Farmland has transformed into a financial asset class. So, what happens when land is owned by large financial institutions? How does it impact farmer autonomy? And could it be good for fighting climate change?
Dr. Madeleine Fairbairn is Associate Professor of Environmental Studies at UC Santa Cruz and author of Fields of Gold: Financing the Global Land Rush. On this episode of Reversing Climate Change, Dr. Fairbairn joins Ross and guest cohost Dr. Lauren Gifford to discuss the emergence of the institutional farmland investments industry and describe how land has value independent of what it produces.
Dr. Fairbairn explores what’s behind the steep decline in the number of farmers over the last century and explains how large-scale farmland ownership could have positive consequences for the environment and negative social consequences at the same time. Listen in for Dr. Fairbairn’s insights into Georgism as a potential policy response and find out what the financialization of farmland means for the small farmer, the economy and the climate.
Key Takeaways
[1:40] How Fields of Gold explores the emergence of the institutional farmland investments industry
[5:24] What Dr. Fairbairn means by ‘the financialization of land’
[9:25] The non-linear progression from communal forms of land ownership to a more and more sophisticated commodification of land
[11:51] How land has value independent of what it produces
[13:52] What’s behind the decline in the number of farmers over the last century
[18:01] The connections between the financialization of farmland and climate (and how what we ask of farmland managers is changing)
[21:12] How large-scale farmland ownership could have positive environmental consequences and negative social consequences at the same time
[26:18] How landowners in Brazil are tasked with serving society as a whole
[30:31] How Dr. Fairbairn thinks about billionaires like Bill Gates acquiring hundreds of thousands of acres of land
[34:03] Dr. Fairbairn’s take on a Georgist land value tax as a potential policy response
[40:03] The relationship between Georgism and the politics of productivity
[42:37] What Dr. Fairbairn is learning about agri-food technology through the UC AFTeR Project she’s working on now
Resources
Dr. Fairbairn at UC Santa Cruz
Fields of Gold: Financing the Global Land Rush by Madeleine Fairbairn
‘Bill Gates: America’s Top Farmland Owner’ in The Land Report
Billionaire Wilderness: The Ultra-Wealthy and the Remaking of the American West by Justin Farrell
The Mason Gaffney Reader: Essays on Solving the ‘Unsolvable’ by Mason Gaffney
Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric A. Posner and E. Glen Weyl
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change podcast by the team at Nori, the carbon removal marketplace. This is a show about the innovators and entrepreneurs developing solutions to climate change.
Ross Kenyon: Hello and welcome to the Reversing Climate Change podcast. I’m Ross Kenyon. I’m the creative editor at Nori’s Carbon Removal Marketplace. Co-host today, haven’t done this one in a while, Lauren Gifford, geographer and postdoc at the University of Arizona and host of the Carbon Social Club podcast. Back on the show. Welcome back, Lauren.
Lauren Gifford: Hi, good to be here. I love doing stuff with you, Ross.
Ross Kenyon: Yeah, it’s been fun. And it’s been a long time since we’ve done this. I’m excited that it’s this show in particular because I found out about this book through a tweet of yours.
Lauren Gifford: Oh, yeah.
Ross Kenyon: Somehow, somehow found this book and it caught my attention. How did you find it?
Lauren Gifford: Madeleine, I was sending this book around to a lot of people. It was released as a free PDF. So it was easy to share and I could read it right away and say like, oh, this is good and interesting. Share it around, send it to friends, tweet it out.
Dr. Madeleine Fairbairn: Thank you so much. That means a lot. I know you can tell we really go on a different profit model in academia that I not, you know, sometimes family members are asking me about if I’m getting royalties for my book. And I’m like, no, I actually paid them thousands of dollars to make it free. I really wanted it to be open access.
Ross Kenyon: Wow, I didn’t realize that. That voice you hear listener is Madeleine Fairbairn, Associate Professor of Environmental Studies at UC Santa Cruz and author of the book we’re discussing, elliptically, Fields of Gold, Financing the Global Land Rush. So Madeleine, thanks for being on the show.
Dr. Madeleine Fairbairn: Oh, thank you for inviting me.
Ross Kenyon: Yeah, financing the global land rush. Farmland, as many listeners I’m sure know, has become an asset class all of its own. In some ways, that’s exciting. In some ways, it sounds like a better thing to invest in than other things that might be deemed destructive or extractive in some negative way. But that really isn’t the whole story. How would you describe your book from a top level?
Dr. Madeleine Fairbairn: Well, my book is based on several years of research that I did while I was completing a PhD in sociology. And it looks at this sort of emergence of a Sort of much more professionalized, institutionalized farmland investment industry. It’s a farmland investment industry that is investing globally, but I was particularly looking at developments in the U. S. and in Brazil, which are two major farmland markets and also two major places that have a lot of investors. And so I’m sort of looking at particularly in the years starting around 2008, although I kind of go back in time historically a little bit in the U.
S. to say sort of what are the origins of this financial sector being interested in buying up farmland. I’m really interested, especially in this kind of flourishing of this industry starting around 2008, which is when the financial crisis happened, of course. And so investors were pretty drawn to real assets because their stocks were going up in smoke. And also a time when farm incomes were very high because there was a food crisis going on globally and agricultural commodity prices were booming. So it wasn’t the start of the farmland investment industry or the start of financial institutions buying farmland, but it was this moment in which it was really kind of Beginning to flourish as an industry.
And I spent a bunch of time interviewing investors. My research was really kind of what anthropologists call studying up. So I spent a bunch of time interviewing investors, interviewing the asset managers who are kind of doing this work, interviewing executives at operating companies, big agricultural operating companies, which sometimes also serve as a farmland investment vehicle. And also going to the sort of physical spaces where this farmland investment industry is being formed. So farmland investment conferences and things like that. And the book is basically argues that farmland is being transformed into a financial asset class, which is actually, I think is becoming less and less of a novel thesis.
Because at this point, I just read articles by, you know, the farmland investment community just uses that language now, like we are transforming it into a financial asset class. But sort of I talk about how this transformation is situated in a longer trajectory of financialization of the US and the global economy since about the 1970s. And sort of look at how this process is happening and why this process is happening and some of the political and material tensions that kind of make it difficult, the types of pushback that are happening around it.
Lauren Gifford: Madeleine, one of the shifts that I saw that happened with that sort of domino effect that you were just talking about of land becoming an asset class is land trust. Directors of land trust went from being executive directors to being CEOs.
Dr. Madeleine Fairbairn: That’s interesting. Yeah, and I mean, it’s an institutionalization process, right? Farmland has been seen as a good investment in places that have private property since time immemorial. Right. It’s not like this is a brand new idea to invest in land, but it’s these sort of the last decade and a half or so has seen a real like formalization and sort of kind of it being taken to the next level of ways of investing in farmland, of accessibility of farmland investment, of the kind of profits that are coming in, of the size of actors that are doing it.
Ross Kenyon: That’s sort of where I’d like to start, which is how exactly is this different? Because as you know, investing in land is nothing new at all. But then being so financialized, whatever that means, I think a person listening, you might not be familiar, might assume it’s something like weird assets that don’t mean anything to a layperson, like mortgage default swaps. I doubt the average person could tell you what exactly that is. So is that sort of way of wrapping an asset being applied to land in some new kind of way?
Is that what financialization means?
Dr. Madeleine Fairbairn: That’s not how I’m using it. So the word financialization gets used in a lot of different ways. And I think that is one way that people might use it as the sort of emergence of all these really Difficult to understand kind of abstract financial securities over the last few decades, but it also gets used in more general ways to talk about the growing prevalence of financial actors, the increasing profits that are going to the financial sector as a share of the economy as a whole. Also the increasing tendency of non-financial companies to rely on financial income from things like investments as a way to fund their non-financial activities.
So companies are increasingly making money by doing financial transactions rather than just by making and selling stuff. It also gets used as a way, which as I become older, this makes a lot more sense to me. There’s a lot of literature on the financialization of everyday life and just the way that our mindsets are increasingly permeated by financial logics. So it used to be in the sort of 1950s that you’d have a pension and you’d just work and then your retirement would be taken care of by your pension. And Now, you know, everyone’s constantly checking their 401k and sort of, you know, people are like trading themselves and checking on the markets becomes a thing that we maybe do even every day, regular people who aren’t in the financial sector.
That didn’t make sense to me until I had a job and any money at all, but now I kind of get it.
Lauren Gifford: And I think too, when we think about the financialization of land, part of it is capital is extracted from the value that land gives to shareholders or stakeholders, not simply from the corn that was grown there or the sort the agricultural products, but there is much more complex capital extraction happening there.
Dr. Madeleine Fairbairn: Yeah. And so in the book, I also talk about it as, so for me personally, in the book, I’m kind of thinking of this financialization of farmland as being, on the one hand, just literally financial institutions are starting to buy a lot more land. So big institutional investors like pension funds and hedge funds, private equity funds are getting into farmland investing. These financial institutions are buying land. But on a more kind of complex level, I’m also talking about the sort of changing mindset that this may bring to farmland or the sort of mindset that these investors bring to land where, yeah, we can think of land as having so many kinds of values, so many complex and interlocking kinds of values, so many different and different ways of producing profit too, right?
Just in the realm of economic value, it produces farm products that can be sold, or if you’re a landlord, it produces rent. But then it also very gradually or sometimes steeply tends to go up in value over time. And so it’s a very complicated asset that produces these very different types of profit. And in my research, I found that these investors were particularly drawn to that kind of second form of profit. We’re tending to think about it Definitely the rent and the productive income is very valuable as well to them, but that kind of long-term tendency to appreciate is a huge part of the mental calculus of why you would buy farmland.
Ross Kenyon: Property ownership model, that’s changing something like everything I’m about to say. I just imagine Wendell Berry screaming while I’m saying it, which is fair to say, among others. But most of our properties, you can part with it, you can sell it. This wasn’t always the way land used to be treated. Sometimes you have more indigenous ways of understanding land as perhaps we belong to the land. There’s a more nefarious version of that, which is serfdom, which is that the peasants or the serfs like literally are bound to the land and cannot leave.
Is it wrong to see land as something else that can be bought and sold without it becoming a spiritual matter? Or is that just the way that it has to be? God, it is a sloppy question. Please save me.
Dr. Madeleine Fairbairn: Okay, I’ll do my best. Well, first of all, I just wanna maybe push back a tiny bit on the premise of the question I think we have to be careful, and this is something I have to really be careful of as well, and I fall into this trap a lot, of thinking of it as kind of just a linear progression that, oh, we used to have these communal forms of land ownership, and then there’s just this totally linear progressive commodification going to like ever more sophisticated forms of commodification to now, you know, land becomes a financial asset.
Because of course... I mean, obviously there’s some truth to this. With colonialism, we see this kind of Western private property model being often violently imposed all over the world. And I do think it’s very much true that with the financialization of the economy since the 70s or 80s, we see kind of ever more sophisticated and abstracted ways of treating land like a commodity. But it isn’t just linear. You know, I did research in Mozambique for a couple of months where there’s The government owns the land and you can have a use right to the land and these customary land users are sort of considered to automatically have a use right to the land just by being on it.
Or they can make that formal, you know, they can apply to have that formalized with the government, but they’re considered to automatically have it just by the fact that they have customarily occupied it. And there are all kinds of different land tenure arrangements that still exist. And I also want to be very careful about speaking of like indigenous ideas about land as something that only exists in the past, right? You know, that also still coexists today in many places and many cultures. So anyway, I’m partly saying that for myself because I think I also like many political economists tend to like get a little too macro and a little too abstract and lose some of that nuances.
Lauren Gifford: Where is that value coming from? You know, it’s not just that land appreciates. There’s value coming from something else. And I’m just curious where the root of that is.
Dr. Madeleine Fairbairn: Okay. Oh, I know. Go deep into John Stuart Mill or something. Okay. Let me think. So, I mean, land, farmland produces food and textile, you know, produces stuff that is inherently valuable that we use. It has, it has use value. And there is no doubt about the value of that, both in terms of, yeah, use value and in terms of that can fetch profit on the market. But It also will tend to go up in value just because of population growth and development. As long as population growth and capitalism and economies are growing all around, the land itself will tend to also go up in value independent of what it’s producing.
It can also go up in value just because there have always been big booms in different places as speculative manias set in around land.
Lauren Gifford: Here’s a little anecdote of why I asked that question, so we can bring it down from academic chatter. I was in Philadelphia over Christmas, which is where I grew up, and I drove to New Jersey through Bucks County, which when I was a kid had all this farmland, and now it has all of these mega mansions and housing developments, tract housing, and every time I would still see a farm, I would think they’re sitting on a gold mine.
Dr. Madeleine Fairbairn: Mm-hmm, yeah. Yeah, absolutely. And, you know, that’s why they say farmers live poor and die rich is there just so much wealth in the value of that land. I mean, it depends. This is entirely geographically dependent. It depends very much where you’re where your farm is located and on a lot of other factors as well. But yeah, absolutely. I can’t remember. And I’ve lost track of the first question of Ross.
Lauren Gifford: It’s OK. We’re fluid here at Reversing Climate Change. And, you know, this other question that when you were just talking, I thought of is that who owns land is changing, right? So we talked about these financial actors, but also, right, there’s this very recent legacy of like smallholder farmers disappearing, black farmers disappearing, right? People who own small tracts of land and, you know, that allowed them to die rich or, you know, whatever, or, you know, were stewards of these small pieces of land. That’s almost becoming a thing of the past.
Dr. Madeleine Fairbairn: Yeah. So I think we have to think about, as a good political ecologist like you, Lauren, I think about these, you know, environmental problems don’t take place in a power vacuum. They don’t take place. And, you know, and therefore it’s maybe difficult to solve them with like solutions that are just new kind of It’s quote unquote neutral and technical. They happen in this really complex social landscape. And in the case of the US, the complex social landscape where this financial investment in farmland is unfolding is one where, yeah, we’ve seen this huge decline in the number of farmers over the last century.
There were close to 7 million farmers in the US in the 1930s, and there’s now about 2 million. And That decline has been fueled by all kinds of things, including government policies encouraging farmers to scale up production and intensify production and produce as much as possible, including corporate concentration in agriculture, where you have an increasingly small number of very big companies controlling farm inputs. And also purchasing, being the sort of purchasers and processors. So both upstream and downstream from farmers, you have a smaller number of very large companies. And that can put farmers into, sometimes it’s talked about as like a cost price squeeze where they’re paying more and more for farm inputs and prices aren’t necessarily going up in tandem.
And often because farmers have produced more and more and more over this time, there’s often problems of oversupply. For U. S. farmers, this has been a huge problem over the recent decades. Where the U. S. government is trying to figure out how to get rid of all this extra grain or milk or whatever. And the farmers are getting really low stagnant or low prices while their costs, their production costs are going up. And they have no choice but to produce and produce and produce in order to kind of stay on this treadmill and keep and not go out of business as so many have.
And so that’s the sort of context in the U. S. in which this is happening. And this has massive racial dimensions, as you suggested, the number of Farms overall has gone down and farm size has increased. So we’re seeing fewer larger farms in the US. But the number of black farmers has gone down much more rapidly. And that’s because they’re kind of dealing with all of these same pressures that are on smaller white farmers, like the need to just produce more and more and more and more and always buy the new technologies to do it or else you’ll go out of business and your costs are going up.
But at the same time, they also face all kinds of racism. There have been a lot of documentation and very successful class action lawsuit about the discrimination faced by Black farmers when it comes to getting USDA loans and services. And so... That had a massive impact and some would argue continues to have a massive impact on the ability of Black farmers to continue. So we’ve seen this small and medium-sized farmers in the U. S. really struggle to survive. And so we kind of have to think about, all right, so now we have this trend happening where large financial institutions are starting to see farmland as something they would like to have in their portfolio, as something that is a great way to diversify their portfolio, as something that produces regular income while also Producing capital gains over the long term.
What is the impact of that likely to be? And I have definitely some concerns about it, which you can probably get.
Lauren Gifford: So let’s shift gears just for a moment to actually talking about climate change and the connections between this financialization of farmland. Both climate change and climate action. Are you seeing, you know, things like carbon farming, soil carbon sequestration, land that’s contested between, you know, should we use this land to reforest or continuous farmland, things like that? I’m just curious if you have seen in your work the connection between financialization of farmland and climate.
Dr. Madeleine Fairbairn: So it’s not something I’d gone into deeply. And I was, as I was saying before, petrified to be on this podcast because I was afraid you would ask me lots of detailed questions. My feeling is, so I’ve been researching something else the last couple of years. But my feeling is that there’s, yeah, it is like the hot topic, you know, just getting this sort of emails that I get about agricultural investment and farmland investment. It’s Increasingly the potential for, I can’t say for sure whether it’s like the income stream from carbon that is increasingly a motivating factor for investors.
I don’t want to speak to that. Or whether it’s the legitimation that comes with being seen as fighting climate change. I think definitely that latter aspect is increasingly being Talked about and sort of is a is a cause for excitement within the farmland investment industry that like this is an opportunity to see ourselves as as really being on the positive side of the fight against climate change. And, you know, there are kind of efforts afoot to different kinds of like certification of doing positive types of. Like carbon sequestration. I don’t know about Nori in relation to these types of investors, so I don’t want to speak to that.
Lauren Gifford: No, I don’t either. So that’s kind of why it’s maybe fun that I’m here. But it seems to me that we’re asking so much of farmland managers. You know, to sort of save the food supply and manage land in ways that continue to produce effectively and also now, you know, sequester carbon and manage for pests and all of these things. And it seems like there’s a lot of pressure on land managers. I don’t know. And I’m just throwing that out there.
Dr. Madeleine Fairbairn: Yeah. And I mean, it’s interesting. One kind of question that I have about this kind of Effort is, you know, there are different actors involved. There’s the farmer and then there’s the farmland owner and, you know, who their relationships to the land are not the same. And so sort of who is this? I’m really curious about whether this is going to create a situation in which we’re seeing farmland owners saying, OK, you have to do these particular actions on the farm if you’re renting for me because, you know, we have to do them for a certain amount of time and You know, who has that lease to that farm changes up over time.
And so I’m curious to like, I’m really interested, I guess this is a question for Ross, to like how this will affect farmer autonomy when they’re farming rented land, because I think, you know, more and more farmers are going to be farming rented land.
Ross Kenyon: There’s a lot of concern about that. And there’s a lot of relationships that go into who has the authority to get permission for this? How are the rewards split among the various stakeholders and agreements like that? And I don’t know that there is some standard agreement. I think a lot of this takes place at the dinner table in the farmhouse, so to speak. Maybe the framing of this, maybe I’m over-interpreting this as being a negative outcome of like a farm manager pressuring a farmer on rented land to improve their stewardship practices.
But that could also be a really positive thing too, I think in some cases, might there not be some benefit to this type of abstraction and massive capital investment? I think putting aside for a second, the fact that land is not really fungible, in fact, very few things are truly fungible in an ontological sense, but a piece of land is a special, unique thing that is not exchangeable for another one that is theoretically like it. And I appreciate that on like a spiritual level, like small scale things. I love gardening.
I love my specific home, not the idea of a home. The bees is still an ongoing project that has not yet taken shape, but working on it. So I can think all of that. But at the same time, I think that especially with my work at Nori, there is some huge amount of benefit to be gained from fungibility and scale and investment in this kind of way. So I can hold all those things in my head at the same time. And I like to think that just makes me interesting, but it might just make me annoying and a hypocrite.
Dr. Madeleine Fairbairn: Anyway, this is a therapy session. Yeah, it’s such an important it’s such an important question. And I think absolutely. I don’t I mean, I’m a sociologist, so I tend to keep going to the people. But I think I think you’re absolutely right that there aren’t sort of predetermined outcomes in terms of, oh, this is just going to be negative or this is just going to be positive. You know, this is like it’s complicated. It’s going to be complicated for sure. And it’s going to be very case specific exactly what the outcomes are.
And I think that. And obviously, what’s positive and what’s negative depends a lot on who who we are and what we think is positive and negative, you know, and I don’t want to. Fall into the trap of romanticizing the small family farmer in the US, which is a massive, you know, there’s sort of a founding myth that our country is based on, that this is a country of small farmers who are, you know, totally the like, I don’t know if it’s a founding myth, but it’s like a founding concept. Right, right.
Lauren Gifford: The salt of the earth.
Dr. Madeleine Fairbairn: We’re the backbone of this country, the moral backbone, this is what makes us a democracy, etc. And I think that idea does a lot of work that can have negative outcomes like erasing indigenous people and... And justifying a lot of subsidies that don’t actually end up going to those quote unquote, you know, small family farmers. So I don’t want to totally like play into that and romanticize that, that disclaimer out of the way. I think that you’re totally right that something can have positive environmental consequences while still having, you know, negative consequences.
Social consequences, maybe at the same time, there are things that, and I think that there are some, this kind of large scale investment in farmland is maybe more conducive to certain kinds of positive environmental outcomes than others. So for instance, yeah, anything that adds to the value of the land is going to be Fairly compatible, I would think, with this kind of investment arrangement. So things like organic certification. I live in California where certifying your land organic is a great way to greatly increase the value of your land. And using organic production in a lot of ways is going to be a huge environmental positive.
Another way, though, to increase the value of your land would be to put irrigation infrastructure and In California right now, that’s not necessarily a sustainable thing to do. So there are kind of very different ways that investors might go about making their property more valuable, that agricultural asset managers might go about producing returns for their investors, and it may or may not have positive outcomes. But it’s certainly possible that it could have positive outcomes. And I think that cover cropping, that some of these approaches to building carbon in the soil are one of the areas where Positive environmental actions are very compatible with large scale farmland ownership.
But yeah, but then there are these other dimensions of like, what does that mean for tenant farmers who are leasing that land? Do they now have this like farmland lord breathing down their neck, telling them they have to do this, that and the other process and like further robbing them of what limited autonomy they had left as farmers in the US? I don’t know. It’s a super interesting area to think about. And yeah, I definitely, I think there are some concerning areas, but that doesn’t mean that there aren’t possible benefits as well.
Ross Kenyon: Two examples of this are a related phenomenon. An episode of the show we did years ago at this point was with American Farmland Trust. And I asked a question similar to your out in Bucks County anecdote, Lauren. They were bragging about how they had preserved so many acres or hectares of farmland outside of cities. Shouldn’t that be townhomes? Rent is expensive. You’re making rent more expensive for this quaint idea. This is a very rude way of posing this question, I realize. But it didn’t seem like there was a clear right or wrong there.
It just seemed like there were trade-offs involved. And maybe that’s sort of what you’re driving at with your sociological lens.
Dr. Madeleine Fairbairn: Yeah. And I mean, I live in Santa Cruz, California, where a house costs a million dollars and it has like two bedrooms and it’s falling down. And so I’m acutely aware of this, this kind of tension. And we’re surrounded by beautiful conservation land. So yeah, it’s complicated. There is no denying that it’s complicated. But and I think that this is the kind of complicated debates that, you know, absolutely were very prominent in as organic was becoming institutionalized as well, you know, is this kind of Tension between scale and purity that as you know, the USDA was creating the organic standards, there were a lot of the sort of social movement version of organic that was very holistic and diversified and like that, you know, kind of really in touch with the soil and thought of it as a suite of practices that kind of had to go together versus the much more stripped down version of organic that’s basically like don’t use synthetic pesticides.
But could be applied on a massive scale. And like that has very real benefits to farm workers, for instance, who are not now breathing those chemicals, you know, but it is a real tension. And I think to me, maybe where I kind of end the book thinking where I’m thinking about, you know, I know we’re kind of having parallel conversations. I think I’m talking about farmland financialization, turning farmland into a financial asset class. And you’re talking about carbon markets. But, you know, I think kind of where I end the book and haven’t thought very hard or well about what this would really look like, but is that this needs to be a conversation.
This needs to be a discussion. I think this needs to be open for democratic debate and like it needs to be something That we as a society are noticing is happening and are really thinking about how we want this to happen and like what values do we want farmland to serve? Because again, it’s not happening in a power vacuum. It’s happening in a market where certain actors have a lot of power and others have very little power. And if we just kind of like leave it up to the markets and private companies to figure out how it’s going to be, I don’t think that’s going to produce the most just outcomes.
In the U. S. , I’m not sure. In other countries, I think it happens a lot. I think about it a lot in the context of South America. I spent time in Brazil doing research. In Brazil, the social function of land is part of the Constitution. And this idea of the social function of land is that the sort of people having a right to private property and the sort of the government being willing to defend that right to private property is only that like social contract only exists if those landowners are using the land in ways that serve society as a whole.
And that can be different things that could mean using the land to actually produce things is like bare minimum. I would say, if it’s farmland, it could also include, you know, giving sorts of environmental services. It could mean using, you know, employing labor in fair ways on that land. It could mean different kinds of things. And I think, you know, in Europe, they talk about multifunctionality of farmland, sort of it has these different purposes. So I just, I think that it’s an impoverished discussion if we are only talking about land as just how much it’s worth.
Lauren Gifford: That’s great. Yeah, no, I think that’s really important. And I’m glad that we have social scientists asking these questions. I think it’s really, really important.
Ross Kenyon: Just for your own job security or something else?
Lauren Gifford: We don’t have, I mean, maybe if you have a tenure track job, you have job security. I have like a nine month job.
Ross Kenyon: Fair enough. What about a case where, as far as I know, Bill Gates is still the largest landowner, at least in the country. I think the Vatican might be bigger than him. Okay, so if you’re competing between the Vatican and Bill Gates, so you’re already at the upper echelons here. How big of a problem is that? Or how should we understand that a billionaire is acquiring farmland dynamic?
Dr. Madeleine Fairbairn: I tend to think, I think it was interesting. I had a little burst of journalists contacting me when that report came out a year or so ago that Bill Gates had 270,000 acres of land in the US, I think. And there were a lot of sort of really fast hot takes that were like, ooh, is it, you know, everybody, it’s Bill Gates, so he’s very polarizing. So everyone’s trying to give him some kind of philanthropic or nefarious motive for doing this. It’s like, oh, he’s growing microchips or something to plant in our brains.
Or he, you know, he’s like trying to save the world from climate change with this farmland. And I think of it much more as just a symptom of what’s going on more broadly, which is that, you know, I don’t think Bill Gates personally, he has like so much money. He doesn’t. Make these individual investing decisions. I think it’s just his asset management company said what many asset management companies, the folks who are managing his wealth just said, hey, this is a good investment. And that’s a decision that’s being made in a lot of places.
And that’s sort of that part of that professionalization of this industry and this sort of farmland starting to be seen sort of lodged in the brains of these asset managers as something you might want to have in your portfolio. So I don’t I don’t know if I necessarily care that it’s Bill Gates buying the land versus TIAA or Harvard Management Company or some other pension fund or endowment or many others that are not household names that we’ve never heard of. I’m more interested in the sort of the processes that are making that possible in terms of the sort of new investment vehicles and the legal frameworks that make that easy to do and things like that.
And the discourses, as you know, social scientists, we’re always interested in discourses, like narratives of feeding the world and, you know, American farmers are retiring and there’s no one to replace them. Their kids don’t want the land, you know, these kind of narratives that are really easy to trot out and that like quickly, you know, spark in people’s brains. That sounds right. Therefore, it’s going to be profitable into the long run. Let’s buy it. I think there are people who do research coming back to Bill Gates on the Sort of millionaires and billionaires buying land.
They’re sort of trophy properties, you know, buying a ranch just because it’s beautiful to have a ranch and they want to go there and hunt like a week out of the year. I think that’s a slightly separate thing. I’m really interested in the sort of purchase of working agricultural properties.
Lauren Gifford: Because there’s that book, Billionaire Wilderness. Yeah.
Dr. Madeleine Fairbairn: Yes, which I haven’t read yet. I just found out about it.
Lauren Gifford: Oh, yeah. Yeah. And it’s about what you were just talking about, sort of like the billionaires buying up ranches, but having different interests and land being valued for like what type of fish are in the stream going through it instead of, you know, its ranching value and things like that.
Ross Kenyon: Yeah. And some cases it could be positive, too, where in some places with riparian rights that govern water and there’s a use it or lose it dynamic in play. Which means if you’re not using that water to irrigate and you’re leaving in the streams for fish, you might lose that water right to someone farther downstream or something like that. And a billionaire might be like, I like the trout, I’ll pay for it. Or someone with working lands might not be willing to do that.
Dr. Madeleine Fairbairn: Yeah, thank you. Yeah, we don’t want to oversimplify. It is complicated, there’s no doubt about it.
Ross Kenyon: Yes. Speaking of overcomplicating things, I like that Georgism makes an appearance in your book. You use the term neoliberalism so many times that I did not expect Georgism to make an appearance, especially given how much Marx hated Henry George. I thought it was really surprising. Some of your other potential policy responses to this dynamic I thought were interesting and A bit more expected than Georgism. So how did this come across your intellect and strike you as a possible good idea? Also, just what is it?
Dr. Madeleine Fairbairn: Okay, well, I can give you the super basics. I think you had mentioned that, you know, I talk about Georgism on like the second to last page. It’s absolutely not a focus of my work. And I’m actually a little embarrassed. I actually have on my desk over here, I have the Mason Gaffney Reader, which I... I have only just started to read. I actually haven’t read it. So I’ll know more about Georgism soon. And I’m a little nervous to talk about it because Henry George has such a cult following on the internet that I think I’m going to get, I’ll get like hate tweets from mainstream economists on the one hand, and then from Georgists will like send me memes of Henry George shooting lasers out of the eyes.
Ross Kenyon: There’s a joke about it too. I mean, it’s used for everything, but it’s how do you know someone’s a Georgist? Don’t worry, they’ll tell you.
Dr. Madeleine Fairbairn: And so, okay, but here’s how Henry George comes up in my book anyway, is that he’s sort of one of the early wave of political economists who thought about land in the, he was in the sort of late 19th century. But he was, unlike the other political economists, he was really focused on land, like obsessed with land. And this was because he was in California at the time when the railroads were coming in, And he was just seeing rampant property speculation all around him, just property, you know, the sort of reigning land value theories at the time where David Ricardo and, you know, the sort of idea that, well, if land is, you know, really at the margin, like the least productive land shouldn’t hypothetically be worth anything.
And this was the sort of developing ideas about how rent works. And Henry George was like, are you kidding? Come to California. Worthless land is worth so much. And I can say living in Santa Cruz that is still accurate. So much. So he really kind of drew attention to the way in which not only does land produce rent, but that land, there’s this kind of what John Stuart Mill called the unearned increment of land just going up in value just because development is happening all around it. And he really saw that as the root of basically all social ills.
He saw that as just a massive, massive problem. He was really ahead of his time. One thing that’s cool, looking back at his book, he is cool for the way that he was one of the sort of an early person to really attack scarcity narratives about famines. And say, he kind of pointed out that these famines that were going on in Ireland and India at the time, or in the 19th century, were not just a result of natural scarcity, as they were often being framed in kind of to the terms of Thomas Malthus, who was a little bit before him, but were in, you know, he argues basically colonial landlords charging tonnes of money and creating famine in the places where they were oppressively ruling.
And yeah, it’s really kind of really ahead of its time. I mean, late Victorian Holocaust, exactly. It’s like sort of that argument being made in the 19th century and Amartya Sen’s work too, you know, in the late 70s, 80s. Really effectively debunking the idea that hunger is caused by a lack of food availability and showing that, no, it’s caused by a certain group of people losing the ability to buy food because of the power relations they’re enmeshed in. And so I think Henry George is really cool just for that aspect alone is pretty neat that he kind of drew attention to that social justice, kind of thinking about land and rent and these things as social justice issues.
But his big solution was we should tax away the unimproved value of land. So basically, we would make it, this would just greatly decrease land values because we could replace other taxes if we just had this big land value tax. And I don’t understand all the dynamics of how currently people are proposing that this would be done. But it’s kind of an interesting one because it’s one that actually really... People on the some people on the left really like and also some people that we associate with the right of the sort of more, you know, neoclassical economists like Milton Friedman called it the least bad tax because basically the idea, you know, it kind of comes back to this idea that we didn’t we didn’t create land like we did not make land.
There are many things that we made. Land is not one of them. We can add to its value and that part would not be taxed away. But so the idea is there are other kinds of taxes that are disincentives to positive things like an income tax could be seen as a disincentive to work or, you know, there are different kinds like a sales tax is a disincentive to buy things which you need for the economy to keep functioning, but a land tax like. Nobody’s making the land. So it would mostly reduce land values.
So that’s the overall argument. I’m not saying that I’m a diehard Georgist, although maybe I will be after I read the Mason Gaffney Reader. I don’t know. I’m just saying that to me, I mean, one of the places where I kind of end up in the book is we need to, this needs to be something we’re thinking about as a country and like having discussions about and thinking about what are all the alternatives There for how we can make land serve a lot of social functions and not just one. And Henry George is interesting.
Ross Kenyon: Definitely is. I have a friend who’s a Georgist to the exclusion of all else, but he always makes me think. And he’s always explained this as, say, for instance, you own an apartment in a city and then they add a subway stop below you. Like that’s the unimproved value increase because your apartment will go up a lot in value, but it wasn’t a result of your labor or anything that you did. It was just basically good luck. People might counter and say, it wasn’t just good luck. You probably had the foresight to know at some point, Subway Stop is going to get added here and therefore you do deserve it.
This is one of those fights. I like linking the Georgism though to the discussion about the politics of productivity in your book too, because Georgism is very concerned about land that is being kept foul or not being used very well because it is not taxed adequately. And so if we are worried about The only way of thinking about land is in terms of what it provides to us financially. Georgism may exacerbate that rather than alleviate it. What do you make of that?
Dr. Madeleine Fairbairn: That’s interesting. I have to think about that more. I don’t think I’m going to have an articulate response to that off the bat. But wait, can you say a little bit more about that, actually?
Ross Kenyon: Sure. I mean, if the unimproved value of land is being taxed at a much higher rate, then you need land to be more productive to pay that tax. Otherwise, it will be sold to a more highly valued use. So like if you have farmland in the heart of the loop in Chicago, you will sell that to someone who’s going to build a skyscraper.
Dr. Madeleine Fairbairn: Yeah, I mean, I think that it’s so complicated. I don’t think I’m going to go there. I’ll have like too many.
Unknown speaker: It’s a great escape.
Dr. Madeleine Fairbairn: Angry tweets.
Ross Kenyon: No, I think it’s a really, really interesting question and a nice nuance there. I’m glad you thought outside the box of going there because that was unexpected and refreshing. And Georgism is also having a little bit of a payday in certain communities too. Did you read Radical Markets at all by Glenn Weil? No. It was pretty influential. I think I found it through Vitalik Buterin and the Ethereum community. But some of those ideas about, especially as digital real estate becomes more of a thing with the metaverse and Georgism and squatting on digital assets, there’s There’s a whole, I’m sure people have already beat you to the research punch.
Dr. Madeleine Fairbairn: I know. I think they have. I think this is like not even, I know I get excited when I see these articles about like real estate in the metaverse. I get really excited about it. And then I’m like, okay, someone’s already working about that. We’ll read all about it when it comes out.
Lauren Gifford: Well, that actually takes me to the question that I wanted to ask you, maybe like a wrap up question, which is you had said that you’ve been working on something else for the last couple of years. And I’m curious, like, what’s your latest project? What are you thinking about and working on?
Dr. Madeleine Fairbairn: I’ve been doing a couple of interconnected projects around sort of related to agri-food tech. So I’m part of a group of scholars in the UC system, well, particularly in the UC system, called the UC After Project, Agri-Food Technology Research Project, looking at a lot of sort of the ways in which agri-food tech is proposing to solve our problems, kind of the one thing that I’ve been doing, for instance, is going to agri-food tech pitches and just sort of looking at the ways in which the problems are being framed, the problems of the food systems system.
How do those line up with what I, like a scholar of the agri-food system, would think the problems of the food system are? What kind of technologies are being proposed? What are the profit models? And so that’s sort of in early stages and just kind of Really fascinating.
Lauren Gifford: We’re on the radio. I was just gonna say we’re on a podcast so people can’t see but I’m like smiling right now. It sounds so cool. So interesting. And like, so on trend, right? Like this is this is I was taught a business class at Northeastern University’s business school this year. And a lot of the students were interested in the agri-food business, actually. And it was a class on impact investing and social finance. But it was so interesting to me to hear how many people in their late teens and early 20s were beyond meat, got them.
And they were like, We can use pea protein and we need to invest in these things. And I was like, wow, all these young people are thinking about this. People interested in finance. So anyway, I think it’s so cool.
Dr. Madeleine Fairbairn: My classes are the same. Like every student wants to do their final paper on cricket protein. You know, it’s the alternative protein space is just exploding. It’s bananas. Yeah. And I think it has to do with certain particular trends, like just alternative protein blowing up because of these certain companies that have inspired a lot of interest. But also, I do think it sort of ties into what we’ve been talking about a lot throughout, which is the sort of growing desire for finance to do more, like the desire for impact. In some ways, sort of really genuine potential to affect change when you’re working in a realm like food or agriculture that is so essential to human life, you know, survival and health and livelihoods.
I do think also it’s an easy place to, you know, to attract investors through claims of impact. So it’s kind of complicated in some of those same ways we’ve been talking about.
Lauren Gifford: Yeah, it fits that narrative of like disruption. But I got to say, as a lifelong vegetarian, I will always be in Camp Black Bean Burger. And that like gross fake meat can just...
Dr. Madeleine Fairbairn: You like your veggie burgers to look like vegetables?
Lauren Gifford: Yes, yes. And I will not waver in that.
Ross Kenyon: Okay. Well, thanks for sharing all of that with us, Madeleine. Thanks for being on the show. The book, if you’re listening and you’d like to read it and get all those details for yourself, is Fields of Gold, Financing the Global Land Rush by Madeleine Fairbairn. Thanks for being here, Madeleine.
Dr. Madeleine Fairbairn: Thank you for having me.
Ross Kenyon: Thank you. It was great.
Lauren Gifford: It was great to chat with you, Madeleine. So cool. Nice to meet you.
Ross Kenyon: Thanks for the help, Lauren. Wouldn’t have been the same show without you and all of your expert knowledge in this area. So thanks for coming and hanging with me. And thanks so much for listening. If you like what we’re doing here, please give us a great rating and review on Apple Podcasts and also Spotify. They just started doing ratings recently too. It helps us a lot. It helps us get the show to new people. Share it with a friend. And thank you so much for listening. Thank you so much for listening.
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