Wall Street Eyes Farmland - Investors Aim to Tap Ag's "Super Cycle"

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http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/landmanagement/news/template1&product=/ag/news/landmanagement&vendorReference=0702DDC4&paneContentId=70119&paneParentId=70104




In a New York City ballroom actor Michael Douglas made famous with his "greed is good" speech in the movie "Wall Street," 400 pension and fund managers, investment bankers and some of the world's largest farmers gathered this week to discuss the latest hot prospect in institutional investment: farmland.

The Who's Who of Wall Street financiers now interested in channeling billions of new dollars into cropland ownership in the U.S., South America, Eastern Europe and even Africa include heavy hitters like UBS, Franklin Templeton, Morgan Stanley, TIAA-CREF, Rabobank and John Hancock.

Underlying the investment frenzy is the knowledge that global food demand will double by 2050 and skepticism that seed companies and agribusiness can engineer higher yields to solve the problem. In that case, millions of new acres will need to be brought into cultivation and current cropland pushed to its max for productivity, which is why investors are interested in both farmland and virgin land that can be planted to crops. The need to bring more land into soybean production is especially acute as China and India improve their diets and yield advances have lagged corn.

"People really do believe agriculture is headed for a super cycle," said Kenneth Van Heel, global director of Dow Chemical's pension fund, which is stepping up its land investments, primarily in the U.S. "Across the industry, there are so many investments to be made."

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A soon-to-be-released study by the World Bank found that institutional investors already have announced plans to acquire up to 125 million acres in global farmland, about the land mass of Germany. In the big scheme of things, that might not sound like a lot, but the issue is that it's just the beginning, said John Lamb, World Bank agribusiness team leader.

Foreign ownership of land is so sensitive in some countries that news that an Asian corporation wanted to buy 3.25 million acres in Madagascar in 2008 led to riots, the death of 130 people and the overthrow of the government. Now the World Bank is trying to develop ethical standards for investors so they don't turn Third World countries into neo-colonial plantations. "It's like the California gold rush. The initial investors are not the most savory characters in the world," Lamb said.

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"We've waited 40 years for something like this," said Tom Hertz, of Nevada, Iowa-based Hertz Farm Management as he eyed the enthusiastic crowd during a coffee break. But he doubts outsiders will hike U.S. farmland values as high as some expect, since institutions need cash returns of about 5 percent and rarely can afford to outbid established farm operators in prime grain belt locations. Farmers still buy and own the vast majority of America's farmland, he said. Institutions like to step in to buy only when there aren't two bidders at an auction.

"Maybe they'll just keep land from the price correction everyone in agriculture's been expecting," he said.
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this is as horrible as the gulf disaster!

[Turbineguy]

1. They've finished looting

the middle class then?

[ensho]

2. anything DOW has a finger in is criminal and murderous

same as the Bush family and their henchmen like Oliver North

[Tashca]

3. This is inevitable

In fact this is sort of old news. The move to acquire farmland around the world has been in high gear for a couple of years.
I have read Africa is in the sights of many investors. The leaders over there need money and have no problem booting off the current residents and invite these large investors to drive up land prices. I wish I could remember the exact countries mentioned.
Most of the large Agricultural firms have zero interest in owning land they can make much more money in either the input side of Ag....or the processing side. Companies like Dupont, Dow, Syngenta, Monsanto, on the input side.....and then companies on the processing side like ADM and Cargill as examples.
The system has been set up and running here in the U.S. and Europe. Expanding quickly in South America. It has been proven to work. All they need are investors to acquire the land so the system can be brought to the rest of the world. Corn and Soybean based. The investors will be in the form of investment companies probably will include money form retirement investments like 401K's.

These people really believe they are saving the world. They really believe they are feeding the world. They believe they have the answers and can make some profit on the side. Their goal if control of the world food supply plain and simple.

On a side note.....interesting to see Tom Hertz mentioned. I'm not sure their is a company more responsible in Iowa for killing the small farm.

[kenfrequed]

4. This is remarkably dangerous

Something has to be done to prevent this.

[Canuckistanian]

5. This sounds like the beginning of a "Soylent Green" scenario

A population boom, massive corporatization and the creation of a superclass of wealthy, protected oligarchs in a police state.

Buy local. Buy organic. And if you can, learn how to grow your own.

[bvar22]

6. This will work out well!

Just what we need,
MORE huge Factory Farms run by Corporate Sociopaths who have NEVER gotten dirt (Ewwww!) under their fingernails.

We Reformed the Democratic Party the Old Fashioned Way

We BOUGHT it!
We won't Stop until we have it ALL!
Hahahahahahahahahahaha!

[TwilightGardener]

7. Water is an issue for a lot of places--wonder whose water they'll steal?

[jxnmsdemguy65]

8. I just don't see how the world's population can go to 9 billion as projected...

We are bursting at the seams now. Surely there will some cataclysmic die off at some point in the next 20 years.