You can look at the U.A.E. I've had been over to the U.A.E several times and had discussions with them about converting their desert into farmland. After COVID they wanted to become more secure on their food initiative, and they have big food initiatives to improve their food security. They have a very heavy code of ethics over there, and a heavy law enforcement presence.
I mean, you can go out in their streets of Dubai at 2 A.M.., and you don't have to fear anything. But if you get caught stealing, maybe not the first time, but eventually, you could lose a hand. There's a heavy hand of the government that keeps, and it makes it a safer investment because people realize that risk of crime and corruption is not there.
And so if people can't govern themselves, then you got to have a government that governs and keeps that stuff in check. And, I mean, you've seen it. We've seen it in the West Coast and Portland and stuff. Retail stores are literally pulling out because they just can't operate business there more simply because of crime.
Brian Kearney: Right.
Wayne Ebersole: It’s a factor in all these other countries–
Brian Kearney: And that's what's great about this industry is, I mean, you hear about the situations where landlords are getting taken advantage of and it does happen, like it happens in every industry, but I've never been in one where you can trust someone's word and handshake more so than this industry.
For the most part, you really can. If you're working with a farmer and they say they're going to do something, maybe eight times out of 10, that farmer is going to do that.
Wayne Ebersole: They will do it. They will at least do their best to accomplish. I mean, they may come up against something that prevents them from doing and they'll be on it and most of the guys will be honest with you and tell you, “Hey, I just couldn't pull it off this year because of weather,” or whatever, and yeah it’s understandable.
Brian Kearney: Yep.
Wayne Ebersole: But my thing is be open and honest with me as a manager and I'll be open and honest with my investors and say, “Hey, look, here's what we faced this year. And this is what happened.”
Brian Kearney: Absolutely. Yeah. I agree with that. Then the last couple of questions I like to ask is if you were starting in this industry again and you could not take the path you took, what area would you be telling recent college grads to look at in the ag space?
Wayne Ebersole: Oh, that’s a good question. One of the big needs that I see, if you're an ag graduate, get into studying biology, especially soil biology. There is so much power in soil biology, like just the microbiome profile makeup of what bacterias and funguses are available on any given farm is as unique as fingerprints.
Study biology, study the conditions that biology thrives in and produces a diverse, balanced, environmental benefit, like there's so much that we don't know about soil biology. There's more, they talk about it, all the cattle, on a grazing area, and there's more life under the ground than there is above the ground, just in the amount of bacteria cells.
There's trillions and trillions and trillions of bacteria cells and funguses, and the more diverse your fungus network becomes, the more strength it has for your plant life, the healthier your plant comes. At the end, the idea, you know, plants will do their best to survive, number one, and then number two, reproduce.
Everything else above that is all about supporting those foundational things. So if you can get your plant health up to the point where it starts producing its own oils, its own protection mechanisms, the organic oil profile, that function as an insecticide protection. That's where plant health needs to go, and all of that is supported by biology of the soil.
One of the reasons we have insects attacking plants is because a lot of insects attack plants based on their infrared profile. A diseased plant produces a brighter infrared profile that basically an insect comes and attacks the sick plant to present to prevent the spread of disease. That's what's really happening.
So when we spray insecticides, we're killing off nature's disease mechanism, protection mechanism just like our bodies have white blood cells to attack viruses come in, nature has its way of preventing disease. And so plant health is directly correlated to soil health, which directly correlates to how much insect pressure or anything like that. Other things, we use herbicides. Pigweed has become a huge thing. Why is pigweed a huge problem? Because it's thriving in depleted soils. It's thriving–nature will send you the plant that you need to rebuild that soil and to cover that soil. Nature doesn't like you farming naked.
It's got to be covered. Soil is meant to be covered. And so all those things. So I would love for students to get an ag degree in biology and focus their research and studies and their jobs on what can we do to build soil profile. What can we do to build compost teas?
What can we do to build inoculants that survive, that can be easily handled, that can go on to build the microbiome faster? That, to me, is the number one area I'd love to see improved.
Brian Kearney: Yeah. That's great advice. I think we'll end it there. Thank you for jumping on the show. This has been a good conversation. Hey, no, I'm sure we'll do this again. As long as you're up for it. This has been a fun conversation, probably have more questions down the road and might get some audience questions that I asked for follow-ups, but, yeah, thank you for jumping on.
Wayne Ebersole: Thank you for having me, Brian. Appreciate it.
And that’s a wrap on this episode of The Land Ledger.
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