Three questions with.... Steve Dyer, Founder, Semper Financial Management

GAI | 5 April 2024

By Michelle Pelletier Marshall, Global AgInvesting Media

Beyond Farming… this is Semper Fund Management (“Semper FM”), a diversified team with 70-plus years of combined expertise in global agricultural commodities and real asset management. Committed to growing farmland values while at the same time conducting detailed due diligence on supply/demand dynamics and return on investment, Semper FM has found the ideal blend of co-investing to serve the entire ag value chain and its funding participants.

Leveraging boots on the ground knowledge with thoughtful capital placement – with a finger always on the pulse of new innovations, risk management, and employing best practices – the company has successfully directed investments undaunted by drought, flood, and other market conditions that have sidelined other funding plans in the sector.

To get more details on the newly formed fund management firm for this “Three Questions With…” feature, GAI News spoke to Founder and Executive Director Steve Dyer, a lifelong agriculture commodities trader.

1). Tell us about your company, with some examples of successes.

In 2019, my co-founder, Ciro Echesortu, and I saw an opportunity in the U.S. farmland market, which prompted us to start Semper. The opportunity arose from a dislocation between commodity price fundamentals and the value of farmland. Coming from backgrounds at Louis Dreyfus Commodities and Ceibos Group allowed us to spot the discrepancy and take advantage of it to garner above market returns. Both Ciro and I have held executive positions with Louis Dreyfus with careers spanning 20-plus years, and since 2003, Ciro has been the executive director of Ceibos Group, which is a vertically integrated company in South America (Argentina, Bolivia, Paraguay, Uruguay) that owns and leases roughly 400,000 acres.

Once Semper was formed, we began raising money through friends and family, which we strategically deployed throughout the Midwest, Mississippi Delta, and Southeast. The fund has been extremely successful, generating returns well above projections. While understanding the commodity market dynamics is a key aspect in value generation, it is only one of three layers that plays a part in our active management strategy. Since the capital has been deployed, we have been hard at work building out a unique well-rounded team with the capacity to expand into new regions with new farming partners.

Semper’s Three Layers of Active Management Strategy

— Commodity Cycles & Regional Markets: Through the correlation between commodity price cycles and farmland values, we tap into the dislocations in the market to gain an initial purchase gap when acquiring assets. Additionally, throughout the life of the fund we roll a portion of our portfolio on an annual basis, thereby capturing value and reallocating funds to regions with higher potential for capital appreciation.

— Land Improvement: At Semper we understand that the value of the land is not just tied to its productivity, but also its longevity. Through improvements in water management systems, soil fertility and biodiversity, and strong farming partnerships, we can set the stage for increasing the value of our properties, now and into the future.

— Farming Practices & Hedging Strategy: Once the land has been brought to its highest potential, it is important to employ a sustainable strategy through the use of best farming practices and promoting a regenerative approach to the land. We partner with quality farmers who engage in cover cropping, no till, and precision agriculture to help maintain the land and drive long-term value of the soil. Additionally, as active managers, we engage in a dynamic leasing plan that leverages our experience in hedging commodity markets. Through the use of crop shares, flex leases, and custom farming, we have been able to generate higher operational returns than if we took a strictly cash lease passive approach.

2). How will your investment strategy bring about positive changes in the sector?

The active approach to farmland management that we take sets the stage for a positive participation in the market. The combination of our investment strategy, which combines land improvement with a dynamic leasing strategy, creates a symbiotic relationship with our farming partners. As an asset class that can have a capitally prohibitive entry point, this allows new and existing farmers to have access to land in an environment where margins are consistently tightening, and land is being consolidated. As we deploy capital to turn underperforming farms into quality pieces of land, it allows farmers to focus on what they do best without sacrificing the long-term quality of the land. Additionally, the wealth of experience and expertise that we bring to the table, along with Ceibos Group, and the utilization of new technologies has a positive effect on the market, which sets up farmers and investors for success. The key is to treat the land as a borrowed asset from future generations.

3). What does “the future of ag” mean to you/Semper FM, and what do you see as the most opportune investment for disruption in the sector?

The future of agriculture hinges on a harmonious integration of optimal farming methodologies and the adoption of emerging technologies. This synergy will empower farmers and investors to navigate the dynamic landscapes of commodity markets and climate fluctuations. Given the finite nature of land, preserving it is paramount for ensuring our food security. Innovative water management systems, regenerative techniques such as cover cropping, and novel inputs like biological agents, offer promising avenues to sustain this invaluable resource.

However, as the agriculture sector evolves, a profound transformation is underway with the integration of artificial intelligence (AI). Although AI is still in its infancy, its rapid advancement is on the verge of reshaping various facets of farming. Initiatives leveraging AI range from developing resilient seed varieties through the mapping of genomes with phenomes to platforms facilitating natural human-like interaction with big data. These endeavors not only signify a paradigm shift in agricultural practices but also propel the industry towards new heights.

To hear more about Semper FM and meet some of their team, head to the Global AgInvesting conference in New York City next week, April 15-17, where they will participate as sponsors.

ABOUT STEVE DYER

Steve Dyer is executive director and a founding partner of Semper Fund Management, a company that was founded in 2019 with partner Ciro Echesortu, former CEO of Louis Dreyfus Company, to seize the unique opportunity in farmland investment. The company has since scaled to $100M AUM.