Finance and the global land rush

In the wake of the 2007–08 food crisis, we have seen the combined development of a rapid financialization of agriculture with the expansion of large-scale corporate farming through large-scale land deals, in particular in developing countries and emerging economies. The rapidly growing appetite for agriculture among financial investors is driven by: mounting risks in “conventional” stocks following the financial crisis, the growing demand and prices for food, and the soaring subsidies for biofuel production. Whereas farming was long considered backward and financially uninteresting, with the new conjuncture in financial firms, a range of farmland settings are now seen as a new, promising frontier of finance.

Important questions arise from these developments. What is the magnitude of the involvement of the financial sector in the farmland rush? What kind of financial actors are involved and how do they operate? How does the involvement of the financial sector change agriculture? And how viable are these investments economically? Contrary to common wisdom, which conceives these farmland investment projects as highly profitable, this article provides evidence of unprofitable and failed investment endeavours. It subsequently looks into causes of such failures, focusing on the intrinsic tensions of the investor-led farming model, and discusses implications for research and policy.