Why did BILL GATES quietly become the largest owner of FARMLAND in the U.S.?
For many investors, agricultural land was not in their investment portfolio until the beginning of 2021. When several u.s media revealed that the largest owner of agricultural land was bill gates, despite being more recognized in the computer world.
as the founder of Microsoft or by his foundation, bill gates quietly bought the last 10 years, 269 000 acres of land, of which 242 000 are for agriculture expressed in another way. These 242 thousand acres are equivalent to 378 square miles. To get an idea, the land area of new york city is 302 square miles, so it’s like bill gates own more land than the entire city of new york. BILL GATES
These acquisitions are not concentrated in a single territory, but he has bought land in 19 states across the united states. But the question is what is bill gates’ interest in accumulating so much farmland to the point of becoming the largest landowner in the united states? Many speculated about bill gates, motivation for buying that much land assuming it was a food sustainability strategy or something to do with climate change. BILL GATES
but gates himself denied that these acquisitions had anything to do with these issues or with any objective of his foundation, so it could be said that the billionaire bought so much agricultural land for the profitability and value they offer and for what food production will mean in the future for the entire population. BILL GATES
Unlike other types of investments, agricultural land has an intrinsic value, no matter what happens, people will continue to need to eat and, with a growing population estimated to reach 10 billion by 2050, there will be no shortage of people to feed. So it is not surprising that the rate of return on this type of land over the last 47 years in the united states has averaged 10.27 percent per year, even if only the period between 1992 and 2020 is taken into account.
The average annual return on farmland was 10.8 percent higher than 8.1 percent for real estate. 7.8 percent for u.s stocks and 6 percent for gold, so buying land is a good investment and has been for a long time because it is a limited resource. So not only is it becoming more and more valuable, but we have less and less land to devote to agriculture in the united states in the mid-2000s land dedicated to agriculture was valued at about sixteen hundred dollars per acre as late as 2021. It was valued at one thousand three hundred and eighty dollars now. BILL GATES
The other question is: if farmland is such a profitable investment, why wasn’t it a common asset among financial investors in the united states, in the past, most farmlands were owned by families and tended to be passed down from one generation to the next. That is the children continued the family business, which created high barriers to entry for non-family investors. BILL GATES
However, this has been changing in recent years, because younger generations are not interested in farming farmers over the age of 65 own 40 of the land and these owners are outnumbered by six times the number of owners under the age of 35, so that as more farmers retire and sell or rent their land a profitable asset that was once difficult to acquire because it remains in the hands of the children, is now falling into the hands of outside investors, both individual and institutional, in other words. BILL GATES
working. The land has always been a physical and demanding task, so it is not difficult to conclude why most of these physically demanding jobs are performed by immigrants according to a study conducted by the center for global development, the willingness of native-born Americans to work in the typical jobs performed by immigrants is close to zero. BILL GATES
The study showed that from 1998 to 2012 at least 130 000, north Carolinians were unemployed year after year. However, the number of native-born Americans who applied for farm jobs was never more than 268 people out of the 130 000 unemployed, that is the proportion of unemployed Americans who applied for farm labor, never exceeded 0.09 percent. BILL GATES
Additionally, the few people who were hired didn’t last long, for example, in 2011 245 people were hired out of 268 who applied for the job, but only 163 showed up on the first day of work and of these only seven lasted until the end of the growing season the study also notes that Mexican workers are much more likely to stay for the entire growing season. Approximately 90 percent continued working until the end. BILL GATES
It is a fact that Americans are increasingly going to college and prefer to seek other less physical jobs, moreover, most work in the agricultural sector is somewhat of a step down in status. So it is not surprising that younger generations are becoming less and less interested in this sector and that this has opened up the opportunity for billionaires. Like bill gates accumulating large amounts of farmland in so many states, it is not only bill gates who have invested in this asset. BILL GATES
Interest has also increased among institutional investors. During the financial crisis of 2008, investors tried to find alternatives to a traditional, haven. Investments such as bonds and gold in 2005 there was 19 farmland, investment funds worldwide and by 2020 there were 166, which translates into a nine-fold increase in just 15 years farmland, apart from being a stable and profitable investment has another advantage, and that is that it is not related to other major asset classes such as stocks,
bonds or gold. This means that it is not affected by the price of other assets, for example, at the beginning of the pandemic. Practically all markets and all types of businesses fell, but the sector that remained in operation or at least was not so affected as agriculture due to its vital function for humanity, so agriculture is one of the oldest and most reliable sources of wealth throughout the ages, but until a few years ago it was a business restricted to families. Now, practically anyone can invest in this asset; it is not necessary to be a millionaire or have specialized knowledge. BILL GATES
Investment platforms allow you to buy stakes and land either by acquiring a share of land, lease fees, or a share of crop sales. In addition, if the farm appreciates, the investor can also make a profit when it comes to selling with all this interest, and consequently, with all the capital that is being directed to this type of investment. BILL GATES
one might think that it will harm the sector because the land will be owned by people who have no idea about agriculture or who do not cultivate the land themselves. However, to meet the needs of the growing population combined with increasingly scarce land, this capital seems unnecessary to increase production efficiency and the long-term sustainability of crops. BILL GATES
All innovations, processes, improvements, or new machinery have a very high cost for farmers- and this is where this new capital will play a very important role for the sector. In short, the reasons behind bill gates’ investments in agricultural land are varied from its vital role in the global food supply to its historically strong financial performance, and this opportunity is being facilitated at present by the fact that new generations and farming families are not as interested in continuing the business.
thus removing a barrier to entry for investors looking to diversify their portfolio over the long term. In addition, the fact that land is becoming increasingly scarce makes it an even more valuable asset, although the potential for agriculture in the oceans has recently been explored so that the land shortage problem could be solved.