Sources of Return

Ceres Partners seeks to generate an attractive total return for its investors through the acquisition and management of highly productive farmland. Income is provided by leasing the properties to an existing network of proven and capable farmers. There are primarily two means of leasing farmland.

SourcesOfReturnImage Cash Rent: The annual rent is assessed based on the farm’s tillable acres and is generally paid in full before any crops are planted. Alternatively, a portion (i.e. 50%-75%) may be collected in the spring with the remainder paid after the harvest. In a cash rent arrangement, all risks associated with planting, growing and harvesting the crop are assumed by the tenant farmer.

Crop Share: In a crop share lease, the landowner is paid a percentage of the crop’s revenue. In a crop share arrangement the landowner also shares the risk of crop failure, but crop insurance is available to lessen this risk. Since there is more risk in a crop share lease, the return is designed to exceed what a cash rent would provide.

In addition to current income, a significant component of the total return is appreciation in the value of properties held in the portfolio. Farmland values have increased in every year except four since the end of WWII (1983, ’85-’87) and have climbed steadily since 1987. Purdue University’s annual land survey shows an annual average gain of 7.4% for Indiana farmland over the past 20 years.

Indiana Farmland Appreciation
1988-2008
	High Quality	Average Quality	Low Quality
5 yr Avg.	10.50%	11.00%	11.50%
10 yr Avg.	6.40%	7.10%	7.70%
20 yr Avg.	6.80%	7.40%	8.20%

Ceres Partners seeks to achieve the highest revenue production from each farm that is consistent with the long-term enrichment of the farm’s value. This may include erecting grain storage bins or machine sheds that are leased to the tenant. Additional sources of income include seasonal hunting leases to individual hunters or outfitters, harvesting mature timber, oil & gas royalties where applicable and billboard rentals. We are also exploring opportunities to lease land for electricity generating windmills.