Farmer Bill.
The largest private farmland owner in the United States is Bill Gates. Bill Gates! The tech giant’s positions are fairly under-the-radar, passing through a number of different investment companies and portfolios, chiefly Cascade Investment LLC. Earlier this year The Land Report broke a story about Gates’ shadowy and far-reaching farmland acquisition game — but it was quickly eclipsed by click-bait intrigue surrounding Bill and Melinda’s high-profile divorce.
At first blush this is surprising (my initial reaction was: server farms, not potatoes and corn, right?). But investing in farmland makes a lot of sense. When you start digging into it, you’ll quickly come across a quote attributed to Mark Twain: “buy land, they ain’t making any more of it,” (and you’ll notice how the real estate industry brandishes this quote with zealous fervor).
Various think pieces and Forbes articles will inform the curious investor that farmland is a good place to park money, for two main reasons. First, and most obviously, it’s inherently productive. It has use value. As Twain suggested, it’s also a limited commodity. That means it has exchange value. Historically, farmland has been valuable primarily because it can produce crops; now it’s also become valuable because there isn’t much of it, and that means people will accumulate and trade it the same way they accumulate and trade fine art.
There are a number of other reasons farmland is an interesting element of a strong investment portfolio. It’s not volatile (meaning it stays steady while the stock market lurches up and down), it becomes more valuable during recessions (because it’s a real physical thing), and it benefits from inflation (because it’s producing a commodity like corn or grain).
In its guide to how and why you should invest in farmland, Million Acres (a branch of the investment advice media giant Motley Fool) notes that “over the last 50 years, the value of American farmland has risen by about 6.1% per year… Add in the cash rent yields, and the return to investors has been even more impressive… To put that return into perspective, it has outperformed all other asset classes except the Dow Jones REIT Index during that time frame.” And those are averages. Since 2005, farmland land in California’s Sacramento area has increased 400%.
Bill Gates’ behind-the-scenes strategy of hoovering up ag land makes a lot of sense – and he’s not the only one who got good advice from a wealth manager. The usual suspects are all on the list of top private farmland owners (Bezos lags behind Gates, at #25).
Recently, it’s become possible to eat a slice of this pie even if you’re not a mega-billionaire. Services like FarmTogether and AcreTrader allow anyone to put some cash into farmland (essentially crowdfunding investment). FarmTogether’s website states that “Farmland's uncorrelated returns to traditional asset classes offer welcome diversification. No investment offers a hedge against inflation like farmland, not real estate or gold. 10-15% returns. High cash yields.” AcreTrader touts impressive passive income from both land value increase and “annual cash rent payments from farmers.”
To me this rings with the same tones as RobinHood did a few years ago (the company’s tag line is “investing for everyone”), but with far more troubling ethical implications. Extending the metaphor I used before: people like Gates are trading land the way they trade fine art, for millions of dollars; tech-savvy people with an extra $10K are trading land the way they trade NFTs, from their phones, quickly, in small increments. Both put farmers’ livelihoods at stake.
Farmers’ Three-part Response.
Although the Gates story didn’t make national headlines, the shift toward farmland as an investable asset hasn’t been entirely unnoticed. There are ripples moving among farmers across the country. A critique is consolidating around three points:
Economic: When land is owned as an investment asset, the goal is returns, in both the use value and the exchange value dimensions. Owners seeking to maximize exchange value might transition the land to a more lucrative use at any moment — Bill Gates’ spent $80 million on “transitional” land on the outskirts of Phoenix, AZ that will become mixed-use development. Swaths of farmland in California are now more valuable as Amazon logistics hubs (the tech giant paid 4x the assessed value for 66 acres in Gilroy) or private prisons. There is a local economics piece as well — absentee land ownership and industrial farming means less participation in local economies. And economic downturns (which, you’ll remember, cause the value of the farmland to increase for owners) can be devastating for renting farmers who live on small margins.
Ecological: Maximizing use value means prioritizing higher-yield, land-damaging farming practices. Because renting farmers might not be working the same land in 5 or 10 years, it is difficult to prioritize sustainable, regenerative farming practices, especially if they are more difficult or expensive. The absentee land owner has little incentive to support long-term land management approaches, because the asset can always be sold (cashing in on exchange value).
Ethical: I can’t put it better than this: “There is also extreme racial disparity between who labors on the land and who profits from it. Over 60 percent of farmworkers are people of color, largely Latinx. Meanwhile, white people own 98 percent of all farmland, or about 50 times the number of acres owned by people of color,” (emphasis added, quote from Civil Eats). This is a current expression of injustices that stem directly from America’s history of slavery and homestead laws.
A New Agenda for Farmland.
These are things we should care deeply about. We all eat, and we all feel the economic, ecological and ethical effects of the food industry, even if they are indirect. Like the forest land in my last post, this is close to home for me. The original story from The Land Report opens with an anecdote about a farmland transaction in the Columbia River Valley of Oregon and Washington, near where I live. That $171 million sale — to a Gates-owned investment company — was the author’s canary in the coal mine.
We need a new agenda for farmland in this country, and the goals are clear. To manage land in a way that: (1) promotes long-term and equitable local wealth, (2) incentivizes sustainable regenerative farming, and (3) addresses the present racial inequalities and historic injustices of land ownership.
Several grassroots initiatives and organizations are doing powerful work to advance this agenda. In Oakland, California, a small urban farm is proving out a new approach. “Sogorea Te’ Land Trust is an urban Indigenous women-led land trust that facilitates the return of Indigenous land to Indigenous people,” (watch a beautiful short film, Remothering the Land produced by Patagonia).
A “Reparations / Rematriation Map” map shows initiatives like Sogorea Te’ Land Trust and agenda-aligned resources across the country. In an article for Civil Eats, Neil Thapar lists many more, noting that “the seeds of land justice and food sovereignty have been sown. What we need now is rain.” As far as I can tell, the rain that Thapar alludes to will flow from two places: alliance-based resource networks, and substantial changes in federal policy.
The National Black Food and Justice Alliance directly addresses racial injustice. The Alliance “represents hundreds of Black urban and rural farmers, organizers, and land stewards based nationwide working together towards an intergenerational, urban/rural movement to map, assess, train and deepen the organizing, institution building and advocacy work protecting Black land and work towards food sovereignty.”
The National Farmers Union has advocated for sweeping transformations in federal policy, including regulations, prohibitions, protections, and incentives. Some of these may materialize in the new American Rescue Plan, as $5 billion for farmers of color. There may also be an opportunity to advance a new agenda as the US experiences a massive transition in land ownership over the next two decades. An estimated 400 million acres will shift as current landowners reach retirement age (“80% of the farmland in the country is owned by somebody 55 or older, and roughly half of [them are] 75 or older,” according to NPR).
Celebrating, contributing to, and expanding bottom up initiatives and alliance-based resource networks is crucial. Transforming federal systems is a challenging battle, and it is one worth fighting. The shift in landownership will crack open a door that has been locked for a long time. Each of these is important, but they are also long-term, complex, and challenging.
What can we do now?
That doesn't mean we are powerless. There are intermediary steps that will move us toward those ambitious economic, ecological and ethical goals, steps that ride the currents of recent trends, but channel them in a new direction.
Designing With Time. The first is inspired by Sara Hendren’s practice of designing with time. In a beautiful article for The New York Times, she described the power of temporary uses for public spaces. In many ways, this echoes what I described in my first Note, Parcel Problems — how fractionalizing the use of space over time can multiply its value. Instead of having a single fixed use that only activates a space for part of the time, and leaves it empty otherwise, why not layer in multiple different uses? Hendren describes a temporary park that manifests on Cambridge’s Memorial Drive every summer Sunday; I describe WeWork and Airbnb; the principle is the same.
A network of farmers in Saskatoon, Canada, is designing with time as an immediate way of honoring treaty rights. “The Treaty Land Sharing Network connects farmers and other landholders with Indigenous people needing safe access to land to practice their way of life. We are committed to honouring the Spirit and Intent of Treaties by sharing the land for mutual benefit.” Farmland owners put up signs on their property that indicate safe access for indigenous groups. The land is still worked as an active farm, but it is also active in its traditional significance. This has a secondary effect of aligning with farming practices like ground cover, composting, and no-till (which involve traditional plants).
“Brad Desjarlais is an Anishinaabe man from the Fishing Lake First Nation who hunts to put food on the table… ‘Once we see these signs … we know we can practise our rights without persecution,’” (quoted in CBC). Imagine a network of farms marked with these signs across the country — what it would mean for free movement of people, plants and animals.
Partitioning Investment. The trend in farmland ownership is toward abstraction — either large investment fund portfolios, or partitioning the investment out among many small funders, through platforms like FarmTogether that pool capital to buy land. The returns are simply passed on to absentee investors (whether singular or fractional). This does nothing to benefit farmers, local communities or the land itself. But financial abstraction doesn’t necessarily create the negative impacts we see today. In fact, it can be used in a positive way — for example, to advance The Agrarian Trust model.
The Agrarian Trust provides legal support and resources for shifting farmland off the speculative market, and into a kind of land trust. There, it can still be worked productively, but there is also a fiduciary responsibility to ensure social and ecological sustainability. An “alt-” version of FarmTogether could complement this on the front-end, by :
Pooling capital;
Separating out non-voting equity in the initial capital raise;
Setting a cap on returns for non-voting equity;
Transitioning land into a trust.
… essentially, using a platform to crowdfund the capital needed to get land into a trust. The “crowd” has non-voting equity, and would receive modest returns (tracking a bit higher than inflation) and quickly be bought out. Land transitions into an Agrarian Trust — which holds the title to one or more local farms. A board of trustees (a local 501(c)3 non-profit subsidiary called an Agrarian Commons) grants equitable leases to farmers. Farmers are empowered to make agricultural land use decisions, keep the profits from farm production, and retain ownership of buildings and infrastructure on their farms. Leases last on the order of 50-99 years. The board and leasehold farmers have a legal responsibility to use environmentally sound farming practices, monitor ecological outcomes, and make land use decisions that support both.
Alternative crowdfunding platforms are useful, because models like the Agrarian Trust and other Community Land Trusts are often constrained by their reliance on grant funding, or because they depend on current land owners voluntarily transitioning land into the trust. A mission-aligned tool to buy farmland can accelerate the transition.
These two strategies are actionable. The tools exist, and they can be scaled. Most importantly, they don’t require a complete overhaul of federal systems or massive investment of capital — and they meaningfully advance economic, environmental and ethical transformation of the US agricultural system, through a new approach to land.