Interview Dick van den Oever (asr)
'We invest in land with a long-term vision'
Standing still means going backwards, and this also applies to agricultural companies. In addition to innovation in areas such as cultivation or technology, society and politics impose requirements on the 'license to produce'. It is difficult for the individual farmer to implement this, not to mention extra costs. Other chain parties will also have to take their responsibility.
One of the chain parties that has already started working on this is asr real estate with the ASR Dutch Farm Land Fund. In 2021, the ASR Dutch Farmland Fund launched a program for farmers who want to work more sustainably. If the tenants meet the sustainability requirements, they can receive a discount on the ground rent. The process has been running for a few years now and is therefore a good time to check in with Dick van den Oever, the director of the ASR Dutch Farmland Fund.
An investment fund that sacrifices returns to push the sustainability of agriculture in the right direction. That seems a bit contradictory. Why this discount for tenants?
"Our mission as an investment fund is to create long-term value for agricultural entrepreneurs, investors and the living environment. We want to pass on agricultural land better. In our view, the operational side of the fund was not sufficiently aligned with the mission. We are working on that. and have given substance to the sustainability strategy. The farmer cannot be left out of this. A farmer who wants to take an extra step in the field of sustainability must be rewarded for this. This is a task for us as a stakeholder farmers who meet the conditions receive a 3% discount on the canon and the remaining term 10%."
What are the conditions?
"We have three pillars on which we assess sustainability. First of all, we look at the business plan. The farmer must convince us of the motivation to become more sustainable and show that the plans are well thought out and substantiated. In addition, we want to be able to measure the efforts and results. We use the Open Soil Index for this, which is a standard for measuring the quality of the soil. Finally, we look at biodiversity arable farming is not properly aligned with business operations. That is why this condition has been expanded with 5% leguminous or biobased crops in the crop plan. To avoid burdening farmers with unnecessary regulatory burden, some labels or quality marks such as Skal or On the way to planet count proof. We ultimately want to enable every farmer to participate in the program. The Open Soil Index is also a source of inspiration. Whether you as a participant have already made great strides in the field of sustainability or you are just starting out, there is always something to learn and improve."
Is there much interest from farmers in participating?
"That is going as expected, even slightly better. Our target this year is that 20% of the land in our portfolio is farmed sustainably. In the first quarter of this year we were at 18%, so I am confident that we will achieve that. ."
Let's take a broader look at the agricultural sector and the land market: Nitrogen is a problem and there is talk of extensification from politicians, among others. How does the ASR Dutch Farm Land Fund view this?
"The challenges for agriculture are great and that brings a lot of uncertainty for the farmer. We want to be a stable partner for the long term. There are many companies without a successor. Stopping, expanding or extensification, it brings dynamism to the land market We mainly have a facilitating role and leasehold is an interesting option for land for expansion, extensification or to make a business takeover possible. Growing together and becoming more sustainable is a win-win situation In many cases the option to buy back the land is important for many farmers.
Can new initiatives such as Herenboeren or Jerusalem artichoke also benefit from the ASR Dutch Farmland Fund?
"We are passionate about community-based farming models such as the initiatives you mention and want to support them. This year we expect to welcome the first Herenboerderij. To this end, we work with a tailor-made solution based on career leasehold."
So far this has mainly been about leasehold. Is this also a consideration for regular lease or short-term liberalized lease (which, for example, the Central Government Real Estate Company focuses on)?
"We have land that is regularly leased in the portfolio, but we no longer give out land under regular lease. The regular lease system needs to be revised in order to become truly relevant again. The return on the land for us as owners is very volatile. due to major annual changes in regional standards. Many parties are involved in the reform of the regular lease, so that it becomes an alternative to, among other things, investing in land. We are also involved, partly directly at the ministry itself and partly through the Federation Private land ownership.”
Dick van den Oever
"Short-term lease agreements are not a goal for us, but are usually entered into for strategic reasons. For example, in anticipation of a new leaseholder. We invest in land with a long-term vision and that is why short-term liberalized leases are not our priority. Our starting point remains a relationship with the tenant for the medium and long term."
Will ASR remain a net buyer of agricultural land?
"Expansion is not a goal in itself. We have more than 38.000 hectares of agricultural land in our portfolio and are one of the largest private landowners in the Netherlands. Our scale is sufficient to work efficiently. Growth is not necessary in that respect. However, we have We have made many purchases within the framework of our sustainability program this year, and we expect to achieve our purchasing targets this year as well."
What do investors think of the sustainability strategy?
"Investors are looking beyond just the financial return. The ecological and social impact is increasingly being taken into account. In addition, green investments are also being encouraged from Europe. We are careful with the green claims we make as a fund. In the Sustainable Finance Disclosure Regulation (SFDR, the regulation regarding the provision of information about sustainability in the financial sector, ed.) We have deliberately chosen Article 8 so that we can be sure that we can meet the expectations of our investors in this area. We prefer not to push the boundaries on."
"Agricultural land is and remains an interesting category for investors in addition to the traditional categories of shares and bonds. The risk profile of the ASR Dutch Farmland Fund is a very nice addition to a well-diversified portfolio."
The fund only has agricultural land in the Netherlands. Is that not a risk, for example with weather extremes, as we have seen in recent months, and is it also an ambition to build up positions outside the Netherlands?
"Within the Netherlands, the positions are fairly well spread across the country. In the past, we may have been somewhat overrepresented in the IJsselmeer polders. In addition to the geographical spread, we lease to various subsectors within the agricultural sector. That also helps spread the risk."
"There is no ambition to acquire land abroad. In Australia, North and South America it is relatively easy to quickly build up a large portfolio. In Europe this is much more difficult. There are not many very large companies for sale In addition, farmers in the Netherlands own a lot of land. We are at home in the Dutch market and as a fund we remain focused on that market."
Jurphaas Lugtenburg
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