How to Start Investing in Farms
Are you starting to become a bit more aware of where the food we eat comes from? Your dinner could come from along a complicated supply chain or come from a small family farm at the market. If you’re interested in getting more involved with the local food movement, you can go beyond the farmer’s market and start investing in farms!*
Why is it necessary to invest in farms?
Investing in farms is necessary because these days, small farms have an incredibly tough time getting loans of any sort from the USDA and from banks. In fact, most lending to farms has historically come from small community banks, and those numbers are steadily dropping as community banks disappear and consolidate.
This is especially true when it comes to minority and women owned farms. The USDA has historically blocked Black farmers from getting loans that are necessary to prepare a farm for the growing season. In fact, in 2020 loans to Black farmers hit an all-time low of only 460 loans. That’s less than 2% of all loans given out.
Small farms are also increasingly important in building up the food system of a region - as tech companies like Harvie can attest. Harvie helps distribute food from small, local farmer throughout the Pittsburgh area through community-supported agriculture shares, which consumers can subscribe to. Last year, Harvie ran a Honeycomb campaign to expand their distribution and marketing and raised $236,535 from 181 investors.
“If local food is going to try to compete with the large corporations that dominate our food system, we don’t stand a chance unless we start investing in marketing to make that happen,” says Simon Huntley, CEO of Harvie. “It’s extra critical for us because we’re trying to inspire behavior change that will shift buying patterns to local producers. This takes extra work, and funds, to get right.”
Why should I invest in farms?
Investing a farm’s Honeycomb crowdfunding campaign can get you a solid return on investment, assuming the campaign is successful and the farm is able to repay its loan. Honeycomb loans have an interest rate of on average 5-12%, which is dependent on the level of risk involved in taking on the loan.
By investing in a farm, you get to invest in something you value, also known as impact investing. Maybe you value farms that use organic or regenerative practices. Or perhaps what matters to you is supporting a family farm, like Blackberry Meadows Farm in Pittsburgh, who crowdfunded a loan to allow them to construct Airbnb staycation cabins, which expanded their farm into agritourism.
Ultimately, the biggest draw to investing in farms on Honeycomb is that you get to tangibly help a farmer grow their business. Cherry Valley Organics Farm used their Honeycomb loan to expand their herbal tea production and raised $36,672 in the process.
“In the wake of COVID, almost no one was able to get any kind of financing from traditional methods,” notes Jodi. “I really liked that Honeycomb was all about sustainable and ecologically minded and socially responsible companies, and I think it was a natural fit for Cherry Valley Organics really to be involved with Honeycomb.”
How do I start investing in farms?
One way you can invest in farms is by crowdfunding! Farms choose to raise money on platforms like Honeycomb because it provides an easy way for investors to find them and invest. It also means that they can crowdfund their growth and actually pay back their community - and in many cases farming is a community act, so crowdfunding is a natural extension of it.
And by investors, we mean people like me and you - you don’t have to be an accredited investor to invest in farms on Honeycomb. In fact, you can invest in a Honeycomb campaign for as little as $100!
You can get started by setting up an investor account and checking out live campaigns today - in addition to farms, Honeycomb also funds other small businesses from distilleries and breweries to composting companies and refill shops!
Grow your local food system and your wallet
Small farms need the help of investors like you to get them the access to funding they need to have a successful harvest. Find out more about investing in small businesses like farms on Honeycomb Credit, and check out live campaigns today!
*Disclaimer: this is not investment advice and should be used for educational purposes only. Investing is inherently risky, and investors should be prepared to lose some or all of their investment.