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Urban Investors Plough Billions of Dollars Into the Farm Economy

By admin

Will the chicken in the market come home to roost?

October 25, 2011

In the last six months corn and soybean prices have skyrocketed, grains exports have exploded, and farm-land prices have steadily pushed upwards; towards the prized value of badly mowed suburban front yard. As agricultural markets boom, investors continue to snap up prime farmland, subprime pastures, USDA -choice pork-ribs, tractors, loose bales of hay, over-packed grain elevators, and mulch.

Just this past year, traders sitting in air-tight windowless office cubicles, hundreds of feet up in sleek Manhattan skyscrapers, have purchased 2.1 million acres of agricultural land, took mixed positions on corn and pork belly futures, and purchased over a billion dollars worth of chicken feet swaps.

Now, the farm journal “Hay-wire” reports that the small investor is plowing his or her hard earned dollar savings into the agricultural sector.

Following large investment banks onto the lush soils of the Midwest and succulent fruit orchards of the south and west coast; these small investors are buying grain by the bushel, tractors by the parts, and —-when the market is ripe for a takeover—– entire fruit trees.

For example, Harvey Winestein, a swap-trader, headquartered in his aunt’s basement in Brooklyn NY has purchased harvest rights on fourteen and half peach trees outside Tifton Georgia. Deals, such as, the Winestein-peach contract, bring the financial sophistication and brash marketing skills of New York City to the small farmer. For example, should peach prices fall below five dollars a bushel, Harvey can let his Georgia peaches fall to the ground and rot, whereby he earns the right to collect an annual USDA fertilizer subsidy for the next two generations of his family.

However, most small traders are moving into grains. For example, Jacob Steinwin, who manages the retirement fund for a group of eighteen Rhode Island school teachers, and five school janitors,  has bought purchase-options on forty eight bushels of Iowa corn, sixteen bushels of Illinois soybeans, and four bales of rolled up hay. Mr Steinwin’s option-deal provides him the opportunity to either:

- unload his purchase on a Halloween hayride,

-to swap his corn for a collection of Hank William songs,

–or, store his soybeans in the garage of any USDA extension agent his does not like.

Similarly, the Vermont English-Teachers union fund has bought milking options on one in-state dairy cow which gives the union the rights to all the cow’s-milk into: perpetuity, or until the cow or its farmer-operator dies; whichever of the three comes first.

Small foreign investors are also moving money into America’s agro-investments. A group of Moscow-based traders, after fruitlessly scouring the Midwestern States for cheap dachas, bought the rights, and wrongs, to 4 backyard garden plots, a “compost pit”, and a tool shed in on farm outside the town of Peoria Illinois. The group says it will only take an investment of few hundred rubles and seven hours of shovel work to convert the tool shed, compost pit, and adjacent garden plots, into America’s first self contained luxury dacha.

Hay-wire also reports that “a collective” of Chinese investors have purchased 36 acres of almond trees and twelve acres of broccoli plants in California’s central valley. The Chinese group soon plans to inject a “significant” amount of Chinese capital into their Agro-American investment. The Chinese investors already have sent the manager of their newly purchased almond grove; a four hundred pound water buffalo. The “collective” has also announced plans to add two wheel barrows and a pig to the farm’s capital base.

Meanwhile, Hay-wire reports that larger trading firms have been bundling agro-investments into financial instruments; similar to bundled home mortgage portfolios of the early 2000’s. For example, Smith Barney is selling a financial instrument which bundles 380,000 bushels of wheat from 65 Illinois farms, with 2 million eggs from a cluster of farms in South Georgia, and with purchase rights to 4 million pounds of upstate New York butter. Traders plan take the financial instrument, —the Pancake–and stack it together, on top of other pancake tranches, and sell them off to investors– or breakfasts diners– across the country.

Yet, in this volatile market even agro-investors are diversifying. Savvy Wall Street investors and basement swap-traders are creating bonds which bundle soybean futures, with presently harvested apples, and past purchased cattle, and which; include options on with past participles, future gerunds, and slowly ripening verbs.

One intrepid investor has even added, to his portfolio, an option which provides him to the legal right to swear at his landlord, or aunt, in the event that that his corn-ethanol investments blow up or are taxed by the U.S. government.

Harvey Winestein provided Haywire magazine his view of the farm investment bubble:

“Savvy investors that are not willing to bet the farm, have found ways to trade a few cows, cherry pick a couple peaches trees, or sell short a USDA subsidy or an extension agent.

However, the high risk-growth oriented investor may want buy to his landlord-aunt, an option on a dacha plot. Sources in Peoria tell me that investments in Russian style dachas are taking off; all over the United States.“

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One Response to “Urban Investors Plough Billions of Dollars Into the Farm Economy”

  1. Thanks for your reason. I really like to see clearly Marcy

    #17230

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