SOCIALLY BENEFICIAL AGRICULTURE’S (SBA) INVOLVEMENT IN ALMENDE APS
The group of organic and biodynamic farmers contacted Or-ganic Denmark, which then applied to the Villum Foundation for funding the project “Socially Beneficial Agriculture”. The group was then included in the project as a partner and case. SBA financed a project manager and a process consultant for the case.
Through Organic Denmark, contact was made to the pension fund AP, which was interested in acquiring land and buildings at the five farms. SBA financed the legal work associated with the process, where AP acquired three of the farms and where two of the farmers established the farming company Almende ApS to operate the farming activities. Furthermore, financing was provided for various advisers for merging and planning the operation of the three farms. A method involving surface com-posting, among other things, was used to improve the fertility of the soil. In connection with this, a collaboration was estab-lished with Tønder Municipality on the application of garden and park waste as a source of carbon for the soil.
The start-up of Almende ApS was financed by the bank with provision of security from the owners of Almende ApS, suppli-ers and customers. An owner’s agreement regulated the col-laboration between the farmer owners as well as between the farmers and the company. One of the owners was hired as CEO. The other took on the role of financial director.
A professional board of directors was set up, with com-petences within farming, business economics and breeding plants and animals.
Almende ApS and Farmland ApS 1 entered into a non-ter-minable 10-year lease agreement, although the lease fee was negotiable. After 10 years, the lessee has the option to buy or, alternatively, the lease can be extended. The price would be the purchase sum plus 80 percent of the market upturn during that period. The lessee was responsible for taking out insur-ance policies, and an agreement was reached concerning the performance of repairs and maintenance as well as the need for new investments.
The ownership form meant that farming could be established with substantially lower capital requirements since it is not necessary to purchase the land and buildings. It also made it easier for farmers to join and leave the operating company.
To reduce the lease fee for Farmland ApS 1, the three farms were acquired for as low a price as possible, without immersing the farmers in debt in the process. The lease fee corresponded to an average interest of about 5.7% on invested capital, which is very comparable to a mortgage interest rate. A combination of pension funds and mortgages would be desirable on the part of the farmers.
The farmers’ sole ownership of Almende ApS is considered to be a temporary solution. Work continues on finding investors in Almende ApS so as to also increase equity.
EXPERIENCE AND LEARNING
The farmers behind Almende ApS are experienced farmers, and a generational change is a pressing matter. It would have been advantageous to have commenced this when the ApS (limited liability company) was formed, but the priorities were differ-ent. Young and experienced farmers working together would have made a good team in relation to partners such as banks, customers and suppliers.
Strategy for maintenance and development of production facilities must be ensured in the agreement with the land own-ers. Furthermore, there is a need for the partners, suppliers and customers, landowners and banks to be willing to enter into a cooperation that will ensure adequate, flexible financing dur-ing the start-up period.
During busy times, the dual role of the farmers, as CEO/fi-nancial director and as the ones who carry out the practical work, has threatened the information flow between manage-ment and the board of directors. Almende ApS has therefore been restructured with a new CEO.
• Almende ApS is a biodynamic agricultural community in Southern Jutland.
• It consists of the farms Langmose, Rosenholdm and Holmgård.
• 720 ha of earth are being cultivated, of which 160 are farmed no-till.
• 360 biodynamic cows are kept, and the milk is sent to Naturmælk.
• Almende is self-sufficient when it comes to animal feed, with the exception of a few minerals.
• The cows are exclusively fed hay as course fodder.
• The concentrated fodder consists of wheat, peas, broad beans, lupins and oats.
• Wheat for consumption is grown on 200 ha.