On behalf of the ASR Dutch Farmland Fund, the owner of the land, a.s.r. real assets is the first landowner to introduce the so-called ‘Transitie Erfpacht’. With this new form of hereditary leasehold, the ASR Dutch Farmland Fund supports farmers in switching to more sustainable farming, such as organic or regenerative agriculture. Since the farmer does not pay a ground rent for a total period of up to two and a half years, spread over the first five years of the contract, there is financial leeway for investments in the conversion in the initial phase. With this discount, a.s.r. real assets wants to accelerate the transition to more sustainable agriculture and thus contribute to better soils, cleaner water and healthier food.
“Transitie Erfpacht” creates financial leeway in a phase in which an agricultural entrepreneur has to make additional investments in order to operate more sustainably and to convert his farm. This is done, among other things, by the fact that the farmer is not charged for (hereditary) lease costs for up to two and a half years. This strengthens the farmer’s working capital. He can determine at his own discretion how to distribute the discount over the first five years of the contract. Afterwards, the regular payment of the ground lease begins for the remaining term of the contract.
Dick van den Oever, Fund Director of the ASR Dutch Farmland Fund: “We are seeing an increasing interest from agricultural entrepreneurs to switch to sustainable business models. Lack of financial leeway can be a reason to postpone the transition. Transitie Erfpacht can make the decisive difference here by creating room for manoeuvre and trust. It is very gratifying to see that our investors support our sustainability programme with a long-term investment horizon and aspire to play an active role in the sustainable transformation of Dutch agriculture.”
At the end of 2021, a.s.r. real assets introduced its sustainability programme, in which farmers are rewarded with a discount of 5% to 10% for the entire term of the contract. However, the switch to organic or regenerative agriculture requires additional investment leeway, especially in the initial phase, as well as buffers to absorb changes in yields in quantity or price. “Transitie Erfpacht” creates this leeway through a discount in the first five years of the contract and thus meets the financial needs of farmers who, for example, want to change their farming and invest in biodiversity or new climate-resilient crops.
Farmers who use the “Transitie Erfpacht” programme draw up a transformation plan together with the ASR Dutch Farmland Fund, which sets out, among other things, the intended conversion, the operating strategy, sustainability goals and financial planning. In addition, participation in the ‘Open bodemindex’ is one of the prerequisites; during the transformation phase, progress is reported on annually. The fund has earmarked part of its investment budget for Transitie Erfpacht.
Transitie Erfpacht has been developed in practice in the past together with hereditary tenants, so that the farmers’ experience has been incorporated into the product. One example of this is the cooperation with Graanbroeders in Friesland.
