Farmers are saying “howdy!” to a new set of neighbors: hedge fund managers. In an effort to stay ahead of end-of-the-world scenarios in which the planet runs out of food and inflation runs amok, hedge fund managers are buying up farmland and agriculture infrastructure like it was Hong Kong real estate. In fact, there is a hedge fund that owns enough farmland to make it the 15th largest farmer in the U.S.
This phenomenon seems to have started in the U.K. circa 2008. At that time, a British newspaper reported on a hedge fund manager who saw rising grain prices as a buy signal for farmland. The trend has crossed the pond, prompting the Federal Reserve Bank of Kansas City to warn against a farmland bubble. In 2011, there is approximately $14 billion of private funds invested in agriculture and farmland. The number is projected to grow tenfold over the next ten years.
Hedge fund managers are counting on the coming of bad times in which people will clamor for their own land and food will be scarce. They forecast a collapsed dollar, runaway inflation, and political chaos that will drive up the price of farmland to astronomical levels. Although the Consumer Price Index is currently showing inflation around 1.5 percent, forecasts of double digit inflation in the next decade are gaining traction. One wonders, if fund managers are this pessimistic, how do they motivate themselves to go to work every day? Perhaps buying farmland is a coping mechanism.
Gloomsters can look to such worrying signs as the World Food Program running out of food, and forecasts of food shortages in the U.S. An investor told CNBC that shortages were coming and prices would skyrocket. The news for anyone interested in growing their own food is to buy your plot of land now before it is too late.
Growing your own food is an understandable reaction to the growing trend of genetically modifying food and adding all sorts of chemicals to foodstuffs. When you own your own farmland, you can choose to plant crops using unmodified seed and to employ organic farming techniques. You will still have to be on guard from invasive genetically engineered seed that could contaminate your crop, as GM seed becomes more prevalent. Luckily, there are still sources of unmodified seed, despite the attempts of mega-agriculture companies to buy up all the independent seed producers. So, if you agree with hedge fund managers that predict the end is near, buy some land, build a bunker, plant some organic corn and stock up on ammunition.