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Geoforum
journal homepage: www.elsevier.com/locate/geoforum

From financialization to operations of capital: Historicizing


and disentangling the finance–farmland-nexus
Stefan Ouma
Economic Geography Research Group, Department of Human Geography, Goethe University Frankfurt am Main, Theodor-W.-Adorno-Platz 6, PEG-Gebaeude, 60629
Frankfurt, Germany

a r t i c l e i n f o a b s t r a c t

Article history: This largely programmatic paper offers a new way of thinking through the incorporation of farmland into
Received 21 May 2015 financial markets. Building on the notion of ‘‘operations of capital”, it sketches analytical entry points for
Received in revised form 28 January 2016 scrutinizing the inner workings of agri-finance capital formation. The concept of operations can make two
Accepted 1 February 2016
useful contributions to the existing discussion. First, it helps provide a more nuanced historicization of
Available online xxxx
the entanglement between finance and farmland. Finance has a long history of penetrating agriculture
and the new quality of the contemporary coupling of finance and farmland only becomes fully visible
Keywords:
when adopting a more nuanced historical perspective. Rather than imagining the history of capitalism
Farmland
Agriculture
as one where industrial capitalism gives way to financialized capitalism, the concept of operations sen-
Global finance sitizes us for the situated modes, processes and practices of financial economization that have reworked
Financialization economy, society and nature at specific historical conjunctures.
Social studies of finance Second, it allows us to move beyond simply treating ‘‘financialization” as explanans. Shifting attention
History to the situated practical activities of global finance, it eventually helps us explore central categories of
Global land rush financial economization (‘‘capital”, ‘‘resources”, ‘‘property” and ‘‘value”) as practical accomplishments
rather than taking them for granted. Only then can we come to terms with how finance works through
farmland in different geographical settings. Empirical material from an ongoing research project will sup-
port my arguments.
Ó 2016 Elsevier Ltd. All rights reserved.

1. Introduction More recently, several authors have used the concept to make
sense of finance’s growing appetite for all things agricultural (for
‘‘Financialization” has become a key term in the critical social critical reviews, see Ouma, 2014, 2015b). While attuning us to a
sciences. Often used to describe a historical condition that is number of important questions, the project of applying a financial-
marked by the ‘‘growing and systemic power of finance and finan- ization perspective to the incorporation of farmland and food pro-
cial engineering” (Blackburn, 2006, p. 40), observers have found duction into financial circuits of value encounters a number of
that almost everything has been financialized: economies, firms, analytical and epistemological challenges. First, much of the liter-
sectors, nature, households, daily life. While scholars working with ature, as the financialization literature more generally, deploys ‘a
the concept have often contributed to enhancing our understand- restricted historical optic, (...) thus overlooking historic parallels
ing of the rise of global finance and its implications for the ‘‘real and (dis)continuities’ (Christophers, 2015, p. 192). After all, finance
economy”, the reiteration of the concept across the social sciences has a long history of penetrating agriculture (Chayanov, 1966;
has not been unproblematic (Christophers, 2015). Frequently, ‘‘fin Cronon, 1992). Second, given that the concept has been used to
ancialization” has been turned into an abstract force sui generis, make sense of dynamics in core regions of global financialized cap-
morphing from explanandum into explanans. In this regard, it italism (e.g., Krippner, 2005; Lapavitsas, 2011), the next challenge
has shared the fate of other concepts such as ‘‘capitalism”, ‘‘the seems to be ‘to produce rich, contextualized research on what pro-
market”, ‘‘globalization” or ‘‘neoliberalism” (Ouma, 2015a). cesses of financialisation mean in broader regional contexts,
beyond the usual financial industries, occupations and places’
(Lee et al., 2009, p. 736). What happens if we start researching
the new finance–farmland-nexus in Zambia, Tanzania, Australia,
E-mail address: ouma@geo.uni-frankfurt.de

http://dx.doi.org/10.1016/j.geoforum.2016.02.003
0016-7185/Ó 2016 Elsevier Ltd. All rights reserved.

Please cite this article in press as: Ouma, S. From financialization to operations of capital: Historicizing and disentangling the finance–farmland-nexus.
Geoforum (2016), http://dx.doi.org/10.1016/j.geoforum.2016.02.003
2 S. Ouma / Geoforum xxx (2016) xxx–xxx

or New Zealand? Might accounts from ‘‘the margins”1 requalify into practical activities – ‘‘things” that are often taken for granted
existing understandings of ‘‘financialization”? Finally, the existing in the existing literature. As will eventually become clear, unpacking
literature is unsure whether it wants to use the concept of ‘‘financi these activities is a political act, because it ‘‘un-black-boxes”
alization” as a prism to theorize accumulation dynamics in contem- ‘devices, practices, or organizations that are opaque to outsiders,
porary capitalism, or whether it wants to say something about how often because their contents are regarded as ‘‘technical”’
finance works. Much of the finance-oriented works on the global (MacKenzie, 2005, p. 555).
land rush does in fact rely on literature that does the former. Of Overall, this paper’s ambition is less to develop a new compre-
course, the question is whether a literature which does not have hensive framework for analyzing ‘‘finance-gone-farming”, but to
the ambition to explain how finance works can fully grasp how sketch different entry points for further exploring the geographi-
the incorporation of farmland and agriculture into financial markets cally variegated operations of agri-finance capital formation. Even
practically unfolds. though the paper’s nature is programmatic, I shall use empirical
This largely programmatic paper offers a new way of thinking material for illustrative purposes.
through the incorporation of farmland into ‘‘financial markets”. This paper is structured as follows: In the next section, I prob-
Building on the notion of operations of capital (Mezzadra and lematize some of the shortcomings of concept of ‘‘financialization”,
Neilson, 2013, 2015), a concept that has the power to bridge con- detailing how it has been put to use to study ‘‘finance-gone-farm
cerns of critical political economy with those of the practice- ing”. I will then propose an alternative analytics before historiciz-
attuned field of the social studies of finance, it sketches analytical ing the finance–farmland-nexus more nuancedly than done in the
entry points for further scrutinizing the inner workings of agri- existing literature. The latter part of the paper will disentangle the
finance capital formation. The concept of operations can make finance–farmland nexus and scrutinize the notions of capital,
two useful contributions to the existing discussion. First, it helps resources, property and value through the prism of the concept
provide a more nuanced historicization of the coupling of finance of operations. Arguments made in each section will be illustrated
and farmland. Early work on the global land rush at times created with empirical material from an ongoing research project on the
the impression that the ‘‘financialization of farmland” is a child of variegated financial economization of farmland and its local entan-
neoliberal capitalism (McMichael, 2012; White et al., 2012). More glements. ‘Follow[ing] the money’ (Christophers, 2011), the project
recently, several authors have tried to transcend this rather narrow builds on interviews with farm managers and/or asset managers in
historical take on finance’s entanglement with farming (e.g., Tanzania, Australia and New Zealand.3 While Tanzania, like much of
Fairbairn, 2014, 2015b; Gunnoe, 2014; Martin and Clapp, 2015). Africa, counts as a risky ‘‘niche market” for only ‘the hardiest of
This paper sympathizes with such undertakings. But rather than investors’ (White, 2014), Australia and New Zealand are considered
mobilizing the historically blurry catch-all concept of ‘‘financializ prime frontiers in financial circles, especially for large (but risk-
ation”, it advances the notion of operations of capital. The latter averse) institutional investors. Each of these countries offers differ-
attunes us to the situated modes, processes and practices of finan- ent crop choices, investment and property regimes, agroecological
cial economization that have reworked organizations, economic conditions, infrastructural bases, local socioeconomic particularities,
relations, labor and nature at specific historical conjunctures. His- and market conditions. Such historically produced and geographi-
toricizing the finance–farmland-nexus gets complicated by the fact cally variegated conditions affect the making of capital, resources,
that there is not one history of capitalist transition, but that there property, and value for ‘‘financial markets” in crucial but differenti-
are multiple histories (Taylor, 2010). The ‘‘financialization of farm- ated ways.
land” may mean different things in different agrarian contexts.
The second contribution of the concept lies in its power to over- 2. Farmland investments as ‘‘financialization
come one of the main lacunae of the existing literature, which,
despite greater historical sensitivity as of more recently, still treats It is now common sense in the critical social sciences that we
‘‘financialization” as an external force. Thus, this paper reaffirms live in financialized times. Since the crisis of industrial capitalism
Visser et al.’s (2015, p. 541) call to ‘examine real-life incarnations in the 1970s, finance has been steadily expanding its operations
of finance in the sector by looking at investment arrangements, into ever-new domains, which subsequently led to the incorpora-
including connections with the state, and its (regional) variations’ tion of currencies, manufacturing, real estate, infrastructure,
(see also Ducastel and Anseeuw, 2016; Williams, 2014). It further households, commodities and even the weather into financial cir-
substantiates this concern, as it urges scholars to investigate the cuits of value. Therefore, it was not surprising that finance recently
historically and geographically variegated grounded operations of turned its eye to farmland and food production, at least this is the
finance. An operations perspective eventually shifts the focus from narrative we frequently encounter in much of the current litera-
an ostensive notion of ‘‘financialization” (i.e. financialization as ture that deals with the finance-driven version of the global land
preconfigured explanans) to a performative one, treating it as a rush (Ouma, 2014). It sounds convincing, as finance’s growing
practical accomplishment.2 The operative dimension of farmland interest in all things agricultural seems to be a text-book case of
investment relations can only be effectively rematerialized if we Harvey’s idea of the spatiotemporal fix (Castree, 2009; Harvey,
break down the categories of capital, resources, property and value 1982): after crises and devaluations in established domains of
finance, capital sought greener pastures, extending its operational
space into geographies in which it was previously not much inter-
1
By account from ‘‘the margins”, I do not simply mean an account of capitalist ested in. ‘‘Finance” itself has not fallen short of spectacularising its
accumulation dynamics produced in a so-called ‘‘periphery” (Shivji, 2009). I rather
new interest in ‘‘real things”. Industry players claim that even
mean an account that aims at decentering histories of capitalism written in epistemic
centers such as North America or Europe in relation to ‘‘other spaces” (Taylor, 2010). though agriculture was the oldest asset class in world, investors
From such a perspective, even settler-colonial countries such as New Zealand or had grossly neglected it. While this claim obscures the long-
Australia would count as ‘‘margins” because they have neither been featured strongly lasting entanglements between finance and agriculture, e.g. in
in the prominent literature on financialization nor in the literature on its agrarian the domain of commodity futures, it serves well to make an
variant (for exceptions, see Le Heron, 2013; Magnan, 2015; Sippel et al., 2015).
2
The inspiration here is Latour’s call for a shift from an ostensive to a performative
3
take on social relations and society at large. We cannot leave the definition of Additionally, it draws on interviews with key industry players placed in Germany,
‘‘society” (or ‘‘economy”) to social scientists and their preconfigured categories. We the US and South Africa, observations made at different agri-investment conferences,
need to focus on how it is performed through everyday practices of definition, and the analysis of media and investor accounts of farmland investments. The project
legitimation, enactment etc. among social actors themselves (Latour, 1986: 273). started in 2013.

Please cite this article in press as: Ouma, S. From financialization to operations of capital: Historicizing and disentangling the finance–farmland-nexus.
Geoforum (2016), http://dx.doi.org/10.1016/j.geoforum.2016.02.003
S. Ouma / Geoforum xxx (2016) xxx–xxx 3

investment case for farmland and agriculture. Indeed, since e-farming”.6 Even though not explicitly rooted in that intellectual
2007/08 farmland/agriculture is framed as a thing you should bet tradition, Martin et al. (2008, p 128) capture the gist of such a pro-
on. According to legendary investor Jim Rogers, ‘farmers are going gramme quite well: ‘(r)eckoning finance into a practical activity dis-
to be driving the Lamborghinis; stock brokers are going to be driv- closes capital’s own methods such that they might be both
ing tractors’ (quoted in Harding, 2012). With farmland/agriculture, reappropriated and redeployed (...)’ – ‘it is an effort to specify what
one can be sure for the next decades that there will be effective capital’s movement does, both to itself and across a whole range of
demand – ‘no matter how bad things get, we all have to eat’ (The social sites and activities’ (Martin et al., 2008: 210).
Economist, 2009).4
Harvey’s oevre, together with a few other political economists 3. Farmland investments as operations of capital
such as Arrighi (1994) or Krippner (2005), often serves as a key ref-
erence when scholars make sense of the finance-driven version of Embracing more practice-attuned approaches to study the mul-
the global land rush and requalify it as the ‘‘financialization (of tiple activities of global finance, however, risks denying ‘analytical
food) and farmland”. For instance, drawing on Harvey (2010), validity to the category of capital’ (Mezzadra and Neilson, 2013,
Isakson (2014: 765) notes: ‘Given that much – though certainly p. 10) and capitalism more generally (Leyshon and Thrift, 2007;
not all [...] – of the acquired land is located in foreign markets, Preda, 2013). In this regard, the social studies of finance have
these land acquisitions can be likened to a ‘‘spatial fix”, wherein attracted the same sort of criticism as its related field, the social
financial actors seek accumulation opportunities abroad when studies of economization and marketization (see, e.g., Fine, 2003;
domestic markets are no longer capable of delivering’ (see also Christophers, 2014; Ouma, 2015a). A useful bridging concept in
McMichael, 2012). this regard is that of ‘‘operations of capital” recently developed
Such a reading is attractive, because it opens the debate on by Mezzadra and Neilson (2013, 2015). Speaking from a political
finance’s penetration of agriculture to broader questions about economy perspective that had fruitful encounters with poststruc-
the spatiotemporal dynamics of capitalism, including its boom turalism and the new materialism (Tsing, 2012), it helps develop
and bust cycles. Yet even though such ‘‘macro language” is good a grounded understanding of historio-geographically variegated
for starting debates about epochal shifts in the global economy financial economization processes7:
and their underlying dynamics, it often fails to provide us with
an understanding of how the economies of finance are assembled ‘Using the concept of operations of capital [...] opens a new
and worked upon in practice. It is against this backdrop that I angle for the critical analysis of the relation between capital
recently argued practice-attuned approaches in anthropology, and capitalism. An operation always refers to specific capitalist
sociology, and the interdisciplinary field of the social studies of actors while also being embedded in a wider network of opera-
finance can help provide novel insights into the grounded work- tions and relations that involve other actors, processes, and
ings of ‘‘finance-gone-farming” (Ouma, 2014, 2015b; see also structures. This gives us two analytical avenues through which
Ducastel and Anseeuw, 2016; Williams, 2014). to examine the work done by an operation. The first, with its
But existing accounts employing a ‘‘financialization analytics” reference to specific capitalist actors, reveals the workings of
to make sense of the enrollment of farmland into financial circuits capital in particular material configurations, shedding light on
of value encounter at least three other (more generic) problems. processes of valorization as well as on the frictions and tensions
First, most of them use ‘‘financialization” as a concept to theorize crisscrossing them in lived and grounded circumstances. The
the changing nature of capitalist accumulation rather than to second focuses on the articulation of operations into larger
unpack finance’s inner workings as such. Second, despite the fact and changing formations that comprise capitalism as a whole’
that the idea of the spatiotemporal fix stands for a geographical (Mezzadra and Neilson, 2015: 6–7).
historical-materialist analytical orientation (Castree, 2009), it was
only more recently that scholars started to explicitly acknowledge Thus, an operations of capital analytics does not solely focus on
the importance of a long-term historical-geographical perspective the everyday practices of finance – finance as work. Operations are
(Fairbairn, 2014, 2015a; Gunnoe, 2014; Martin and Clapp, 2015; quotidian and abstract at once, as they speak to shared legal stan-
Sommerville and Magnan, 2015). Third, available readings largely dards, conventions, heuristics and rationalities of the global
operate with a foundational vocabulary that takes for granted the finance industry. These are recursively enacted in the everyday
objects it describes. In other words, existing works consider practices of financial economization, invoking a ‘relation between
money, capital and the farmland underpinning the latter to ‘be moment and totality’ (Giddens, 1979, p. 79).
unproblematic material resources’ (de Goede, 2005, p. 6). However, For instance, the remaking of farmland/agriculture into an alter-
like money capital, resources, property and value – central ‘‘things” native asset class is embedded into the larger socio-legal and -
in ‘‘financialization of farmland” – ‘are not unmediated economic technical architecture of the world of money management, which
realities that can be taken as a starting point for academic inquiry’ is led by institutional investors such as pension funds and insur-
(de Goede, 2005), but arise from contested practices of financial ance companies. These act as trustees for the original asset owners
economization.5 Unpacking the practical activities of finance and usually delegate their funds to specialized asset managers
in situ has been the prime goal of an interdisciplinary field popular- (Clark and Monk, 2014), which in turn would invest these funds
ized as the social studies of finance (see, e.g. Langley, 2008; into farmland operations, either through a lease-operate, own-
MacKenzie, 2005; Preda, 2013; Pryke and Du Gay, 2007). Insights operate or own-lease structure (Daniel, 2012; Fairbairn, 2014).
from this field can breathe fresh air into the study of ‘‘finance-gon The investment relationships underpinning these deals are heavily
contractualized and they contain as much public regulation (e.g.,
4
As outlined elsewhere (McMichael, 2012; Fairbairn, 2014; author, 2014), there
6
are several other reasons why farmland (and agriculture more generally) is currently This is not to say that all large-scale land acquisitions happening over the past
being promoted as an ‘‘alternative asset class”. Among others, this includes farmland’s decade or so have been driven by genuinely financial investors. Strategic acquisitions
simple and tangible character, as well as its attested portfolio-diversifying charac- by agrobusiness enterprises or states have also been key drivers of the global land
teristics and negative correlation with the value of other mainstream assets; ability to rush. These acquisitions are not subject of this paper.
7
store and produce value; and robustness against inflation. What should be added in this regard is that the concept of operations does not
5
The term ‘‘financial economization” as used here is inspired by the social studies necessarily call for an ethnographic approach to cash in its epistemological ambitions.
of economization and marketization literature (Çalısßkan and Callon, 2009, 2010). Rather, it stands for a way of ‘undertaking problematizations’ (Roy, 2012, p. 34) of the
Practices of financial economization lie at the core of finance’s operations. world of finance.

Please cite this article in press as: Ouma, S. From financialization to operations of capital: Historicizing and disentangling the finance–farmland-nexus.
Geoforum (2016), http://dx.doi.org/10.1016/j.geoforum.2016.02.003
4 S. Ouma / Geoforum xxx (2016) xxx–xxx

with regard to investor protection; information sharing; division of According to the interviewee, the mandate that had been given
labor) (Ortiz, 2014) as they contain financial theory (MacKenzie, to him was to ‘realize the optimum potential’ (interview, 2013).
2005). What struck me, besides this being a great example of the
When it comes to farmland investments, both large investors ‘wormhole form’ of globalized capitalism (Sheppard, 2002,
(such as pension funds) and asset managers usually relate to the p. 323),9 was to see that the whole 4000 ha property was fenced
same models, which have been formalized since at least the by a New Zealand type livestock fence, which was guarded by a
1980s. For instance, much of the arguments for farmland as an patrol car 24/7. The fence was meant to keep out local pastoralists,
investment opportunity invoke the basics of modern portfolio who would frequently send in their cows after fields had been har-
management theory (MPMT), which stipulates that ‘diversification vested, which, however interfered with the zero tillage10 cultivation
increases expected portfolio returns while reducing volatility’ methods the farm management employed. While the farm manager
(Cumming et al., 2013, p. 21) – add farmland to your portfolio, was quick to point out that ‘this is a livestock and not a security
and you will have a more robust one (Chen et al., 2014)! While fence’ (interview, 2013), it was, nevertheless, part of a larger security
MPMT is usually associated with quantitative techniques of portfo- apparatus that was meant to tame risk by annihilating contingency.
lio management and construction (Langley, 2008; Vormbusch, The fence, together with the frequent reporting required by inves-
2012), farmland investments have not yet been subjected to highly tors, helped align the ‘historical time’ (Vogl, 2011: 171) of farming
sophisticated mathematical modelling due to the limited calcula- with the specific temporality of the world of money management
tive commensurability of farmland with other asset classes.8 Nev- (Mezzadra and Neilson, 2013, p. 8; Ouma and Bläser, 2015). For an
ertheless, the associated models still exert an influence on the investor or asset manager to know where an asset stands, it must
performative constitution of an ‘‘asset class in-the-making”. Thus, be possible to ‘‘present-ize” its future value through techniques of
contemporary practices of financial economization rest upon a valuation (Ducastel and Anseeuw, 2016). The less contingency
‘finance-specific order of knowledge’ (Vormbusch, 2012, p. 314) that impedes this process, the better. Especially pension funds, who often
regulates the placement of capital into established and new promise their clients guaranteed minimum returns on capital, are
domains. As one investment consultant interviewed said, ‘it does interested in securitizing the ‘‘presentization” of future value. There-
not matter how an asset class is being called, but that it can be rep- fore, turning farmland into a financial asset is about more than sim-
resented according to financial criteria’ (interview, 2014). ply investing with a profit. It is about establishing the power to
Institutional investors and delegated asset managers constantly capitalize future returns (Nitzan and Bichler, 2009). An operations
have to weigh the future worth of existing investments vis-à-vis perspective sensitizes us to the intertwinedness of concrete practices
the potential future worth of alternative investments (Ducastel of financial economization with more general investment rationali-
and Anseeuw, 2016: 4). Subjected to both the dictates of financial ties, heuristics, and standards as well as the value regimes shaping
theory and a fiduciary imperative, they will only go for an ‘‘asset these.
(class)” if it has a justifiable financial worth (Orléan, 2014). This
does not simply mean that an object generates sufficient returns
on capital, but that it generates relatively superior, risk-adjusted 4. Historicizing the finance–farmland nexus
returns. There is no final worth in the world of finance, only asset
classes competing with each other. These structural imperatives Since capitalism is a highly dynamic system (Harvey, 2010),
make fund managers ‘face the constant challenge of maximizing operations of agri-finance capital formation have changed over
returns on their investment portfolios, subject to risk and liquidity time. This is why it is important to situate the contemporary
constraints’ (Lins et al., 1992, p. 449), which puts pressure on finance-driven version of the global land rush historically in order
investments further downstream in the ‘‘financial value chain”. to be in a better position to tease out the specific qualities of the
An empirical snapshot may illustrate this. When visiting a contemporary process. Let us start in Brisbane, Australia.
finance-backed grain farm in northern Tanzania in 2013, I met In September 2014, the Queensland Art Gallery hosted an exhi-
the farm manager, who also would act as the local representative bition called Harvest,11 which engaged with the history, geography,
of the Asia-based financial intermediary who managed the ‘‘asset” production and politics of food in Queensland and beyond. The exhi-
on behalf of a European institutional investor. During the inter- bition featured a collection of photographs by Richard Daintree, one
view, in a moment of reflection upon his daily routines on a farm of the first British to explore what is now known as Queensland. A
that was now part of a financial portfolio, he emphasized that geologist and photographer, he took some impressive pictures of
much of his job was about accountability – producing numbers the region’s landscape, which he presented, together with geological
for investors. He would carry his phone with him twelve hours a maps, at the 1862 International Exhibition in London in a bid to
day, so that he could always be reached by the asset manager attract immigrants and investors to the colony (field diary, 2014).
entrusted with the project. There was a satellite interlink on the This account shows that neither the use of visual techniques to ren-
farm so that information could get out very quickly. The manager der land investible (Li, 2014), nor capital criss-crossing the globe to
underlined that ten years ago, this would not have been possible invest in farmland and other extractive industries are per se novel
due to technology gaps in this part of the world. Such connections, phenomena. While early accounts of the global land rush depicted
however, were necessary to meet the strict reporting standards of the new love affair between finance and food as an ‘unnatural cou-
large institutional investors, who themselves were subjected to a pling’ (Gosh, 2010), more recent work has shown that the entangle-
fiduciary imperative. Regularly, huge amounts of information had ment of finance with agricultural production dates back many
to be reported and he spent several hours every day administering decades, if not centuries (Martin and Clapp, 2015; Ouma, 2015b).
excel spreadsheets, rather than working on the farm itself. These accounts call for a longue durée perspective (Edelman et al.,
2013: 1528) ‘so that key continuities and shifts are clearly grasped

8 9
This is for a variety of reasons: First, there is a lack of historical data for many Sheppard (2002, p. 323) uses the metaphor of a wormhole to argue that under
regions of the world that would allow to compare the performance of specific globalized capitalism, two locations which are spatially distant can still be relation-
farmland investments with the performance of other assets. Second, while the value ally proximate through technology-mediated flows of communication, authority or
of other assets (such as stocks) can be assessed on a daily basis, this is much more commodities linking them.
10
difficult with farmland (‘there is no ticker for farmland’, see Sherrick et al., 2013). Zero tillage is a way of growing crops or pasture without disturbing the soil
Third, many farmland investments are conducted on case-to-case basis rather than through ploughing.
11
through sophisticated portfolio structures. http://www.qagoma.qld.gov.au/exhibitions/past/2014/harvest?refer=redirect.

Please cite this article in press as: Ouma, S. From financialization to operations of capital: Historicizing and disentangling the finance–farmland-nexus.
Geoforum (2016), http://dx.doi.org/10.1016/j.geoforum.2016.02.003
S. Ouma / Geoforum xxx (2016) xxx–xxx 5

with due to attention to agency and contingency’. This is a welcome time, farmers were increasingly being provided with ‘‘informal
move, and one which casts doubt on the analytical accuracy of credit” by agribusiness (input-providers, processors) under
accounts that equate ‘‘financialization” with the period of neoliberal contract-farming schemes (Weis, 2007: 89). These basically act
capitalism (e.g., Harvey, 2007; McMichael, 2012), since finance’s as ‘merchant-creditors’ (Axelrod, 2014, p. 8).
repeated extension into agriculture at earlier historical conjunctures The current phase of agri-finance capital formation evolved
could be equally understood in such terms. However, as welcome as from such shifts to a market-based system from 2007 onwards,
they are, existing historicizations are often done with little system- but also reflects novel developments inside and outside the
aticity and sensitivity to capitalism’s multiple histories.12 domain of finance15: the rise of institutional investors,16 such as
A longue durée operations of capital perspective implies engag- pension and private equity funds, the general acceptance of financial
ing with the shifting, place-specific couplings of finance and farm- practices and rationalities, the evolution of an unseen globality of
land that are nevertheless often co-constituted by global processes. finance due to regulatory convergence, the proliferation of invest-
As finance has been co-producing agricultural landscapes in alli- ment standards, the crises of established asset classes such as stocks
ance with farmers and the state around the world for decades, and bonds, as well as the increased demand for food, agrofuels and
our engagement with the finance–farmland nexus should be cen- carbon sinks are new developments which made finance take a sec-
tered on the question how this has unfolded in different geograph- ond look at agriculture, something which in the past it had often
ical and historical settings and how this has affected the structure, found too risky to invest in without state involvement (Martin and
management, control and ownership of farms. In this analytical Clapp, 2015). In detail, these developments have resulted in the fol-
spirit, Table 1 provides a systematic historicization of the lowing novel phenomena:
finance–farmland-nexus for the case of the US, which was selected First, rather than simply underwriting the individual or corpo-
due to the high availability of farmland data.13 rate control of land and resources (Burch and Lawrence, 2009,
Finance capital was heavily involved in the colonization of the p. 268) or buying of and leasing out land, finance is increasingly
US, not just by investing in slave-plantation agriculture, but also establishing direct ownership and managerial control over produc-
through several land bank initiatives, in which ‘local land owners tion, often through private equity-like17 (Daniel, 2012) or corporate
pooled mortgages on their land, and issued notes which were investment structures such as a private investment company18 (Luyt
accepted, locally at least, as a form of currency’ (Barry, 2003, p. et al., 2013). As argued earlier, this is often mediated by specialized
3). While farmers usually accessed finance through informal means asset managers, which in turn collaborate with so-called operators –
throughout the 17th, 18th and 19th century, the US government hired managers –, nurturing a new form of finance-driven contract-
entered farmland financing by passing the Federal Farm Loan Act farming (Sippel et al., 2015, p. 6) (see Fig. 1).
in 1916, which created the Federal Land Bank System for farm Second, obviously the contemporary version of the finance-
mortgage lending. It was a direct response to private finance’s driven land rush happens at a much larger scale. However, it seems
reluctance to invest in agriculture as well as to the political pres- to be less planetary in scope than many academic and industry dis-
sure mounted by well-organized farmers.14 What is interesting is courses tend to suggest. Even though some observers have noted
that the government-entry stage of agri-finance capital formation that development finance institutions such as the International
marks the beginning of increasing land consolidation in the US, Finance Corporation (IFC) are increasingly teaming up with private
where average farm sizes ‘ballooned between 1910 and 1970, from investors to ‘‘unlock value” from farmland in the Global South
138 to 390 acres’ (Axelrod, 2014: 6; see also Weis, 2007: 83). This (Daniel, 2012), large institutional investors such as Western pen-
suggests that debt-based forms of financial expansion can as much sion funds19 seem to mainly focus on four geographical regions:
lead to ‘‘new enclosures” as the equity-based forms currently criti-
cized in much of the land rush literature (Daniel, 2012).
From 1968 to 1986, the US government slowly decreased its
involvement in agricultural finance and banks took over, which 15
While I agree with Fairbairn (2015a: 211) that the current wave of financial
again led to further productivity increases and land consolidation, expansion has unique characteristics, I doubt that these can be identified by
with the average farm size during that period reaching 450 acres mobilizing the historically blurry notion of ‘‘financialization”.
16
(Axelrod, 2014, p. 7). The involvement of large institutional investors in farmland is not a thing of the
recent past (Ouma, 2015b). For instance, in the US, life insurance companies have
From 1987 onwards, a time of considerable financial deregula-
more than 80 years of experience investing in farmland (Fritz, 2012), and Continental
tion, we have basically seen the evolution of a market-based stage, Illinois Bank & Merrill Lynch tried to launch a farmland fund as early as 1977, a move
an important antecedent to the current system of agri-finance cap- that prompted congressional hearings and was finally stalled (Fritz, 2012). The early
ital formation. It is ‘marked by the introduction of more sophisti- coupling of finance and farmland in the US is also underlined by the fact that it has
cated agricultural finance’ (Axelrod, 2014, p. 8). At the same been theorized as a potential alternative asset class since at least the late 1960s
(Barry, 1980; Kost, 1968). As financial theory may contribute to the financial
formatting of the world it purports to describe (MacKenzie, 2005), this suggests that
finance permeated farmland markets much earlier than often assumed.
12 17
I am here less inspired by the varieties of capitalism literature, but more by ‘A private equity fund is a fund established to buy and sell companies, through
postcolonial literature, which is skeptical of accounts of capitalism that imagine its buying their equity (or common stock) in the stock market (where a company is said
history along a single trajectory that has its roots in Western ‘‘core economies” (see, to be ‘‘public”, that is, available for members of the public to buy or sell) or buying it
e.g., Taylor, 2010). from its owners (in the case of a privately held company), and reselling the ownership
13
Obviously, the processes described here have played out differently in other claims on the company at a profit’ (Toporowski, 2012: 278). Adopting the generic
countries. For instance, in Germany, the government entered agricultural finance private equity model, most agri-focused private equity funds link pension funds,
much earlier, and the country has not seen the emergence of a truly market-based insurance companies, family offices, foundations, university endowments, high-net
phase. In Australia, the government- and banking-based modes of finance co-existed worth individuals and development finance institutions as limited partners (LPs) with
for a long time. In much of the Global South, institutions to provide farm credit were a specialized fund manager, who acts as a general partner (GP) and provides expertise
replicated in the 1960, and 1970s (Martin and Clapp, 2015), but the banking-phase to acquire and manage investments.
18
never really took off. What is interesting is that besides finance targeting large-scale These are private entities, in which investors can buy and sell shares, offering
investments in some parts of the Global South, there has also been an increasing more liquidity than a closed-end fund. A model common in parts of Eastern Europe, as
interest in financing smallholders through impact investing or contract farming well as in New Zealand and Australia is that investors buy land or shares in a holding
schemes. These often work through public–private financing initiatives (McMichael, company managed by an asset manager, which either co-invests alongside the former
2013). owner, leases back the land to a specialized operator, or installs a new farm manager.
14 19
At the same time, the government heavily regulated the presence of non- These are ‘asset class makers’ in their own right due to the vast amounts of capital
agricultural entities in commodity futures markets, which emerged in the 19th they administer. In 2011, institutional investors had assets worth USD 84.8 trillion
century in the US (Cronon, 1992), and even earlier in the UK. under their management (Çelik and Isaksson, 2014: 97).

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6 S. Ouma / Geoforum xxx (2016) xxx–xxx

Table 1
Finance’s co-production of agricultural landscapes in the US, 1860–2015. Source: Own design; based on Axelrod (2014).

Informally Government-based period Bank-based period (1968–1986) Market-based period I Market-based period II (2008–)
served period (1916–1967) (1987–2007)
(1860–1915)
Government role Government role Government role Government role Government role
Little to no Expanding available credit, working Oversight and regulation Deregulation General reregulation of financial
involvement through farm-level organizations; markets in the wake of the financial
enhancing agricultural productivity crisis, but no reregulation of
more broadly agricultural finance
Sources of farm Sources of farm financing Sources of farm financing Sources of farm financing Sources of farm financing
financing Debt: government-supported Debt: commercial lenders’ share of Debt: banks, securities, Shift from debt to equity: increasing
Debt: non- community lenders agricultural debt is greater than or equal to ‘‘merchant creditors” importance of private equity, REITs
institutional government-sponsored institutions; and other sophisticated financial
moneylenders informal lenders are a minority structures
Farm structure Farm structure Farm structure Farm structure Farm structure
Smallholders Decrease in smallholders as land Land consolidation intensifies Split between large Large-scale commercial farms that are
and tenant consolidation increases commercial and ‘institutional-grade’; other large and
farmers smallholder farms with smallholder farms with links to
links to merchant merchant creditors
creditors
Farm productivity Farm productivity Farm productivity Farm productivity Farm productivity
Low Increased input use drives rising Productivity further increases High High
productivity
Nature of Nature of financial economization Nature of financial economization Nature of financial Nature of financial economization
financial Extensive Extensive–intensive economization Intensive–appropriative (direct
economization Intensive–captive ownership of farmland)
Extensive

Fig. 1. Investors, intermediaries and investment structures in the agricultural finance space. Source: own research; Buxton et al., 2012, p. 3.

‘(...) Australia/New Zealand, Brazil, Canada and the United institutional equity structures invested in primary agriculture.
States. These regions account for more than 80 percent of the The four most-favoured regions are also seen as accounting
current and targeted value of investments globally and over for ‘‘about 65-70% of the currently investable market in farm-
64 percent of the number of individual funds and other land globally” (...)’ (Luyt et al., 2013, p. 32).

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S. Ouma / Geoforum xxx (2016) xxx–xxx 7

What these regions have in common is a strong agricultural political and moral questions, Williams (2014: 7) argues that
potential, well-developed farmland markets, a significant depth within these accounts ‘farmers tend to emerge (...) as not only pas-
in farming expertise, and effective legal and contracting processes, sive victims of the financialized food system, with finance proceed-
with each of them being a net food exporting region (Luyt et al., ing more or less unopposed, but also as a singular and
2013). These are ‘‘institutional-grade” investment regions because undifferentiated group. This of course overlooks important differ-
they match the risk-return horizons of large institutional investors. ences among farmers, their relative assertions of agency and the
Third, finance’s current interest in all things agricultural goes limits of financialization as an ongoing pursuit rather than simply
beyond the sphere of production. Investment structures such as a description of reality.’
mutual funds have emerged, which are specialized, sector- Insights from my own research illustrate this. During fieldwork
focused funds that invest in stock-listed companies. As part of a in Australia in 2014, I visited the ‘Drought, Finance and Future’-
more generic financial economization of food industries, summit in rural Queensland, organized by a young, concerned
agriculture-oriented mutual funds often not only invest in land- farmer-entrepreneur from ‘‘the bush”. Here farmers, struck by
owning, production-oriented companies, but also place their years of prolonged drought and piling debts, would meet private
capital along the whole agricultural value chain from input, over equity investors to discuss the future of Australian agriculture.
production to logistics and retailing (Burch and Lawrence, 2013; One of the big themes was that the common way of financing Aus-
Isakson, 2014). One representative of an asset management com- tralian agriculture, by taking on debt from banks and by upscaling
pany was keen to emphasize that the real money lies there, not farms to be able to service it (Lawrence, 1989, p. 242), was no
in agricultural production, so he could not understand why NGOs longer sustainable. Instead, fund managers, researchers and indus-
made all this noise about farmland investments (interview, 2015). try experts promoted private equity investments as the future of
Fourth, some larger agribusiness firms, such as Cargill, have Australian farming. Mark⁄,20 a farmer who had been hard hit by
themselves morphed into financial intermediaries by providing drought and debt for the past three years, said he ‘had never seen
asset management services, in addition to their often-speculative so many resilient men struggling, because they see the assets their
activities in commodity markets. They do so by using their insider fathers and forefathers build withering away’. He was convinced that
knowledge on land markets and commodity price movements and ‘we got so much happen here and the thing that is holding us back is
their access to large tracts of land in Latin America and other parts finance’. Several of the other conference participants argued that
of the world (Salerno, 2014). what Australian agriculture needed most was ‘good capital’ (i.e.
Fifth, the financial asset character of farmland is intensified long-term private equity), not ‘bad capital’ (i.e. bank-issued debt
through the securitization of aggregated income streams from var- capital). Responding to the media criticism that rural Australia was
ious farming properties into the form of (publically-traded) sold to foreigners,21 a local politician argued that there was no prob-
exchange-traded farmland funds or corporations (Fairbairn, 2014; lem with foreign investment in Australian farmland since the whole
Gunnoe, 2014; Sommerville and Magnan, 2015; Stevenson, 2014). country had been ‘built on foreign capital’ (field diary, 2014).
Finally, investors, including retail investors, may get exposure At an investment conference in Singapore and during fieldwork
to farmland by investing in listed equities of agricultural compa- in neighboring New Zealand, I met several farmers/farm managers
nies, a rather classic way of capitalizing agriculture. who made a case for (foreign) equity capital investing into farm-
Fig. 1 disentangles the complex actor-networks that are usually land as long as this was done through equal partnerships. In Singa-
lumped together or obscured in the existing literature on the ‘‘fi- pore, one large-scale farmer from the US noted that in case a
nancialization of farmland”. Taken together, the actor-networks financial investor ventured into US farming operations and would
depicted here make up farmland/agriculture as an ‘‘emerging alter- like to assume too much control (as it is the case with private
native asset class”. Its evolution has been marked by the ‘integra- equity-type models), ‘this would be a tough play because many
tion of new sources of capital, new instruments and vehicles, and farmers are also very entrepreneurial, so we need more partners
new forms of both ‘‘productive” and ‘‘speculative” investment’ into rather than owners’ (field diary, 2013).
farmland (and agriculture), ‘which, in effect, reflect a new demand Based on these accounts, it can be argued that the contempo-
for investment opportunities’ (Sommerville and Magnan, 2015, rary financial economization of farmland may mean very different
p.126). This represents a unique historical situation for finance things in different agrarian contexts. In a settler-colonial economy
itself, because it involves the internal reorientation and reorganiza- such as Australia, whose history is tightly entangled with foreign
tion of the money management industry. Farmland can only be finance capital, which has embraced a neoliberal model of agricul-
reframed as an ‘‘alternative asset class” if it is ontologically recon- ture since the 1980s (Pritchard, 2005), and where the future of
figured. ‘Ontological reconfiguration’ (Çalısßkan and Callon, 2010, p. many family farms is uncertain owing to rising levels of indebted-
25) here means not merely that farmland needs to be ‘disembed- ness and the old age of farmers (Cullen, 2014), equity capital taking
ded’ and abstracted so that it can be incorporated into established over or jointly investing in farms alongside farmers is seen as land-
sociolegal/-technical and worth architectures of global finance; revitalizing rather than a land-grabbing force.22
rather, ‘the social relations with which the new resource was
entangled’ are reformatted, extending ‘the network of actors and
devices connected to it’ (Li, 2014, p. 590). 5. Disentangling the finance–farmland-nexus
All in all, a more nuanced historicization of the finance–farm-
land nexus does not simply call for bringing in history, but for If one subscribes to the notion of the spatial fix, one basically
bringing in diverse histories. Accounts from the ‘‘the margins” also subscribes to the notion of circuits of capital (Harvey, 1982).
may eventually destabilize dominant understanding of the ‘‘finan- The latter has become a convenient means to assume that capital
cialization of farmland”. For instance, one of the arguments in the circulates because of its inherent properties. This kind of analytics
dedicated literature has been that ‘hungry capital’ (Russi, 2013) often misses the operative dimensions of circulation – ‘the
threatened smaller farmers by contributing to rising land values
20
and that it would potentially lead to material dispossession and All names marked as ⁄ are pseudonyms.
21
For details, see Sippel et al. (2015).
decreasing food security among affected rural communities in 22
While many farmers in Australia seem to be open to foreign investment from the
the wake of the corporatization of the food system. Typically, these Anglo-Saxon world, there appears to be some reservation or even outright public
arguments have been formulated for farmers and rural communi- resentment against foreign investments from the Gulf States, China or Indonesia (see
ties in the Global South (Cotula, 2013). While these are important also Sippel, 2015).

Please cite this article in press as: Ouma, S. From financialization to operations of capital: Historicizing and disentangling the finance–farmland-nexus.
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8 S. Ouma / Geoforum xxx (2016) xxx–xxx

formative stages, the processes and practices that shape and gener- To fully understand how the networks of agri-finance capital
ate the flows and circulation’ (Pryke, 2006, p. 63). formation expand, how they work through the materiality of farm-
The notion of operations instead highlights that the coming into land and how they make it amenable to space-time and risk-return
being of capital hinges upon establishing often far-flung connec- calculations (Pryke, 2012, p. 1), we need to unpack categories that
tions that enroll and reformat organizations, economic relations, are usually taken for granted in the land rush literature: capital,
labor and nature itself at different sites in often surprising config- resources, property, value. Each of these ‘‘things” is produced dif-
urations. It helps disentangle how the connections sustaining the ferently in different geographical settings, while at the same time
workings of finance capital are made: ‘(a)side from the material being shaped by more general principles of abstraction circulating
infrastructures required to establish such articulations, there is a in global financial markets.
need for rules, instructions and standards that guide and frame
the operative principles at stake in these dynamics’ (Mezzadra 5.1. On capital
and Neilson, 2013, p. 15). Making such connections is as much a
matter of financial engineering as it is of material engineering It is particularly in the critical political economy literature on
(French et al., 2011).23 ‘‘financialization” (Lapavitsas, 2011; Zeller, 2010) that finance cap-
These connections are entanglements of diverse actors such as ital is imagined as an abstract entity, which circulates around the
end investors, asset managers, agribusiness companies, intermedi- globe as a function of its profit-seeking imperative, thereby
aries (industry intelligence, placement agents, due diligence provi- impacting adversely on households, communities, companies,
ders, etc.), as well as national and regional governments, local regions, and ecosystems. We also encounter this ghostly figure in
elites, communities and the farming properties themselves. At much of the land rush literature (e.g., McMichael, 2012).
one end of the spectrum, we may have a case such as the US pen- In this regard, it is often forgotten that ‘‘capital” does not simply
sion fund giant TIAA-CREF, who in 2010 acquired its own asset impact on socio-material relations as a fait accompli, but is actually
manager, and who now uses this in-house expertise to offer made up by them (French et al., 2011, p. 801). Capital, like money
institutional-grade deals to other pension funds who are hungry more generally, is ‘a social relation, a symbolic system and a mate-
for farmland, but do not have the capabilities or risk-appetite to rial reality’ (Maurer, 2006: 27, cited in Christophers, 2011, p. 1070).
do this on their own. This is done through a corporate structure Finance, be it in the credit or credit-plus-interest form, is an effect
(‘‘co-investment platform”), under which farmland is acquired of discursive, material and social relations at once (de Goede,
but then leased out to operators to generate constant income 2005). Capital is socio-technical work. This applies especially to
streams. This deal architecture has the advantage that it is rather the new ‘frontier regions’ (Mitchell, 2007; Ouma, 2015a) of the
simple and does not involve the short-termism and fee frenzy of finance-driven land rush, where this work still needs to be orga-
the private equity model.24 At the other end of the spectrum, we nized and performed in the very first place: the ‘taming of nature’
may find a specialized, boutique-style asset manager who manages (Prudham, 2003), the extravert organization of production to meet
a range of farming properties and assets downstream and upstream the demands of end investors, the formal and real subsumption of
the value chain ‘‘private-equity style” around the world. Because labor, the establishment of property rights, the management of
some of the ‘‘assets under management” have been secured through political opposition and the alignment of the historical time of
‘‘informal” connections in high-risk (but potentially high-return) farming with the temporality of finance are all laborious acts in
countries such as Zambia, Tanzania or India, this asset manager does the financial economization of farmland. The words of an investor
not cater for your typical US pension fund, but for more risk-taking behind a large-scale grain farming project in Central Tanzania are
financial entities, such as ‘‘high net-worth individuals”. A TIAA-CREF telling in this regard:
would find it hard to invest in such ‘‘geographies”. Various interme-
‘In some ways it’s a very sobering example. My firm has no
diate forms exist in between these two poles.
interest in bad investments. We only want to make good invest-
The contemporary extension of finance’s operations from shiny
ments. But we have been open-minded about making good
office towers in urban areas into rural spaces around the world
investments that are very bad career choices (...). It’s a green-
produces socio-spatial formations that are yet to be fully under-
field agricultural project, and people tell you that can’t be done.
stood. The farm in Tanzania mentioned earlier appears to be a local
It’s in Africa, which is far outside the risk spectrum for most
farm. Indeed, for most neighbors and adjacent communities, the
people. Besides a fundamental issue that you’re trying to make
farm is known to be run by bwana (Mr.) Jim⁄, who has lived in
a viable business in a sector where today it’s uncompetitive. If
the area for many years. However, the farm, which is administered
you succeed, you look really smart and everyone says it’s obvi-
by an Asian asset manager on behalf of a large institutional client
ous, but most of the time you don’t, and then you look really,
from Europe, more resembles a ‘global territory’ (Opitz and
really dumb (...). The simple thing was not going to work. At
Tellmann, 2012). Here, the operations of private equity materialize
every level you’re noncompetitive if you’re in this part of the
– minimize risks, optimize returns, align interests, unlock value,
world. Lack of training, corruption. Of the biblical plagues,
exit. If territory can be ‘broadly understood as the workings of
we’ve had most of them: locusts, flooding, malaria, I forget what
power’ (Elden, 2010, p. 804), then this begs the question what kind
else’ (source withheld to retain anonymity).
of power is actually at work in the resource territories of global
finance?
Many investors in Africa and elsewhere have faced similar chal-
lenges with making their investments financially productive
23
The focus on material engineering is important here, because large-scale (Cotula, 2013; Li, 2015). However, even in cases where financial
appropriations of farmland often involve considerable investments into material
investors invest into existing farming operations such as in the
infrastructure, logistics, irrigation, precision farming and real time farm management
in order to align the farm with the requirements, conventions and temporality of the US, Australia or New Zealand, one should not assume that finance
world of money management. This is particularly the case for ‘‘greenfield invest- works smoothly through farmland’s materiality: ‘(t)he operative
ments”, but also applies to the rehabilitation of existing farming properties. dimensions of capital are crisscrossed by contestations that occur
24
Private equity asset managers in established financial domains usually charge at several different levels and many different sites’ (Mezzadra
investors a 2% annual management fee and are given 20% of the overall net profit on
investments. Since the financial crisis, this model has been criticized by many
and Neilson, 2013, p. 10). If ‘(c)apital should be a defined as a pro-
observers in the financial industry for the incentive structure it creates and the ‘‘value cess rather than a thing’ (Harvey, 1982, p. 20), then the circum-
transfer” it implies (Monk, 2012). stances of its accomplishment matter for they can acquire a

Please cite this article in press as: Ouma, S. From financialization to operations of capital: Historicizing and disentangling the finance–farmland-nexus.
Geoforum (2016), http://dx.doi.org/10.1016/j.geoforum.2016.02.003
S. Ouma / Geoforum xxx (2016) xxx–xxx 9

disruptive quality. Thus, we need to move from circuits of agri- generate constant income streams (Leyshon and Thrift, 2007), but
finance Kapital to the frictional enrollments for agri-finance capital from an expected appreciation of its value over time (capital gains)
formation (Callon and Latour, 1981; Russi, 2013). (Fairbairn, 2014). To fully realize this value, one needs to be able
to sell the asset with the underlying ownership rights on ‘efficient’
land markets. This is not the case for parts of Eastern Europe (such
5.2. On resources
as Ukraine) or Africa (such as Ghana or Tanzania), where foreigners
often can only acquire leasehold rights or where land tenure
Much of the existing land rush literature implicitly assumes
arrangements require investors/and or farm managers to become
that finance works smoothly through the materiality of farmland.
‘political entrepreneurs’ (Ducastel and Anseeuw, 2016, p. 12) and
This misses that land, like labor and money, is not just a ‘fictitious
forge alliances with local, regional or national power brokers. While
commodity’ as Polanyi (2001[1944]: 71–80) famously put it; it also
it is true that ‘even where ownerships rights to land cannot exist,
often exposes an unruliness that challenges the circulatory appara-
companies/land can change owners through share sales’ (Cotula,
tus of finance. As I argued in a previous commentary, it is not for
2013, p. 37), such incomplete property rights pose an entry barrier
nothing that a common joke on agri-investment conferences is
to the more risk-adverse or liquidity-seeking factions of finance cap-
‘how to make one million in agriculture? Invest two!’ (Ouma,
ital, such as Northern pension funds and insurance companies.
2015b). Thus, even though it may be tempting to make the finan-
For instance, with regard to the Central and Eastern Europe and
cial economization of farmland part of the ‘capitalization of almost
Commonwealth of Independent States regions, often hailed as one
everything’ (Leyshon and Thrift, 2007), farmland’s specific material
of the prime frontiers of the finance-driven version of the global
and symbolic properties impede a quick economization: the dis-
land rush in the literature (Luyt et al., 2013), one representative
tinctive nature of farmland as a scarce, localized, socioecologically
of a large European asset manager noted that even though there
embedded, life-sustaining and potentially political resource make
may have been some ‘success stories’ over the past years, these
it ‘an awkward, resistant or incomplete commodity’ (Li, 2014,
were ‘non-replicable and are not suitable for institutional inves-
p. 592).25
tors....they are non-replicable because someone goes there with
Farmland’s ‘resourceness’ (Li, 2014, p. 589), similar to capital’s
his Kalashnikov....or marries into a family and assimilates himself
‘‘capitalness”, can hardly be taken for granted in ontological terms.
and plays by the local rules and these are other rules than we play
Both work in agrarian political economy (Mann and Dickinson,
by’ (interview, 2013). The investors behind the central Tanzanian
1978), as well as work in political ecology has shown this
grain operation mentioned earlier had to resettle and compensate
(Prudham, 2003). More recent work on resources and resource
local farmers settling on ‘‘their” land despite the fact that they had
extraction in geography and anthropology helps shed further light
acquired the title for the 4000 ha-plus property from a state
on the fact that the resources through which returns of capital are
agency, and thereby the legal means to exclude others (field diary,
generated are never given as such, but are made geographically
2013). In other cases, it may be difficult to establish legitimate
and historically through material, discursive and relational invest-
property rights or carve these out from existing socio-
ments (Barney, 2009; Li, 2014; Richardson and Weszkalnys, 2014).
institutional relations surrounding land. What counts as legal does
Additionally, ‘resources are far more than economic’ (Bakker
not need to be considered legitimate by all parts of society, as Greco
and Bridge, 2006, p. 13). While observers suggest that ‘extraeco-
(2015) has shown for a farm backed by foreign private equity in
nomic actors’ such as states play a central role in the process of
South-West Tanzania.
farmland-based capital formation (Fairbairn, 2015b; Greco, 2015;
Again, in other cases corporate/institutional landownership
Martin and Clapp, 2015), the extraeconomic forces mediating
may be legally prohibited. In the US, the heartland of pension-
agri-finance investments are yet to be fully explored (Williams,
fund capitalism and capitalist agriculture, there are restrictions
2014). This insight calls for further investigating how the topolog-
on nonresident/corporate/institutional or foreign landownership
ical networks of agri-finance intersect with the material, social,
in nine states, all of them Plains states such as Iowa,28 Nebraska
institutional and political realities of target regions (Visser et al.,
or Missouri – mainly to protect the ‘‘All American family farm”. Dur-
2015). It also asks us to unpack the both productive and constrain-
ing an interview in the US, an industry observer noted the frictions
ing power of investment and, tax regimes, as well as the modalities
between state law and federal law in this regard. While he under-
of state-investment relations in regions where finance goes farm-
lined that pension funds and other institutional investors have
ing and how these shape investors’ access26 to natural ‘‘resources”.
increased their lobbying with states to open their lands to financial
capital, he also emphasized that their bid saw a setback after the Sas-
5.3. On property katchewan regional government barred the Canada Pension Plan
Investment Board (CPPIB) from acquiring more farmland in the pro-
In this regard, property plays a central role, not only because it vince, in addition to the $120 mn investment it had already made
is essential for any investor’s project of economization, but also (interview, 2015). The fear was its additional land purchases would
because it lies at the core of the ‘‘value creation” process of most ‘squeeze local farming businesses on land values’ (Burwood-Taylor,
investors and asset managers (Christophers, 2010).27 Much of an 2015; see also Magnan, 2015).
asset’s projected future value derives not only from its ability to All these cases are about the constraining role of property
regimes. However, one should equally engage with the productive
25
Fairbairn (2014: 782), drawing on Coakley (1994), makes a similar point: role of such regimes: in Australia and New Zealand, for instance,
farmland’s ‘imperfect substitutability, its illiquidity and its limited divisibility (...) governments (and some opposition parties) have developed a very
mean that it is only a ‘‘quasi-financial asset” in which rent and interest remain open stance towards (foreign)29 investment in farmland (Lawrence,
analytically distinct.’
26
The emphasis on access, defined as ‘the ability to derive benefits from things’
(Ribot and Peluso, 2003: 153), is important here, because it calls for an analysis of ‘the
28
constellations of means, relations, and processes that enable (...) [finance] to derive For instance, the law for Iowa reads: ‘Nonresident alien, foreign business or
benefits from resources’ (Ribot and Peluso, 2003). Relations of access in many frontier foreign government may acquire real property except for agricultural land or interest
regions of the finance-driven farmland rush are likely to be more complex and in agricultural land as a citizen and resident of the US’ (National Association of
multilayered than the existing literature suggests. Realtors, 2006: 6).
27 29
As Williams (2014: 25) notes correctly, ‘the financialization literature, not only in Interestingly, while foreign pension funds have invested heavily in Australian
relation to food and agriculture but also other economic fields, has paid scant farmland, local players such as Australian superannuation funds have been very
attention to the role of law and thus the legal dimensions of financialization.’ reluctant (Magnan, 2015).

Please cite this article in press as: Ouma, S. From financialization to operations of capital: Historicizing and disentangling the finance–farmland-nexus.
Geoforum (2016), http://dx.doi.org/10.1016/j.geoforum.2016.02.003
10 S. Ouma / Geoforum xxx (2016) xxx–xxx

2012; Sippel, 2015). Yet even Australia has seen a wind of change ‘‘financialization” as being currently used in the finance-oriented
with regard to its investment and property regime. Reacting to land rush literature is a problematic analytical concept. Among
increased public scrutiny, the then Prime Minister announced in others, accounts utilizing it often have little to say about histori-
early 2015 that from March 1st onwards the threshold for scrutiny cally and geographically situated practical activities of finance.
of farmland sales to foreign private entities by the Foreign Invest- Building on the concept of operations of capital, I proposed an
ment Review Board (FIRB) would be lowered to a cumulative $15 alternative analytics, which attunes us to the modalities, processes
million, down from $240 million. He was quick though to point and practices of financial economization that have reworked orga-
out that this was not a move against foreign capital. After all, ‘Aus- nizations (such as farms), economic relations, labor and nature in
tralia was built on foreign investment from Britain, the United States particular geographical contexts and at particular historical con-
and Japan’ (Vidot, 2015). junctures. Second, I suggested that the coupling of finance and
These empirical illustrations relate to the more general histori- farmland/agriculture has a long history, and the new quality of
cal fact that propertied space is the outcome of a ‘productive pro- the contemporary entanglements between finance and farmland
cess’ (Elden, 2010, p. 806; Li, 2014). The material, social, political only becomes fully visible if embedded into capitalism’s multiple
and legal aspects of this process can be disentangled empirically. histories. Often, earlier rounds of financial economization in con-
With spaces of finance it is no different. junction with other forces provide the foundation for the contem-
porary financial economization of agricultural resources. For
5.4. On value instance, in Australia the provision of debt to farmers to finance
costly expansion plans coupled with a prolonged drought led to
The study of ‘‘financial markets” and how they work through the indebtedness of many farms, which now facilitates the entry
the materiality of nature and local political economies must even- of equity capital into the farming sector. Third, I showed that com-
tually go further than just historicizing and disentangling the ing to terms with the operations of agri-finance capital formation
finance–farmland-nexus. As Christophers (2014, p. 15) notes in a would eventually require overcoming pregiven notions of capital,
piece that seeks to reconcile critical political economy and resources, property and value. This also calls for rematerializing
practice-oriented approaches to markets, the latter ‘must be stud- the operative dimension of farmland investments – a political act
ied not only for their own sake, but also for their direct salience to in its own right.
the productive and value-creative sphere.’ An operations of capital
perspective suggests that something such as farmland does not
have an inherent financial worth that can be ‘‘unlocked” – a com- Acknowledgements
mon narrative in contemporary financial markets (Christophers,
2010; Ducastel and Anseeuw, 2016; Orléan, 2014). Creating an ‘‘as- Research informing this paper benefited from the support of the
set” with financial worth is a productive process, which is often Friends and Supporters of Frankfurt University and the Center of
contested (Magnan, 2015). Interdisciplinary African Studies at Frankfurt University. I would
For some observers, this means to engage critically with how like to thank Kerstin Bläser, Antoine Ducastel, Leigh Johnson, Peter
finance creates ‘‘value” from agriculture30: Lindner, Jane Pollard, Rasmus Hundsbaek and Lars Buur for com-
ments on earlier version of this paper, as well as the three anony-
‘Part of the problem has been a disconnect between what corpo-
mous reviewers and Padraig Carmody, whose comments have
rate or investment bankers think they know about agriculture
greatly improved it. I would also like to thank Mangasini Katundu
and what they actually do know. Even when a banker partners
and Moshi Cooperative University for their research support in
with a farmer, in my experience the greed rubs off and one is no
Tanzania as well as Geoffrey Lawrence, who provided some vital
less greedy than the other (...). There have also been highly dis-
information on the Australian case. Finally, I am grateful to the
connected projections of returns and what is actually achiev-
the many people who have allocated their scarce time to support
able. There is this idea that you can make private equity type
this project as interviewees. I am solely responsible for the con-
returns but that is very rarely possible so the industry needs
tents of this paper.
to employ some realism. Another big issue is fund managers
that charge fees when they make a farm investment. This is
nonsensical in farmland because you are not instantly buying
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