If the farmers have decades long relationship with the landowners this looks like a power play by tillable/VCs to get in there and take a recurring cut. They know the farmers have no option but to rent land and the VCs know it. So they are using their money to pay cash to landowners and get them on the site. Probability wise there is a 90% chance that the land will be rented by the same farmer as before because of land proximity issues. So it’s just free money for tillable.
Yeah, they quote Parker Smith saying they’re making connections that wouldn’t otherwise happen, but that’s obviously a lie. The farmers don’t need a ‘market maker’ if they’re already renting land from landlords they know. And it’s not like they can move operations around randomly, like an apartment or hotel room.
Because he needs land to farm on, or he stops being a farmer and has to shut down his business.
He will now pay e.g. $1000. Tillable will offer $1100 upfront to the land owner and then "offer" it to the farmer for the low price of $1200. Since he can't just farm on some piece of land 500 miles away, he can either pay the new price, or stop farming.
Tillable offers no significant service here. It's not that there's a lot of land sitting idle because farmers and land owners have no way to come in contact, they are not solving a problem, they are just injecting themselves to extract rent with VC money.
If the farmer is willing to accept a $1200 price, then what prevents the land owner from charging $1200 right now? All the factors you list which push the price up apply just as well for the current owner-renter negotiations.
The scenario you describe is possible only if there is a lot of land that's severely mispriced / underpriced - in which case the price should and would get corrected, and after that the arbitrage opportunity disappears because, as you say, the land owner can come in contact directly with the farmer and make arrangements.
>> If the farmer is willing to accept a $1200 price, then what prevents the land owner from charging $1200 right now?
The same reasons that have kept my landlord from raising the rent me and my partner pay in over 14 years now. When we asked him if he didn't want a raise (we were concerned he was not making enough and would have to sell the house) he said that no, he prefers to know that the house is rented long-term and he doesn't have to find a new tennant every few months.
So, basically: stability. Some people tend to value that very highly. I know I (and my partner) do, which is btw the reason why we've stayed in the same place for over 14 years. That and all the scare stories of asshole landlords we've heard from friends who moved frequently (we're in the UK btw).
> If the farmer is willing to accept a $1200 price, then what prevents the land owner from charging $1200 right now?
Basic human decency? These are often long-term relationships between neighbours, whose families lived next to each other for decades or hundreds of years.
Apparently nobody turns to Tillable. It's Tillable that's turning to land owners and tries to convince them to not renew their contracts with farmers so Tillable can negotiate new contracts with higher prices, likely with the same farmers (as farming is very much a local thing, you can't farm a piece of land from a thousand miles away).
That only brings us back to the question of why landowners wouldn't go directly to the farmer and ask for the hypothetical $1,200 that Tillable would also ask of them? It is not exactly difficult to figure out who the farmers are in your local area, and it is especially not very difficult to figure out which ones are the hungry ones willing to pay top dollar, if that is your goal. Chances are they have already been hounding you for years. Exactly because people don't normally seek farmland a thousand miles away, where there could potentially be a benefit in new introductions, it remains unclear where Tillable fits.
I believe it's similar to smart phones being produced by humans at the other end of the world who live in bunk beds, have 10-12 hour shifts and barred windows + nets below so they don't jump out trying to kill themselves. Most people at this end of the world are not okay with those conditions and do not tolerate them if they know about them. But put a suit at Apple and another suit at Foxconn between the consumer and the producer and they don't know about it. When it comes out, people are appalled and Apple & Foxconn have to shift strategies or face consumers shunning them. Tillable are those suits.
Land owners are not in the business of maximizing profits at any cost, but if you approach them with a much better offer for their land, they don't see the ways how you're able to afford that offer, much like the smart phone buyer does not know why it doesn't cost $100 more. When people profit from something, they are usually not too concerned with the details and accept that things happen that they wouldn't allow if they knew about it, by turning a blind eye (blinded by the profit, you might say).
People are willing to pay more to Apple than to Foxconn for an iPhone simply because intellectual property law prevents Foxconn from realistically selling the iPhone at a lower price. When one decides the iPhone is the device for them, they have little choice but to buy it from Apple at whatever price Apple has decided to charge. If there were no such IP encumberments, Foxconn would sell an identical device for a lower price and people would quickly forget who Apple even is.
Farmers approach landowners with better offers all the time with no qualms about paying top dollar to get it. Being a farmer myself, I can tell you first hand that competition for land if fierce. Sometimes the approaching farmer is taken up on the offer, sometimes not. But I see no real indication of pent up demand that isn't being satisfied because people cannot figure out who the landowners are. There is literally a land registry, if all else fails. But rural communities are small. You already know who owns what, and conversely who farms what.
Exactly that. And while I hope this won't work because it's mostly trying to insert itself between a landowner and their neighbourhood farmer, there's probably enough less personal relationships in this space for Tillable to find a foothold, from which they'll continue "disrupting" the space.
(Worth remembering that disrupting evokes, particualrly in this context, the picture of a disruptor - a weapon used by evil Klingons and sneaky Romulans.)
Your explanation makes me think of a paraphrase I like to post: the only thing necessary for the triumph of evil is to separate good men from it with enoungh layers of indirection.
And that brings us back to my original answer: why would they? Trying to extract maximum profit from the counterparty is adversarial, whereas a relationship between a land owner and a neighbourhood farmer most likely is cooperative.
EDIT: for the same reason, I don't think Tillable has a chance of working, and to the extent it does, it's actively destructive.
And now we're just talking in circles. Before your original 'answer', the scenarios presented were that farmers who:
1. Want to extract as much money as possible will turn directly to the farmers willing to pay top dollar to maximize the take.
2. Want to build solid relationships with farmers will turn directly to farmers to find a suitable fit.
The question presented before your original reply was in trying to understand where Tillable fits. Your answer did not provide that information, and your follow up still does not attempt to answer the question.
Your edit seems to suggest that they don't fit, as was already established, which leaves us wondering what your original response was for?
Presumably tillable will make the same dela to every landowner in the area, reducing the competition between landowner and therefore enabling the increase in prices.
"Willingness" vs "No other choice but shut down". It's similar to how you're "willing" to "accept" increased taxes. You don't have to, of course, you can leave the country, but I wouldn't consider that willing acceptance.
As TeMPOral mentioned in a sibling comment, mostly their long-standing relationship, and his non-predatory business model. Right now, he's a land owner. If he uses Tillable, he's a property investor.
For now it's fueled by VC cash so people will adopt it because of it. This gives Tillable growth numbers that impress investors to give even more money and so on, until it's so large that it can apply ideas of scale, like integrating vertically in some form.
The vertical integration Uber envisions is self driving cars. Any company which has a foot in the hauling market will have an advantage over a purely self driving research company. The vertical integration of Tillable would involve things like buying the land, renting out machines, completely automating the work, etc. Something like that.
Yes, but he smart landowners will realize that the same farmers will now need to pay more, and have a less direct and shorter-term connection to the land.
The farmer will have less means, and less motivation to invest in proper fertilization & care of the land.
This pushes everyone to a pure extractive business model, and away from investment.
The result will be land that is worth less until it is worthless.
All for a few more bucks up front.
Capitalism is not solving any problem here, it is creating a massive problem. What's the solution when a massive portion of the arable land is worthless?
