Farming as Financial Asset. Stefan Ouma
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of modern finance have been crucially shaped by developments in land-based production.
Chapter 4 engages with the question of what we do and can know about the contemporary wave of financial expansion into farming and agriculture. It offers an attempt to open the black box of finance-gone-farming: the actors, relations and geographies underpinning farmland investments. It will become clear that finance’s run on farmland has been less Global-South-centred than many critical accounts suggest and that agri-finance capital is not a homogeneous entity but made up of various financiers with different investment cultures, fiduciary obligations and liabilities. The chapter then moves on to problematize the opacity and secrecy that characterize many of these investments.
Chapter 5 interrogates how far investment records of states may provide alternative sources of information on finance-gone-farming. This is ultimately linked to the larger question as to how financial investments into farming are regulated and accounted for. Despite the talk about the retreat of the state in a globalized economy, and the growing power of footloose finance, the state, in all its manifestations and across juridical scales, remains a central figure in the regulation of all sorts of flows critical to rendering farmland, and agricultural production more generally, investable. The regulation and state-mediated “landing” of agricultural investments in Tanzania and Aotearoa New Zealand invite us to shed light on these themes. The countries offer two starkly contrasting examples of a state’s role in turning particularly farmland into a global financial resource, exhibiting very different histories and forms of “geopower” (Parenti 2016), but also varied capacities (and willingness) to regulate and account for the new financial flows into agriculture.
Chapter 6 follows the collective, globally distributed processes buttressing the ontological reconfiguration of farming into an “alternative asset class”. It challenges the idea that finance is an amoral force by reimagining the world of asset management as one permeated by shared moral registers, norms and standards. These conventions help coordinate the actions of industry participants in light of the uncertainty attached to the future outcome of their trade and serve as higher common principles against which the legitimacy of investment decisions and the worth of a potential “asset” are assessed. In tandem with legal and technical devices, they help enact the morality of asset management. As will be shown, however, the quest to turn agriculture into an “alternative asset class” has by no means gone uncontested. The conventions structuring the world of money management have also constituted a barrier for those trying to mobilize capital from weighty institutional investors because of the size, risk profile and idiosyncratic nature of farming deals. At the same time, social forces from outside the world of asset management have challenged its stable framing as a legitimate “alternative asset class” (NGOs, activist-scholars, regulators).
Chapter 7 follows a number of investment chains into concrete agrarian environments in Tanzania and Aotearoa New Zealand. Since finance capital and investment chains are often imagined as a fait accompli in the existing debate, the task of this chapter is to unpack the socio-technical, -legal and -cultural relations and practical operations through which the journey from money to more money via agricultural production (and processing) is organized. It moves the empirical focus from abstract circuits of agri-finance capital – as in much of the structuralist literature on financialization – to the frictional enrolments for agri-finance capital formation. This process meanders between the universal aspirations of financiers and the place-based frictions and uncertainties that pose a challenge to their calculative schemes. For instance, re-resourcing agriculture into a financial asset in “emerging markets” such as Tanzania, with a largely smallholder-based economy, entails challenges that investors often do not encounter in countries with highly advanced capitalist agricultural sectors, such as Aotearoa New Zealand.
Chapter 8 zooms in on different agricultural ventures (including cases of agro-processing) in the research regions, which are part of extended and heterogeneous global investment chains. It unpacks the ontological reconfiguration of farming into a financial asset, which depends on instituting certain material, organizational, legal and technological conditions on the farming ventures acquired, through which these become financially productive. It will become clear that turning farming ventures into financial assets is not a straightforward process, as it encounters a variety of forms of recalcitrance and unforeseen obstacles. Neither is it one that is necessarily always about the maximization of shareholder value (as often posited in existing debates on financialization). In “frontier markets” such as Tanzania, investors are often forced to make a wide range of costly adjustments to their original investment calculus in order to accommodate social demands or political resistance mobilized in adjacent communities. In countries with a highly productive and technology-intensive agricultural sector such as New Zealand, investors often do not reinvent the farming wheel but mimic established industry practices, albeit with a much deeper capital structure. Surprisingly, institutionally backed investments in farmland may have a stronger sustainability ambition and track record than many domestic “family farms”. Although increased demand for farmland has led to rising land prices in many hotspots of the global land rush, some Aotearoa New Zealand farmers are active partners or advisors to foreign financiers, or need them to drive up land prices so that their own speculative endeavours can materialize. This type of farmer can be contrasted with the “Third World peasant” usually making the rounds in debates on the global land rush, who is usually presented as a victim of foreign investment activities.
Chapter 9 explores whether, despite the criticism that institutional investments in agriculture have received (touted as large-scale, productivist and poor in terms of their social and environmental footprint), the massive amounts of financial wealth accumulated in the present can still be harnessed for greener and more just food futures. It introduces two potential models. One is an enhanced “ESG (environmental, social and governance) model”, accompanied by technological fixes and some regulatory adjustments, which does not evade some core problems characterizing the financial present, however: the opacity of the money management industry; the unsustainable growth imperative engrained into debt-based economies; how value is imagined and produced in financial markets; the homogenizing tendencies of scale-hungry agriculture; and various inequality issues related to financial accumulation. The other model breaks in more radical ways with the temporality, sociality and materiality of modern finance and the return logic inscribed into contemporary institutional landscapes. Each of these models forces us to ask what kind of spatialized value relations are engendered by particular kinds of food futures. The book closes with an epilogue that takes us back to some of the very origins of institutional landscapes.
1.Maturity goals refer to the planned date of payment – i.e. when a liability, such as a pension or insurance payout, is due.
2.They can be contrasted with retail investors, who are individuals and who can access only certain types of financial products.
3.I use the wording “Aotearoa New Zealand” in this book in order to make visible the colonial origin of today’s nation state, a past that continues to shape the present. The addition “Aotearoa” stands for the description of the country in the language of the indigenous Māori population, which is also the second official language of the country (next to English).
4.“Studying up” implies engaging with “the colonizers rather than the colonized, the culture of power rather than the culture of the powerless, the culture of affluence rather than the culture of poverty” (Nader 1972: 289).
Optic: How do we study the finance–farming nexus?
Whither financialization?
“Financialization”