Wall Street Adding Farmland to its Portfolio

 

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As prices are rising for farmland, financial institutions have been buying more farmland.  TIAA-CREF, the massive California teachers pension plan, and big insurers such as John Hancock now invest in farmland.  Pension funds own almost 700,000 acres, by one estimate.  Hancock Agricultural Investment Group manages 230,000 acres worth more than $2 billion, 40 percent of it for almonds, pistachios, walnuts and macadamia nuts, Asia favorites.  Swiss giant UBS’s farm portfolio more than doubled to over $400 million from 2010 to 2012.

By some estimates, Wall Street investors own $5 billion in farmland and are ready to plant $10 billion more in coming years.  In the next 20 years, half of all U.S. farmland is expected to change hands as the current generation of farmers retires.  That’s 400 million acres up for grabs, and Wall Street’s pockets are a lot deeper than Farmer Ben’s. As financial institutions infiltrate farmland, they can alter the infrastructure and bottom line food supply.

The year 2013 was a great one down on the farm:  Farms had net income of almost $130 billion on gross revenue of close to $445 billion, the U.S.D.A. says.  That’s a profit margin of 29 percent, compared with 5 percent or so for high-tech hardware.  But now corn and grain prices are falling, sending profits down more than 10 percent (to $115 billion) last year.  Farm profits are projected to fall a painful 32 percent this year, down to less than $74 billion (a 17 percent profit margin).  Regardless of the dropping figures, the farm industry remains a profitable one.

 

Via DuJour and Salon.com