As part of a growing trend toward investment in agricultural commodities globally, investment bankers are now recommending that their clients invest in agricultural land as a stable finite commodity with a strong likeliness for long-term returns. Their rationale is that human population growth translates into a growing demand and commodity value for food.
With food production limited by the availability of agricultural land, and land becoming in short supply around the world due to development, pollution, climate change, unsustainable agriculture, and biofuel production, land has emerged as a limited resource destined to continue to increase in value as an ever increasing population competes for agricultural products and access to agricultural land.
As an emerging global commodity, this land is now traded internationally, often leading to sharp and unpredictable price spikes as other investments become less attractive, or as new regions are “discovered.”
This commoditization of land places small farmers in competition with global investors and agro-industry conglomerates, ultimately pricing them out of the land market and hence, undermining local subsistence agriculture, leading to food instability and shortages disproportionately affecting the world’s most vulnerable populations.
A December 23rd, 2011 Wall Street Journal report typifies mainstream reporting, focusing on barriers to such investment rather than effects on the poor.
Sources:
Charles, Dan. “Mozambique Farmland Is Prize In Land Grab Fever,” All Things Considered/NPR, June 14, 2012. http://www.npr.org/2012/06/14/155036821/mozambique-farmland-is-prize-in-land-grab-fever
Charles, Dan. “African Land Fertile Ground For Crops And Investors,” All Things Considered/NPR, June 15, 2012. http://www.npr.org/2012/06/15/155095598/african-land-fertile-ground-for-crops-and-investors
Chatterjee, Pratap. “Argentine Farm Sales Raise Questions of Land Speculation By Soros,” Corp Watch, January 15, 2013. http://www.corpwatch.org/article.php?id=15807
Romig, Shane. “Argentina fences off land to foreign buyers,” The Wall Street Journal, December 23, 2011.
http://online.wsj.com/article/SB10001424052970204464404577117072741675152.html
McAndrew, Mark. “Agricultural Land As Best Bet Investment,” Birmingham Post, October 20, 2011.
McDonald, Frank. “Petition Calls for halt to new ‘land grab’ in Africa,” The Irish Times, June 22, 2011.
Mckenna, Tjada, and Munthali Mwiza . “Why Does Hunger Still Exist in Africa?” Tell Me More, by Michel Martin, May 18, 2012. http://www.npr.org/2012/05/18/153005649/why-does-hunger-still-exist-in-africa.
Johnston, David. “Farmers wary of Chinese connection; interested in large tracts of land. Speculative buying would drive up prices, says Union des producteurs agricoles,” The Gazette (Montreal), March 27, 2010.
Student Researcher: Eric Rose, SUNY Buffalo State
Faculty Evaluator: Dr. Michael I. Niman, SUNY-Buffalo State