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Wall Street Eyes American Farmland as Its Next Target

RP Siegel | Thursday February 27th, 2014 | 1 Comment

farmlandWe have seen the level of income and wealth disparity in this country reach unprecedented levels. The reasons for this are numerous. Many of them, as documented by Robert Reich’s book “Aftershock,” have occurred as the direct result of policy decisions that were made regarding tax codes and the deregulation of Wall Street.

Wall Street speculation has had a huge impact on the distribution of wealth. With a constant barrage of new, sophisticated derivatives, high-speed trading algorithms and don’t-try-this-at-home tricks that are only available to those with huge portfolios, they have turned investing into a spectator sport for the rest of us. All the big action and the big money goes to the big guys, while a few percentage points fall through the cracks for everyone else. This is what the players proudly call a free market.

It’s no longer just stocks and bonds. In order to feed this greedy machine’s enormous appetite, new opportunities must be found with ever-higher returns. Things like real estate, home mortgages and now “private equity assets,” which used to be within the reach of ordinary working-class people as a way to enhance their earning power, are being scooped up and dragged into the Wall Street coliseum. We can only sit and watch as these are devoured, their prices driven up beyond the reach of ordinary mortals. Home mortgages are the most recent example. Everyone has seen how this game led to the complete collapse of the world economy, with millions feeling the brunt of it, many of them still recovering. The players, who made this all happen, got off with a slap on the wrist, much as football, baseball, and basketball players get away with their misdeeds.

Now their scouts have eyed another target: farmland. According to a study conducted by the independent policy think tank Oakland Institute entitled “Down on the Farm,” the first years of this century saw an enormous land grab in the developing world: 500 million acres, an area eight times the size of Britain, was bought or leased by speculators. This often occurred at the expense of food security and land rights. When the price of food spiked in 2008, this was a buy signal to investors, screaming out, “Farmland is valuable now and will be even more so in the future.” This, of course, is exactly what they are looking for–a big growth opportunity (no pun intended).

Unfortunately, as the result of this speculation, which drove food prices even higher, the number of hungry people in the world rose to more than 1 billion. So much for ending world hunger.

Now, they are setting their sights on American farmland. It’s worth a lot and will be worth even more as the population grows. People are always going to need to eat. Large-scale investors with an estimated $10 billion to spend are cruising for deals right now. According to the report, large investors are lining up to purchase an estimated 400 million acres that is expected to become available over the next two decades. That amounts to half of all U.S. farmland.

Says Lukas Ross, an Oakland Institute fellow and author of the report: “If they succeed in consolidating control over our land and infrastructure, this new class of land barons could imperil our nation’s food supply.”

How is that? Well for one thing, the lands they purchase will not be managed for maximum food production. They will be managed instead to maximize profits for their new owners–whether that means industrial farming, biofuel production, turning the land over to oil and gas, or even renewable energy production. Meanwhile the speculation will drive land prices and tax assessments up, making it harder for traditional farmers to hold onto their property or to ever get it back if they lost it.

In some cases, land prices will go up so high, farmers will be extremely tempted to sell. Will they? Consider the demographics. Today, 57 percent of all American farmers are over 55-years-old, while a meager 5.3 percent are 35 or younger. What do you do when you want to retire and your land is worth a fortune to a big investor willing to pay far more than your neighbor can?

This is an attractive investment for those who, after the debacle of the financial crisis, are looking for a safer alternative to stocks, bonds and derivatives, especially at a time when farming has reached unprecedented levels of productivity. What’s at stake here is nothing less than who owns our food supply.

Considered in the light of some of the Wall Street tactics we’ve already seen, like leveraged buyouts (LBO), those often predatory purchases of companies that are bought and then dismantled for a quick profit, this is a frightening prospect.

The report includes the story of Willy Reid, a farm worker who tried managing a bio-dynamic farm for a group of investors. Frustrated and discouraged by their short-sighted meddling, Reid left, saying:

“When managed by people in offices who have no understanding of farming, you essentially have outsiders telling you what to do, putting business before natural systems and telling you when and when not to spread compost or order seeds.”

Willy’s farm was owned by a Waldorf school. Imagine if it were owned by TIAA-CREF or Goldman Sachs. What would their incentive be to see that the lands are managed sustainably? But it’s worse than that, really. Many of these farmers unwittingly sign complex, and some might say predatory, leases that absolve investors of any responsibility with clauses in which the lessee will be “ harmless” for “all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, attorneys’ fees and expenses)” associated with the property.

This is a trend clearly worth keeping an eye on and possibly asking our representatives to regulate. Though considering the amount of influence Wall Street money has in Washington, it might be asking a lot to expect meaningful action.

Image credit: Willie Peat: Flickr Creative Commons

RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.

Follow RP Siegel on Twitter.


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  • Bee Farms

    between the Banks and this , farming for individual citizens of America will be gone –and all the legal rights and protections of the individual citizens of America will also be gone –will be lost to big money and “govt” helps them, or turns a blind eye at every step– i believe only just a few big food processing companies already call all the shots in farming — like big beef and chicken processors and so forth -