Global agri-food relationships are continuously changing. However, some periods are perceived as critical moments when sudden events challenge established patterns within the agri-food system. Many observers identified the food price hikes in 2007/08 as such a “turning point”. A decade on, the COVID-19 pandemic has disrupted global agri-food relationships again. Based on an analysis of 160 articles on COVID-19 and agricultural investment published on the platform Agri Investor between March 2020 and July 2021, this blog post juxtaposes the crises of 2007/08 and 2020/21. It asks, how have financial investors dealt with the COVID-19 crisis? How has the pandemic been rhetorically framed, what kinds of investment strategies have been promoted, and how have financial investors anticipated their engagement with agri-food in (post-)pandemic times?
The 2007/08 Food Price Crisis and the Emergence of Financial Actors in Agri-food
In 2008, after two decades of volatile but overall declining food prices, global prices for staple foods increased significantly within just a few years (Mittal, 2009). The food price hikes especially impacted on those groups of people who already needed to spend a major part of their income on food (McMichael, 2014, p. 948). At the same time, the increase in food commodity prices also led a number of new actors starting to engage more actively in the area of natural resources. Among these actors were state- and finance-backed actors, who were first and foremost prompted to invest in productive farmland.
These investors were searching for new “alternative” asset classes as a consequence of the poor performance of “traditional” asset classes (e.g. bonds, stocks) during the financial crisis. Agriculture and farmland have been promoted as investments that offered a low or negative correlation with traditional assets and positive risk-return characteristics. Moreover, and contrary to other asset classes, in financial theory both appreciation and the productive capacity of land (i.e. the value of its products) constitute the financial value of land. Thus, farmland is seen as both productive and appreciating. Additional so-called “investment fundamentals” for farmland investments are the finite availability of land, combined with the rising demand for food due to prospective population growth.
Since the early 2000s, numerous specialized agricultural investment vehicles have been established (including private equity funds, hedge funds, real estate management trusts, and private and public companies) to construct income streams for investors (cf. Daniel, 2012; Fairbairn, 2014, 2020; Bjørkhaug et al., 2018).
Never Waste a Crisis? Financial Investors’ Response to COVID-19
Given that financial actors’ much more intimate engagement with agriculture emerged out of the conjunction of 2007/08 crises, how have these actors dealt with the COVID-19 crisis? Three major themes can be identified.
COVID-19 as a justification for increased agricultural investment
The first theme is that COVID-19 is considered to have justified agricultural investment. In late June 2020, Macquarie Infrastructure and Real Assets (MIRA) CEO Elizabeth O’Leary explained that agricultural investments were continuing to perform well in comparison to other asset classes (Kemp, 2020b). Similarly, in early July 2020, Angus Ingram, manager for investments and partnerships at Kilter Rural, was quoted saying, “In terms of financial performance—because we are primary production, farmland and water managers—we just haven’t been exposed to any economic downturn at all [from the coronavirus]. In fact, probably quite the contrary” (Kemp, 2020a).
Some months into the pandemic, COVID-19 was mostly portrayed as showing agriculture’s resilience as an asset class. This resilience has been seen as being based on agriculture being an “essential” sector, as well as its non-correlation to other economic sectors (Kemp, 2020b). The crisis has been perceived as serving to “reaffirm ag as a resilient and uncorrelated asset class” (Ali, 2020). Similar to the situation in 2007/08, food (in)security has been presented as another strong incentive for agricultural investment. At the end of 2020, the major conclusion was that agriculture had proven itself as “crisis resilient”. Furthermore, it was promoted that “agriculture as an asset class navigated through 2020 relatively unscathed from the covid-19 crisis” (Corbett, 2020), while another article concluded, “the world needs food and fiber just as much during a pandemic as at any other time” (Kemp, 2020c).
COVID-19 as a push for ag- and food-tech investments
The second key theme is that COVID-19 has exposed the future relevance of digital technologies, which help make investment in ag- and food-tech sectors lucrative. Indoor ag-tech, for example, has been presented as having a “sizable runway as many in and outside the industry look toward it as a potential future solution to food scarcity and food supply chain issues” (Szkutak, 2020). It was further reported that COVID-19 had even led state-owned investors to divert their attention away from real assets towards ag-tech, as the threat of a food security crisis had made agri-focused technology a “small but important” part of investments.
Issues surrounding labour that have been exposed during the pandemic are the second major incentive for investment in agricultural technologies. As one article stated, COVID-19 has revealed shortcomings in food supply chains such as the reliance on migrant labour and poor working conditions in food-processing facilities. These issues, the article suggested, will “largely be solved by increased mechanization and automation”. The pandemic was further presented as an important moment to be making an investment in this direction: “Recession and covid is this perfect storm for advancing the field of robotics, from a customer interest standpoint, a decade forward” (Janiec, 2020b).
Lastly, food-tech investments have been promoted as an important future growth sector. With the entire food industry going through a transformation, this growth has been considered as being driven not only by increasing consumer demand for alternatives to meat and dairy but also by major changes in how people are purchasing their food, where food is prepared, and how food is delivered to the consumer.
COVID-19 as a push for sustainability
A third theme is a stronger emphasis on sustainability, with the pandemic being presented as a “test” for future challenges in light of climate change. In an article titled “Sustainability now matters in PE [private equity]”, it was reported that British Private Equity and Venture Capital Association (BVCA) director general Michael Moore called the pandemic a reminder that the industry is both “an economic force and a social one” (Mitchenall, 2020). According to MIRA CEO O’Leary, there is “strong proof” that sustainable farming that addresses climate change is mutually beneficial to the environment and to the “farmer’s bottom line” (Kemp, 2020b).
Agriculture has been identified as playing a key role, notably in reducing emissions, as the world moves towards greater resilience following COVID-19. Referring to a McKinsey representative, one article reported that agricultural companies were developing business models designed to benefit from potential future regulations on carbon emissions (Janiec, 2020a).
Cashing in on COVID-19?
COVID-19 has once again revealed the multiple flaws in our food system, which is largely built on long-distance food supply chains, many of which have been disrupted due to lockdowns and trade restrictions. Yet, for some, such crises also provide the opportunity for profit-making. Agri-food investors have used the most recent crisis to further strengthen the justification for agricultural investment. While the 2007/08 events represented the “initial” crisis moment that incentivized investors to search for alternative investment possibilities, the pandemic has been presented as consolidating agriculture as an alternative investment class. Three concluding observations can be made:
First, throughout both crises, the rhetoric has followed a rather simplistic neo-Malthusian argument that “people need to eat” in moments of crisis as much as they do during a pandemic. This narrative continuously disregards the complexity of food security and the critical insight that food security is not just a matter of food being produced. The pandemic has lowered people’s ability to access sufficient and nutritious food due to the consequences of lockdowns and economic recession, especially for vulnerable groups (Clapp and Moseley, 2020). Thus, financial investments that focus on food production and supply chains might allow investors to generate returns from an “essential sector” – but they do not help alleviate the food insecurity of those who cannot access food.
Second, the pandemic has been used to justify and defend further investments in agriculture and food that go beyond those promoted in 2007/08, most prominently investments in the areas of ag- and food-tech. New digital agri-food technologies have been presented as both a “fix” for social issues as well as undercapitalized, and therefore newly emerging, lucrative investment opportunities. However, underlying issues of social inequalities and vulnerabilities of mostly migrant farm and food-processing workers are not being tackled within this approach. Rather than suggesting that farm and factory workers’ labour conditions need to change, the human factor has been identified as the “problem” to discard.
Third and last, the pandemic has made sustainability and climate change much more prominent, both of which were not part of the agri-food investor discourse in 2007/08. However, these issues are being addressed purely within a market rationale. While environmental issues are now at least recognized as important challenges, the agri-food investor discourse suggests that they are not dealt with out of insight or necessity but only if there are worthwhile financial returns. In sum, while the agri-food investment discourse has moved on to new areas and issues due to the pandemic, its underlying logic has remained stable – amid calls for “more of the same” approaches to solve those crises it has helped to produce.
Ali, Binyamin. 2020. Four lessons coronavirus has taught us about ag. Agri Investor, August 26. https://www.agriinvestor.com/four-lessons-coronavirus-has-taught-us-about-ag/.
Bjørkhaug, Hilde, André Magnan and Geoffrey A. Lawrence (eds). 2018. The financialization of agri-food systems: Contested transformations. London, New York: Routledge.
Clapp, Jennifer, and William G. Moseley. 2020. This food crisis is different: COVID-19 and the fragility of the neoliberal food security order. The Journal of Peasant Studies 47 (7): 1393–1417.
Corbett, Matthew. 2020. Agriculture had a resilient 2020 and will have a solid 2021 – Fiera Comox. Agri Investor, December 21. https://www.agriinvestor.com/agriculture-had-a-resilient-2020-and-will-have-a-solid-2021-fiera-comox/.
Daniel, Shepard. 2012. Situating private equity capital in the land grab debate. The Journal of Peasant Studies 39 (3–4): 703–729.
Fairbairn, Madeleine. 2014. ‘Like gold with yield’: Evolving intersections between farmland and finance. The Journal of Peasant Studies 41 (5): 777–795.
Janiec, Chris. 2020a. McKinsey sees momentum behind ag emissions reduction. Agri Investor, June 15. https://www.agriinvestor.com/mckinsey-sees-momentum-behind-ag-emissions-reduction/.
Janiec, Chris. 2020b. Coronavirus has created “perfect storm” for ag robotics to thrive – Root AI. Agri Investor, September 1. https://www.agriinvestor.com/coronavirus-has-created-perfect-storm-for-ag-robotics-to-thrive-root-ai/.
Kemp, Daniel. 2020a. Kilter Rural’s Ingram on fundraising challenges and ag’s coronavirus resilience – interview. Agri Investor, July 6. https://www.agriinvestor.com/kilter-rurals-ingram-on-fundraising-challenges-and-ags-coronavirus-resilience-interview/.
Kemp, Daniel. 2020b. MIRA’s Liz O’Leary on ag investments in the wake of coronavirus – exclusive interview. Agri Investor, June 29. https://www.agriinvestor.com/miras-liz-oleary-on-ag-investments-in-the-wake-of-coronavirus-exclusive-interview/.
Kemp, Daniel. 2020c. Year of turmoil proves resilience of agriculture assets. Agri Investor, December 24. https://www.agriinvestor.com/year-of-turmoil-proves-resilience-of-agriculture-assets/.
McMichael, Philipp. 2014. Historicizing food sovereignty. The Journal of Peasant Studies 41 (6): 933–57.
Mitchenall, Toby. 2020. Covid-19 heralds hard decisions on sustainable investment. Agri Investor, October 14. https://www.agriinvestor.com/covid-19-heralds-hard-decisions-on-sustainable-investment/.
Mittal, Anuradha. 2009. The 2008 food price crisis: Rethinking food security policies. UNCTAD G-24 Discussion Paper Series, No. 56. New York, Geneva: United Nations.
Szkutak, Rebecca. 2020. Agtech offers room for a multitude of investors to take root. Agri Investor, November 24. https://www.agriinvestor.com/agtech-offers-room-for-a-multitude-of-investors-to-take-root/.
This blog post is a short version of the article “Agri-investment cashing in on COVID-19”, forthcoming in Victoria Stead and Melinda Hinkson (eds) Disruption: Food Systems in a World on the Edge, Palgrave Pivot, 2022.