Terrafine, a land portage cooperative

Enabling farmers to refinance themselves by becoming tenants of their land is the approach taken by the Terrafine cooperative.

Terrafine, a solidarity cooperative

Terrafine is still a young company as it was created in 2016, but it has a strong experience.

Jean-Jacques GAUDICHE, the founder of this company, knows the agricultural sector and the difficulties of financing perfectly.

Terrafine is aimed at 2 audiences:

• Farmers (or future farmers) in need of financing
• Investors wishing to invest in the agricultural sector through a socially responsible and fiscally advantageous investment.

Terrafine is a cooperative company whose members (and therefore decision-makers) are the founders, investors and beneficiaries.

It also benefits from an approval as a social utility company which allows the holders of shares to benefit from a tax reduction of 25% on the amount subscribed*.

How does Terrafine work?

Terrafine buys agricultural land and then leases it back to the farmer who requested it.

Terrafine finances its acquisition through the contributions of its investors. The latter benefit from a tax reduction and a social, environmental and ethical performance. And they are fully informed about the use of their savings.

The lease concluded with the farmer is a transferable lease which has several particularities compared to a classic rural lease:

• The rent can be increased by up to 50% compared to a standard lease
• The lease has a minimum duration of 18 years
• The farmer can transfer the lease to his transferee when he stops working, which is not possible with a classic lease
• The lease designed by Terrafine also includes environmental clauses to preserve biodiversity

The farmer benefits from an option that allows him to buy back the land within 5 years at the initial price regardless of the evolution of the land price since the purchase.

It should be noted that this solution is aimed at both candidates for installation and farmers wishing to reduce their debt or finance new projects.

Already operations

Terrafine has already supported more than ten projects for a total surface area of 203 hectares and €1,210,000 of land capital.

It should be noted that a farmer who had sold a dozen hectares to Terrafine in 2019 has already exercised his option to buy back this land in 2021.

Our opinion on the solution

The original choice to use a transferable lease is explained by Terrafine's desire to provide legal security for the farm by allowing it to transfer the lease to its transferee when it stops operating. Leasing the land (rather than owning it) is therefore no longer a hindrance or a risk in the future transfer of the farm.

Investors are above all interested in the fiscal leverage and the ethics of the project. They are looking for meaning in their investment rather than for a rental return, even if this is necessary to balance the project.

And the possibility for the farmer to buy back the land within 5 years without revaluation is a very interesting guarantee.