Since
the global financial crisis and food riots of 2008, many hedge funds
and investment companies are buying up farmland. Some consider it a
better investment than precious metals. As one investor
put it, you cannot eat gold.
While
these big-name hedge fund managers like George Soros are buying up
arable land everywhere, it is becoming scarce and more expensive. It
may sound like material anxiety for devotees to worry about this. Shouldn't we know that Krsna is untimately in control?
Once, a devotee asked how we, as neophytes, can know if our
anxiety is still material when we feel anxiety in devotional service.
Srila Prabhupada replied: "No, no"– and he said that if
you feel anxiety for Krsna, it is not material but love. As neophytes, we still feel anxiety for the Krsna consciousness
of our children and the people of this world. We feel anxiety that the
coming golden age within this Kali-yuga will transition easily. This
is not material.
Vaisya
devotees should be buying up these hugh tracts of land in their
countries to put it to proper use. Devotees should settle on
them, creating communities - as an investment in a future varnasrama society. Our brahmanas should advise and encourage our vaisyas in this way.
Below are some excerpts about notable investors buying up farmland since 2009
From an article on CNN Money June 16, 2009
A
Nebraska farm girl who went on to a globetrotting career as a
derivatives trader for Goldman Sachs (GS, Fortune 500) and then as a
hedge fund executive in London, Warner, 45, is back on the farm
pursuing what she believes is a huge moneymaking opportunity. Two
years ago Warner launched an investment firm, called Chess Ag Full
Harvest Partners, with a fairly simple underlying strategy: Buy
undervalued farmland in the U.S. and profit from the coming global
agriculture boom.
"Farming might not look sophisticated," says Warner. "It might wear overalls and talk funny. But it's older than Wall Street, it's a fine-tuned machine.
"Farming might not look sophisticated," says Warner. "It might wear overalls and talk funny. But it's older than Wall Street, it's a fine-tuned machine.
Warner
is just one of many financiers around the world making that same bet.
Over the past few years hedge fund gurus like George Soros,
investment powerhouses like BlackRock, and retirement plan giants
like TIAA-CREF have begun to plow money into farmland - everywhere
from the Midwest to Ukraine to Brazil.
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"I'm
convinced that farmland is going to be one of the best investments of
our time," says commodities guru Jim Rogers, who serves as an
adviser to AgCapita.
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The
biggest investors in farmland over the next decade will probably be
sovereign wealth funds and governments of crop-starved countries
eager to secure food supplies for their rapidly growing populations.
In 2008, China announced a $5 billion plan to develop agricultural
assets in Africa. That's just a start. Given that it has 20% of the
world's population but only 7% of its arable land and 7% of its
freshwater resources, China has no choice but to look beyond its
borders. And the global recession has hardly slowed its appetite for
crops. In the first four months of 2009, China imported a record 13.9
million tons of soybeans.
The
Gulf States of Qatar, Abu Dhabi, and Saudi Arabia have already begun
making deals to acquire or lease large tracts of farmland in Africa
and Asia at bargain prices. That in turn has led to a spate of
headlines recently about a "land grab" by rich countries.
When South Korea's Daewoo Logistics announced a $6 billion deal last
November to lease roughly half the arable land in Madagascar - a plot
about twice the size of Delaware - it caused so much anger that it
helped spur a coup d'etat. In May a UN-sponsored study concluded that
too many farmland deals were giveaways by leaders of poor countries,
with only vague promises of jobs and investment in return.
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If
any investor has a long view on world markets, it's Lord Jacob
Rothschild. The 73-year-old scion of the world-famous European
banking dynasty need only look to his own family history, which dates
back some 200 years to the rise of patriarch Mayer Amschel Rothschild
in Frankfurt.
He
also has a strong opinion on the prospects for farmland. "We
think right now is an excellent point of entry for taking a long-term
position in agriculture," he tells Fortune.
Rothschild
did just that last year when he invested $36 million for a 24% stake
in a venture called Agrifirma Brazil. The company is the brainchild
of Jim Slater, a longtime City of London investor and investing
writer known in the 1970s as one of Britain's most feared corporate
raiders, and Ian Watson, a Canadian investment banker.
"If
you look at the macro picture today," says Rothschild, "we
have an extraordinary situation. If you take governments' printing
money as fast as they are, borrowing as fast as they are, and bailing
out white-elephant corporations, we're surely going to have an
inflationary situation fairly soon." In that kind of
environment, owning a hard asset like land is a good hedge.
Agrifirma
has already acquired some 100,000 acres in the Brazilian state of
Bahia and holds an option on another 60,000. This summer it will
produce its first crops of soybeans, cotton, and corn.
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"They
can't change the laws on me, because I've got the guns," says
Phil Heilberg. The chairman and CEO of Jarch Capital is explaining
his investment strategy over breakfast at the Regency Hotel near his
office on Park Avenue in New York City.
With
hundreds of thousands of acres of lush, undeveloped land in the Blue
Nile and White Nile valleys, Sudan has the raw potential to develop
into an agricultural powerhouse. Investors from Abu Dhabi, Qatar,
Saudi Arabia, and Kuwait have already reportedly made deals to lease
land in the predominantly Muslim northern part of the country. But in
January, Heilberg raised a lot of eyebrows by announcing that he had
agreed to lease roughly 1 million acres of undeveloped land - an area
the size of Rhode Island - in Mayom County in southern Sudan.
His
ideal investment scenario involves southern Sudan's making a
relatively bloodless split from the Muslim north and being recognized
by the U.S. as an independent nation.
From MSNBC 16 July 2011
A
new breed of gentleman farmer is shaking up the American heartland.
Rich investors with no ties to farming, no dirt under their nails,
are confident enough to wager big on a patch of earth — betting
that it's a smart investment because food will only get more
expensive around the world.
They're buying wheat fields in Kansas, rows of Iowa corn and acres of soybeans in Indiana. And though farmers still fill most of the seats at auctions, the newcomers are growing in number and variety — a Seattle computer executive, a Kansas City lawyer, a publishing executive from Chicago, a Boston money manager.
The value of Iowa farmland has almost doubled in six years. In Nebraska and Kansas, it's up more than 50 percent. Prices have risen so fast that regulators have begun sounding alarms, and farmers are beginning to voice concerns.
Buyers say soaring farm values simply reflect fundamentals. Crop prices have risen because demand for food is growing around the world while the supply of arable land is shrinking.
"Agriculture was sleepy," he says. "People looked at me like, 'What are you doing?'"
Now he's buying for 71 wealthy investors. Ceres Partners, his 3½-year-old private investment fund, owns 65 farms, almost half bought since November. He says he's returned 15 percent annually to his investors overall.
Returns from farmland have trounced those of equities. Ceres Partners produced an average annual gain of 16.4 percent after fees from January 2008, just after the firm started, through June of this year, Vieth says.
From Bloomberg Markets Magazine 10 August 2011
They're buying wheat fields in Kansas, rows of Iowa corn and acres of soybeans in Indiana. And though farmers still fill most of the seats at auctions, the newcomers are growing in number and variety — a Seattle computer executive, a Kansas City lawyer, a publishing executive from Chicago, a Boston money manager.
The value of Iowa farmland has almost doubled in six years. In Nebraska and Kansas, it's up more than 50 percent. Prices have risen so fast that regulators have begun sounding alarms, and farmers are beginning to voice concerns.
Buyers say soaring farm values simply reflect fundamentals. Crop prices have risen because demand for food is growing around the world while the supply of arable land is shrinking.
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Vieth,
the former head of fixed income investments for PanAgora Asset
Management in Boston, started buying farms with his own money five
years ago, when buyers with no farming experience were rare. "Agriculture was sleepy," he says. "People looked at me like, 'What are you doing?'"
Now he's buying for 71 wealthy investors. Ceres Partners, his 3½-year-old private investment fund, owns 65 farms, almost half bought since November. He says he's returned 15 percent annually to his investors overall.
Returns from farmland have trounced those of equities. Ceres Partners produced an average annual gain of 16.4 percent after fees from January 2008, just after the firm started, through June of this year, Vieth says.
From Bloomberg Markets Magazine 10 August 2011
Investors
are pouring into farmland in the U.S. and parts of Europe, Latin America and Africa as global food prices soar.
A
fund controlled by George Soros, the billionaire hedge-fund manager,
owns 23.4 percent of South American farmland venture Adecoagro SA.
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Hedge
funds Ospraie Management LLC and Passport Capital LLC as well as
Harvard University’s endowment are also betting on farming.
TIAA-CREF, the $466 billion financial services giant, has $2 billion
invested in some 600,000 acres (240,000 hectares) of farmland in
Australia, Brazil and North America and wants to double the size of
its investment.
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“I
have frequently told people that one of the best investments in the
world will be farmland,” says Jim Rogers, 68, chairman of
Singapore-based Rogers Holdings, who predicted the start of the
global commodities rally in 1996. “You’ve got to buy in a place
where it rains, and you have to have a farmer who knows what he’s
doing. If you can do that, you will make a double whammy because the
crops are becoming more valuable.”
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The
growth in demand for food, spurred by the rising middle classes
in China, India and other
emerging markets, shows no signs of abating. Food prices in June, as
measured by a United Nations index of 55 food commodities, were just
slightly below their peak in February. The UN’s Food and
Agriculture Organization said in a June report that it expects food
costs to remain high through 2012.
So
many investors have rushed to capitalize on food prices in the past
three years that they may be creating a farmland bubble. The Federal
Reserve Bank of Kansas City,
which covers Colorado, Kansas, Nebraska and other agricultural
states, said in May that farmland prices had surged 20 percent in the
first quarter compared with a year earlier.
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Hedge-fund
manager Stephen Diggle calls farming the ultimate safe haven. Diggle
began buying farms with his own money in 2008 after Lehman Brothers
Holdings Inc. (LEHMQ) filed for bankruptcy in September of that year
and the S&P 500 plunged 43 percent in the next six months. He
purchased 8,000 acres in Uruguay, three smaller plots in southern
Illinois and an 80-acre New Zealand kiwi-and-avocado orchard.
“We
really thought all the investment banks would go under,” says
Diggle, who as a hedge-fund manager uses options and warrants to bet
on price swings in the market. “Everyone said, ‘Buy gold.’ But
at the end of the day, you can’t eat it. If everything else goes
and I just have these farms, it makes me moderately wealthy.”
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In
the U.K., where farm prices are also rising, one money manager traded
his career at BlackRock
Inc. (BLK) for one in farming. Graham Birch, 51, left in 2009 as
the London-based head of the natural resources team at BlackRock, the
world’s biggest asset manager, to run his two dairy, wheat and
barley farms in southwest England full time.
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Ceres
Partners’ Wall Street roots are evident in the firm’s makeshift
office in an old clapboard farmhouse that sits in the middle of
cropland. Lucite tombstones resting on a shelf in a small room mark
deals done by Brandon Zick, a former vice president of strategic
acquisitions at Morgan
Stanley (MS)’s investment management unit. Vieth hired Zick in
January to help analyze and manage farm purchases.
“I
was more convinced hard assets were where you wanted to be, and
farmland was the best investment I could identify,” Vieth says. By
May 2011, he had collected 17,238 acres, mostly in the Midwest.
While
the former trader keeps a close eye on the dollar, he says farming
will continue to thrive.
Investors
seem to agree. At a dining-room table in the farmhouse in Granger,
Vieth sits down at his computer one evening and totals the day’s
haul: another $900,000 from investors looking for comfort -- and
profits -- in one of the oldest and most essential industries on the
planet.
