The Planted Row: Cut out the new middleman

Stan Wise
Farm Forum Editor

Sometimes I wonder if there’s a room on Wall Street filled with people whose only job is to think of new ways to get just a little bit more of farmers’ money.

It certainly seems that way.

The newest scheme appears to be a company wedging itself into a space in the ag economy as a middleman where there had previously been no middleman necessary.

This company is the venture capital-backed Tillable.

It takes publicly available data from county tax offices, the U.S. Department of Agriculture and the U.S. Geological Survey and runs that data through computer algorithms to identify farmland and a profitable rental rate for that land. It then sends “hassle-free lease” offers to the landowners. These leases offer cash up front to landowners for three years of rent on the land, during which time Tillable can list the land on its website and sublet it to farmers who will work the land — presumably for more money than Tillable is paying the landowner.

The problem is that almost all farmland available for rent is already being rented. Farmers already compete for it. They already try to form good relationships with their landlords so they can keep their rental agreements in place, especially should another farmer come along and try to outbid them.

Farmers talk with landlords. They form business relationships — two parties working together so that both benefit from the partnership. There is no middleman making money off the arrangement.

Apparently, that caused so much consternation to someone that they decided to do something about it. Now, no one has to actually show up and try to talk a landlord into taking a new rental agreement. Instead, an offer for a big check just shows up in the landlord’s mail box. If they accept it, they don’t have to think about rental agreements for a while. Tillable, the new middleman, will take care of that for them.

Sounds good for the landlord, right? But what about the farmer who had been renting from the landlord? The farmer will now likely have to pay more money to Tillable to rent and work the same ground.

Oh, and one other thing. Tillable requires that renters share their agronomic and financial data with them, ostensibly so they can pass it on to the landowner as proof the farmer isn’t neglecting the rented ground.

It won’t take too much work for a computer algorithm to look at your receipts and your agronomic data and make an educated guess as to what your profit margin is on the land. What happens if Tillable looks at that data and decides next year you can afford to pay a little more in rent? My guess is that you’ll either pay it or it’ll put the land up for bid on its website again.

Tillable’s service will run on a portion of the money that used to travel directly between renters and landowners, but that isn’t the worst thing it will do. It will drive up prices for land rents and make it easier for larger farms to outbid smaller farms on their rented land. All it will take is a search and a click. Smaller farms will go out of business at an even faster rate.

If we look at our ever-more-sparsely populated rural landscape, we see that farms and ranches are the final things holding rural communities together. If we don’t protect those farms and ranches, our rural communities will collapse.

Hopefully, both landowners and renters who care about their communities will continue to work together and avoid letting any middlemen gain a foothold in their relationships.