Preserving farmland in Montana: 3 tools for rural community development – nonprofit news

Venture to the west [CC BY-SA 4.0], via Wikimedia Commons

September 15, 2019; Shelterforce

Montana may only be home to 1.06 million people, but according to the 2017 Census of Agriculture, it has 58 million acres of farmland, more than any other state in the Union, in the except Texas. However, it also suffered the third-highest decline in farmland between 2012 and 2017, losing more than 1.6 million acres. Nationally, the country has lost 14 million acres of active farmland in those five years, a decline of about 2%. Write in Shelterforce, Kristin King-Ries notes that “Non-industrial farms are disappearing at an alarming rate. She adds, “Family farmers and ranchers are unable to compete with giants like Monsanto-Bayer and Dow-Dupont who dominate large-scale agriculture in Montana.

King-Ries works at Trust Montana, a Missoula-based nonprofit that serves as a statewide community land trust, a development that in itself is unusual. But even more extraordinary is what she writes about: the development of a network of “farmers, ranchers, lenders, financial professionals, nonprofits and land trusts” who have come together to develop new tools to preserve rural agricultural land.

The groups came together at a summit last February. King-Rees reports that “more than 50 participants braved icy roads and temperatures 10 below zero to spend a day and a half at the summit, discussing professional divisions to brainstorm solutions.” The tools that reached the top, she adds, were “rural investment cooperatives, social capital investment and community land trusts.”

The first tool, a rural investment cooperative, enables family farmers with modest means to make long-term collective investments in their communities by purchasing cooperative shares. The Montana Cooperative Development Center in Great Falls provides technical assistance to these cooperatives. Executive Director Janice Brown notes that, “While the annual return for each preferred shareholder is modest – not exceeding the six percent threshold set by Montana law – the economic benefits to the community as a whole are expected to be significant. “

King-Ries sets out the basic principles:

  • Each member-owner purchases one common share and is entitled to one vote.
  • The purchase of additional non-voting shares is optional. Members elect a voluntary board of directors to research potential investments.
  • The cooperative transfers the capital to the farm or ranch chosen by the board of directors.
  • The co-op charges fees for dealing with 401k tax and investment limit issues, due diligence, and fund management.
  • The typical cooperative board of directors is elected by the member-owners; each member-owner has one vote, regardless of the size of their investment — RICs can include multiple categories of members and investors.

A second tool available to King-Rees is the social (or “impact”) investment firm. At the summit, Bill Stoddart, co-founder of HomeStake Venture Partners in Bozeman, noted that there are many ways to structure these investments, including “farmer mortgages, farm-friendly land leases, lease agreements with option to purchase and revolving loan funds at interest. Stoddart tells King-Ries that investors need to be educated to understand that “investing in farmland and farmers, especially those who are committed to rebuilding healthy soils, is not a high yield proposition; rather, it is a long-term commitment to establish and maintain food security.

An example of King-Ries highlights is Iroquois Valley Farmland REIT (Real Estate Investment Trust). Montana. Among its services, notes King-Ries, are the following:

  • Land purchases for active farmers.
  • Five-year leases, with two-year tacit renewal clauses.
  • Potential for a lifetime lease.
  • Rent based on the purchase price of the land.
  • Base rent with variable rent when an operation reaches a certain level of profitability.
  • Mortgage financing: five-year fixed rate with interest payments only.
  • Refinancing to consolidate debt.
  • Financing of agricultural equipment.

The third tool King-Rees emphasizes is the community land trust. It should be noted that although the very first community land trust in the United States involved black farmland in Georgia, today most community land trusts are found in cities. However, King-Ries reports that at the summit, “the idea of ​​owning the improvements on the land, and not the land itself, was comfortable for a number of farmers as long as they had security of tenure. in the form of a renewable 75-year contract. , transferable and transferable land lease. King-Ries adds that Trust Montana’s presence as a statewide organization enables rural areas that might not otherwise be able to use a community land trust to do so.

The conference, of course, took place seven months ago. Now comes the hard part of forming committees and taking action. But King-Ries is optimistic about their chances, concluding that over the next two years our organizations and pilot project partners will develop the tools identified so that they can be marketed statewide and used to achieve the overall goal: More Montana farmers with viable land tenure and farming businesses. “—Steve Dubb

About Keneth T. Graves

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