Saturday, September 8, 2012

Financial Speculators Buying up Farmland - Prices Soaring. Shouldn't Devotees Step in Now!

Since the global financial crisis and food riots of 2008, many hedge funds and investment companies are buying up farmland. Some consider it a better investment than precious metals. As one investor put it, you cannot eat gold.
While these big-name hedge fund managers like George Soros are buying up arable land everywhere, it is becoming scarce and more expensive. It may sound like material anxiety for devotees to worry about this. Shouldn't we know that Krsna is untimately in control?
Once, a devotee asked how we, as neophytes, can know if our anxiety is still material when we feel anxiety in devotional service. Srila Prabhupada replied: "No, no"– and he said that if you feel anxiety for Krsna, it is not material but love. As neophytes, we still feel anxiety for the Krsna consciousness of our children and the people of this world. We feel anxiety that the coming golden age within this Kali-yuga will transition easily. This is not material.
Vaisya devotees should be buying up these hugh tracts of land in their countries to put it to proper use. Devotees should settle on them, creating communities - as an investment in a future varnasrama society. Our brahmanas should advise and encourage our vaisyas in this way.

Below are some excerpts about notable investors buying up farmland since 2009 


From an article on CNN Money June 16, 2009 


A Nebraska farm girl who went on to a globetrotting career as a derivatives trader for Goldman Sachs (GS, Fortune 500) and then as a hedge fund executive in London, Warner, 45, is back on the farm pursuing what she believes is a huge moneymaking opportunity. Two years ago Warner launched an investment firm, called Chess Ag Full Harvest Partners, with a fairly simple underlying strategy: Buy undervalued farmland in the U.S. and profit from the coming global agriculture boom.

"Farming might not look sophisticated," says Warner. "It might wear overalls and talk funny. But it's older than Wall Street, it's a fine-tuned machine.
Warner is just one of many financiers around the world making that same bet. Over the past few years hedge fund gurus like George Soros, investment powerhouses like BlackRock, and retirement plan giants like TIAA-CREF have begun to plow money into farmland - everywhere from the Midwest to Ukraine to Brazil. 
"I'm convinced that farmland is going to be one of the best investments of our time," says commodities guru Jim Rogers, who serves as an adviser to AgCapita.
The biggest investors in farmland over the next decade will probably be sovereign wealth funds and governments of crop-starved countries eager to secure food supplies for their rapidly growing populations. In 2008, China announced a $5 billion plan to develop agricultural assets in Africa. That's just a start. Given that it has 20% of the world's population but only 7% of its arable land and 7% of its freshwater resources, China has no choice but to look beyond its borders. And the global recession has hardly slowed its appetite for crops. In the first four months of 2009, China imported a record 13.9 million tons of soybeans.

The Gulf States of Qatar, Abu Dhabi, and Saudi Arabia have already begun making deals to acquire or lease large tracts of farmland in Africa and Asia at bargain prices. That in turn has led to a spate of headlines recently about a "land grab" by rich countries. When South Korea's Daewoo Logistics announced a $6 billion deal last November to lease roughly half the arable land in Madagascar - a plot about twice the size of Delaware - it caused so much anger that it helped spur a coup d'etat. In May a UN-sponsored study concluded that too many farmland deals were giveaways by leaders of poor countries, with only vague promises of jobs and investment in return.
If any investor has a long view on world markets, it's Lord Jacob Rothschild. The 73-year-old scion of the world-famous European banking dynasty need only look to his own family history, which dates back some 200 years to the rise of patriarch Mayer Amschel Rothschild in Frankfurt.
He also has a strong opinion on the prospects for farmland. "We think right now is an excellent point of entry for taking a long-term position in agriculture," he tells Fortune.
Rothschild did just that last year when he invested $36 million for a 24% stake in a venture called Agrifirma Brazil. The company is the brainchild of Jim Slater, a longtime City of London investor and investing writer known in the 1970s as one of Britain's most feared corporate raiders, and Ian Watson, a Canadian investment banker.
"If you look at the macro picture today," says Rothschild, "we have an extraordinary situation. If you take governments' printing money as fast as they are, borrowing as fast as they are, and bailing out white-elephant corporations, we're surely going to have an inflationary situation fairly soon." In that kind of environment, owning a hard asset like land is a good hedge.
Agrifirma has already acquired some 100,000 acres in the Brazilian state of Bahia and holds an option on another 60,000. This summer it will produce its first crops of soybeans, cotton, and corn.
"They can't change the laws on me, because I've got the guns," says Phil Heilberg. The chairman and CEO of Jarch Capital is explaining his investment strategy over breakfast at the Regency Hotel near his office on Park Avenue in New York City.
With hundreds of thousands of acres of lush, undeveloped land in the Blue Nile and White Nile valleys, Sudan has the raw potential to develop into an agricultural powerhouse. Investors from Abu Dhabi, Qatar, Saudi Arabia, and Kuwait have already reportedly made deals to lease land in the predominantly Muslim northern part of the country. But in January, Heilberg raised a lot of eyebrows by announcing that he had agreed to lease roughly 1 million acres of undeveloped land - an area the size of Rhode Island - in Mayom County in southern Sudan.
His ideal investment scenario involves southern Sudan's making a relatively bloodless split from the Muslim north and being recognized by the U.S. as an independent nation.                                                              

From MSNBC 16 July 2011


A new breed of gentleman farmer is shaking up the American heartland. Rich investors with no ties to farming, no dirt under their nails, are confident enough to wager big on a patch of earth — betting that it's a smart investment because food will only get more expensive around the world.

They're buying wheat fields in Kansas, rows of Iowa corn and acres of soybeans in Indiana. And though farmers still fill most of the seats at auctions, the newcomers are growing in number and variety — a Seattle computer executive, a Kansas City lawyer, a publishing executive from Chicago, a Boston money manager.

The value of Iowa farmland has almost doubled in six years. In Nebraska and Kansas, it's up more than 50 percent. Prices have risen so fast that regulators have begun sounding alarms, and farmers are beginning to voice concerns.

Buyers say soaring farm values simply reflect fundamentals. Crop prices have risen because demand for food is growing around the world while the supply of arable land is shrinking.
Vieth, the former head of fixed income investments for PanAgora Asset Management in Boston, started buying farms with his own money five years ago, when buyers with no farming experience were rare. 

"Agriculture was sleepy," he says. "People looked at me like, 'What are you doing?'"

Now he's buying for 71 wealthy investors. Ceres Partners, his 3½-year-old private investment fund, owns 65 farms, almost half bought since November. He says he's returned 15 percent annually to his investors overall.

 Returns from farmland have trounced those of equities. Ceres Partners produced an average annual gain of 16.4 percent after fees from January 2008, just after the firm started, through June of this year, Vieth says. 

From Bloomberg Markets Magazine 10 August 2011 


Investors are pouring into farmland in the U.S. and parts of Europe, Latin America and Africa as global food prices soar.
A fund controlled by George Soros, the billionaire hedge-fund manager, owns 23.4 percent of South American farmland venture Adecoagro SA.
Hedge funds Ospraie Management LLC and Passport Capital LLC as well as Harvard University’s endowment are also betting on farming. TIAA-CREF, the $466 billion financial services giant, has $2 billion invested in some 600,000 acres (240,000 hectares) of farmland in Australia, Brazil and North America and wants to double the size of its investment.
I have frequently told people that one of the best investments in the world will be farmland,” says Jim Rogers, 68, chairman of Singapore-based Rogers Holdings, who predicted the start of the global commodities rally in 1996. “You’ve got to buy in a place where it rains, and you have to have a farmer who knows what he’s doing. If you can do that, you will make a double whammy because the crops are becoming more valuable.”
The growth in demand for food, spurred by the rising middle classes in China, India and other emerging markets, shows no signs of abating. Food prices in June, as measured by a United Nations index of 55 food commodities, were just slightly below their peak in February. The UN’s Food and Agriculture Organization said in a June report that it expects food costs to remain high through 2012.
So many investors have rushed to capitalize on food prices in the past three years that they may be creating a farmland bubble. The Federal Reserve Bank of Kansas City, which covers Colorado, Kansas, Nebraska and other agricultural states, said in May that farmland prices had surged 20 percent in the first quarter compared with a year earlier.
Hedge-fund manager Stephen Diggle calls farming the ultimate safe haven. Diggle began buying farms with his own money in 2008 after Lehman Brothers Holdings Inc. (LEHMQ) filed for bankruptcy in September of that year and the S&P 500 plunged 43 percent in the next six months. He purchased 8,000 acres in Uruguay, three smaller plots in southern Illinois and an 80-acre New Zealand kiwi-and-avocado orchard.
We really thought all the investment banks would go under,” says Diggle, who as a hedge-fund manager uses options and warrants to bet on price swings in the market. “Everyone said, ‘Buy gold.’ But at the end of the day, you can’t eat it. If everything else goes and I just have these farms, it makes me moderately wealthy.”
In the U.K., where farm prices are also rising, one money manager traded his career at BlackRock Inc. (BLK) for one in farming. Graham Birch, 51, left in 2009 as the London-based head of the natural resources team at BlackRock, the world’s biggest asset manager, to run his two dairy, wheat and barley farms in southwest England full time.
Ceres Partners’ Wall Street roots are evident in the firm’s makeshift office in an old clapboard farmhouse that sits in the middle of cropland. Lucite tombstones resting on a shelf in a small room mark deals done by Brandon Zick, a former vice president of strategic acquisitions at Morgan Stanley (MS)’s investment management unit. Vieth hired Zick in January to help analyze and manage farm purchases.
I was more convinced hard assets were where you wanted to be, and farmland was the best investment I could identify,” Vieth says. By May 2011, he had collected 17,238 acres, mostly in the Midwest.
While the former trader keeps a close eye on the dollar, he says farming will continue to thrive.
Investors seem to agree. At a dining-room table in the farmhouse in Granger, Vieth sits down at his computer one evening and totals the day’s haul: another $900,000 from investors looking for comfort -- and profits -- in one of the oldest and most essential industries on the planet.