“Like gold with yield”

Evolving intersections between farmland and finance
01 January 2013
Paper

Since 2007, capital markets have acquired a newfound interest in agricultural land as a portfolio investment. This phenomenon is examined through the theoretical lens of financialization.

Since 2007, capital markets have acquired a newfound interest in agricultural land as a portfolio investment. This phenomenon is examined through the theoretical lens of financialization. On the surface the trend resembles a sort of financialization in reverse — many new investments involve agricultural production in addition to land ownership. Farmland also fits well into current financial discourses, which emphasize getting the right kind of exposure to long-term trends and “value investing” in genuinely productive companies. However, capital markets’ current affinity for farmland also represents significant continuity with the financialization era, particularly in their treatment of land as a financial or quasi-financial asset. Capital gains are central to current farmland investments, both as a source of inflation hedging growth and of potentially large speculative profits. New types of farmland investment management organizations (“FIMOs”) are emerging, including from among large farmland operators which formerly valued land primarily as a productive asset and source of use value. Finally, the first tentative steps toward the securitization of farmland demonstrate the potential for a much more complete financialization of farmland in the future.

Madeleine Fairbairn PhD candidate in the joint Sociology/Community and Environmental Sociology graduate program, University of Wisconsin-Madison. Her previous research examined food sovereignty as a social movement frame. She has also studied land grabbing in Mozambique. Her current work explores growing interest in farmland on the part of the financial sector, as well as the policy debate that surrounds foreign farmland investment in the case of Brazil.

Food Sovereignty: a critical dialogue, 14 - 15 September, New Haven.