Farming as Financial Asset. Stefan Ouma
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Source: Updated after Weaver (2003: 89) (reprinted with permission).
Many of the overseas investments during this period went into only six commodities – sugar, palm oil, rubber, bananas, tea, and food staples, all of which should play an important role in the production of agrarian landscapes up to the present. Sugar and palm oil even received “a new life” (Byerlee 2013: 23) as agrofuel inputs. Except for food staples (and wool), all these commodities were usually produced on plantations or large-scale estates, as these were amenable to economies of scale and vertically integrated production, thus making such operations attractive to scale-hungry financiers. In contrast, food staples such as grains, dairy or meat and wool were largely produced by family farms, particular in the settler colonies of the Americas, Australia, New Zealand and eastern and southern Africa. These would buy land from colonial governments or companies. Some argue that it was only more recently that financial investors would target food crops directly because of advancements in crop/animal husbandry, technologies and farm management and the increasing consolidation of farms in different parts of the world (Byerlee 2013). But a closer look reveals that even these petty colonialists had often tight links to (high) finance, connecting metropolitan credit, land speculation and enclosure (Weaver 2003: 194). With the advancement of credit, mortgage, farm insurance and agricultural futures schemes (Martin & Clapp 2015), these became enmeshed in “giant chain[s] of debt-obligations” (Graeber 2011: 347) and contractual entitlements.
This can be vividly illustrated using the example of Aotearoa New Zealand, where “[f]rom early times farmers insisted on securing the freehold of their land, which alone created demands for heavy doses of capital” (Pryde 1987: 6-1). Just 45 years later, after James Cook as the first European had landed in Aotearoa (as the local Māori tribes would call it), the first cattle were brought to the country in 1814, once the colonizers had realized that “the local climate allowed for year-round pasture growth and that wool, meat and dairy produce could be produced in New Zealand with very few resources” (Wynyard 2016: 63). As elsewhere, the sporadic trading activities backed by merchant capital soon gave way to more direct forms of colonization, spearheaded by large colonial companies and a few land-hungry individuals. Even though these forces were not always successful in their agricultural ventures (Fairweather 1985), they were still quite effective in dispossessing the autochthone Māori populations through a mixture of purchase, theft, fraud and coercion. Millions of acres of land, particularly in the South Island (Wynyard 2016), were thus appropriated. Early settlers would engage in speculative runholding practices, whereby livestock herds, often financed by loans from overseas or larger runholders, would be moved around. After the colonial government signed the Treaty of Waitangi (1840) with local Māori tribes, the leasing of Māori land became illegal, as the Crown was given “a complete pre-emptive right to all land purchases” (Fairweather 1985: 441) in order to “shield” Māori lands “from unscrupulous land jobbers” (Wynyard 2016: 76). Runholders therefore became a crucial force in pushing for the autonomy of the colony, so that they could establish full property rights over the best lands. The squatting mode of production increasingly reached spatial limits in the years to come, which led to the emergence of larger ranching estates (Fairweather 1985). Contrary to the runholding, with its links to more short-term-oriented sources of finance, domestic and overseas alike, estates had tight financial connections to private persons and investment trusts in both England (London) and Scotland (Edinburgh).1 One of these companies was the New Zealand and Australian Land Company, founded by Scottish financier James Morton in 1865/6 (Tennent 2013). The company acquired dozens of properties in the Southland and Otago Regions, turned them into “British farms” by introducing European flora and fauna and established the first frozen meat exports to the colonial motherland in 1882. In later years it also leased out and sold land to settlers. The company “established a managerial structure which linked specific places on both sides of the world and allowed directly for the transfer of financial capital, technology, skills and raw materials” (ibid.: 91). This structure, when juxtaposed against contemporary financial investments in Aotearoa New Zealand agriculture, looks all too familiar (see Figure 3.1). In the case of the Land Company, as well as other estates backed by metropolitan finance, a shareholder value gaze “penetrated the production sphere of pastoralism” (McMichael 1987: 431) at a surprisingly early juncture, “institutionalising the managerial goals of closely supervising production, enhancing productivity and rationalising the enterprise with various technical developments involving fixed capital investment” (ibid.).
Sources: A: own research*; B: redrawn from data provided in Tennent (2013: 86).
The estatization of Aotearoa New Zealand agriculture was also supported by several legislative acts passed from 1863 onwards. Passed amidst a series of wars with Māori related to the control of the highly productive regions of Waikato, Taranaki, and Eastern Bay of Plenty in the North Island (where Māori tribes were better placed to resist European colonization and runholding, and estates could not spread accordingly), these provided the basis for the confiscation of millions of acres of additional Māori land (Wynyard 2016: 75). With these acts at hand, all the colonial government had to do was to claim that an iwi (the traditional family unit of the Māori), or a significant number of members of an iwi, had risen against the Crown. In addition to war and “punishment”, state-led land purchasing and the establishment of a Native Land Court in 1865, intended to “modernise” the Māori communal land tenure system by individualizing it, further redistributed land or access to it in favour of Pākehā (the Māori name for white colonialists) settlers. At the same time, the land inequalities between settlers would grow tremendously. As a consequence, many of the South Island’s large land holdings were broken up through a series of Land Acts between the late 1870s and early 1890s. Crucial here was the small-farmer-oriented politics of John McKenzie, the agriculture minister of the Liberal Party government from 1891 to 1900 (Wynyard 2016). Although this laid the foundation for different farm structures and land ownership relations, it was the rise of the government-mediated credit and mortgage industry that was the tipping point in the country’s agricultural history. Via the Advances to Settlers Act of 1894, the Liberal government of the time obtained funds in London and made loans to farmers below current market rates of interest, thereby providing “the credit necessary to establish small intensive farms … and stimulate the dairy industry …, remov[ing] the barrier which had been preventing New Zealand from recovering from the long depression …, [and] organis[ing] and systematis[ing] the market