The Political Economy of Institutional Landownership: Neorentier Society and the Financialization of Land

Abstract

In recent decades a substantial shift in landownership has taken place in rural America as millions of acres of land have come under the ownership and control of various financial institutions. This article outlines a political economic framework for explaining and interpreting the significance of this proliferation of institutional investments into rural lands. Focusing on two of the nation's most important rural land resources-timberland and farmland-I suggest that we are witnessing an unprecedented integration between finance capital and landownership that harkens back to previous eras of rentier control.

Agriculture as an asset class: reshaping the South African farming sector

“…Through the various options to take advantage of these different trends, such as commodity future contracts or public companies' equities related to agriculture (Goldberg et al 2012), farmland is also recognised as an emerging asset class. Although this interest from financial industries in farmland and farming is not totally new-particularly in the United States (Gunnoe 2014)-its spread towards new geographical regions and the involvement of increasingly diversified types of investors, seems to announce a broader evolution within the financial sector and its procedures for capital allocation. Indeed, ''the multiple food-energy-climate-finance crisis'' (Margulis et al 2013) opened a window for the promotion of alternative assets, such as farmland.…”

Situating global finance in the Land Rush Debate: A critical review

“…Second, much of the literature deals with the incorporation of farmland and agriculture into financial circuits from a narrow structuralist perspective, portraying it simply as the material expression of the latest ''spatial fix'' of a crisis-prone system (Harvey, 2006(Harvey, [1982; Smith, 2007). Even work that explores the financialization of farmland/agriculture in more detail (Dixon, 2013;Fairbairn, 2014;Gunnoe, 2014;McMichael, 2012;Sommerville, 2013) often does not escape this analytical gaze and usually makes use of a narrow range of authors (Arrighi, 2010(Arrighi, [1994; Epstein, 2005;Harvey, 2006Harvey, [1982; Krippner, 2005), whose take on financialization is largely compatible with a more structuralist political economy perspective. Many intriguing perspectives on money, finance, or the making of new markets in the fields of heterodox economics, cultural economy, the social studies of finance, the social studies of markets, economic geography and sociology have received little to no recognition in the existing literature (but see Ducastel and Anseeuw, 2014;Ouma, 2014;Williams, 2014).…”

“…Other modalities include by investing in listed vehicles such as mutual funds (Herre, 2010) and by channeling capital into listed exchange-traded farmland funds. As Fairbairn (2014) shows, these investment structures represent a first attempt of securitizing farmland, because they bundle income streams generated from the leasing out of several individual farm properties into a single vehicle (see also Burwood-Taylor, 2014a;Gunnoe, 2014;Leyshon and Thrift, 2007). Thus, they basically mimic listed real estate investment trusts (REITs), which ''enable investors to access the commercial real estate asset class indirectly through ownership of equity shares in a company whose assets consist primarily of commercial properties or mortgages and whose revenues derive primarily through commercial property leases or mortgage payments'' (Baker and Filbeck, 2013: 9).…”

“…Thanks to both university-based academics and researchers working for NGOs or multilateral organizations, we are slowly coming to terms with how global finance, represented by sovereign wealth funds, pension funds, insurance companies, asset management companies, investment banks, family offices, endowment funds, high net-worth individuals and development finance institutions (Bergdolt and Mittal, 2012;Buxton et al, 2012;Humphreys et al, 2013;Wijeratna et al, 2014), has started to capitalize farmland and agriculture more generally: first, by investing in 'non-listed' vehicles such as private equity funds, managed investment trusts or farmland investment funds, in which investors' money is pooled, managed (for a fee) by a specialized asset manager, and channeled into agricultural ventures. This may either involve buying up and leasing out farmland to other farmers, who sometimes were the former owners or the land (Fairbairn, 2014;Gunnoe, 2014;Sommerville, 2013;Williams, 2014), or investing directly into primary production (Daniel, 2012;Dixon, 2013;Silici and Locke, 2013). Second, agriculture has been capitalized by investment in privately held or publically listed companies involved in primary production (Luyt et al, 2013;Ouma, 2014).…”

Global finance and the land grab: mapping twenty-first century strategies

“…Daniel (2012) focuses on the rise of private equity funds in African land markets and provides useful context on the changing overall role of this type of investor. Most recently, Fairbairn (2014aFairbairn ( , 2014b, Gunnoe (2014) and Gunnoe and Gellert (2011) have usefully analysed the recent financialisation of rural land in more thoroughgoing ways, particularly in the US context. They explore the discourses, institutions and instruments being developed to make farmland and timberland "investable".…”