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Yes, Agribusiness Can Capitalize on the O-Zone Program
Much of the discussion about the Opportunity Zones program focuses on capital infusions within lower-income census tracts in urban cores. However, many of the federally-designated Opportunity Zone tracts reside in rural and agricultural areas.
As such, Fort Worth investment firm Harvest Returns recently launched its Sustainable Opportunity Zone Fund. Harvest Returns spearheads capital raises for small- to medium-size farmers, and does this through agricultural investments open to accredited investors.
On a recent podcast with OpportunityDb.com, Harvest Returns founder and CEO Chris Rawley pointed out that agribusiness has every right to be the recipient of capital through Qualified Opportunity Zone Funds (QOZF), as does any other business. Basically, the Harvest Returns’ QOZF is “bringing urban capital into rural areas to benefit families and farms that produce food for the rest of us,” he said.
The fund, itself, is more focused on the business of agriculture, as opposed to the actual real estate, with Rawley pointing out three benefits:
Demographics. The amount of arable land is decreasing around the world, while populations are becoming wealthier and tend to eat more. As such, this is the dynamic that is “driving economics behind food production,” Rawley said.
Diversification. While there are some risks to agriculture, such as weather, O-zone agriculture provides an asset that isn’t correlated with stocks or bonds.
Returns. Rawley indicated that returns from the Sustainable Agriculture Opportunity Zone Fund are competitive with those from other real estate Opportunity Zone funds, with an estimate of 10%-12%. Furthermore, because agriculture is a slow-growth industry, it takes time, and “works well with opportunity zones,” he said.
Rawley did point out that, as with any QOZF, the fundamentals and parameters need to make sense. “You don’t want to do a deal, just because it’s in an Opportunity Zone, or seems to offer favorable tax circumstances,” he commented. However, agriculture does offer a different type of investment under the Opportunity Zones program.
Said Rawley: “Investors who might not have ever considered investments in real estate or agriculture now have the opportunity to take the capital gains from selling their stock or business, to redeploy it into an Opportunity Zone, and reap the benefit from a tax perspective.
Connect Opportunity Zones will be presented for the first time on Oct. 23 in New York. For more information, or to register, click here.
For comments, questions or concerns, please contact Amy Sorter
