A field that was formerly scrubland is now planted with soybeans somewhere on the western fringe of Brazil’s Cerrado, a huge tropical savanna that spans the country’s interior and has grown to be the most productive agricultural frontier in the Southern Hemisphere. The logistics system that connects the harvest to a port on the Atlantic coast, the GPS-guided planting equipment, and the infrastructure for soil amendments are all funded by a fund structure with offices in Geneva, London, and New York rather than a Brazilian farming family.
This is not uncommon. For the past ten years, this pattern has been developing throughout South America and increasingly in some parts of Sub-Saharan Africa; it will pick up speed in 2025 when institutional capital enters agricultural land at a rate that makes it hard to ignore the trend.
Global agriculture investment funds were expected to grow from $40 billion in 2020 to $60 billion in 2025, a 50% rise. Institutional investment in U.S. farmland alone increased from less than $2 billion in 2005 to more than $16 billion in 2025. However, these figures only reflect a small portion of the global picture, as American institutional buyers have been looking south as domestic farmland prices have increased and corporate land ownership has come under more regulatory pressure.
Due to their lower per-acre costs, plentiful water, consistent growing seasons, and the unique benefit of counter-seasonal production—harvesting in the summer in the Southern Hemisphere while fields in the Northern Hemisphere are covered in snow—Brazil, Argentina, and Uruguay have drawn the most capital. Vertically integrated food companies and sovereign wealth funds find this year-round supply chain control appealing.
The investment thesis is based on a number of reasons that are both individually and together difficult to refute. In a context when traditional inflation hedges, such as gold and some real estate segments, have demonstrated greater volatility, agricultural land has typically outperformed inflation over extended periods of time. The Food and Agriculture Organization predicts that in order to feed the world’s population of almost 10 billion people by 2050, global food output will need to rise by more than 50%. This means that food demand is essentially inelastic.
As urbanization paves over agricultural area throughout Asia and portions of Africa, the amount of arable land available to raise that food is concurrently decreasing. Investors purchasing acreage in Mato Grosso and Uruguay are not making predictions about the value of produce in the upcoming quarter. They are placing a wager on a structural supply-demand imbalance that has been growing for decades. The question of whether that wager is financially justified is different from the question of whether it is morally right.
The people whose everyday lives are closest to the land being acquired are the ones who make the strongest ethical criticisms. Critics characterize the pattern as an international land grab, a neo-colonial model in which local farmers, unable to compete with institutional capital for land purchases, find themselves working as tenants on land they once owned or hoped to own, while developing countries produce bulk export commodities for wealthy private interests.
In areas that institutional purchasers target, land prices have increased to the point where local farmers are effectively shut out of the market. The income streams from water rights and carbon credits that institutional buyers are increasingly extracting from these properties reflect economic value that, under a different ownership structure, may support local community development rather than remote portfolio profits.
Observing the regulatory discussions taking place on both sides of the equator gives the impression that the political response to institutional farmland acquisition is moving in the right direction but hasn’t kept up with the rate of acquisition. Examples of this include Senator Booker’s Farmland for Farmers Act in the United States and pressure from rural advocacy groups in Brazil and Uruguay for ownership restrictions.
Legislators move more slowly than the funds. There is absolutely no movement of the ground. The question of whether the financial logic that attracts institutional investors to farmland is compatible with the long-term food security of the countries whose soil is being purchased remains unanswered as capital flows at this scale into a limited, essential, and politically charged asset class.
