Investment dollars that were once reserved for residential and commercial real estate holdings have gone country. A growing number of domestic and international investment firms have started moving money into the agriculture sector, buying up large swaths of farmland in countries across the globe.
On Tuesday, the largest such transaction was announced. TIAA-CREF Global Agriculture LLC began investing in farmland in the U.S., Australia and Brazil last year and plans to devote just shy of $2 billion to purchase the ground.
Many people believe investment funds are moving to farmland because of its predictability and steady return on investment. While it’s nice to see someone believes our ground is worth a few dollars, watching large investment firms sweep in and purchase prime cropland is downright frustrating as my husband and I look for opportunities to expand our farm.
Land is essential to farming and the absence of acres severely limits the ability of new farmers to enter the farming industry. Land prices have already become an insurmountable hurdle for some but the presence of investment firms in the land market will make it even more difficult for farmers to expand in the future.
Many investment companies dabbling in agriculture claim they plan to work with local farmers to lease the land for crop production. While leasing ground does provide opportunities for farmers, it’s not the same as owning the ground and does not provide the same long-term financial return. The ability to hand down land to the next generation is the goal of so many farm families and helps new farmers get a leg up on the many financial hurdles that come with farming. When multi-billion dollar firms begin taking away the opportunity to own land, they take with it part of the family farming tradition.