Iroquois valley farms introductory presentation 2013 09-23

September 2013

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Table of Contents

I. EXECUTIVE SUMMARY

II. COMPANY OVERVIEW

III. WHY WE ARE DIFFERENT

IV. COMMITMENT TO THE LAND

V. INVESTING IN AGRICULTURE

VI. GOING ORGANIC

VII. DELIVERING RESULTS

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IROQUOIS VALLEY FARMS

EXECUTIVE SUMMARY

Iroquois Valley Farms connecting investors with organic farmland and family

farmers since 2007.

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EXECUTIVE SUMMARY

• Farmland is an highly stable investment with a long-term

trend of steady value appreciation

• Macro global trends are enhancing the economics of farming

through higher crop prices, which in turn leads to

appreciating farmland value

– World population expected to increase 30% over 2000

levels to nearly 8 billion people by 2025

– Arable land in developed nations forecasted to decline 3%

between 2005 and 2030

– Developing countries are shifting to a protein-heavy

western diet which requires more agricultural land to

support

Why Agriculture?

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EXECUTIVE SUMMARY

• Conventional agriculture is unsustainable and less profitable

than organic

– Chemical fertilizers and other synthetic inputs are

dependent upon and subject to price swings of finite

natural resources

– Herbicide and pesticide resistant plants, insects, and

diseases are appearing with higher frequency

• Changes in consumer food preferences, driven by health and

environmental awareness, support and increase the need for

organic and sustainable farming

– The organic food market in the U.S. has grown by over 15%

per year in the last eleven years compared to the total

food market which grew 3% per year

Why Organic & Sustainable Agriculture?

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EXECUTIVE SUMMARY

• Iroquois Valley Farms has a six-year track record of successful

sustainable organic farmland investing

– Started in 2007, Iroquois Valley was the first company to

connect socially responsible investors to local and organic

farmland (grown from 10 investors to nearly 100)

– Original members have seen investment value increase

2.5x the initial amount, reflecting a 20% internal rate of

return

• Investing in Iroquois Valley Farms provides immediate access

to a diversified portfolio of revenue-producing farms

• Iroquois Valley Farms supports local and organic family

farmers by providing indefinite land tenure through a unique

board-governed corporate structure

Why Iroquois Valley?

COMPANY OVERVIEW

In every deliberation we must consider the impact on the seventh generation –

Great Law of the Iroquois

Business Mission

Iroquois Valley Farms connects local, organic,

sustainable farmers to farmland

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COMPANY OVERVIEW

The mission is to operate a for-profit farmlandcompany that positively impacts local, organic, andsustainable agriculture – focusing on the mid-sizefamily farmer

Business Model – It Starts With the Farmers• The Company partners with local and organic

farmers looking to expand their existing businesses

– Iroquois Valley and the farmer develop the land opportunities together (no speculative purchases)

• As a farmland company, Iroquois Valley Farms buys the farmland and leases to the farming partner

• Iroquois Valley provides unique long-term leases, allowing the farmer to view profit as recurring and think generationally rather than make year-to-year decisions

– All farmers obtain organic certification or will exclusively follow organic practices

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COMPANY OVERVIEW

Making an Impact

Impact investments are investments made with the

intention to generate positive social and environmental

impact alongside a financial return

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COMPANY OVERVIEW

Social

Environ-

mental

Financial

• Expanding and supporting the local farming business

of family farmers through long-term land tenure rights

• Enhancing food security and local economies

• Improving the soil, protecting water quality, and

increasing food nutrition through sustainable and

organic farming practices

• Building a new class of investor capital with a next-

generation focus by combining economic returns

with social and ecological impacts

Farm Summary

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COMPANY OVERVIEW

Farm

Acq.

Year Acres Status County

Hoekstra 2007 81 Organic Iroquois, IL

Martin 2008 160 Organic Iroquois, IL

Denker 2011 225 Organic - 2013 Livingston, IL

Pleasant Ridge 2011 76 Organic Livingston, IL

Old Oak 2012 121 Transitional Huntington, IN

Rock Creek 2012 80 Transitional Will, IL

Hedge Creek 2012 80 Transitional Will, IL

Red Oak 2013 115 Transitional Boone, IN

Jackman 2013 71 Transitional Boone, IN

Mooday 2013 59 Transitional Montgomery, IN

Shiawassee 2013 238 Transitional Shiawassee, MI

Mary Ellen’s 2013 115 Transitional Iroquois, IL

One Bottom Pending 40 Transitional Iroquois, IL

Taconic Ridge Pending 163 Pending Washington, NY

Long Term Focus For the Next Generation

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COMPANY OVERVIEW

Investor Base (% of invested capital) Young Farmer Land Access Program

• Approximately 80 investors

• Investors have a long term

focus as evidenced by 40% of

the capital from retirement

accounts

• The Company generally

partners with younger farmers

that have limited access to

capital and that otherwise

would not be able to obtain

tenure on additional farmland

WHY WE ARE DIFFERENT

Our favorite holding period is forever. – Warren Buffett

Unique Company Structure

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Long-Term

View

Board

Managed

• The Company takes a multi-generational view of farmland

ownership and encourages members to think long-term

(40% of investments from retirement accounts)

• The company structure allows indefinite ownership so the

farmer will not be displaced (no investment termination

date) – only the farmer can purchase the land

• Seven member board of managers elected by voting

members

• Voting structure reflects long-term vision

• Board protects, enhances, and evolves the triple bottom

line focus

Iroquois Valley Farms LLC is a company - not a fund,

limited partnership, angel investor network, or

farmland broker

Socially Responsible Investment

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Triple bottom line focused with a mission to provide

opportunities to local and organic family farmer

Sustain-

ability

• The unique company structure ensures the farmer will not

be displaced, unlike other funds or partnerships which

eventually need to wind-down or terminate

• Local and organic agriculture reduces environmental

impacts and enhances crop diversity

Proven

Impacts

• Obtained B Corporation certification and was

internationally recognized for positive impacts with a

selection to the 2012 Impact50 (1)

Young

Farmers

• The successful Young Farmer Land Access program reflects

the Company’s “next generation” focus

• Acquired over $6,000,000 of farmland for young farmers in

the last 12 months(1) Third-party public database of experienced private debt and equity impact investment fund managers

Access to Diversified Portfolio at Net Asset Value

• Immediate ownership of existing portfolio of

working revenue-producing farms (not buying into a

blind pool)

• Available to accredited investors with low minimum

entry

• Buy-in at net asset value (membership unit price

based on appraised value)

• No fee for buying membership unit

• Asset productivity increases over time (10 years to

return soil to its natural fertile state)

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COMMITMENT TO THE LAND

What I stand for is what I stand on. – Wendell Berry

Sustainability is Indefinite

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• Built a corporate entity committed to holding the land for

generations

• Investment capital is open ended and democratically

governed

• Farmland is not treated as a trade

• Farm tenants earn the option to purchase the farm

• Voting structure reflects long-term vision

• Transitioning the next generation of sustainable farmland

investors

Iroquois Valley is the sustainable solution to farmer land access

The care of the Earth is our most ancient and most worthy, and after all our most

pleasing responsibility. To cherish what remains of it and to foster its renewal is our

only hope. – Wendell Berry

Matching the Farmer Commitment

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Farmer CommitmentOne generation

Pass to Next Generation?

Indefinite ownershipIroquois Valley Commitment

Traditional Wall Street Commitment10 years

Support Multi-Generational Tenure

Well Hopefully…

Aligning with the Farmer’s Interest

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Time Frame for Farmer to Restore Soil Fertility10 – 12 years

Full benefits of organic achieved

Iroquois Valley Next Generation Structure

Traditional Wall Street “Exit” Model

10 years

Five-year initial term with evergreen renewal options

supports generational tenure

Well Hopefully…

5 years Indefinite renewal options

INVESTING IN AGRICULTURE

Buy land. They ain't making any more of the stuff. – Will Rogers

Strong Historical Appreciation

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Source: United States Department of Agriculture, National Agricultural Statistics Service.

Reflects value of all agricultural land (cropland and pastureland) including buildings.

Value of U.S. Agriculture Land ($ per acre)

• Since 1990, agricultural land has steadily grown in value reflecting a

constant annual growth rate of 6.3% over the 22 years

Highly Stable Investment

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Reflects value of all agricultural land (cropland and pastureland) including buildings.

Year-Over-Year Change in Farmland Value

• Since 1960, a 52 year time-span, the value of farmland has increased

in 47 of the 52 years

Rising Global and Domestic Food Prices

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Source: Food and Agriculture Organization of the United Nations and United States Department of Agriculture,

National Agricultural Statistics Service.

Global and U.S. Crop Price Indices (Indexed to 100 in 2000)

• Food prices have been steadily rising both globally and within the

U.S. since 2002

Farm Prosperity is on the Rise

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Ratio of Crop Prices to Farm Input Cost Indices (Indexed to 1.0 in 2000)

• Since 2005, the prices farmers are receiving for crops is growing

faster than the cost to grow those crops providing more cash flow to

the farmers

Population Growth and Arable Land

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Source: United Nations Department of Economic

and Social Affairs / Population Division, World

Population to 2300.

World Population Projections (billions)

• The growth in projected arable land in use is significantly less then the projected

growth in the world population

• Pressures for alternate uses on farmland in developed countries will reduce the

arable land in those regions

Arable Land Projections (million hectares)

Source: Food and Agriculture Organization of the

United Nations, Looking Ahead in World Food and

Agriculture.

GOING ORGANIC

Eating is an agricultural act. – Wendell Berry

High Growth Organic Food Market

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GOING ORGANIC

Source: Organic Trade Association.

Value of Organic Food Market ($ in billions)

• The organic food market has grown 15.3% per year since 2000,

significantly faster than the total food market which grew 3.2% over

the same period

Organic as % of

Total Market

2000: 1.2%

2011: 4.2%

Organic Delivers Better Profits

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GOING ORGANIC

Profit Per Acre

• Productivity from organic fields increases over time as it takes over

10 years to return soil health to it’s natural fertile state

• Multiple research studies, including reports from independent third

parties, academic institutions, and the USDA, have proven that

organic farming is more profitable than conventional

Source: Rodale Institute Farm System Trials.

• The Rodale Institute’s research

finds that organic farming is

nearly 3x more profitable than

conventional

– These outsized profits for

organic farms go along with

equivalent yields and better

performance during drought

conditions compared to

conventional systems

Organic Provides Social & Environmental Impacts

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GOING ORGANIC

• In addition to economic benefits for the farmers,

organic farms provide numerous social and

environmental benefits when compared to

conventional agriculture

– Higher labor costs and no synthetic input expenses assist

local economies rather than corporate profits

– No herbicides, pesticides, or synthetic fertilizers

– More nutrients in organic foods for end consumer

– Build rather than deplete soil organic matter

– Use 45% less energy

– Conventional systems produce 40% more greenhouse gases

Conventional Agriculture is Unsustainable

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GOING ORGANIC

• Chemical fertilizers used in conventional agriculture are dependent on limited natural resources, including oil, phosphate, and potash– Rising costs of finite resources will directly increase prices of

conventional inputs

• Due to soil degradation from years conventional farming, more chemical fertilizers are required to maintain the same yields on conventional farms

• Water shortages and weather instability have greater impacts on conventional agriculture compared to organic

• Consistent use of herbicides and pesticides are creating chemical resistant species

• Plant diseases dormant for decades are returning to attack unhealthy conventional crops

DELIVERING RESULTS

It will never rain roses: when we want to have more roses, we must plant more

roses. – George Eliot

Six Year Track Record

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DELIVERING RESULTS

Owned Acres

Note: 2013 transitional acres reflects year-to-date acquisitions.

2013 organic acres includes the Denker Farm (225 acres)

scheduled for organic certification during the year.

• Iroquois Valley Farms has a six-year track record of successfully

acquiring organic and transitional farmland

– Purchased over

1,400 acres of

farmland (200

additional acres

contracted)

– Over 600 acres of

certified organic

land by end of the

2013 crop season (includes 61 acres sold

to farming partner)

• Waited three years to transition original farmland to organic

certification and prove business model before raising expansion

capital

Disciplined Investment Strategy

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DELIVERING RESULTS

Acres by State (including contracted farms)

• Find the farmers first –

no speculative

purchases

• Partner with

experienced farmers

with local knowledge

• Focused target markets

with steady, stable

expansion

Target

States

366238857

163

– Of the 1,600 acres, 1,082

have gone to young farmers

in the last two years

– Farmers immediately adopt

sustainable organic

practices, eliminating the

use of chemicals

– All existing land will obtain

organic certification by

2015

Providing Opportunities

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DELIVERING RESULTS

• Consistent with the Company’s mission, Iroquois Valley Farms has

connected local and organic farmers with over 1,600 acres

Acres to Young Farmers

Strong Historical Returns

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DELIVERING RESULTS

• A $10,000 investment in the initial private offering in 2007 would be

valued at $24,816 as of the end of 2012 (represents a 2.5x multiple

of capital invested and 19.9% internal rate of return)

Value of $10,000 Investment ($ in thousands)

Note: No revaluation was performed in 2008. The 2008 valuation is estimated based on change in Illinois

cropland value as per the United States Department of Agriculture, National Agricultural Statistics Service.

Growing Investor Base

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DELIVERING RESULTS

• After successful private offerings in both 2011 and 2012 the number

of investors grew from 10 investors in 2010 to 70 at the end of 2012

• Iroquois Valley Farms expects to double in size with its current

offering

Number of Investors

Iroquois valley farms introductory presentation 2013 09-23

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