Farming is one of the most widespread occupations in the world, and a noble one that provides sustenance for everyone else. But that doesn’t mean that the obstacles farmers face on a daily basis are properly understood, nor that it is easy to manage a farm these days. LANDE was born out of a desire to support farmers’ financial well-being with a dedicated service and a real understanding of agriculture businesses.

One of the key aspects that sets farms apart from the rest of the economy is seasonality and its impact on cash flow and decision-making. Unlike most other businesses, which have relatively constant income streams, farms experience major fluctuations in their cash flows simply because of the natural lifecycle of their key assets – whether they work with crops or livestock or both.

Farming business cycle

We all know that farming is cyclical and based on a very stable sequence of operations, including planting, growing, harvesting, and selling crops or, if we're talking about livestock farms, breeding and caring for the animals and selling meat or dairy. But these activities can be affected by external and uncontrollable variables such as weather conditions, market demand and prices, and input costs.

For example, during the planting season, farmers invest in seeds, fertilizers, and other inputs, but they don't see immediate returns. As the crop grows, expenses continue to accumulate in the form of labour, equipment maintenance, and irrigation. But income doesn't come in until harvest season, which can be months away from the first investment cycle.

So despite the overall operational stability, farms tend to experience irregular cash flows throughout the year. This has an impact on several business indicators, including the way farmers structure their loans and repayment schedules.

Financial management in farming is further complicated by the fact that crop cycles often split across fiscal periods and that a lot of debt may be accumulated at certain points in the year, even if the business is actually doing quite well when the big picture is in view.

LANDE investment cycle

Since LANDE’s services are exclusively dedicated to farmers, our financial products are set up to best serve this market segment, meaning we have adapted both our loan conditions and our investor policies to the business cycles described above.

That’s because LANDE aims to respond to one of the biggest issues farmers face when they need to access credit: the misalignment between their specific needs and the way loans are usually structured by banks and other financial institutions that don’t have dedicated products and teams for agriculture businesses.

The seasonality and fluctuations that are natural for a farm are very often seen as disqualifying by credit institutions. LANDE’s mission is to bridge that gap and meet farmers where they are.

What does this mean for investors?

A key aspect to keep in mind is the fact that seasonal repayments will translate into seasonal returns, so monthly account influx will be less likely to occur – instead, the biggest returns from farmer loan payments will come during the most profitable months for the farms each investor supports, across the lending period – which can go up to 3 years, averaging at 17 months on the LANDE platform.

For example, rather than repay monthly, crop farmers in our markets tend to prefer to make larger payments twice a year, after they sell their products – that's usually at the end of the summer and fall seasons.

For an investor who has a mid- to long-term outlook, the payment schedule may be a relatively minor concern, with the benefits of such an investment being much more significant.

First of all, with interest rates of 10.8% on average, investors can be confident that LANDE be a profitable platform for them, especially because our project evaluation team is highly experienced on this market and we make sure that the farms we lend to are stable and trustworthy, meaning they have a high likelihood of repaying their loans on time. In fact, LANDE's borrower default rate is only 1% - an extremely low figure compared to those reported by our peers.

Our LTV threshold of 60% is another way in which we guarantee security and peace of mind for our investors. We evaluate collateral assets through a tried and tested method that ensures accuracy and reliability.

Furthermore, the wide variety of projects on the LANDE platform makes it easy for an investor to select the ones they prefer, while the high availability means that there will always be plenty of investment opportunities.

Another important feature of LANDE for investors is our fixed interest rate, which translates into high predictability, no need to be concerned about supply and demand, and no risk of diminished returns due to variable interest rates over a certain period.

LANDE investors are valued partners for us and their involvement in supporting farms across our markets is highly appreciated, as farmers are struggling more and more to keep up with the demands of today’s fast-paced economy. That said, we want to make sure that investors have a good understanding of the realities of the farming business, because their experiences on the platform will be based on the farm financial cycle, which will vary based on the type of farm being financed through each project, the purpose of the loan, the time of year and length of the contract, as well as by any unpredictable conditions the farm might deal with during that period.