Farming as Financial Asset Global Finance and the Making of Institutional Landscapes by Stefan Ouma

CHAPTER 1
INTRODUCTION

Finance has gone farming. Since the financial and food price crises of 2007/8, 
the world has seen a stark rise in financial investments in farmland and agri-

cultural production by investment banks, sovereign wealth funds, pension 
funds, private equity funds, insurance companies, family offices, endowment 
funds and high-net-worth individuals (HNWIs). Indeed, finance has been 
identified as one of the main drivers of the so-called “global land rush” (Grain 
2008; McMichael 2012; Fairbairn 2014; Ouma 2014), in which non-financial 
entities, such as state-run or parastatal companies or other types of corporate 
entities, also play a central role. As a result of declining or negative returns 
on mainstream assets in the wake of the global economic meltdown, a fear 
of rising levels of inflation caused by counter-cyclical interventions, money 
printing and quantitative easing in “core countries” such as the United States, 
low returns on savings and a rise in general distrust in complex financial 
products, investors searched for new “alternatives” within their “investment 
universe”. What was suddenly in demand was less “financial engineering” 
and more “real things”. Farming seemed a perfect match, with parts of the 
financial industry starting to make a strong case for the sector as an “alterna-

tive asset class” that was sustained by a set of strong market fundamentals. 
A growing world population (passing 7 billion people by the end of 2011); 
changing dietary preferences towards meat and protein in emerging markets 
such as China and Indonesia; a rising demand for agrofuels (and carbon 
sinks) in the light of peak oil and climate change; the limited availability of 
agricultural land (“peak soil”); and stagnant, or even decreasing, productivity 
levels in core production regions and climate-change-induced crop failures 
all seemed to make farming a safe financial bet. The financial industry quickly 
determined that these factors would shape future demand–supply dynamics 
along the agri-food chain in crucial ways.
In light of these dynamics, a standard narrative has evolved, which 
emphasizes that investments in agricultural operations and the underlying 

farmland should guarantee stable returns on capital invested. In addition, 
their “value” is likely to appreciate when growing demand meets growing 
resource scarcity. Unlike gold, a favourite during times of financial crisis, 
agricultural production and the underlying land store and produce capital. 
Additionally, investments in farmland and agriculture are said to enhance 
portfolio diversification and efficiency, thereby increasing the robustness of 
investment portfolios with regard to external shocks. These promises, which 
go hand in hand with the relatively low complexity of farmland investment 
instruments and the tax allowances granted on farmland investments in many 
countries, have made agriculture a space of “other investment”, rendered as 
exceptionally secure in a turbulent world. As The Economist puts it, “No 
matter how bad things get, people still have to eat” (The Economist 2009). 
Accordingly, between 2005 and mid-2018 the number of investment funds 
specializing in food and agriculture assets skyrocketed from 38 to 523, with 
assets under management (AuM) surpassing US$83 billion, excluding timber 
(Valoral Advisors 2018a). During the same period institutional investors, 
such as sovereign wealth funds, pension funds, insurance companies, asset 
management companies, investment banks, family offices, endowment funds 
and HNWIs, have significantly increased their exposure to food and agri-

culture (Lapérouse 2016: 1). This surge in agri-investments has led to the 
proliferation of new investment vehicles, relations and practices. Although 
these numbers seem tiny compared to other “asset classes” – investors had 
channelled US$533 billion into natural resources globally as of June 2017 
(Preqin 2018a: 56) – one cannot deny that something has happened in the 
“AG space” (to use the industry vernacular) over the past ten years. Shiny 
investment brochures, high-profile conferences dedicated to the agricultural 
investment space and the rise of an agri-focused investment media are fur-

ther testament to this.
PLACING THIS BOOK’S APPROACH
The global run on farmland and agricultural production by financial actors 
has sparked a lively debate in the media, among scholars and in activist 
circles. The overall tone of these debates is an alarming one, as financiers 
are blamed for rising land prices, corporate enclosures, the dispossession of 
smallholder farmers and the expansion of large-scale industrial agriculture 
around the world. Although this book acknowledges the concerns voiced 
in these debates, it takes a broader and deeper view on the transform-

ation of farmland, agricultural production and food chains into objects of 
financial desire. It proposes a middle ground between work that is engaged 
with theorizing the systemic dynamics of financialized capitalism and its

Farming as Financial Asset Global Finance and the Making of Institutional Landscapes by Stefan Ouma