Episode #320: Shonda Warner, Chess Ag Full Harvest Partners, “The Interesting Thing About Ag Is That It’s There To Play Another Day”

Episode #320: Shonda Warner, Chess Ag Full Harvest Partners, “The Interesting Thing About Ag Is That It’s There To Play Another Day”

 

Guest: Shonda Warner founded Chess Ag Full Harvest Partners in 2006. Shonda has thirty years of experience in managing a multitude of financial assets besides just agriculture.

Date Recorded: 5/26/2021     |     Run-Time: 1:11:57

Summary: In today’s episode, we begin with Shonda’s early career on the trading desks of Goldman Sachs and Cargill in London and Tokyo. Then she shares what led her to decide she wanted to return to her farming roots and launch an agriculture asset management firm. We cover her areas of expertise, what realistic return expectations are in the space, and the possibility for vertical integration going forward. We even touch on some ag tech and the need for infrastructure around hemp to help the industry grow.

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Links from the Episode:

  • 0:43 – Intro
  • 1:35 – Welcome to our guest, Shonda Warner
  • 2:32 – Shonda’s history in the agricultural sector
  • 9:38 – Trading in Tokyo during the peak of the Japanese market bubble
  • 12:43 – From Goldman Tokyo to Goldman London and beyond
  • 15:35 – Launching Chess Ag. Full Harvest Partners
  • 21:00 – How farmland survived the 2008 financial crisis
  • 26:39 – Their farming calendar, assets, crops, and geographical distribution
  • 30:25 – Sponsor: Bitwise
  • 31:25 – How one could choose to allocate their funds to build a farmland portfolio
  • 37:43 – Changes in the farming sector like global warming, technology, organic and regenerative agriculture
  • 43:36 – Best practices as a long-term farmland owner operator
  • 47:23 – AgTech as a primary focus of investment instead of agriculture as a whole
  • 54:18 – Other topics of conversation in the agricultural space
  • 57:31 – Changes she would make to the farming space if she could wave a magic wand
  • 1:01:18 – Her most memorable investment across her career
  • 1:04:57 – Thoughts on investing in international markets in the current market landscape
  • 1:09:09 – Learn more about Shonda; shonda@chesscapitalpartners.com
  • 1:09:55 – Shonda’s favorite farming event of the year

 

Transcript of Episode 320:

Sponsor Message: Today’s episode is sponsored by Bitwise. You’ll hear more about them later in the episode.

Welcome Message: Welcome to the “Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Meb: What’s up, friends. We’re heading back to the farm for an amazing show for you today. Our guest is the founder of Chess Ag Full Harvest Partners, an asset management company focused on agricultural investment opportunities. In today’s show, we begin with our guest’s early career on the trading desks of Goldman Sachs and Cargill in London and Tokyo. Then she shares what led her to decide she wanted to return to her farming roots and launch an agricultural asset management firm. We cover areas of expertise, what realistic return expectations are on space, and the possibility for vertical integration going forward. We even touch on some ag tech and the need for infrastructure around hemp to help the industry grow. And I kid you not, the hazelnuts I ordered from her farm are the best I’ve ever had. Please enjoy this episode with Chess Ag, Full Harvest Partners, Shonda Warner. Shonda, welcome to the show.

Shonda: Thank you.

Meb: Where do we find you today here in end of May, 2021.

Shonda: Rural Oregon. About 20 miles south and east of Salem.

Meb: One of my favorite fishing trips was down the Rogue River in Oregon where we got to go steelhead fishing with my brother. Had a blast. Beautiful country up there. Although we’re recording this in the midst of a Denver Nuggets, Portland Trail Blazers NBA playoff series. So I’m sorry, I’m cheering against your local team because I’m a Nuggets fan. But other than that, Oregon, awesome spot. This is going to be a fun, highly varied podcast today because I think you’re a farm girl originally but then had a long swath of derivatives and fund to funds trading in the middle in various countries and then back to the farming world. So let’s start at the beginning. What kind of farm? Dairy? Was this a traditional wheat farm? And where was it?

Shonda: Rural Northeast, Nebraska and it was classic corn and soybeans. Been in the farm since 1864.

Meb: We could have been related or certainly at least neighbors. My father’s side was farm background in Holstein, Nebraska. You ever heard of it, near Hastings?

Shonda: Totally.

Meb: Oh. Cool. Well, I have a lot of fond memories. I think I had my first Budweiser in Holstein, Nebraska. I’m not going to admit what age that was on the podcast, but let’s just say things were different back then. All right. So you grew up in traditional Nebraska Husker land and was the family all farmers?

Shonda: Yep. Family was all farmers. I think there were a few rogue lawyers here and there way back several generations ago. Maybe a U.S. Marshall, but otherwise, agricultural family.

Meb: What was the initial inspiration? Did you start out in finance or there was an initial brief stop before that?

Shonda: I started out trading commodities for Cargill. And as a teenager, my father had a little teeny tiny elevator that filled three-car units on the Burlington Northern railroad and ran them all over the place. And so I kind of left school at 3:00 in the afternoon and went to work at the elevator and ran the elevator the rest of the day and did the books and things. And so when I got out of school and a friend suggested that I get to know or interview a few places, Cargill was one of those places and they thought I’d make a good trader. And I said yes.

Meb: And so where was this?

Shonda: When I was with Cargill trading grain, I was in Kansas City, Missouri at the board of trade, which was fascinating back in the early ’80s. It was the value line, which was the original stock index and the hard red winter wheat pit because we had both things going on. We were there through in 2000… Oh, sorry. In 1987 during the crash, fascinating time and interesting time to be in ag. It was the height of the bust of agriculture in the United States. So if you remember, most people remember Farm Aid that are a little older like myself, probably more than anything else. But in the ’70s, it was kind of fascinating. One of the first credit products in the United States didn’t go to residential mortgages, it went to farmers. It was a much larger percentage of GDP and so everybody was telling farmers, borrow, borrow, borrow. They don’t make more land. I mean, that old chestnut. And that was in the 1970s and everybody did. Interest rates blew up too, I think at one point, what? 15%, 16% in the early 1980s and took out maybe half of the farmers in America. I think I heard a statistic a few years ago that 65% of American farmers had to get second jobs in the 1980s. It was so tough back then. That was an interesting time to start in agriculture.

Meb: I remember that time. And I remember having conversations with my old man and he had a phrase he’s like, “Son…” He said, “When I grew up, the farmers used to drive Cadillac’s, and that’ll be true again one day and this concept of farmland as an asset class.” But if you back at a lot of the farmland indices and reports and studies that go back 100 years, that period that you’re talking about was extremely painful, kind of just a confluence of events. And the lesson being one that investors have to learn over and over again, doesn’t matter if it’s in real estate or farming or stocks, is that leverage and taking on a bunch of debt works both ways. And often in the wrong way.

Shonda: I learned that lesson early and hard, and I think it has informed my risk management approach ever since. That was a fascinating time. So I did that. I started at Cargill. I originated grain. There’s eight sub terminals in the United States, Kansas City being one of them. At that point in time, probably still, about three-quarters of the grain that’s exported out of this country, goes out at Port Allen, near New Orleans. So Kansas City went often down the river, down the Missouri River and into the Mississippi River, down to Port Allen and often on railroads around the place. I think I ended up doing some of the soybean trading into the Mexican crushers at one point. That was really fun and interesting. And then I was trading milling wheat in the middle of nowhere. I was in Omaha, Nebraska. It was beautiful to go out across Western Nebraska. Had all these clients up on the South Dakota Nebraska line. You would just drive for… I was talking with someone the other night about that, hours and hours and hours and not see another car.

I mean, it was shocking if you saw a tree. It’s still a beautiful drive up there. I go up there to fill my own heart gas tank sometimes. Just go do that drive. I thought I wanted to go to business school. Grain trading was one of the few girls in that business, and so I resigned from Cargill and I got a call from the head of everything. A guy, I had shaken his hand once. Didn’t know him. Get your bottom at my office at 4:00 tomorrow afternoon. We’re not losing another woman. What’s going on here? And so I did, and he was kind enough to send me all over the place, which was so fascinating, orange juice and metals. What do you want to do? And they had this little group and it was really amazing that had started a couple of years previously from that time…for me, it was probably 1988 by that point and I basically… Cargill looked at all these financial futures and all these things, these derivatives and said, “We invented futures in the 1890s. We know about this stuff. These financial things, they’re kind of complicated. They’ve got a different vocabulary, but we should be doing this.” And so they started. They took a group of people from all different disciplines, trading disciplines, and started trading financial instruments. All of a sudden I said, “Gee, you’re going to pay me $35,000 to do this. I don’t have to pay Northwestern $35,000 to go to school there.” I joined that desk and I was doing Japanese government bond arbitrage. And I said, “What’s a Japanese government bond? I don’t understand. What’s a bond?” And they said, “Shonda, it’s a truck of corn. Think of it as a truck of corn, you buy the corn, you hedge it with futures. You buy the bond, you hedge it with futures.” And I was off and running.

Meb: I love that. I wish someone had just given me that analogy when I was younger. And, by the way, Cargill, for the listeners, one of the most fascinating companies. It trades places with another one or two companies, but often…I mean, it’s been around 200 years and it’s usually the largest private company in the U.S.

Shonda: Yes. I don’t know if this is true anymore. They used to say if it were listed, it would be the size of Coca-Cola. It’s that large a company. So incredible company.

Meb: You were Tokyo or London first?

Shonda: I was Tokyo first.

Meb: What year would you have been in Tokyo? Do you remember?

Shonda: I would have started in Tokyo in about 1989.

Meb: Oh, man. Right at the peak, the boom of the Japanese bubble. What was it like?

Shonda: We could talk about financial instrument trading stories and I will tell you one, it was incredible although I didn’t know enough to know how incredible it was. We had this idea that instead of buying a warrant and hedging it by selling the underlying stock, we could hedge it with futures, but we didn’t know that we had to delta neutralize it. So stupid us. We hedged it 100%. Better lucky than smart is the role of the game on occasion. That turned out in February of, I think it was 89, right? That was the peak of the market, 40,000 on the Nikkei and down we went evermore. So it was a wild time to be in Japan during those years. We had the Barings collapse and everything that came a few years later, but I had such an interesting ride and it was baptism by fire for sure. I went to London first for a really short period of time then I went to Tokyo and Goldman hired me in Tokyo. So all of a sudden I was kind of running a proprietary trading book for Goldman doing warrant arb.

Meb: Similar analogy for me was I was San Francisco…visited during the end of the Bubble, ’99, 2000, but eventually moved there 2001. My timing was poor, but I remember visiting and going to a lot of company launch parties and the free champagne, free beers, free everything. I was like, “This is great.” This VC money, I just thought it was a normal thing just flowing everywhere and then got to experience the bust and then, you know, there are definitely some parallels to today, a little different and obviously, every cycle is, but just thought that was normal.

Shonda: I remember an amazing man who still runs all of the proprietary trading at Cargill, I guess it’s called Black River now. It’s spun off into a hedge fund. I think he still runs it. It’s a man named Gary Jarrett. He was so wise. They had been negative on that market and they had to sit and they would tip their toes in and short and get blown out and tip their toes in again. And I remember him saying, “It’s seven years. I’ve hated this thing for seven years and I can’t buy it. I just can’t bring myself.” I think maybe momentum trading wasn’t such a thing and people were really focused on value investing back then and finally, it came right. And it’s a matter of when you tip your toe in and you’re wrong, cutting your losses, right, as quick as possible than just waiting and having your conviction. And that lesson has stuck with me all these years. I have a hard time trading against my underlying views. I guess I should get out of that and learn. It would make me more popular with the times, but it’s a different kind of trading style.

Meb: Eventually you hop back over to, what? The Brits and get a little bit into the fund world. Is that right?

Shonda: I moved from Goldman Tokyo to Goldman London, stayed in proprietary trading, sort of global macro stuff, some of the original emerging markets trades. Spent some time in India on behalf of Goldman and Southern Africa, a lot of the countries playing on my knowledge of supply and demand economics from Cargill and commodities and sort of looking at a lot of those very early listed companies and some of the stock indices which were just being invented, I guess. They were commodity-backed businesses, so they were fascinating to look at and there were trades that one could do. You could buy underlying metals and short stocks or buy stocks and short underlying metals and things like that. And so we did some of those kinds of trades. And I guess I left Goldman in the late ’90s and joined a fund of funds based in London as the CIO of that business and sold my stake in that business in 2003 and 2004 and was thinking about what to do next.

My heart had always been kind of home on the farm. Friends from Goldman and other places used to tease me, “Shonda, you’re the only person we know that goes and gets on a tractor to relax. Why don’t you take all of that knowledge and mix it with all your Wall Street knowledge and do something with it?” And I thought about it and had some other offers and thought, “You know what? This is really what I feel like.” And I will mention sort of an odd little thing, which I’m feeling today which is why I mentioned it, and that is, I remember telling my father in 1990 or ’91, “Dad, you work so hard. Why don’t you take a load off and let me invest some of this money in hedge funds? They’re going to give you a better return than all this work on the farm and life will be okay.”

And by 2003 or 2004, I was feeling like, “I want to get rid of all these hedge funds. This stuff is crazy. Something bad is going to happen.” I think one of the last little things, I remember interviewing at Lehman to help build one of their risk systems and thinking, “Oh, my God. This is a mess. This is what they look at for their daily VaR and putting together equity risk with fixed income risk.” Fixed-income risk and currency risk were better understood at the time but maybe the writing was on the wall for what was to come a few years down the road. All of those things sort of combined together and made me think, “You know, why not try this?” And so I came back to the states… I guess it was 2006 and brainstormed with some friends and started, I think, one of the first four or five agricultural asset management companies and thought, “Okay. We’re going to put all this together.”

Meb: So tell me, what was the initial inspiration and what was sort of the original game plan? I know like most entrepreneurs and people starting out, it certainly changes many times over the years, but when you guys were starting, what was the goal? What were you guys looking to do?

Shonda: The goal has stayed somewhat the same. I have to say that I’m much more the nerdy investor trader type of character, not so good on the marketing. And it’s fun to be on your show. I had a friend and he was one of the people encouraging me to do this. His name was Hunt Taylor. He was going to do the marketing and be a partner in this fund. Sadly, we had been at a conference down in Arizona and, in fact, looked at a map of where he was going to go for a motorcycle ride with his brother-in-law and he crashed and perished.

Meb: So sorry.

Shonda: His father had been a trader on the Cotton Exchange in Memphis and he had grown up around commodities. If anybody is listening out there who is a bit older like myself, an older vintage character, they might’ve heard of Hunt. And he had a radio show similar to yours. Although back then it was a radio show, not a podcast, based out of New York that I never heard that often but was legendary. He was a true character in our investment world. That sort of broke my heart. And it was really hard to think about doing this business without Hunt and his charisma and we just decided to go ahead anyway. I think that we’re terrible marketers. The fund launched in 2007 and closed to new investors in 2008. So what was looking like $100 million, $150 million fund ended up being $30 million. Everybody ran for cover. They had too many illiquid assets back then which I think might be a lesson to be learned again as well and parallels that we can talk about as we continue to unravel this discussion.

So we started that fund and invested in row crops. We told people we were going to make them 8%, 9%, 10%. And we did. That’s another very interesting subject. And I don’t know what you think about this, but if you look historically to give someone an 8%, or 9%, or 10% return is decent, it’s good. High singles. And perhaps we’ve gotten greedy or we’ve lost track of what that is because people think they need double-digit returns, mid-double digit returns. And so I remember in the fund of funds days, I’m sort of one of those old fashion, under-promise, over-deliver characters, and so I would think about like, “Okay. I think I can do 9 or 10. Feeling really good about it.” And people go like, “1999, get out of my office, babe. I can make that in an afternoon with an internet stock.” And there were young people in coffee shops trading like crazy. And I was doing some road travel with the COVID situation this year and I saw some of that again, it took me. I haven’t been back there mentally since 1999 or 2000. And I felt like I was seeing it again with Robinhood and everything going on this year and, you know, a new incarnation, but same old story. Kind of scary.

Meb: You hit on a touchy subject for me because I talk about this a lot in a romping stomping 10-year bull market tends to have these effects where people extrapolate the recent past to forever. And unless you’re a student of history, that’s seductive as, you know, everyone sort of has their own life experiences as the template for what always will be and if you’re young and have only experienced a bull market, then why else would you consider something? And so there was a recent survey, like you mentioned, the U.S. stock market, one of the best country stock markets in history has only done about, I think 9% per year. In a recent survey that came out last year was that U.S. investors had the highest expectations and they were 15% on average. There’s a great quote from Charlie Munger I’ll read to you that defines a lot of the conflicts in our world where it says, I know one guy who is extremely smart and a very capable investor. I asked him, “What returns do you tell your institutional clients you’ll earn for them?” And he said 20%. I couldn’t believe it because he knows that’s impossible. But he said, “Charlie, if I gave them a lower number, they wouldn’t give me any money to invest.”

The investment management business is insane. And so part of that is like trying to sell the sizzle. You know, if you’re a PE firm and you’re going to lock up somebody’s money for 10 years, why not say we target 20% returns because no one’s going to know the guy that hired you from CalPERS, he’s not going to be the same person even around in 10 years. So, sure. Let’s go after the people that at least theoretically can promise these returns that no one can get. And, by the way, there’s an old post from a buddy on Alpha Architect that says, basically, “If you compound at 20% or 25%, you eventually become one of the richest people in the world after not that long.” So these returns, while seductive, are a lot harder than it sounds. So nothing wrong, by the way. You get really rich at 8%, 9% over time.

Shonda: I think that that’s a more appropriate expectation, but I just feel like a little, you know, grey-haired old lady creeping around. Like, everybody’s like, “You’re crazy. No way.” And I’m like, “Yeah. Well, you know, I’m going to do my own thing over here in the corner. Thank you very much.”

Meb: So you guys started out with this row crop idea, financial crisis came and went, a lot of lessons to be learned, but like, as you mentioned, particularly illiquid investments were not in fashion because of a lot of the liquid parts went down by half or more and a lot of these big institutions got in trouble. But farmland did a great job kind of over that period.

Shonda: Hung in there. I think that in times, it’s very, very interesting and I’d love to know what you think. During the 2008 crisis, it was an equity crisis. It was not a bond crisis. And at that point, the Federal Reserve had a lot of room and a lot of ammo to cut rates and to support the economy. And that’s gone. That’s not there today. And I worry, even for ag, I want to make a case for ag. We do ag investing and it is highly correlated to inflation, and that is just in the past two weeks, my head has been spinning. It’s been so crazy busy with inquiries and things going on, but I want to kind of, again, caution, because that’s my character a little bit. When we have a kind of economic crisis that is fixed income-led or that is equity and fixed income-led which is a little bit about what I personally have been worrying about and you have a sharp movement in interest rates, which could happen, I worry about liquidity of the bond market. I worry about all sorts of things. You know, that door with everyone rushing out could be very small. And I think that agriculture will do better than anyone else, right? It did great in 2008 and there were these really weird things going on. Like I was seeing haircuts in the fixed income in the financial community in borrowing and lending and they weren’t there at all in ag lending. And I was like, “Wait. Wait. Aren’t you folks talking to each other? Aren’t you all one big bank? What’s going on here?” It was amazing. And we rode through swimmingly. And that’s partially what we’re there to do. And, you know, when the big end hits, we might be bumpy too, right? If interest rates jerk up to 500 basis points, 600, 700 basis points, all of a sudden, there’s ag debt out there. It’s not what it was in the 1980s. There’s a hell of a lot of debt. And, you know, other than ag, and everybody else is going to be in worse shape.

But the interesting thing about ag is that it’s there to play another day. If you cannot over-lever…the key to it is not over-levering and you can sort of limp along, even with your wings clipped slightly, you know, you’re there next year to play again and you’re there the following year. We employ a variety of techniques in our asset management business. I mean, we’re landlords in a diversified fund, right? And we’re farmers and we hire out and do custom farming. But particularly as a landlord, you might get zero. You might have to go help your tenant drive his tractor or whatever, but you’re there for the next year. You don’t completely collapse. And that is a comforting thing for, I think, should be a comforting thing for part of a portfolio.

Meb: Yeah. I mean, we talk a lot about the case for farmland. We often say that of the global market portfolio of investible assets, it’s like the last one, particularly for individuals and advisors that’s really hard to invest in just because most of it is either family office, institutional-owned, private funds, and so the opportunity set for U.S. stocks and bonds in the history of U.S. stocks and bonds is at one of its worst. The problem is because they both look bad at the same time. Usually, like late ’99, if you recall stocks, expensive, but bonds yielded like 4% or 5%. So there was an alternative and also real estate and foreign stocks were better. Therein lies the challenge and the opportunity for farmland. So I think that if constructed properly, illiquidity of an asset class like farmland, it’s a feature, not a bug. Like it’s actually a good thing.

So if you’re not using leverage in debt but investing dollars of your portfolio into something like farmland, it’s incredibly great. And the listeners who are listening to this on the podcast can’t see it, but I have a picture of our farm in Western Kansas. The beauty is you can’t go day-trade it. You can’t get on your Robinhood app and trade. I mean, you can obviously trade the futures, but don’t, listeners. It’s a slow-moving, but great returning asset class. And I actually had a tweet. I’ll have to pull it up from maybe like the early 2010s. And I said, “Look, this has been one of the best asset classes the last 10 years.” And then you had kind of four or five years of positive, but not great returns. And then things are picking up again recently pretty dramatically.

Shonda: Actually, negative. I mean, right? Between 2013 and last November, commodity prices were down 60%, 70%. Farmland prices were negative and that’s…all of a sudden, they’re up 100% from the lows a year ago. And that’s a little concerning. Maybe it’s overdone. Maybe it’s not, I don’t know. But I think that it does go in cycles. You’ve got to be patient, but that’s okay. There’s nothing wrong with that.

Meb: Tell us a little bit about what you guys do today. Are you still row crops? Are you all in a certain geography? How do you go about it? What does the farming calendar look like?

Shonda: I think it depends on what the risk appetite of our underlying clients are. So if someone said, you know, “I just want some exposure to agriculture,” then I think an investment in a fund, ours or someone else’s, you know, makes a lot of sense. And when we do that type of fund, it’s diversified between row crop and permanent crop, some development, some specialty crop in there. It’s a lot of little things and all the eggs don’t go in one basket. If somebody says, “You know, I own a whole bunch of tips at a better place. I don’t want that row crop. I want something sexier.” Then we do segregated accounts for people. We have ideas. I think one of the things that kind of, I suppose, makes us a bit unique is that all these years of Goldman and everything else, of being a student of the markets, we sit and say, you know, what’s happening. If we’re lucky, we get to be any of these birds at 50,000 feet, where should we be investing? We know we can’t pinpoint climate change exactly. That’s crazy, but stuff is happening. And so where do we think that our culture is leaving? Where do we think it might be going? Cities are going to be the important cities in the next 5, 10, 15, 20 years. Where’s it going to be important to farm?

Meb: Tell us all the answers. We got the questions now. Let’s hear it, Shonda. Where do we put it all? Is the new Napa Valley going to be in Canada what?

Shonda: I actually think that the new Napa Valley is going to be…well, the new Sonoma Valley is going to be the Willamette Valley.

Meb: Some great Pinots up there, right? Isn’t that what they’re famous for? Pinot Noir?

Shonda: It’s very, very beautiful. And there’s just not much here yet in terms of development or great restaurants or… Portland has it, of course, but once you get a little bit south, you’re pretty devoid of recreational opportunities in terms of food and culture anyway. You have fabulous hiking, wonderful beaches, all of those kinds of things. And we have good water. We did have some wicked fires last year. I was out of my house for two weeks in a secondary evacuation order that happened overnight. Really shocking. So I think that the problems are going to be absolutely everywhere, but I think that certainly, the Pacific Northwest will be in the ascendance. We have good soil, decent water, and California is struggling. Maybe things that can leave California, certain things we can’t grow here. You guys are going to grow citrus, you’re going to grow avocados, but maybe other things that can be growing elsewhere will slowly move.

And so one of the things that we think about is a lot of that high-level strategic stuff and then we’re really good at hooking up our tractor and figuring out how to grow something or how to till the field and we’re probably unusual in that we have those two skillsets under one roof. There are a lot of people that could talk about it and strategize and, you know, they wouldn’t know how to plough a straight row if their life depended on it and vice versa. And so we try and put those two things together. It’s not easy to farm. It’s really hard and deliver what we say we’re going to deliver and execute.

Meb: The romance of the asset class, I think, is obvious. And certainly, people have this fascination of what it would be like to be a farmer, but then you talk to any farmer, you know, that wakes up at 4:00 in the morning and it’s a lot of hard work, certainly, any type of farming.

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Let’s play a fun hypothetical. So you’ll definitely get some of these calls and emails after this. So just be forewarned. But let’s say somebody calls you and is like, “Look, I love the podcast. I got a million bucks, 10 million bucks,” whatever it is, “What should I do with it?” And say, “Look, I got a traditional portfolio. I just want to diversify and really build a nice farmland portfolio for the next 20 years.” What would you say to that person?

Shonda: So it depends on how much money somebody has. Let’s just be real, right? And so in order to make like a high net worth or individual investment, you probably need a million, 2 million, 3 million bucks. And then you’re probably going to get one farm. You can have a farm for less than a million and lease out that land to someone and you might get 3% or 4% return. If you want that farm farmed for you by someone like ourselves or another player in the market, you need the $2, $3, $4 million. Permanent crops take a lot of infrastructure to set up and develop or by the time they are developed, they’re trading for $40,000, $50,000 an acre, so you’re not going to buy too many acres anyway with $600,000. That makes it hard for the average person in this country to get exposure to farmland. And I like that institutions are willing to hold it because certainly when we have institutional clients, I feel like I’m helping stabilize the pension funds of teachers and firemen and all sorts of really important people across the country. So that feels good.

I have had an idea… You challenged me a couple months ago to think about a way… And I don’t think a lot of people are coming out with these funds that have $10,000 minimums or very liquid, etc. And I sort of worry that they’re not going to deliver maybe what they’ve promised people. And when someone has a fight, how do you adjudicate that fight? Right? And, you know, do your partition a farm $10,000 a block? It’s kind of messy if you look under the hood, really. And so I was thinking about this and I think that maybe what you’ll see in five or 10 years is a situation where farming’s so hard. I mean, it is so hard. I had a call earlier today. We are about to go into blueberry harvest. We’re big blueberry farmers, and last summer was bad with COVID.

I mean, oh, my gosh, you should have just… It was so hard. And somebody said to me this morning, “Shonda, it’s going to be twice as hard. Everybody’s on unemployment in California and they’re not coming up to picking blueberries. Nobody wants to go back to work.” And I’m thinking, “OMG we’re in trouble here.” And it’s really hard. I think that one of the ways… And prices are low. Gas prices are going up and inflation prices are going up and to buy a bar of steel to fix my combine costs three times as much as it did a year ago. And I’m not getting any more from the grocery store this year for my berries. It’s concerning. And when we think about real solutions, we can talk about ESG and impact and some of those things as well. And there’s a lot of talk and not a lot of reality that things that really can make a difference that can add to a farmer’s bottom line.

There are a couple of things that actually do. I was thinking that a company needs to vertically integrate. And so we’ve had all these supply chain disruptions, right? So if someone, let’s say Heinz Ketchup…and I think they did this and I think it was a disaster, and I think I know why it was a disaster. And maybe they didn’t. Maybe I’m thinking… Maybe it was Hunts. I don’t know. But let’s just have a hypothetical ketchup company so that no one yells at me later…and they go out and they buy some farms around tomato farms that supply their ketchup business. Economies of scale are vertically integrating… I don’t mean like glasshouse lettuce farms, that’s a whole another subject. But vertically integrating from the farm through distribution to the table where there is… And I think that this was the problem when this was tried earlier, not enough appreciation at a corporate level for how hard it is to farm and really getting the right people that know what they’re doing on the team and really respecting the implementation of that. But if you did that and did that successfully, all of a sudden, you would have vertically integrated company that could be invested in a securitized manner. And that makes a lot of sense. I was thinking about that in response to your challenge when we spoke a couple of weeks ago about doing this podcast about how people could… And I don’t know, you know, this crazy spec thing is nuts. If it settles down and make sense and someone does it intelligently, if you spec a few farms and spec a distribution company together or if you do it a more traditional way.

Meb: This very specific challenge you mentioned, which is it’s like if you could only go out and buy one stock, do you have a diversified portfolio? No. You know, and so the same thing with farming. And look, this is close to home because we had and continue to have some farmland in Western Kansas that is very specific geography and specific crops. Now you can rotate based on year, you can rotate the crops, but it’s still not really diversified. And so you have either low prices or times when just the weather’s not great or like I did a combine, catch fire and burn down the entire crop. Like, you know, there are things that happen and that’s just the reality of a portfolio. And so my ideal is kind of like this topic you’re talking about, which is I would love to have part and partial of a blueberry farm and a grape farm and all the other 20 different types of crops because you have these sort of zigs and zags.

But anyway, you mentioned a number of things that I’d love to get deeper into at some point. One of the topics that I think is interesting is sort of the tectonic changes that are happening in the farming sector, whether it’s potential global warming, whether it’s technology, which is a big one, but also a potential shift in thinking about traditional versus organic or regenerative. You know, a lot of these terms are very broad and you talk to every farmer, it means something different. Do you have any general thoughts on any of those three topics, but organic could certainly be one that we could use as a jumping-off point?

Shonda: I’ll probably get hate mail, but we are agnostic. And so the way that organic versus conventional or why GMO is not okay and CRISPR gene editing is okay, those things all are frustrating for us because we’re on the ground here having to implement. And so when I look at the list of organic chemicals, let’s take copper soap. Copper soap is a classic organic chemical. It’s really poisonous. It’s super toxic. If I spray it more than once a year on my organic hazelnut trees, I will burn the bark of the tree and kill it. And yet it’s got an ooey-gooey feel to it. I think that a lot of people in the U.S. think that organic means no chemicals. No. And, in fact, for us, organic can mean a lot of chemicals. So we do farm… People say they want organic methodology and we say, “Okay. Do you know that it’s going to cost twice as much to execute? Are you sure about this? And on an average year, you might make slightly more money but then sometimes the price of the organic produce falls through the floor of the price of conventional? Are you ready for that increased volatility?” And if they say, yes, we’re like, “Okay. Off we go. We’ll do it.” But also, we spend a lot of time trying to get people to maybe realize that sometimes using one conventional chemical saves you eight organic sprays of an equally toxic chemical. I’d rather use the conventional. Just because it was made in a lab, who cares? And what’s far more important is how am I conserving water? Do I have riparian borders on my farm? Do I use cover crops? If I’m tilling something that’s a row crop, do I do no-till versus… And really where the rubber meets the road, what are my practices that ensure I’m building organic matter in my soil and conserving the water supply that I have? Huge.

And so I think that some people like, for instance… I’m sorry. I think you’re in California. I don’t mean to pick on California, but if you look at the nut industry in the United States, almonds and pistachios are everything, right? I love hazelnuts. Hazelnuts are grown in Oregon. We are the…I believe, the fourth-largest producer in the world. We are way behind Turkey, Iran, and Italy. I think we supply 4% or 5% of the world’s hazelnuts. They are equally nutritious to an almond or pistachio. They’re delicious. And no one thinks about them outside of Nutella. They should be in every food mix and every bar trail mix, whatever bread mix. We can make hazelnut flour very easily and they take 70% less water than a pistachio or an almond. And so people who are growing organic almonds, well, okay, you’re using organic chemicals on your almonds, but did you really think about the big picture of what foods you should be growing?

And that’s sort of a more difficult discussion and it becomes geographic, and it gets everybody riled up, and all of a sudden, the head of the Almond Board Marketing Committee’s going to come punch me in the face for saying this. And I don’t want that hassle. So to each their own. But I think that thinking about ESG and some of these things in that way, in a bigger picture way as well as implementing thoughtful stewardship on the ground and not checking the tiniest little box that somebody is going to lie about anyway, that’s what’s important to us. We’re signatories of the PRI, but the PRI is self-governing for heaven sakes. I can go in there and fill out their annual audit and give myself As and no one ever checks me. I mean, that just makes a farmer laugh.

Meb: I was smiling as you’re talking about hazelnuts because my mom’s favorite thing to do when she comes to visit me in California, she’s kind of fed up with me not owning a house and her sort of…what’s the right way to describe this? Storing all of my junk from decades of being her son. And so anytime she comes out, she basically brings one suitcase at a time of things. And the most recent one she brought out was like an old nutcracker from wherever they are, Germany or Switzerland, but we’ve just ignored any potential value of this and turned it into an actual nutcracker for my son who’s four. And so we spend a lot of time cracking hazelnuts and everything else and the actual Steinbach Nutcracker. He can now identify about 10 different nuts just from that experience. But you touched on something that we all want the world to fit into these very neat boxes and things to be clean, but the reality of concepts, like some of the things we talked about, organic and regenerative and ESG for the investment folks is that it’s often not that simple, you know, or more complicated. So water is one that is an obvious big lever and consideration in that standpoint. What other sort of best practices do you think about as a long time owner/operator of farmland space that you think is important?

Shonda: It never went completely out of vogue. It’s been practiced for many, many, many years. I mean, no-till, of course, but everybody says no-till. I want to talk about two things. So one is cover crop. Cover crop, cover crop, cover crop. And a lot of people have implemented cover crops all across the United States. People that voted for Donald Trump, people that voted for Joe Biden. It’s one of those… Thank goodness it hasn’t been politicized. It just makes sense. And although it costs us as farmers an extra $20 or $30 an acre, make it $40 by the time we pay for the seed and spread it, it adds incredible value to our soil and even within a year or two, we can see our yields go up.

Meb: And for the listeners who aren’t familiar, what does that even mean, cover crop?

Shonda: A cover crop is a tillage, a radish. A tillage radish is a classic cover crop. And if you drive in the highways, you see all those pretty flowers in the verges of major interstates, certainly across the Midwest and other parts of the United States, that’s called crown vetch, that’s a classic cover crop. And those both are legumes. So they’re kind of bean related plants and they fix nitrogen. And so if you plant them, once you’ve harvested, let’s say your wheat or your soybeans or corn, you sprinkle out the seed and let it grow in the fall and winter…and it probably kind of doesn’t stop growing in the winter, especially if it’s really cold, but it grows a little bit. And it might like winter wheat come back in the spring a little bit, and then you simply plough it in before you plant your spring crop, it adds incredible value and organic matter and nitrogen and intelligent things to your soil. And that is really important.

Building soil health, soil health, soil health. And so that’s what a cover crop is. And we are still learning about them. We’re one of the first organic hazelnut growers in the United States here. I poo-poo organics. And what are we doing? We’re growing organic hazelnuts. And we are agnostic. So we will do both.

We are trying to figure out what crops we can grow between the tree rows. That’s really exciting. That will give us a bed. And hazelnuts, the nuts fall in the ground and they get swept up and harvested with a machine that we can cut short enough to let the nut fall and we’ll be able to sweep it and harvest it. So we’re still figuring out what the exact right crop is for that. If anyone’s out there listening, please let me know your ideas. It’s fun. There isn’t the right answer yet. We are doing R&D, we’re developing things, we’re trying things. When you think about trees, nut trees, whether they be almonds or pistachios or hazelnuts or anything else as well, as Ford announces, this carbon sequestration or Chevron… Sorry, it’s Shell today, isn’t it? Shell is forced to cut their carbon emissions. And so if they have to go out and buy carbon credits to do so, I believe a tree, on average, sequesters, 48 pounds of carbon a year. And, you know, we plant per acre, 400 trees, that begins to add up. And so if we can do other carbon-sequestering practices as farmers and we don’t use a lot of fuel, all of a sudden, we become part of the answer and that can add value to what we’re doing going down the road. And all of those things are really interesting and important.

I want to touch on one other thing, and that’s ag tech. And there’s a ton of it out there. Sadly, there’s more money going into ag adventure cap and ag-tech than there is going into big ag, overall ag right now. And I wish that that would switch because agriculture needs the money. I’m sure that ag-tech and venture cap think that they do as well, but a lot of those people I think are out of touch with, you know…they need to come live on a farm for four or five years before they … their projects. I was talking to someone earlier who was living in Big Sur and they’re like, “Yeah. And then I saw this thing and it didn’t work because there wasn’t cell signal in the field.” I’m like, “Yeah. That’s right.” But one of the areas that are really working is electrostatic spraying. If you have a positive and a negative charge that helps whatever you’re spraying, organic or conventional chemical, adhere to the leaf, you use less chemical, and that’s a really sexy, good thing. So there are technologies coming out that really do make an immediate difference to my pocketbook. I have to pay for less expensive chemical and to the environment all at the same time. And that’s exciting in terms of ag going forward.

Meb: You think about all of the tech innovation. I mean, I remember even as a kid ride around a tractor, it was like the nicest piece of futuristic machinery I’ve ever seen like in the cockpit, the amount of displays and iPads before there was iPads and GPS and everything else. And imagine in 10 years what the world’s going to look like with all the advances. I see a lot of early-stage startups and it’s pretty exciting. So as you look around sort of the geography, are there any particular crops that have a sort of warm, fuzzy place in your heart as being crops that you love as far as a farmer, you’re like, “You know what? No matter what, it’s always going to be hazelnuts for me.” I know you’ve done a million different types, hemp everything in between, and then also anything where you’re looking at it now and you’re like…stock lens where you’re like, “Look, growing broccoli is great but it is so overvalued right now, or the best opportunity is rice farms.” Anything as you look around the farming space that’s got you particularly interested or worried?

Shonda: There’s a ton of opportunities, I think. As a country and the planet in general, we’ve hybridized all this rice and it tastes like cardboard and like Uncle Ben’s rice. And nothing’s wrong with Uncle Ben’s, but it doesn’t have a lot of flavor. And so I think that there’s really interesting opportunities, for instance, let’s talk about… I love rice. I like growing rice. I like growing rice in a way that doesn’t use a lot of water, intelligently, that builds soil matter, and I like growing some old varieties of rice. One of our partners has a farm, Two Brooks. Go online and try some of their black rice, or their red rice, or their brown rice. And I think that growing those sort of unique. Sometimes they’re older varieties, sometimes they’re newer varieties that have been hybridized out of an older variety. As we’re breeding these new types, we’re looking for flavor as opposed to shelf longevity or as opposed to consistency of color which in rice was really, really important to Americans in the 1950s and ’60s. It all had to be the exact same color white and then you thought it was special. That’s crazy to us today. So it’s looking at crops in those ways.

We should have…that I speak to anyone who will listen about the need for hemp infrastructure before we start farming hemp on mass because we need decortication plants, we need hemp paper mills, we need to be making fabric. And so we need the infrastructure and the capital investment. And then we as farmers… And we need some strong seed varieties and some better breeding as well. And forget the CBD and the THC and everything else. I’m just talking about true old-fashioned hemp. Wow. What an incredible opportunity, what an incredible plant to clean up the soil, to get rid of toxicity. I sometimes think of hemp as alive even when it’s just a seed or dead or whatever. And I mean, it’s got the deepest root structure. And we need R&D and we need infrastructure and we need banking laws to be cleaned up so that if I farm hemp, it doesn’t keep me from doing business with my… Right now it keeps me from doing business with my bank even if I don’t have THC or CBD or anything else attached to it. And so we’ve got some scurry laws and some books that need to be cleaned up. And I love that crop. It’s so interesting. We love berries, we love hazelnuts. Things that provide diversification of nutrition and are fairly easy to grow and are delicious. How can you lose?

Meb: As you were talking, I pulled up Two Brooks farm and I’ve never heard of this. And as a partial Southern boy, I have to order it, but they have Mississippi basmati rice grits. So I’m a huge grits lover.

Shonda: It’s like potatoes.

Meb: I can’t get my boy to eat it. So I currently just checked out. I bought four bags of rice.

Shonda: You can go to our website, farmacopiafarms.com, F-A-R-M-A, C-O-P-I-A and buy roasted hazelnuts.

Meb: Farmacopia Farms, is that a distinct or a similar brand? The Chess Ag sort of brand?

Shonda: Farmacopia Farms, I own it. I founded it, the label, everything else, and it’s my own soon to be certified little organic hazelnut farm. But hopefully, it will grow and be a whole bunch of other things. And is sort of what I was talking about earlier, perhaps a prototype for going from the field to the grocery store all the way through. So it grows a hazelnut, we process them in-house, we clean them, crack them, process them, and then sell them. And lots of people do that in a small way in farmer’s markets across the U.S., but I don’t think that on a larger scale, when you think of distribution, etc, that model hasn’t been done. And I think that that’s an interesting model to look at into the future.

Meb: The only risky part for me with getting hazelnuts in bulk is the temptation to then try to create homemade Nutella, which is like absolute crack. I can’t have Nutella without eating an entire jar of it. You got a good Nutella recipe for me?

Shonda: Yes, yes, yes. I can send you a great Nutella recipe. I can send you variations.

Meb: It’s got to be a slightly healthier version than the one that’s made by the main one, but I’ll give it a go. As we sort of start to wind down a little bit, any other general thoughts on farming that we didn’t touch on? We didn’t really get into momentous changes like this potential transition away from meat consumption if that’s even happening or it’s just a fringe trend or anything else that we didn’t talk about today that you think is fun to or important to chat about?

Shonda: I think that there’s absolutely… I know so many people and so many investors that are investing in alternative proteins. And I would say that think about it hard before you go down that road. Soybeans is an alternative protein. And I think maybe we should divest in soybean slightly. That’s more monocropping. We need a diversity of crops. But all these plants that everybody’s growing to create this meat and stuff until it could be made in a lab and then I have other kind of weird issues. They’re probably juvenile emotional issues attached to completely lab-made food, but plant-based is tough because it requires a ton of water, a lot of work, and soil degradation to grow these plants. And it can be argued… I’ve heard arguments every which way, but Sunday, and I won’t even lay my personal opinion down here, but I think it’s not as straightforward as it seems right now in the hot trendy space of alternative proteins and plant-based foods because plant-based foods have been around for a long time and we have terrible water problems.

I know, you know, Nebraska and Montana are growing pulses out the Wazoo to meet Saba’s chickpea consumption, sort of levels and things. And the water table in Nebraska as you know, you’re in Western Kansas, Kansas is a beautiful state in that it has some of the most sophisticated and early water rights, things that they’ve developed to protect their water supply. I mean, you can’t put down a new well in Kansas for love nor money and they’ve been doing it for 20 or 30 years and they’ve been fighting with Nebraska over water and… I’m from Nebraska, water tables are lower and the Ogallala aquifer that underlies those two states has dropped from, I don’t know, 50 feet when I was a little girl in the ’60s down to maybe 25. And it might be lower. I’m sure my numbers are off. We need to really think about what all the trendy words mean.

I guess if I could leave everyone with one notion or one idea is to really, you know, even stop on a highway as you’re driving in rural America someplace and talk to a real farmer. Talk to someone driving the tractors, not the think tanks and the people that are podcast here. Don’t talk to us. Go talk to, you know, real people in rural communities about some of what they think and what they’re seeing on the farms because they’re not stupid. They’re smart and they have real issues and real problems and we need to find a way, urban and rural people, to talk to each other and to see each other and to think together for food security for this country. It’s really important. And, you know, sort of maybe the alternative protein thing. They’re going to have different views, I can assure you, and we can learn from each other and grow.

Meb: If you could wave a wand, and this is risky, is there any sort of ideas or concepts where you’re just like, “Man, the government gets in their own way or there are ways to do it better, or like farming industry, in general, could make better progress in some idea or concept.” Is there anything that comes to mind at all?

Shonda: Well, I think that farming is no different than other large industries. I don’t want to bash farming in the nose or U.S. agriculture in the nose, but I think that the PACS and the large…the Dairy Council and the Soybean Council and the Corn Council, and everybody, the people that have the most money have the largest voice in Washington or with the legislatures in various states and I guess I would love to see the legislators look beyond those lobbyists, perhaps, and look holistically at what we need in this country. And I think that we need to encourage farmers to diversify crops. We need to support specialty crops and younger farmers in a much better way than we have over the years. There has certainly been, as a woman, getting…we use very little leverage even at a corporate level. I’m a big Goldman financier and I don’t get a meeting at many rural banks, that’s sort of crazy. And if you’re brown or black or whatever color or a woman, it’s tough in agriculture, so things to support those people are helpful.

The other thing I would say is that if you want to support rural communities and your governments or legislators, this carbon issue is going to be huge. We are part of the problem in rural America. We use a ton of fuel to farm our farms, but we are also part of the answer. And so I would love to see the FSA, Farm Service Administration, the USDA, really help to ensure that these carbon credit payments, etc, go straight to farmers and not to the Monsantos and all the middle people who are happy to put their chief legal counsel on the phone with Chevron’s chief legal counsel and do some deal and give us a little dribble of that payment and put it in their pocket. That irritates me. And so, hopefully, as we sort of move down this road and really sort of hone in on how we want to do this and how we want to sequester carbon, farm practices that do that should be incredibly, highly valued. Rural communities and the farmers in them should receive the benefits for that.

Meb: It gets complicated anytime you start getting governments involved. I remember a million years ago reading a Jim Rogers book or this new talk about something in his particular Ayer was focused at the challenges that some of the direct payments and free-market distortions they make. And I think he was specifically talking about… This is a long time ago. Sugar farmers in Florida. And he’s like, “You know, we’d be better off buying each one a Ferrari and just giving them a Ferrari than making these payments because it creates a lot of secondary knock-on effects down the road that are even more problematic.”

Shonda: I think it’s different than if there’s a global carbon credit market. Ton of carbon is $23. And I sequester a ton of carbon, I want to be paid $23. I don’t want to be paid $5 and have Monsanto paid $17 of that. And so I don’t want a free handout from the government. But if you want me to sequester carbon and enrich my soil to save the planet and you’re paying people anyway, pay me the whole amount, thank you very much.

Meb: As you reflect and look back on this pretty varied career in both farming as well as in finance, traditional investing, derivatives world, do you have any most memorable investments? If you kind of cross over to farming, it could be particular farmland moments or harvests or anything else that were particularly memorable too. So it’s a wide-open question, good, bad, in between.

Shonda: That’s a difficult question. I’ve been very, very lucky to have a wild and crazy and interesting career. But I don’t know why something just jumped into my head, and that is that in 1994, off the back of NAFTA, I did a trade while I was on the global macro desk at Goldman and it was mostly fixed income and currency guys on that desk and, of course, I was the only girl and I was the only equity person. Because I thought NAFTA was such a good thing, I bought this whole basket of stocks, of Mexican stocks and I shorted the S&P against it. It turned out to be a great trade, but why I think I’m thinking of that, and that’s one of many good trades and I have a whole bunch of terrible trades too. I’d love to…you know, you can tell real traders, I think. They’ll start telling you their disasters where fake traders only tell you they’re good ones.

Meb: Everyone on Twitter is only 100% successful trader, so.

Shonda: I was down in Mexico two weeks ago and I was looking at some farms down there in some states that, you know, I was even a little afraid to go to. And I’m kind of intrepid. And I have to say that I’m very excited about Mexico. In terms of what I saw agriculturally there was technology that exceeded, by 10 or 15 years, anything that I’m seeing in Oregon right now. And that was unexpected and shocking and it made me think back to that NAFTA trade. Somehow that’s been on my mind. And it’s probably scary. Certainly, in blueberries, a bunch of Southeastern and I think Floridian farmers brought a case to the WTO about berries coming in from South America, ruining the U.S. market. And it might be tempting to think that that could happen, but I think it’s such a strong lesson. It was to me anyway, seeing the sophistication by which these farms were run and the innovation. They had solar diffused netting on their high tunnels and stuff that we didn’t…

I got home, I called our local supply place. I’m like, “I want carboxylic acid and I want this and that.” And they’re like, “What? We don’t have that. We’re going to get it from Mexico.” And I think that it was such a strong, “Whoa, we need to wake up and smell the roses and lots of competitors are jumping at our feet. And maybe that’s scary. And we want to say, “Get away. Let us close in on ourselves and supply our own market.” But I don’t think that that’s the answer. I think the answer is, “Okay. Cool. Let’s take it up, and let’s grow, and let’s rethink ourselves and rethink agriculture in this country and what can we do? And let’s use new technologies and let’s think about farming in a different way and let’s get new people involved.” In our rural communities, in our farming, we have to in order to grow otherwise, you know, we’re going to shrivel up and die. And that’s really scary. I am such an American and I don’t want that for my country.

Meb: How do you think about investing in international markets? I mean, I think probably everyone listening is like, “Oh, dude, what? Investing in Mexican farmland?” Or even thinking, I remember back in the day just getting pitches from Baltic farmland funds and Argentine funds and ideas. And most people are like, “Oh, man, that sounds pretty risky.” How do you think about that? Is that something you do consistently just thinking about or more looking at it from operationally, or what’s the motivation there?

Shonda: Well, you know, it’s something that we might do every once in a while. I would absolutely… You know, what might’ve been risky 20 or 30 years ago is less risky now that we have six mass shootings a day or whatever. And, you know, everybody seems to have trouble, us included. And so let’s not pretend otherwise. There are currency issues and things in some of these places and you have to have a good partner, but really, I kind of mention it more in… I’m certainly very interested in investing in some of those farms but in also adopting that technology here on our farms. We get mad at the Chinese for coming in here and going to our universities and being extremely well-educated and going back home and stealing ideas or whatever and making them better. We can do that too. And we’re not be all that ends all in lots of things. And so sharing information, working together, I see much in Mexico, they have different social issues and, you know, it is not easy, but we’re not particularly easy right now. And I see them very much as a partner in growing food, Mexico, the U.S., and Canada, and the North America… the NAFTA treaty, right? And I go back to that crazy trade at Goldman all those years ago when those doors opened and that making a lot of sense and loving the fact that I can call up this Mexican company and order whatever as long as it’s made there to be delivered up here and utilize that technology in growing intelligent berries in Oregon for heaven sakes. That’s exciting. And I don’t recommend that necessarily anybody without deep due diligence and ties that go back 10, or 20, or 30 years with an individual go and do that. Having said that 15% of our population is Hispanic of origin and what we’re seeing in Mexico right now are a lot of very successful U.S. doctors and lawyers who are second-generation with families back in Mexico going back and giving some farm management company some money, a couple million dollars to do their farm in Mexico. And they know the culture, they know people in that community, they’re tied in, in a way that many of us are not. Makes a ton of sense. Love it.

Meb: Going back to the earlier part of our conversation, just circling back to the concept of diversification, not just in the U.S., but all of a sudden, then you get some potential currency diversification and likely, in many chances, cheaper prices, probably in a lot of markets, depending on what’s going on. But as you mentioned, certainly requires a little more homework. Buffett’s kid was big on trying to spread ag-tech around the world and in Africa. And in many years working on that, I was thinking the other day… It was like a month after it got disclosed that Bill Gates is the world’s largest farmland owner. Now that he’s getting divorced, I was like, “I wonder if that’s going to start to generate …” Sorry. U.S’s biggest, not global. Might see some distressed divorce sales at some point, I’m not sure. So maybe be on the lookout for some Pacific Northwest. I’m sure he’s got it everywhere.

Shonda: I know the person that runs that business for the Gates and I would be surprised if any of it gets diversified, but if Melinda French Gates needs a new female asset manager, I hope she calls us.

Meb: Melinda, when you’re listening, hit Shonda up. She can help. This has been so much fun. I’m now the waiting recipient of a bunch of hazelnuts and white grits and everything else in between. So I’m excited to try those out. By the time this is published, I think I will have already received them. Shonda, if people want to get in touch with you, they want to follow along with what you’re doing, if they want to put 10 million to work in farmland, where do they go? How do they find you?

Shonda: Shonda@chesscapitalpartners.com. Well, find me and feel free to share that email. And we’re a small kind of tight team, but if anyone, you know, come sometime. You should come and do a farm tour, bring some of your listeners on a farm tour, whatever.

Meb: Be careful what you ask for because Oregon is one of my special favorite places. So I may just have to road trip up there. And we joked before the podcast, one of my favorite trips ever was a fishing trip down the Rogue River, and then go spend some time in Portland and eat some blue star doughnuts and everything else in between. So let us know when the good time is, when’s crush? What’s your favorite farmland sort of event of the year? Because a harvest in Kansas, while a little bit fun, it’s usually like 100 degrees and maybe not the most enjoyable experience. What’s the best for you guys?

Shonda: We get really crazy busy from about June 25th until September 1st in Oregon, harvesting blueberries. This year across all the farms that we manage here in Oregon that we actually farm, we’re going to harvest a couple of million pounds of berries. Nuts come next, September 8th or so till whatever, middle of October, depending upon rains. So it’s fun if you want to see harvest to come during those times, but it’s absolutely beautiful from about May 15th to June 15th. The weather’s great and it’s quieter if you want to chat with people or have a more relaxed experience, come at that time. And I would suggest not coming from sort of December 1st to maybe March 1st. We are covered in clouds and drizzly rain every day, which is great for our soil, but not a lot of fun to hang out in if you want to see the fields. And we meet people all over the place, look at our Mississippi, Arkansas, California, wherever other farms or other farming opportunities, all over the place. So it’s interesting and maybe we’ll set up a tour. I won’t take the bulk of it. We’ll give some of our competitors fun. You could go see three or four…have tours from three or four different players in the marketplace. That would be a fun Faber road trip event.

Meb: I love the idea. Well, we’ll get it to work. Get it on the paper now that the world is reopening. Shonda, this has been so much fun. Thank you so much for joining us today.

Shonda: Pleasure.

Meb: Podcast listeners, we’ll post show notes to today’s at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at feedback@themebfabershow.com. We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.

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