With Bill Gates on a farmland buying spree, is farming the next market windfall?

On the premise of global hyperinflation and economic downturn, the rich, led by Bill Gates, are investing heavily in agricultural land. I’m afraid that “food for the world” isn’t just a load of crap. In an uncertain 2022, the Russia-Ukraine war, inflation or global supply chain crises all point to one thing – food, the most basic human need, is not as cheap and plentiful as we think. Data shows that the price of potatoes in the US alone is up 41% in 2022 compared to the same period in 2021, and that not only is production declining and supply insufficient, but demand for basic foodstuffs such as potatoes is rising due to a downgrading of consumption. The intense volatility of global food prices is a sudden reminder that food production is no longer the business of the local farmer, as it used to be. The composition of the “landowners” has become extremely complex, sometimes appearing as several layers of skin companies.
In Ukraine, for example, more than 10 percent of the country’s arable land is contracted to Chinese agricultural companies, which grow and raise almost exclusively imported Chinese food, which does not correspond to local dietary habits and food needs. And big corporate agriculture, starting with the rise of Monsanto and others, has gradually eaten up a great deal of farmland in countries across the globe. The farmers who originally lived on the land have instead lost their arable farmland.
Crops or arable land, like art, is a financial hedge against inflation and is simpler and more tangible than art, with low investment thresholds, manageable risk and little volatility, making it a star in the investment market in 2022. In fact, a considerable number of the world’s richest people and hedge funds have long begun to layout agriculture, is investing a large amount of money to buy farmland.
The investment firm associated with Microsoft founder Bill Gates has become the largest landowner of farmland in the U.S. over the past decade, owning a total of about 270,000 acres of farmland in 18 U.S. states, which is much larger than the entirety of New York City. Many people think that Gates, who likes to talk about the environment, is personally interested in high-tech agricultural production, but in fact this part of the investment was made entirely by Gates’ asset management consultants, mainly for hedging reasons. Economists will point out that the price of farmland is one of the few value-protecting investments that runs counter to the stock market. When the stock market is red hot, almost no one will think to buy farmland, but the price of farmland won’t go down dramatically, not to mention the rent and income from harvests. And when the market enters a bear market, the price of farmland, one of the most conservative investments, will begin to rise.

Gates’ investment firm, Cascade, is managed by his longtime investment advisor, Michael Larson, and almost all investments related to the purchase of farmland are his handiwork. Larson usually acquires farmland with small, unnamed, skinflint companies in order not to attract too much local attention. It takes a lot of research for locals to realize these companies are connected to Bill Gates and Cascade. Gates has also invested in Monsanto and the tractor company John Deere, and his involvement in the agricultural industry began more than a decade ago. In Gates’ home state of Washington, for example, Cascade-led Shadow paid $170 million in 2018 for a 14,500-acre (the size of the entire Xuhui district of Shanghai) potato farm consisting of a hundred huge circular fields, and is one of the suppliers of McDonald’s french fries. The investment was so large that the price of $12,000 per acre far exceeded the average price of $2,000 per acre for farmland in the state of Washington, and the acreage was much larger than the average farmer would have had.
Cascade’s investment direction has created a buzz. After all, farmland is the perfect hedge against tech stocks. Even Elon Musk has been desperately trying to encourage people to buy “the real thing” lately, and has bought a new piece of land next to his Tesla factory in Austin, Texas, calling it a future “eco-paradise”. Also owning a lot of land in Texas is Amazon founder Jeff Bezos, although most of the original farmland he purchased ended up not being used for agriculture, but for testing high-tech products.

Another billionaire who has taken the plunge into agriculture is Warren Buffett’s son, Howard Buffett, and this one has ambitions that go even beyond being a landowner to actually being a big farmer. Howard Buffett owns 1,900 acres of commercial farms in his hometown of Nebraska and Illinois, where he mainly grows the most basic food crops – corn, soybeans, and so on. Most of the money Buffett left to his children had to be used for charitable purposes, and Howard did indeed donate much of the food he grew to underdeveloped areas and farmed in the name of “feeding the world”.

Even with the strong presence of institutional investors like Cascade, most of the farmland is still owned by local professional farmers, such as in Washington State, where farmers still own more than 60% of the farmland, and there is still some farmland contracted by farmers. The presence of big capital naturally makes competition more intense, small farms can not compete with large farms, and large local farms can not compete with capitalized corporate farms, so in the eyes of local farmers, Bill Gates and so on are usually not very popular, even if they bring more jobs and potentially high-tech agricultural operation model.
In traditional agriculture, farmers have always had a fairly direct relationship with the land, and owning land is considered an unrenounceable belief for farmers. After large landowners such as Gates entered the market, land prices began to rise, making it difficult for farmers to buy their own land. Many farmers believed that this would have a very negative impact, resulting in farmers being unable to acquire assets through their own labor and having to work for Gates for generations. Especially in the context of inflation and rising global food prices, wage earners are not taking advantage of much without owning the food itself, and the cost of living has increased massively.
Another major problem brought about by the farm-buying spree of Gates and other tycoons is that most of the small farms have had to be merged after being acquired. In this sense, price gouging on certain crops is almost unavoidable; Cascade has acquired farms all over the U.S. under the names of different shell companies, which continue to acquire new farmland and merge and reorganize, and in the end the sum total may provide more than half of the carrots for the U.S. dinner table without Americans knowing about it, and it is even more unlikely that small farms will be able to compete with them. In addition, Gates has other investments, such as artificial meat companies, all along the chain of agricultural production.
Those who support the entry of capital into agriculture believe that traditional agriculture wants to progress, must be more and better introduction of new technologies in the science and technology industry, such as big data, etc., to reduce the consumption of manpower in traditional agriculture, to produce more food, and only in this way can we avoid the next food crisis. And Gates, such technology capital is very focused on environmental protection and arable land health, but also focus on their own image in the local community, is not rough farming, to protect farmland instead of favorable.

In any case, food-related investment products have risen considerably in the market this year, and farmland and food have become high-profile investments in the market. With the economy still uncertain, I fear that the billionaires’ strategy of hedging their bets against high risk with farmland will continue.

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