Enter the new farmers

June 25, 2008

Wheat field in RomaniaWhat’s with farming these days? The humble, even if slightly romantic vocation, is attracting a new breed of participants as investing in farmland and agriculture becomes the latest fad in the world of investments.
 
With financial markets in tumoil and commodity prices at record highs, traditional financial players such as investment banks and hedge funds, and even sovereign wealth funds of cash-rich emerging economies are increasingly looking at farm land as the next major investment avenue.

The motivations are varied — from pure financial punting to concerns about food security. Underlying all this is the belief that the rapid economic expansion of China and India could add more than a billion people between them to the ranks of consumers of meat and wheat-based products. And then there is the growing demand for land to grow crops for biofuels.

Morgan Stanley has bought some 40,000 hectares of land in Ukraine , while the New York Times reported this month that Calyx Agro, a division of the giant Louis Dreyfus Commodities, is buying tens of thousands of acres of cropland in Brazil.

Chinese firms are said to be locking up farmland and mineral reserves in Africa, while Saudi Arabia and Bahrain plan to grow strategic grains abroad to protect their countries from crises in world food supply.

Near the Khurais oil field in Saudi Arabia/Ali JarekjiAccording to Asia Times, Pakistan’s Prime Minister Yousaf Gillani during a visit to Saudi Arabia in early June sought $6 billion in financial and oil aid in return for hundreds of thousands of acres of agricultural land, which could be tilled by the Saudis.
 
All this could present some poor countries with both opportunities and threats. With oil prices at near record highs, they could trade their energy security with the food security needs of their investors and bring millions of acres of non-arable land into use. But contract farming could just as easily boomerang if high prices and domestic food shortages create a backlash against such barter deals.

3 comments

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As usual, it comes down to profit and greed. Imagine being a Ukranian farmer under the yoke of Morgan Stanley. One slip up in wheat yield and you’re out on your (wheat) ear.

This horrible world gets even worse day by day, courtesy of fanatics. And not just fanatical terrorists, because there are equally fanatical greed-merchants who are intent on making money out of misery. They have much more of a terrifying, immediate and long-lasting effect on us all than bin Laden or any other murderous loony might have.

Terrorists might kill some of us, and that is awful. But the avaricious barbarians who jiggle and joggle “hedge funds” and the manipulators of “sovereign wealth funds” condemn millions to everlasting poverty and hideous lingering death at the tap of a keyboard when their screens indicate where profit is to be made. The cost of our daily bread is decided at their whim. They make millions. And the poor suffer hikes in the price of rice, onions, bread — the staples on which enormous profits are made — when avaricious speculators decide to cash in.

They are economic terrorists.

* Starvation in Africa? — Let’s get in there and buy agricultural land cheap, say the sleek and sleazy bookmakers in the stock exchanges. And there are as many sleek and sleazy Byzantine operators in Beijing and Delhi as there are in New York and London. These sleazebags play their millions on tables in world-wide casinos just as they play the markets that condemn the poor to remain in destitution.

* Lack of water supply in South America? — let’s get in there and buy water resources and reticulation cheaply say the exploiters of humanity. And it happens in the US, too — just look at California. God help the thirsty poor, because nobody else cares about them.

I have to disagree with Santosh Menon about farming being “slightly romantic.” I’ve lived close to farmers in Malaysia, Australia, Kashmir, Scotland, New Zealand and France, and let me tell you that farming is a damn’ hard slog. There is nothing romantic about it.

Farmers only want a fair day’s wage for a fair day’s product, just like most human beings. But they are now being exploited, just as Santosh Menon indicates, by “financial punting.”

And none of us can do anything about it.

If we’re middle class people, western, southern or eastern, we’re all right. We’ll survive. And you — You who are reading this post — you will never be thirsty or hungry, will you?

But the poor will die — and the exploiters of the poor will always prosper.

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I have to agree with Santosh Menon…

It is interesting that beecee denounces people investing in agriculture at a time of food shortages.

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