This article summarizes what I believe to be the driver of land degradation in our region: the disconnection of land ownership, land management, and the land itself. The driver are institutional investors who sub contract land holdings for management, who ultimately rent out land to large cash cropping operations.
The purpose of this blog is to summarize my foggy knowledge from a few interviews. I am trying to connect with others who can contribute their own knowledge – maybe you? I am not intending to provide solutions, but I am intending to help formulating a question. I am inviting people interested in advocacy and writing, people who are knowledgeable in institutional portfolio investment and land management, or just owners of pension plans willing to stir the pot!
PROBLEM STATEMENT:
The outcomes are dire: we have no idea who owns the land around us; large agri-corporations cash-crop this land via sub contractors; their industrial farming practices degrade the ecological and hydrologic value. Biodiversity diminishes, the terrestrial water cycle is disrupted, municipalities have to handle erosion and roadway destruction from very large farm vehicles, climate resilience of landscapes collapses, and landscapes are losing their beauty and attractiveness. The cost of these “environmental externalities” is carried by local communities.
The drivers of this land ownership transition seem to be institutional investors. Data and information is foggy at best; land registries only report numbered companies, many of which may be subsidiaries owned by larger companies. At the same time, investment funds (including pension funds!) are increasingly investing into low-risk assets (land, buildings) as part of their risk management portfolio. Land ownership merely serves as “low-risk anchor” that enables funds to participate in high-risk investments. The portfolio funds don’t need to report the exact land they own, not even the total land acreage per region. Portfolio funds also don’t engage in land management and leave that to sub contractors. These sub contractors work efficiently: they rent out land to large cash cropping corporations in tens of thousands of acres.
THE MECHANISM OF INSTITUTIONAL LAND INVESTMENT
The problem of land management by institutional investors is pervasive and starts with lack of transparency:
- Who finally owns our land, who is behind these number companies?
- What land do institutional investors (e.g. pension funds) own? This data is proprietary and protected by privacy laws; investment funds only report highly aggregated numbers (e.g. % of assets in the category “land & real estate”).
Furthermore, land management is performed by land holding companies that are owned by one or multiple institutional investors. These land holding companies add another layer of separation between land users and land owners. Most land seem to be rented out in very large chunks: cash cropping corporations rent tens of thousands of acres in a single contract. This is easy to administer by land managers and minimizes the number of costly business transactions (contracts, credit checks, etc). Again, environmental externalities and a healthy community are not taken into consideration whatsoever.
Our aging farmer generation has two options: maximize the return of their land by creating industrial ag land, or missing out on their retirement. After decades of poor earnings in agriculture, it is unfair to blame our farmers for what they are doing. In the end, isn’t it the community at large that has asked farmers to produce food as cheap as possible, conveniently processed and packaged?
WAYS FORWARD
In my opinion, much of the global loss of our biosphere can be attributed to the financial mechanisms that drive the industrialization of agriculture. Indigenous societies, ecological farmers like ourselves, and the agroecological movement globally, have all demonstrated that alternative management of land is possible, in ways that provide human food while also fostering a biodiverse nature. Farmers are blamed for their destructive practices, but their realm of agency is so little that they are trapped in this destructive path. If we want to preserve nature for generations to come, new leverage points must be explored that address the real culprit: the disconnection of land ownership and land management from the land itself.
- Fact finding mission
As a first step, I am propagating for a fact-finding mission:
- How much land is owned by institutional investors?
- How much land do particular institutional investors own?
- Who is managing the land owned by institutional investors within our region?
- Spreading the word
The negative impacts of industrial agriculture are no secret, but the role of institutional investors is totally unknown. Articles need to be written that publicize the information that is available. Beneficiaries of pension funds (that’s most people in our country!) can lobby their funds, and “Corporate responsibility” advocates can develop indices that measure landscape impacts.
- Finding an “willing” institutional investor as ally
There may be institutional investors open to solving this systemic problem caused by our financial system. This ally may be interested in becoming a shining star in the investor world? The investor would share the total amount of land under its ownership, identify the land manager, and be open to negotiate about different forms of land management.
Ultimately, I hope that institutional investors will agree to testing “ecologically regenerative” land management that internalizes environmental externalities. This would take into account the water cycle, erosion and other problems around nutrients and mineral cycling, and promote biodiversity. Landscapes would increase climate resilience rather than undermine it. Municipalities would benefit from less pressure on public infrastructure, and communities could enjoy a more beautiful landscape.
I would add :What are those investors going to do with the agricultural land?” Will it still produce food?
We see fine agricultural land covered with bare earth solar installations. Who will use that power when there is no food to sustain power users?
We see agricultural land replaced by paved facilities. Who will use those facilities when there is no food to sustain customers?
Thanks, Joy!
Recently, I promoted an article on FB that showed grazing underneath solar panels – an interesting compromise in my opion (shade-grown plants may be another option for dual use!). Interestingly, I was viciously attacked by a dogmatic vegan who claimed that there is no place for animals in modern agriculture … This example just highlighted to me why it is so difficult for ecological farmers to make our argument: We are facing technocratic or reductionist opinions all over.