The Rise of Agriculture as an "Alternative Asset Class": Global Geographies of Financial Economization

• Applicant: Professor Dr. Stefan Ouma
• Subject Area: Human Geography
• Term: from 2017 to 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 363300598

Since the financial and food price crises 2007-8, the world has seen a stark rise in financial investments in farmland and agricultural production. Indeed, global finance has been identified as one of the main drivers of the so-called global land rush. The subprime shock of 2007-08 induced great uncertainties among financial market players and investors suddenly were in search for new alternative asset classes that promised higher risk-adjusted and more stable returns than established asset classes such as bonds, equities, and real estate. Consequently, financial investors have made a strong case for agriculture as an alternative asset class in recent years. Factors that seem to make it a safe bet are a growing world population; changing dietary preferences towards meat and protein in emerging markets; a rising demand for agri-fuels and carbon sinks in the light of peak oil and climate change; the limited availability of agricultural land; stagnant or decreasing productivity levels in core production regions, and climate change induced crop failures. There is a growing literature that tries to make sense of the finance-driven land rush and we are slowly coming to terms with how financial investors (e.g. sovereign wealth funds, pension funds, insurance companies, asset management companies) have ventured into investing in farmland and agricultural production. This includes a wide range of investment modalities that help turn farmland or shares in agricultural companies into tradable financial products. However, this literature (owed to a restricted analytical, empirical and methodological optic) also exposes several research gaps that this project seeks to address. Using insights from the geographies of money and finance, social studies of finance, sociology/social studies of markets, and new economic geography and anthropology of resources literatures, this project will generate pioneering knowledge on a) the global evolution and sectoral architecture of farmland/agriculture as an alternative asset class; b) the microstructure of particular investment networks and how those operate within concrete geographical, economic and political-institutional contexts; c) how agricultural production is organized in a social field where the demands of investors encounter the demands of local and national stakeholders. Tanzania and New Zealand will serve as case studies for answering questions b) and c). Overall, this project will enrich current debates on the entanglement between financial markets and resource-based economic activities in economic geography and cognate disciplines. Fellow academics, civil society and policy-makers will benefit from such a reconstructive analysis. The global financial crisis showed how important it is to have an understanding of the quotidian workings of financial markets.

• DFG Programme: Research Grants
• International Connection: Tanzania
• Cooperation Partner: Mangasini Atanasi Katundu, Ph.D.