The Overlooked Diversifier: A New Playbook for American Farmland

Prices for critical inputs such as synthetic fertilizer, chemicals, and diesel have surged in recent years as supply chains buckled, from Covid to the Russia-Ukraine war to the blockade of the Strait of Hormuz, which moves a third of the world’s fertilizer. Meanwhile, farm margins have been shrinking, and the US has lost almost 150,000 farms in the last five years alone. The commodity model that American agriculture has run on for decades is under real pressure, and the consequences aren’t abstract. We’re already seeing the impact of these events on food prices, the economic health of rural communities, and our national food security.

So in this episode, Sanjeev sits down with Justin Bruch, CEO and co-founder of Clear Frontier, a company that buys farmland and partners with farmers to transition it to organic production through long-term, farmer-friendly leases. He’s joined by Bryce Irlebeck, an Iowa farmer who took his family’s 600-acre conventional operation and grew it to nearly 10,000 acres, almost entirely organic.

Together they make a compelling case that farmland is one of the most overlooked diversified assets available to investors right now, and that soil health is a lot more relevant to its long-term value than most people realize. We get into where the current model is breaking down, who’s bearing the cost, and whether a more resilient approach can actually take hold.

Sanjeev Krishnan: Alright. Welcome Justin and Bryce to the SG podcast. Justin, you’ve been here before. Welcome back.

Justin Bruch: Thank you.

Sanjeev: Bryce, this is your first time. Thank you for doing this.

Bryce Irlebeck: Thank you for having me.

Sanjeev: Maybe just before we get into the future of American agriculture, the state of the world, maybe even spring planting and how that’s going from a farmland perspective, maybe just backgrounds. Who are you, and why are you here?

Bryce: Okay.

Justin: Who do you wanna go first?

Sanjeev: Justin, you go.

Justin: Okay. Sanjeev, S2G. Thanks for having me on your podcast. So I’m Justin Bruch. I live just outside Omaha, Nebraska. I’m a fifth-generation farm kid from northwest Iowa. I spent about 11 years abroad farming, seven years in Ukraine with an extensive amount of work in West Africa as well, while I was there on farming stuff.

And then about another. Four and a half to five years in Canada building a farmland portfolio for CPPIB at an institutional level, and then founded Clear Frontier with S2G and your team in 2019. And so we’re a farmland fund based outta Omaha, Nebraska, where we buy farmland with a predominant focus of transitioning it over to certified organic through long-term leases and helping tenants get to organic and stay organic so that we can focus on the impact of soil health and the transition from conventional to organic ag, as well as try to take advantage of the demand side of organic.

So we’re a farmer-centric group that is focused on the farmer side. And I still farm part of the family farm as well today, which is about majority of that’s organic with a little bit of conventional on it. So that is me in a nutshell.

Bryce: Great. Thank you, Justin, and thank you guys for having me as well. My name is Bryce Irlebeck. I grew up in western Iowa. On a conventional corn and soybean farm, about 600 acres, not enough to even support one person. It ended up going to Iowa State University for agriculture.

And during that time, I spent time in Brazil, went to college down in Brazil, made friends down there, and was able to jump into the agriculture down there, investing down there as well. And spent some time in Tanzania, Africa, on a 12,000-acre rice farm.

So we were there as they were trying to launch an investment fund. We were there as consultants and spent about seven months there as well doing that. And then I came back to the family farm. As discussed earlier, 600 acres, it wasn’t viable. And so I looked around at what would make the farm viable if I ever wanted to come back.

And that was turning it organic in 2015. About the same time, Justin Bruch started in the organic space as well. That’s how we all met. And we took that farm in 2015 from 600 acres to, we’re about 10,000 acres now. Almost all organic, a lot of it regenerative. We focus on food-grade, so we have corn that goes into a bag of chips, and we’re heavily invested in the company.

That goes to Costco, Whole Foods all over the country. We’re looking at building an organic dairy, breaking ground this year. We have the whole family back on the farm. My mom, dad, my brother-in-law, and we have extra employees. So I think one of the themes that you’ll see today out of us is this was a way to save the farm and keep it in the family and allow us to be a family farm again.

Sanjeev: Thank you both. How common is it for two farm kids from Iowa to go to Brazil and Africa? Is this a common thing, or are you guys uncommon in your world?

Bryce: I think Justin and his brother Tyler, were pioneers of being the younger people to go out into different countries and understand what is going on. I was a little bit later, and it was just getting started as I was going to Brazil and Africa, and now I think it’s more prevalent because people realize the value of that.

The one thing I would suggest is that people go down to those areas and understand agriculture and understanding how big Brazil is, how efficient they are, how good the managers are. Quite frankly, it has a lot of effect on, as Justin talked about, why we do stuff in the United States today and how we do it.

Sanjeev: That’s a good segue to the first topic that I want to get into, which is the past is typically not the future, although most people tend to cut and paste statistics and correlations in the past. But if I think about and tell me how wrong this is, but if I think about the last 30 years, particularly 25 years at least, you’ve had sort of two big super cycles that I think American agriculture has benefited from. And one has been China pork demand and soy going to China. And then two ethanol. Those two big super cycles have influenced acreage and the commodity-based agricultural business model. Do you guys agree with that? And is there a third or a fourth that you’d put in there?

Bryce: I’ll let you go, Justin.

Justin: So I agree on the China pork. I think it’s significant. I think ethanol is significant. When you look at the numbers, I don’t think we’re far from 50% to the US corn crop going into ethanol today. You look at the United States and what you’re gonna grow, ballpark, 90 million acres of corn, 90 million acres of soybeans in this country.

And you look at half of that going into ethanol. And then the export side that we’ve had on the soybean side in order to feed pork in China, from a protein standpoint, is hugely significant. There’s another one you put in there, and you could go back into the early nineties of glyphosate and Roundup Ready soybeans, and that change in what it did for the change in the overall farming system is kinda you have to step almost back to Norman Borlaug and the Green Revolution to find another blip in the system of what changed us. But I think today, if you look at ag, and you look at the focus on soil health, which comes into the regenerative, the organic, it’s what you see outta MAHA. Look at nitrogen prices today and cost of inputs, and what’s going on, and then look at consumer demand.

I think that’s the next frontier that we’re looking at today, that it is happening right now, and it’s a snowball effect starting to roll. So I see that as one that’s coming in front of us next. I don’t know, will it be as big as Roundup Ready, or China pork or ethanol? I can’t say, but I think it’s one.

Sanjeev: Yeah. The other thing I was gonna throw in there, Justin and Bryce, maybe you react to it, was also the advent of cheap shale gas that led to very attractive urea prices for a while. Is that another one, Justin, in your view, that led to?

Justin: It is. We saw effective price of inputs for a very long time, which made your ability to produce corn sub $4 conventionally to make it economically viable. But we’ve seen a whole change of that in this input complex. Now, some of that is short-term, but ultimately, since the run-up really post-COVID, from an inflationary standpoint, our cost of production, our cost of equipment, everything has skyrocketed, but it has made things very tight. Bryce, is there anything on there we’re missing?

Bryce: I’d add one thing from a farmer’s standpoint, the policy. So if we look back to 2000, and crop insurance started to come in, and all the policy, all the government programs push people into two crops. It’s very hard not to grow corn and soybeans as a farmer that borrows from the bank that needs crop insurance to borrow from the bank and buy his inputs and all that. And it’s sad, but most farmers are locked into doing that even if they wanted to do something better or do a rotation or do something else.

They just can’t. And that’s what we’ve broken on our farm. We grow multiple different crops. I don’t really care what insurance is anymore. We use it, don’t get me wrong, but it is what it is. We’re gonna grow what’s best for us and not what’s best for insurance, and the bank. And that policy, up until the last few years has been driven to corn and soybeans, and now I think we’re starting to see a gradual shift in the policy where maybe that isn’t the best thing to just have the government funnel people into corn and soybeans.

Sanjeev: You’re talking to  my favorite topic in agriculture, which is credit and risk management, but we’ll get into that later. I’m of the view, and this is going to be challenged. But that commodity system that we grew up with in American agriculture, I believe, is fundamentally under threat just driven by perhaps China, Brazil, Argentina, and soy dynamics. Justin, your views of the consumers perhaps choosing or wanting a different thing. Third is profitability. We were so much on a yield per acre, but as more and more acres get rented, maybe we’re gonna have to focus on profit per acre.

I’ve told this to Justin, like we’re in need of a new grand strategy. ​‘Cause the grand strategy of the last 30 years ain’t gonna work for the next 30, just given some of the things I described, and perhaps others agree, disagree.

Justin: So I would agree. I think this is one of those times in life where you can look back and say I don’t think what we’ve done in the past if we’re just gonna continue doing it is going to work the same way. When you look at Brazil, and you look at the infrastructure going out to the west and their ability to get to China, and what they’re producing on a double-crop basis, and ultimately for the most part, their price of land. That is going to completely change that dynamic. So there are some significant changes that are gonna have to happen in the system, and I would argue, and this pulls back a little bit to the policy side and farmers won’t like to hear this, and so this would be offensive to some, and I apologize, but we are working our way towards being just a subsidized operator for a system. And Europe is a heavily subsidized agriculture system. 

And there are a lot of farmers last year, that I think the only profit they made was the fact that we got bridge payments through the government. And it’s not the farmer’s fault. We have to figure out a way to do something different so that we actually have better markets, and you go out and make a living doing what you are doing without relying on a government payment to come to you. But that is partly ​‚back to Bryce’s point on the policy side, partly where we’ve been driven to on corn and soybeans in the system we’re in.

And a long short answer is yes, I would agree with you. 

Sanjeev: We’re in danger of a common agriculture policy 2.0.

Justin: Correct. I think so. The next 30 years has got to look different than the last 30 years in my perspective. Bryce, what do you think?

Bryce: Yeah, from a farmer’s point of view, if corn’s $7, a bag of corn is $400 to plant. And nitrogen’s a thousand dollars, and that actually hasn’t come down. And the policy that we’ve put in place to allow two to three seed corn companies to control the market. You allow one to two nitrogen people to control the market, and it’s just not fair anymore.

And they got there through policy. They didn’t get there through they were just better at supplying nitrogen to everybody. The patent laws allow a seed company to definitively keep a patent on seed for a pretty long time. And I don’t think that is the way we intended our policy to be.

That’s the way it turned out. And so I think we’re in a lose situation as conventional farmers that the policy is just gonna keep riding along with big Ag and eventually it’ll be subsidized as Justin talked about.

Sanjeev: So what I’m hearing you say a little bit, and I’ll be more provocative than you both, so the business model of buying retail, selling wholesale only works if you have a common agriculture policy 2.0.

Justin: I think it’s a fair assessment. 

Sanjeev: Yeah. And I don’t think anyone who has studied common agricultural policy like I did in college when I was at school thinks that’s the ideal system.

Justin: No.

Sanjeev: I’m sure there’s protagonists that will argue why that is working in Europe, but I think the American agriculture system can do better.

Justin: You know, there’s that great JFK quote that the farmer buys everything in retail, sells everything in wholesale, pays the trucking both ways. It was true in the sixties when he said it was true today. It’s not a good system for where we live for the next 30, 40, 50 years in ag.

Sanjeev: That’s how we got to where we’re going to, let’s talk about where we’re going. Justin and Bryce paint your visions of where, if you are talking to the Senate Ag Committee and the future Farm Bill architects, if you’re talking to innovators, you’re talking to capital markets, what is your sort of vision or formula for where American agriculture goes?

Justin: Bryce, you go first on this. I know you got an answer.

Bryce: It’s a very big question. I think it starts with the monopolies that we have in agriculture and how do we break them. And look, I think everybody should have a business to make as much money as possible. So let’s break them in a business-wise.

We grow 90 million acres of corn, 90 million acres of soybeans. If we look at a different world, and maybe the government has to subsidize through the process, don’t get me wrong. Let’s just say, we turn 10% of our acres into wheat that grows a cover crop that produces nitrogen, that we need 10% less combine power, 10% less tractor power, 10% less chemicals.

And we change the system to not be as heavily reliant on those monopolies. We could break those monopolies down. And efficiently get back to a less leveraged place for the farmer. For example, we grow wheat in Iowa. We spent $13 billion given away from the government. If we turned a third of the wheat in Iowa and subsidized it to profitability, it would cost us, I think, around $7 billion. We’re already paying this money out. Why not do something good with it rather than promote more corn and soybeans.

Justin: Yeah, I totally agree with that. On how we’re using government money and where it ends up going. I think from an innovation and from an ag standpoint, we have got ag in the US pigeonholed into this corn and soybean component.

And then we’re very pigeonholed into what is our market offtake demand. And so you take the ethanol side, and then you look at oil and gas and competition on that side. And now the competition in South America, we have put ourselves into a box, and in that box, to Bryce’s point, you’ve got a few seed suppliers.

You’ve got three basically major equipment suppliers that own the entire market. And then you’ve got a whole bunch of independent people that are out trying to farm that are ultimately price takers. They get told what the price is off of Cbot, and that’s what it is.

And so it’s pretty constricted on that basis. If I were sitting in front of the ag committee, I think for me it would be around yes, we’ve gotta figure outbetter uses for our demand. There’s a lot of things I agree with current administration on.

There’s a lot of things I don’t agree with. I like the idea of trying to figure out how we can use more of our own products in our own country and find better uses for ​‘em. So I think we’ve got to figure out a component on that. But I think we’ve gotta innovate to change the way that’s going forward.

We’ve got the average age of the US farmer is 59 and a half. The USDA says we’re gonna trade 30% of farmland in the next 10 years. So you’re gonna see this enormous shift in agriculture of the ownership of farmland whatever, a $2.2 trillion asset cost in the United States. It’s an enormous shift in farmland ownership, and you’re gonna see a shift in the farmers and the operators doing it. And it’s going to be people Bryce’s age or my age and younger that are going to be holding that torch going forward. So there’s a big shift coming. I wish I had the answer to say here’s the five-point plan or the 10-point plan of what we’re going to do in order to make that all happen.

I don’t honestly know exactly how we’re gonna solve the issue of how that change is gonna be converted, and ultimately, at the end of the day, how you do it so that the American farmer does not have to be a massive-sized farm operation to be able to make a living, support their family, support their local community, and continue to be successful.

The American farmer is the greatest entrepreneur, in my opinion, because they’re their banker, they’re their accountant, they’re the agronomist, they’re the mechanic. And they’re working night and day from early spring until late fall, as well as most of ​‘em, they’re doing their marketing.

So there’s a lot there. And you gotta figure out a way for someone that’s wearing that many hats, how do they continue to be successful so they can carry on doing it?

Sanjeev: Maybe I can take a stab at the five-point plan or the 10-point plan, Justin. Because I think it involves a number of things, but at its root, it’s about how do you get more cash flow from these real assets that are inflation hedged, uncorrelated, whether you own or rent land. And you tell me, ​’cause you guys are the experts. There could be a K‑shaped, and that could be okay. Like you have a bunch of commodity people that do commodity things, and they’re gonna consolidate and it’s gonna look slightly Brazil style, but not to the scale of Brazil maybe.

And they’re gonna be able to make their utilization of farm machinery, their scale. That could work. But then you’ve got this other end that’s gonna be specialty-focused, less yield per acre focus, but more profit per acre focused. What you guys have done already in the organic space, and other things that you all are doing. And if we can accept that, there’s gonna be a segment of the market that’s gonna be highly consolidated, significant acres, and a segment of the market that’s more specialty, I think then you’ve got the makings of a plan, whether it’s innovation, for the new genomics, new cash cover crops, new specialty seed that goes into unique niche markets.

And then you need the financial system to finance that so that the current financial system doesn’t veto lending and risk for you guys. And then you’ve got the merchandising aspect of it, which I think between GLP‑1 and the new consumer and kind of traceability and a bunch of things that make, I think animal protein is gonna be more specialty, and that’s gonna provide potentially some tailwind.

And then on top of that, you’ve got the opportunity to make agriculture from, and this may sound controversial, from extractive mining to regenerative mining, i.e., soil health and building that up. Does this sound far-fetched, or do you have a different way that this could go down practically?

honestly, Sanjeev, your components of that are spot on. How you find specialty markets, or how you find a way to make money and also limit cost. And, to the listener of this, conventional ag feeds planet earth.

At the end of the day, we grew 90 million acres of corn in the United States last year. We grew about 440,000 acres of organic corn. Put that in perspective. It is what feeds the mass majority of the chickens, the dairies, the beef that we all consume on a daily basis, or go into your food supply.

So I’m not saying we don’t have to have it and it has to stay there, and it has to continue. Where the opportunity lies today in agriculture is when you look at a conventional corn price of around $4.27 Chicago, and you look at an organic price of nine and a half dollars. That’s why Bryce is not so worried about it, because he’s gonna be profitable at nine and a half dollars plus corn in what he’s doing. So finding something where you can change your need for relying on urea fertilizer at a high cost because you’re using a manure or compost or a different way of getting fertility, or cover crops, and then figuring out a way to get a premium for it.

That’s the greatest entrepreneur there is. How do I find a way to go find a different way to do something that everybody else is doing and make more money on it? And it may not all be organic. Maybe it is more regenerative or more ways to figure out, or maybe it’s technology-driven on how we figure out to use more of the biologicals to reduce what we need for nitrogen at a much lower cost.

But there’s a change gonna have to happen, and it’s gonna have to come in the coming years, for this engine to continue to run.

Bryce: I’ll add in there just on your five-point plan I go back to policy because the hardest part about organic is the government. And we were, I would say ​’cause of lack of better words, attacked by the USDA when we went organic by the rules and policy that were in place.

You can’t till, you can’t do this. They really limited our freedom to earn. So I think policy, if people are listening out there to let people do the right thing. Most farmers will do the right thing.

Most farmers will try to do better, and government policy gets in the way quite a bit of the time. And I don’t think it’s meant to, but it does.

Sanjeev: So we talked about the last 30 years and some of the potential models for the next 30 years, mainly being specialty-focused or maybe K shaped, but specialty, providing a big profit pool. Small base, to your point Justin, but real opportunity to go from yield per acre to profit per acre.

A lot of my friends are in buyout and private equity, and middle market private equity’s been a darling for allocators, but it’s reliant on not just buy low, sell high, it’s often reliant on leverage. And that leverage is getting more expensive and driving less alpha, in my opinion.

And then, demographics, big challenge, right? We’re aging massively globally. And the question is, what do you do? And maybe Justin, I want you to bring into this is I believe there’s a role for diversifiers, and the diversifiers we have today, if you’re an asset allocator, are really gold, silver, bitcoin, all three of which have a lot more volatility than what you’d want in a diversifier. And perhaps their inflation hedges, perhaps not, TBD a little bit. ​‘Cause we’ve had such a stable inflationary régime up until Covid. But curious your thoughts about, ​’cause you spent a lot of time with allocators and investors. How do you think about the role of diversifiers?

Justin: I think the only one you missed, you said gold, silver, or bitcoin. I think you should have added farmland to that. 

Sanjeev: That’s what I wanna talk about. Yeah.

Justin: There are some things in there with diversifiers. Like when you look at the 1980 farm crisis that the United States went through and then you look today, the debt to equity ratio is about 13.5% on US farmland. And that basically tells us that, I would argue, you’re not gonna have a 1980s farm crisis and farmland even at high interest rates, which we saw interest rates, whatever, in the 19, 20 percents back at that point.

You don’t have to see that just because your equity is so much better across the nation from an ownership standpoint versus a debt standpoint. And you look at farmland, and you look at its returns and the fact that you can go out and buy a real asset of something you can see, feel, and touch, that produces a crop that is…

Sanjeev: Heavy asset, low obsolescence, as they say now, HALO.

Justin: Yes.

And it produces something that we can eat and consume on a daily basis. It’s an appreciating asset. Unlike a building that’s a depreciating asset, it appreciates, and it has since the Second World War on a long-term trend. And so to me, as I look at this market, I’m thinking, If you run that through ChatGPT and you do that gold comparison of an ounce of gold and an acre of Iowa farmland, for a hundred years, and you run that out, you basically come out of ​‘em being at about a parity. However, farmland has produced you somewhere between a two and a half and a four and a half percent cash yield for a hundred years whereas gold in that theory sat in your gun safe without providing a dividend. As I look at farmland and I look at all of the things going on in the market, I think it’s one of the most stable places you can go, put money and hold an asset that produces a dividend, and that is an inflation hedge in the market today.

And I can’t decide if I’m just overly biased because it’s what I do for a living or if I’m missing something here. But to me, when I look at that, I think it is the right place for a long-term investment. And I think a family office might say, ​‘Hey, I wanna be in private equity because I wanna flip this company every five or seven years, and it’s gonna be a higher return.’

Which, to be fair, it is gonna be a higher return if you can do that right. Farmland is appreciated about five and a quarter percent on the 25, 50, and 75 year long-term average. You can look at that and say, if I’m a family office, do I wanna be in something I can flip out in seven years?

The answer might be yes. Or you can look at it and say, do I want something that I can hold for 10, 20, 30, 40, 50 years, that is gonna continually produce a long-term appreciation and produce something that the world needs, and if I put the right operators on it I can improve it over time as well. I think it’s a very bullish case as you look at differentiators of parking money as a long-term investment. 

Sanjeev: Justin, can I challenge you on one thing? I totally buy all of that and obviously I gave you a softball to tee you up to the farmland thesis,

Justin: It was a curve ball man

Sanjeev: Softball, curveball, whatever. I do want to press on one thing on the appreciating asset bit. Is all of it appreciating? Like at some point, it is my view that soil organic matter increases and the durability, particularly if you think about water issues, heat issues, other just climactic events, is it all appreciating or are there some that are gonna be much more resilient and therefore better, more durable appreciators within farmland?

Justin: So I would say today in the market, the market trades off of a comp base today. No different than a house trades in town off of comps around it for comparables. I believe that market will change as you talk about changes in the next 10, 20, 30 years going forward, I believe that is going to change in that it’s gonna trade off of productivity and productivity is based off of soil quality. And today, farmland does trade off productivity. To be fair, if you’ve got a 90 CSR in Iowa, it’s gonna trade better than a 40 CSR is because it is more productive. But as you look at higher quality and better performing farm ground, soil organic matter, you look at that for every 1% of soil organic matter, you’re gonna hold about 30 pounds of free nitrogen that’s available to plants.

Nitrogen is gonna be your most needed nutrient. Today, it’s your most expensive. You’re also gonna hold about 20,000 gallons of usable water, from a cation exchange standpoint, the plants can take out. Water is going to be absolutely crucial for us as we look at the next 30 years out and we look at where that sits.

So yes, to your point, I believe improving soil organic matter, improving soil health, and having the right water is going to be the differentiator. The last piece on this is if you looked at the state of Iowa in the 1850s, people were coming across in a covered wagon.

Your soil organic matter, on average, is gonna be about 7%. That’s about your plateau of where it’s sat. Today, let’s say we’re maybe a 3% average, if we’re lucky. So we’ve degraded 400 basis points in 150 years of soil organic matter. And if you re revert back to what I just said about pounds of nitrogen and available holding water capacity, that’s what we’ve basically degraded off.

So improving that and changing that, that is your future of using less inputs, producing a bigger crop, and having a better asset value.

Sanjeev: Bryce I called Justin on Saturday, I was like, we gotta write a bipartisan piece on like how to improve rural America, and get more money and flows into rural America. If that happens, one of the things I get questioned a lot is, things like the words, corporate farming, tenant farming.

And how should money, if it shows up in your part of Iowa or other parts of rural America, show up? ​‘Cause I think there is this hesitation or concern of if capital starts to flow, whether it’s to farmland or to other things that finance this stuff, or is that just a made up hesitation?

Like people in rural America want capital to come, they want to partner with capital?

Bryce: Yeah, I think, are we talking about capital for land or capital for towns and everything involved in that?

Sanjeev: Either, both. Maybe just differentiate however you think.

Bryce: Yeah. I think the worst way capital shows up is government programs. I think for the value of the farmer the way he thinks about himself, everything. Everybody accepts it. I accept it. I’m not above that, so I don’t wanna put it there. But it sucks to get that, it sucks to have your living based on that.

So I think the value of farmland and the value of the work and the value you create, you should get paid on. That’s the best way for money to show up in small towns, to show up in rural America. They actually get the value that you’re creating, and you’re creating probably the second most valuable thing on this earth, other than water, protein, and food.

And our policy and everything that has been created in the last 20, 30, 40 years has been to take that value out of the small town to crush that small town. If we just had a fair marketplace, I think capital would flow into those small towns.

Sanjeev: And maybe Justin, what are the options today for owning farmland? How do you partner with farmers? I think you do it very differently, in a way that is in partnership, but I’m biased too. But give us the state of the state on farmland ownership, and where we are today.

Justin: So, for someone’s ability to go buy farmland, there are several different paths you can go about it. There’s land for sale all the time. You can go out and find a farm for sale and buy it and own that and rent it to a local farmer.

Farmland’s a unique asset class in that there’s a zero vacancy. You don’t drive past a nice farm and see it growing the weeds, ​’cause no one decided to rent that like you would a house in Chicago or Omaha. Someone can just go out and buy that asset, hold that title in their name or in an LLC, and rent it.

And that farmer could rent it themselves, or they can go to a third-party company and say, manage this asset for me, and do that. It’s pretty turnkey. The second option is you’ll have certain groups that want to go out and hold that through like an SMA or an SPV, where they want to be able to go out and maybe put a larger investment amount of $50 million or a hundred million dollars and say, ​‘Hey, go out and buy me this certain number of farms.

Hold them and manage them for me.’ And so that’s a path. You can do it through a fund. So for something like what we do, you got a collaboration of people that come into it, and we buy it, manage that, and hold it for ​‘em and do a turnkey on it all the way through for that period. So there’s multiple different paths of ownership. And there’s ownership for someone that wants it to be in row crop production.

There’s ownership of people that want to have ranch land that they might wanna spend the summers riding their horse on or fly fishing on and have cattle on it. There’s permanent crops, almonds, pistachios, grapes, citrus that they can have that can be in a permanent basis, which all of those things come in different plays.

Another component of this whole piece is, and Bryce is an expert on it, is around the tax side of it is, there’s also people that’ll come into either direct farm ownership, SMAs. We structure things through REITs typically to try to manage our tax exposure, but there are ways to do a lot of deductions which flow back through to owners, whether it’s under 179 in the big beautiful bill, section 180 under soil depreciation which Bryce does, or different ways.

So it can also be a great tax strategy for holding assets. But there are multiple paths to get into farmland. And farmland, I’ve been chastised multiple times for saying farmland’s not very liquid. It depends on how you wanna really form liquidity because if you go put a farmland up, you can put a farm on auction and it’s gonna trade in the next 30 to 45 days and it will sell.

There is always a buyer there for it. And so you can get in and get out of farmland, and there’s always farmland for sale. We look at about a billion dollars worth of farmland, plus a year every single year of stuff that’s on the market that we could acquire. So there’s a lot of different paths to get into farmland for someone that’s interested in that diversifier.

Sanjeev: I feel like we’ve had an hour-long talk about agriculture and talking to two people in the business of agriculture and farming, and not talking about regenerative, I gotta be cliché and ask about that. What is regenerative agriculture?

Bryce: I can go first, Justin.

Justin: Go for it.

Bryce: Perfect. No, we got regenerative certified. You can take that for what it means. And the reason we did it as the chip company we’re involved with, wanted to be regenerative certified on the label on their bag. So a lot of our corn goes into that chip, and they put that on the label.

So we do get a bonus for the regenerative certification. Now, for us, I think regenerative means that we are producing crops without having to be reliable on other people, for the most part. Now we’re not a 0%, but regenerative means a rotation where we’re not buying all of our inputs. We’re not relying on chemicals.

Now we rely on tractors still and things like that, so it’s not zero. But we raise a lot of alfalfa. We grow 150 pounds of nitrogen. We place 50 pounds of nitrogen on the field. Alfalfa takes care of our weeds for the most part. It’s phenomenal. We grow corn, soybeans back to alfalfa, and we are really down to using two inputs of manure and sulfur and a little bit of lime.

So regenerative, I think, means vastly different things to different systems and throughout agriculture. And that’s why you don’t see one regenerative brand, because for a cattle producer, it might be different. For a conventional row crop producer, it might be different. But the regenerative definition that we’ve used on our farm is being able to rely on ourselves rather than third-party inputs.

Justin: Bryce, I think it’s a great definition of what regenerative is. So I talk to a lot of people who talk about regenerative, and I love to ask what is regenerative? And everybody has typically got a different answer as to what the definition of that is. And farmers do as well. One farmer will say I use cover crops on part of my farm, so that’s regenerative.

Another one has got a fully integrated livestock program, crop rotation, et cetera. So there are variance levels to it. I challenge the market a little bit on someone who is a regenerative farmer in Iowa. And maybe they’re using cover crops, maybe they use some manure on their farm to limit their synthetic nitrogen needs.

Most of their corn will probably go to the ethanol plant just like everybody else’s. So Bryce has found ways to go find a premium for doing what he’s doing, which to me is a great reason to drive the economics of getting people to make a change in practice. The vast majority of the market doesn’t have that offtake opportunity.

And ultimately doesn’t get an economic benefit from it other than the long-term benefit of improving soil health and reducing inputs. But I would argue that to say the old statement, it takes money to buy whiskey. Farmers at the end of the year have to pay the bank back.

And so it comes to what is my cost for putting cover crops? What are my costs for doing this? And if I’m at a break-even basis, it’s harder to get people to make that transition. Over. I think it is a combined piece of ultimately soil health rotation, what you need to bring outside of the farm versus what you can produce within, and how you can try to break the mold and change it to do something different.

The last piece I’d say on regenerative is a lot of people will look at organic and say. I don’t know if it’s regenerative enough ​’cause it’s organic, and I kinda look at this bar of saying if this is regenerative, underneath it is your regenerative practices of maybe cover crops and a crop rotation, and then you have organic, where you’re using no synthetics, no herbicides, insecticides, fungicides, no synthetic nitrogen, no GMO traits, and a crop rotation that fits that  following the 36-month transition period.

And then you get further over to the right, and you get ROC Regenerative Organic Certified, which is even a more stringent classification to get to. I think all of those things are regenerative ​’cause they’re all good for soil health and what you’re trying to achieve. There’s just variances to ​‘em.

And there are also pay scales that come with them.

Sanjeev: I wanna link this to Las Vegas.

Justin: Nice.

Sanjeev: That’s my segue here. If you think about Vegas, you’re gambling effectively, and farmers are gambling with weather, they’re gambling with commodity prices.

But let’s just bring this to life. Strait of Hormuz, there’s a gamble right there. 40% of your fertilizer crosses those straits. How are you, Justin, the prototypic Clear Frontier Farm, Bryce, your farm operations, how antifragile are you to what’s happening in the Strait of Hormuz right now?

Bryce: Yeah, so it’s actually helping us. And I’d just say that lightly. A lot of the fraudulent organic grain comes in and around that area. And so we’re seeing prices increase to what they should be for the work and the risk that we’re putting on in organic.

Sanjeev: Sorry to interrupt you, but I also imagine it’s helping you, but also it’s not, ​’cause you said manure, sulfur, and I forgot the third thing.

Bryce: Just manure and sulfur.

Sanjeev: And you’re protected by that, I imagine, relative to other farmers.

Bryce: Manure is local, and sulfur comes from Montana or Canada, and it’s less than 1% of our operational cost. Yeah. And so sulfur has gone up. Manure follows nitrogen a little bit, but it’s still, we don’t lose sleep over what’s going on outside the US, just because we’re not affected by it as much on the organic side.

Justin: Yeah, it’s great insulation today for the operator that’s getting manure compost  locally. Fuel we use fuel and probably maybe a bit more fuel than the conventional farmers. So there is an effect there. What’s happened from both the what’s going on in the Middle East, because of the tariff, especially on Turkey, it has reduced some of the imports that I will argue are predominantly a lot of times fraudulent or not to the same standards as what we produce here. So it’s reduced some of that. So it’s actually been bullish for us. But I think we’re quite insulated in the way we farm in our practices versus a lot of people that are very dependent on it. So, in some ways, it’s sad from a geopolitical standpoint, but it’s great for us from a business standpoint.

Sanjeev: Yeah, and I think not to put too fine a point on that. I think the fragility aspect of what you all are doing is important, right? From a food security, national security, and economic security perspective. I’ll end with this. I want to thank you both. I think my business partner Chuck always says, three of the most important stakeholders in the American system are the military, entrepreneurs, and farmers in no order.

And thank you for what you guys do for feeding the world and for what you’re doing to plot the next 30 years.

Justin: Thank you, Sanjeev. Honestly, I’m gonna say thank you to what you guys do as well. You guys have made a lot of investment in entrepreneurs and in businesses across all ag, which it is important for that investment to come in as we look at that next 30-year period going forward.

Sanjeev: Bryce, thank you for joining to the podcast.

Bryce: Yeah, I appreciate it. Thank you.

Tonya: Thank you for tuning into the S2G podcast. If you enjoyed this episode, please subscribe, leave us a review, or share it with a friend. For more information or to connect with us, check out s2gin​vest​ments​.com.