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Investment company backs ag growth, expansion

“Investing with operators to build great Canadian farms.
Joelle Faulkner, co-owner of Area One Farms, visits an operator with whom her company has partnered to help expand his farming operation.

“Investing with operators to build great Canadian farms.”

For the last two years, that guiding creed has led Area One Farms to secure agricultural investments with producers in Alberta, Saskatchewan, Manitoba and Ontario, and now the North has entered onto its radar.

The investment fund, which is based in southern Ontario, is a unique solution for existing producers who are looking to take a bigger risk with land acquisition and development than what a traditional bank loan can offer.

“Everything has to be in alignment, which is the hard part,” said Joelle Faulkner, who runs the venture with her brother, Benji. “You have to have a person that wants to partner, you have to find the proper property for them, they have to have a plan that is growth on what they’re already doing, and they have to be interested and excited about it.”

The business model is designed around building partnerships through which farmers can expand their operations without paying fees, rent or interest. Area One works with backers who invest in property, land improvements, equipment and other expenses associated with farming. The farmer is then able to maintain financial stability while growing the business. Profits are shared between operators and the investors.

The idea was hatched from personal experience. A decade ago, the Faulkners, whose family has a long history in agriculture in southern Ontario, wanted to grow their own operation by purchasing a neighbouring farm. The family didn’t want to take on additional bank debt, but couldn’t find investors to partner with them, and so the investment went unrealized.

Area One aims to offer farmers the opportunity the Faulkners were denied.

The company hasn’t yet secured any agreements with Northern Ontario producers, but the Faulkners are intrigued by the opportunities presented by the fertile land of the Northern Claybelt, stretching from Kapuskasing to Rouyn-Noranda, Que.

The Faulkners have spent time in the North over the last year and are speaking with potential partners, but any prospective projects are still at the exploratory stage, Faulkner said.

“We’re in the process of finding guys who do want to grow,” Faulkner said. “We end up getting led to places by people, so we find partners first and places second.”

The length of a partnership depends largely on the scope of the project and the goals of the producer, she noted, but they tend to span a long term, because it takes time to make the projects work. Eventually, when the operators are stable and no longer need investor assistance, Area One works with the producer to dissolve the partnership.

Always on the lookout for new operators, the firm is currently sitting at seven operators, and “all of them are happy — that’s our metric of success at the moment,” Faulkner said.

“We have a very interested and excited group of operators who have done very well with us and we continue to do very well with,” she said. “Hopefully that will work just as well in Northern Ontario as it has in other parts of the province and other parts of the country.”