Farmers and ranchers face a long-term challenge: how to retire. Monetizing a farm or ranch often involves difficult choices: to divide land into parcels for development or to hope for a like-minded Ag buyer. Developing Ag land takes land out of production and densifies the landscape. Many in our community favor local food production for self-sufficiency and for scenic preservation. Finding an Ag buyer often requires a large financial commitment by a young farmer/rancher – a tricky proposition.
“Green bonds” could assist the intergenerational transfer of Ag lands. Green bonds are loans backing environmentally-related investments. According to the World Bank, more than $130 billion of green bonds were sold in 2017 to individuals and to institutions with environmental investment mandates.
A La Plata County green bond offering of roughly $10 million might facilitate the purchase and sale of 15-to-20 parcels of Ag land. Coordinating the purchase/sale agreements and managing the resulting portfolio of Ag land loans would be a local bank. The portfolio of Ag land loans would represent the collateral behind the green bonds. If the portfolio was effectively managed, the green bonds could be refinanced at the 15-to-20 year maturity.
Green bonds are not silver bullets that address all the challenges of the Ag community. However, such an investment structure could assist Ag baby boomers achieve a well-deserved retirement. Also, such an investment vehicle could demonstrate well-intentioned concern for the well-being of the area’s Ag people and Ag lands.
Tom DeHudy
Durango
