Agriculture and Human Values

, Volume 34, Issue 2, pp 251–265 | Cite as

Grounding the financialization of farmland: perspectives on financial actors as new land owners in rural Australia

  • Sarah Ruth Sippel
  • Nicolette Larder
  • Geoffrey Lawrence


Sparked by the conjunction of food, fuel, and financial crises, there has been an increasing awareness in recent years of the scarce and finite character of natural resources. Productive resources such as agricultural land have been touted by financial actors—such as merchant banks, pension funds, and investment companies—as providing the basis for a range of new “alternative” financial asset classes and products. While the drivers, motives, and rationales behind the increasing interest of turning farmland into a financial asset class have been traced by a number of scholars, the interpretations of, and interactions with, financial actors at the community level have received less attention. Based on qualitative research in rural Australia, this paper reveals the grounds on which finance-backed investments have been accepted and accommodated by communities in rural Australia and delineates the reasons that have led to feelings of unease or refusal. The paper thereby demonstrates that the financialization of farmland is neither abstract nor one-sided but rather a multidimensional process that not only includes financial actors but also the impacted rural populations in various ways. Positioning the activities of financial actors in Australia within the emerging research on the financialization of farmland, the paper endorses context-sensitive analyses to better interpret these recent transformations of the agri-food system.


Financialization of farmland Rural landownership change Community perspectives Australia 


The conjunction of food, fuel, and financial crises has led to an increased awareness in recent years of the scarce and finite character of natural resources, resulting in a heightened interest of the finance sector in productive areas such as agriculture and food. This has prompted an emerging body of research addressing the “financialization” of the agri-food system (see Burch and Lawrence 2009; Clapp 2014; Isakson 2014; Visser et al. 2015; Clapp et al. 2016; Gertel and Sippel 2016). In the broader sense, the term financialization has been used to capture the growing influence and importance of financial capital, markets, and motives throughout the economy and polity—with profit-making occurring increasingly through financial, rather than productive, channels (see Arrighi 1994; Epstein 2005; Krippner 2005, 2011). While there are varying understandings of, as well as critical approaches to, the concept of “financialization” (see Van der Zwan 2014; Christophers 2015), scholars increasingly argue for the need to better understand how financial logics and rationales are not only affecting the economic sphere but also substantially alter other areas of society along with the everyday lives of people and the social construction of norms and values (see Martin 2002; Finlayson 2009; Hall 2011; Christopherson et al. 2013; Ouma 2016). Interlinkages between finance and agri-food have been observed in diverse areas including food retailing and agribusiness (Burch and Lawrence 2009, 2013; Baud and Durand 2012; Murphy et al. 2012; Williams 2014), agricultural derivatives trading (Clapp and Helleiner 2012; Russi 2013), agricultural risk management (Isakson 2015), and agricultural production and farmland (Fairbairn 2014; Gunnoe 2014; Ducastel and Anseeuw 2016). Adding to the latter thread of literature, this paper investigates investments of financial actors in Australian farmlands.

While there has been a concerted effort, particularly by civil society, to trace agri-finance investment in the global South, where the spectre of “land grabbing” has been a core research focus (see Cotula 2012; Edelman et al. 2013; Scoones et al. 2013), scholars have increasingly pointed to an equally relevant, and in some cases, more advanced inflow of finance capital into farmland in the global North, particularly in countries such as the United States (US), Canada, and Australia (see Luyt et al. 2013; Gunnoe 2014; Larder et al. 2015; Magnan 2015). Linking the discussion of the “global land rush” with the literature on financialization allows for a more nuanced understanding of the drivers and interests behind land investments by the financial sector.

Financialization is a historic process. It relies on a number of techniques and metrics as prerequisites, which have been created over several centuries (Gertel and Sippel 2016). The explicit treatment of productive land as a financial asset class first emerged in the US in the 1980s when large portions of land, especially timberland, changed hands from vertically integrated corporations to financial actors (Gunnoe 2014). This transfer was spurred by three pro-financial federal policies: the Employee Retirement Income Security Act of 1974 (relaxing the investment rules for US public pension funds); the shift of the tax burden (from finance to industry and labor); and the federal monetary policy of low interest rates (incentivizing institutional investors to search globally for new income streams) (Gunnoe 2014, pp. 10–12).

The conjunction of crises since 2008 has accelerated the rush for “real asset class” investments. This “return to the real” is rooted in the search for alternative investment opportunities following the weak performance of “traditional assets,” such as bonds and stocks, and in response to the current capital accumulation crisis (Arrighi 1994; McMichael 2012). Thus far, research has focused on the strategies and instruments by which farmland is transformed into a financial asset class, along with the financial rationales and discourses employed in this process. As Li (2014, 2015) has pointed out, the immobility of land means it is bound to various local and regional legislative frameworks, which limit its accessibility for financial investment. Rendering land an investible resource therefore requires complex cultural work relying on an assemblage of materialities, relations, technologies, and discourses. Financial entities and finance scholars have constructed farmland as having an important role in improving financial portfolios due to farmland’s positive risk-return characteristics and historically low correlation with traditional assets, thereby serving as a hedge against inflation (Painter and Eves 2008; HighQuest Partners 2010). Unlike other asset classes, both land-value appreciation and land’s productive capacity (that is, the value of its products) can provide returns on investment. In this way, the construction on farmland as a financial asset class is deeply enmeshed with the “neo-Malthusian” discourse about global population growth and resource scarcity, which has been somewhat revived since 2008 (Fairbairn 2014), with financial actors drawing heavily on the “food security” narrative when investing in agricultural production (Larder et al. 2015).

In addition to these financial rationales and discourses, scholars have underlined the role of the state in mediating agricultural finance (Martin and Clapp 2015) as well as the alliances between international development organizations—notably the World Bank Group—and private equity capital to integrate farmland into financial circuits. This has been especially so in relation to control over land in so-called “emerging” or “frontier markets” (Daniel 2012; Dixon 2014; Salerno 2014). Referring to the Canadian prairies, Sommerville and Magnan (2015) demonstrated how trajectories of agricultural restructuring—mainly implying various degrees of liberalization—have helped to promote land as new financial vehicle. They further stressed that financialization should not be seen as a one-way process. While accelerating the concentration of land and resources, at the individual level it has allowed some families to expand their farming operations. Moreover, Magnan (2015) and Kuns et al. (2016) have pointed out that the endeavor of turning farmland into a financial asset class is an uneven process that can also lead to failed investments, revealing the potential contradictions between the logics and temporalities of finance and agriculture.

Missing from this emerging debate, however, is a detailed understanding of how rural communities are responding and reacting in light of the entry of financial actors to the sector. This paper argues that the financialization of farmland needs to be embedded within specific local settings to improve our understanding of how interactions between finance companies and farmers take place. It is especially important to avoiding constructing farmers as a singular and undifferentiated group of “victims” of a financialized food system (Williams 2014, p. 407; see also Borras and Franco 2013; Hall et al. 2015; Larder 2015). This grounding of financialization echoes calls to explore the “machinations of financial actors and intermediaries” (Pike and Pollard 2010, p. 30) and to pay attention to the way financialization disrupts and reinforces existing subjectivities, discourses, and ideologies (Pollard 2013). Being, to our knowledge, the first study addressing the aspects listed above in relation to farmland, this paper offers preliminary insights on the local negotiation of shifting land control towards financial actors. In this way, the paper contributes to an understanding of the financialization of farmland as being neither abstract nor one-sided but rather a complex process, which is disputed as well as accommodated by rural populations.

As part of an ongoing project,1 our research design consisted of two interrelated steps. For the first step, recent changes to agricultural landownership towards financial actors were traced at the national Australian level—with the aim of identifying major actors and areas of investment. In the second step, a specific local setting (Warren shire in central New South Wales [NSW]) was chosen to investigate how the entrance of financial actors has been negotiated within the community. The recent investments of three key actors—one backed by a sovereign wealth fund, one a farmland investment firm of a US pension fund, and another a farmland investment firm managed by a major Australian bank—made the case particularly interesting for this study.

We start with sketching out the context for the financialization of farmland in Australia, followed by an outline of how landownership change was conceptualized and studied. We then introduce the site, namely Warren shire, and the financial entities that have invested in this location since 2009. Based on that, we explore the community interpretations of, and interactions with, the financial actors through three key themes: acceptance, accommodation, and unease. In this way, the paper helps to ground the financialization of farmland within a specific context where financial investments have occurred and delivers valuable insights on the multifaceted interactions between farmers and financial actors. We conclude by emphasizing the need for more context-sensitive and case study based investigations of the ways in which landownership and agricultural production are being reconstructed in the context of emerging financial interests.

Financializing farmland: Australian perspectives

Adherence to a productivist (high-technology/industrial) form of farming is one factor that attracts financial investors to Australia’s agricultural land; another is a receptive regulatory and political environment that encourages foreign capital investment in natural resource development (Lawrence et al. 2013; Keogh 2014). The neoliberal role-back of the state has reduced support and protection for family farmers, opening the way for enhanced private sector investment in agriculture (Lawrence and Campbell 2014). Against this backdrop, Australia has emerged as a preferred region for financial entities entering agricultural production based on the following assumptions: Contrary to the global South where investments have mainly sought to capitalize on allegedly “vacant” and “underperforming” land (Ariza-Montobbio et al. 2010), the Australian context appears attractive to investors due to its assumed “low-risk environment,” where a stable government, well-established and attractive investment laws, and strong private property rights provide the necessary preconditions for land investment (Larder et al. 2015; Magnan 2015). Moreover, Australian rural properties are vast and the country has a reputation for quality production, particularly in cattle and sheep industries, and an assumed capacity to increase production (Broadbent and Pritchard 2011). In comparison to the US or Europe, Australian farmland prices are still relatively low (Savills Research 2012) although, since the early 2000s, land values have increased considerably (Pritchard et al. 2012a, pp. 31–32).

In recent years, there has been an apparent increase in agricultural investment in Australia from financial actors, with capital often stemming from overseas given that Australian investors have been reluctant to invest in agriculture. Magnan (2015, Table 5) estimates that financial entities have invested more than AUD 3 billion in Australia’s farmland and agri-food industries. Contrary to other investment contexts such as the US and Canada, the “own-operate” model has been the most common land management strategy in Australia. This model, where the investor also engages in commodity production, is viewed as promising higher returns but also higher risks in comparison to the rather conservative “own-lease out” strategy, in which the investor acquires the land and leases it out to a tenant for cultivation. Further aspects in favor of financial actors’ engagement in Australia include: a geographical diversification strategy (investment in the Southern Hemisphere to balance investments in the North) considered to reduce risk of poor seasons in any one location; Australia’s strategic location in the Asia–Pacific region with its burgeoning middle-class population; and, numerous free trade agreements with countries in Asia, most recently including China.

The foreign ownership of agricultural land has, however, provoked a heated public debate in Australia about the extent of investment, and the motives and implications of this investment (Keogh and Tomlinson 2014; Sanyal 2014; Sippel 2015). As a result, the foreign investment regime has been subject to the most significant revision in its 40-year history (Jepps 2015). Major changes of the new legislative regime, in force since late 2015, have included a new threshold mechanism for review of agricultural land acquisitions by foreigners (starting from land valued at AUD 15 million or more) and the introduction of a public foreign ownership register of agricultural land, regardless of the value of the purchase. Data will be collected by the Australian Tax Office (The Treasury 2015). These changes can be seen as a clear signal to the Australian public that concerns about foreign landownership are not being ignored by the government. At the same time, it continues to encourage foreign investment. There is a clear tension, here. It is too early to determine the possible impacts of the new legislation. It is worth noting though that under both the previous and the current regime all foreign government investors require approval by the Foreign Investment Review Board. Furthermore, there will be a number of exceptions from the new rules within the context of free trade agreements.

The debate about foreign landownership is partly mirrored at the community level as will be demonstrated below. Our research, however, underlines that recent landownership changes towards financial landowners need to be understood within the specific social settings as well as individual circumstances to fully comprehend their implications for communities in rural Australia.

Studying changes to land ownership

As the result of a myriad of socio-economic and environmental processes, current patterns of rural landownership are “artifacts of past decisions and processes” (Pritchard et al. 2012a, p. 6). Changes to landownership can be conceptualized utilizing Wilson’s multi-dimensional framework of rural transitions (Wilson 2008, p. 368). The transitions are shaped by the following three key features: (1) decisions by individual landholders are temporally non-linear (there is not a single, unidirectional change of one form of land use to another); (2) outcomes are spatially heterogeneous (not all geographical localities are affected in similar ways); and (3) processes are structure-agent inconsistent (different geographical contexts provide different opportunities for individuals to act) (see Pritchard et al. 2012a, p. 17). On a further level, mechanisms of landownership change can be distinguished from their actual interpretations and perceptions, which also depend on the individual awareness, experiences, and attributions of change (Williams and Schirmer 2012; see also Carroll et al. 2011; Williams 2011; Schweinsberg et al. 2012). These two interrelated levels have informed our research, with an emphasis on the site-specific local actors—notably the farmers—and the effect of their decision making processes on changing land ownership (Hersperger et al. 2010, p. 7). Farm-level decision making is significant because it helps to explore how individual’s situations—along with their values, attitudes, and biographies—shape decisions to engage, or not, with financial actors. This perspective has been missing in agri-food financialization literature to date, which has tended to focus on financial entities as drivers of land ownership change, neglecting the role existing landowners play in enacting new land ownership relations.

Research addressed the following critical questions: How were the new farm owners and their practices interpreted at the community level and was any difference made in comparison to established corporate landowners? How did interactions between financial actors and local residents take place? And why did farmers decide to sell to, or enter contractual agreements with, financial actors? To address these questions, a case study approach was chosen with the aim of producing nuanced, detailed, and context-dependent knowledge (Flyvbjerg 2001, p. 72). To this end, the choice of interviewees was crucial and followed an information-oriented selection that was made on the basis of expectations on the possible content (that is, knowledge and perspectives) interviewees would be able to contribute (Flyvbjerg 2001, p. 79).

During a field visit in June 2012, 12 in-depth interviews were conducted in Warren in central NSW, which, based on previous mapping of financial actors’ activities in rural Australia, had emerged as a suitable location for fieldwork. Our sample included eight farmers (six male, two female) who reported on a variety of interactions with financial actors (including land sale to, lease-contracting with, and approaches of financial actors) and provided first-hand experience of how interactions were taking place as well as the rationales involved. The choice of farmers was designed to cover the broad spectrum of farming of the area. Farmers selected operated farms of between 1800 and 30,000 hectares and engaged in livestock, grain, and cotton production, with some of them representing the more traditional type of “family farmers” in the Australian context (ABS 2012), and others who could be considered as “globally engaged farm family entrepreneurs” (in the sense described by Pritchard et al. 2007; Cheshire and Woods 2013). To incorporate the broader perspectives of non-farm based community members, another four individuals (three male, one female) were interviewed relating to their functions as both Warren residents as well as representatives of local council, a brokerage, and agricultural businesses and corporate firms. Lastly, it should be noted that some of the people approached, among them farm managers of financial entities, were not available for interviews or refused previous appointments.

Given that our study sought to uncover individuals’ experiences and interpretations and to understand how people were “making sense” of events in their lives, our aim was to help the participant explore a topic while considering ourselves as co-producers in the production of situated and context-specific knowledge (Elliott 2005). Interviews were open-ended and conversational, with questions framed in “everyday” rather than academic language. Interview data were de-identified, in line with university ethics requirements.

The Warren shire (NSW) and new financial landowners

The Warren shire, located in central NSW, is predominately an agricultural district with over 40 % of the workforce employed in the agricultural sector (MDBA 2010, p. 1070) (see Fig. 1). The shire is part of the Macquarie River Valley and is situated within one of the eight northern Murray-Darling Basin catchments, the Macquarie-Castlereagh catchment, which contains one of the most significant semi-permanent wetlands in Australia, the Ramsar listed Macquarie Marshes (DIPNR 2004; CEWO 2015). As with the rest of the Murray-Darling Basin, the catchment was significantly affected by the extended drought through the first decade of the 2000s and the district experienced steady population decline evident in much of regional Australia (MDBA 2010, p. 1061). More recently, evidence suggests young people are returning to the district after the breaking of the drought and the population is estimated to be currently at around 2900 (WSC 2015). The area is dominated by cotton, grain, and livestock production with landownership structures being characterized by a mixture of family-run farms and absentee landownership of both family and corporate firms. Corporate ownership is a common and well-established component of landownership and dominates ownership structures together with private individual ownership (Broadbent and Pritchard 2011).
Fig. 1

Location of Warren shire (NSW), Australia

Situated in the preferred investment corridor for foreign investors in NSW (PRD Nationwide 2012, p. 2), Warren became a target for financial entities around 2009. The inflow of capital was driven by the conjunction of two main factors. First, two long-established corporate actors, the Twynam Agricultural Group2 and Clyde Agriculture,3 began divesting their agricultural holdings which, in both cases, was not restricted to Warren but concerned holdings throughout Australia. Second, and at the same time as these actors sought to divest their holdings, the food crisis of 2007–2008 revealed global food insecurity as a powerful draw card for institutional investors and superannuation funds, keen to invest in stable “real” assets, such as food production. The sale of large holdings by existing corporate actors provided opportunity for land purchases in Warren. Three financial actors made use of this opportunity, namely Macquarie Group, Westchester Agriculture Asset Management, and Hassad Food, and supplemented these purchases with a number of further acquisitions from private individuals. Landownership changes therefore included both “asset switching” (one large corporate owner replacing the other) and “corporatization of agriculture” (large corporate owner replacing family farm) (Pritchard et al. 2012a, p. 18).

Between 2009 and 2012, the three financial actors bought at least eight properties (four from corporate and four from private owners) in Warren shire and, as a result, now control at least 11 % of the total non-urban land in the shire.4 While all three actors are characterized by their interlinkage with the finance sector they represent different ownership structures as well as strategies of capital raising and land management (see Table 1). Macquarie Pastoral Fund and Westchester Group of Australia are both agricultural investment firms; the former belongs to a major Australian bank and the latter to a leading financial services company based in the US. Hassad Australia has state backing relating to its ownership by Qatar’s sovereign wealth fund. Warren residents’ responses to the new landowners can be viewed as threefold: (1) acceptance, (2) accommodation, and (3) feelings of unease.
Table 1

Profiles of financial actors that invested in Warren.

Sources: Hassad Australia (2015), Hassad Food (n.d., 2011), Larder et al. (2015), Paraway Pastoral (2016), TIAA-CREF (2015), WAAM (2011, 2014, 2016)

Company’s name

Type and structure

Sources of capital

Farmland investment model

Type of agriculture

Land owned/managed in Australia (ha)

Macquarie Pastoral Fund

First unlisted institutional agricultural fund of Macquarie Group, an investment bank and financial services provider

Launched in 2007 and owned and managed by Macquarie Agricultural Funds Management Limited (MAFM)

Not publicly disclosed


Livestock production

2.7 million

Westchester Group of Australia

Australian subsidiary of Westchester Agriculture Asset Management, since 2010 a subsidiary of American financial services company TIAA-CREF (Teachers Insurance and Annuity Association–College Retirement Equities Fund)

Investments in Australia since 2007

Not publicly disclosed

Own lease-out

Row crop production


Hassad Australia

Australian subsidiary of Hassad Food Company, established in 2008 and owned by Qatar Investment Authority (Qatar’s sovereign wealth fund)

Investments in Australia since 2009

Revenues from Qatar’s oil and liquefied natural gas exports


Livestock and grain production


Compiled based on desktop research and complemented by three interviews conducted with representatives of two of the companies

Acceptance of financial actors

Acceptance can be seen as the result of a judgmental process where a situation is considered as superior or sufficiently similar in comparison to its known, favorable, or imagined (future) alternatives (Williams 2011, p. 56, following Brunson 1993). Drawing upon the literature on Australian rural ideology (Bryant 1999; Gray and Lawrence 2001; Wilson 2001; Berry et al. 2016) and upon the literature detailing public acceptance or opposition to land use change in rural Australia (Williams 2011; Williams and Schirmer 2012), we suggest that both positive and negative responses to financial actors in Warren have been tied to the “visibility” of these actors. Two connotations of “visibility” appear to be influential in community acceptance: the notion of the “good corporate citizen” and the “traditional”—that is farming-based—use of the land.

Good corporate citizenship

The contribution of corporate actors to the building of “community” proved of central importance for people engaged in this research (both farmers and further community members) as expressed in the notion of the “good corporate citizen.” In reference to the latter, individuals often recalled the case of a long-term corporate cotton producer in the region who was seen as an example of a good corporate citizen, mainly linked to the monetary contributions the company has made, and continues to make, to the community. Interviewees pointed out that the cotton producer’s company gives “money to put the local kids through university, every year they give a scholarship” (cotton and cattle farmer 2012) and described the company as being “extremely generous” and having a “really good sense of community” (grazier and representative of the Shire Council 2012).

Echoing these experiences with “good corporate citizenship,” a desire to visibly participate in the community by frequenting and supporting town service providers framed the way individuals assessed the new financial landowners: “[I]’d be hopeful that they would be good corporate citizens and buy as much as they could locally and employ locals where they can” (grazier and representative of the shire council 2012). The acceptance of new landowners was intimately tied to their willingness to make positive (financial) contributions to community life by maintaining local employment and engaging in benevolent activities.

Keeping up “traditional” land use

Within Australian—and wider, agrarian, rural ideology—rural producers hold farming to be a vocation that encapsulates a spirit of hard work, family values, and persistence (Bryant 1999; Gray and Lawrence 2001). Farmers view themselves, and are viewed more widely, as “stewards of the land” and as protectors of the rural environment. Urban and industrial development are, in turn, considered as “threats” to the countryside (Wilson 2001, p. 80). A recent quantitative survey in Australia has confirmed the strong and widespread support for agriculture (Berry et al. 2016) and indicated that in terms of rural land use changes, residents of rural Australians distinguish explicitly between traditional agricultural and non-traditional land uses (such as plantations or residential development), with support for agricultural land uses persisting despite evidence of negative community impacts (Williams 2011, p. 61).

The interpretation of the financial actors’ activities in Warren as a continuation of “traditional” land use was most notably expressed by a farm family entrepreneur who owns and manages a large Merino wool farm in the district. He suggested the community of Warren was generally receptive to financial investors because they would look after the land and “do up properties” by carrying out improvements to fencing and water sources and by upgrading buildings. In this way, they “tend to be quite good custodians of the land.” Interestingly, this sheep farmer drew upon the phrase “custodians of the land,” a term normally associated with family farming in the agrarian tradition, to describe the new financial farm owners. Tied to attempts to move beyond ecologically damaging and unsustainable productivist agriculture (Lang and Heasman 2015), the discursive construction of farmers as “stewards of the land” can be located in agro-environmental policies (Cocklin et al. 2006). The attribution of “custodians of the land” can be explained by the fact that the financial actors are not engaged in large-scale transformation of the landscape. Instead, they are engaged in the kind of positive change to the landscape other farmers undertake in the day-to-day act of “taking care” of their properties.

In relation to the new landowners being a possible threat to community identity and way of life—opposition to mining on agricultural land in Australia as a case-in-point (Mercer et al. 2014)—the practices that the financial investors adopted did not lead to criticism. Investors have been using land in its “traditional” agricultural sense that fits with historical patterns of production in the area. In this way, the positioning of financial actors as “custodians of the land” is inherently linked to their operation as “traditional” actors, running and operating property as “true” farmers would. This continuity of land use meets local actors’ expectations of how rural land should be used and is reflective of the socially and culturally derived norms surrounding appropriate land use (Barlow and Cocklin 2003; Williams and Schirmer 2012).

Accommodation of financial actors

In addition to this acceptance of financial actors we found several instances where farmers have been accommodating the new landowners. Some farmers used the entrance of financial actors to their advantage, actively pursing partnerships and approaching financial actors as buyers. This finding contradicts the idea of one-sided power relations when it comes to financialization of farmland.

Financial actors as solvent buyers

There was a range of motivations and reasons why farmers decided to sell their land (more generally) and to sell it to financial investors (in particular). Typically, land sales in rural Australia are related to the generational change of young people leaving rural areas and not taking over the family farm (a point well established in the literature, see McKenzie 2014). Among farmers we interviewed, motivations also included personal reasons such as the acquisition of another property elsewhere, a change of the style of farming, or health issues. Furthermore, decisions to sell were underscored in relation to the impact of the drought in the first decade of the 2000s, which reduced profits and increased bank debts. Farmers’ recourse to financial actors as potential buyers has to be seen within the context of the changes in rural land market prices in recent years, associated with an increase in price for some commodities, along with speculation in land values—as part of the global process of the financialization of food and farming (Russi 2013). As one family farmer noted, land prices have been greatly affected by urban money inflow into the area, which induced an increase of land prices so that many families were no longer able to “buy the next door neighbor out” (grazier, 2012). Rather “it got to the stage where the value of the land was beyond most people’s reach.” In this context, corporate and financial actors emerge as assertive buyers, with farmers actively seeking out such investors to purchase their lands. A number of interviewees suggested there was even competition among farmers to sell to investors. Large-scale investors were known to offer “big money” and, as Prichard et al. (2012a) and Eves and Painter (2008) have noted, sales of farmland in Australia, as with other real estate, tend to follow boom and bust cycles. The influx of investors and urban capital sent a further “boom” signal, motivating those wanting to leave the sector to sell while prices were high.

James Thompson’s5 case is an example of how such a deal with a financial actor took place. As explained by his father, Harrison Thompson, James’s decision to scale down his business was mainly due to poor health following years of hard work, and stress during the drought. Unable to find a buyer willing to pay the amount he believed his farm was worth, James approached a financial fund and, after five months, completed the deal. During these five months the investors “went through it with a pretty fine-tooth comb” checking what the property had done in the past and “whether it was as good as we said it was.” While James would have preferred to sell the property and move on immediately, it was part of the fund’s condition that it be leased back to James for at least three years. His father Harrison explains how the lease-contract works:

He’s got to pay them 5 % of its worth each year, so he’s still farming it in his own right. What he grows, he gets. If he makes AUD 3 million off it, he gets AUD 3 million, if he makes AUD 2 million, he gets AUD 2 million. If he makes AUD 5 million, he gets AUD 5 million, and he’s got to pay them the 5 %, which he’s got to pay six months in advance of each 12 months. (Retired cotton farmer, 2012)

The example of the Wilson family adds a further perspective on the multi-layered relationship between farmers and financial actors. Liam Wilson is the third generation owner of a family-farm business operating a large-scale sheep stud, which supplies sperm from rams nationally and internationally. In 2009, Liam received an offer to sell one of his holdings. As he reports, he was contacted by a large fund that was interested in his property because of its size, scale, and diversity. Although the family, in consultation with the board of directors, carefully considered the offer, the family finally declined it. One reason was that the price was “not sufficient.” But there were also further motives behind this decision:

[The family and the board members] thought that there would be a food shortage in Asia and the rest of the world and that we were in a good position to [take advantage of] that. As it’s turned out that was the right decision because the land values have been going up, the seasons have been quite favorable and the commodity prices have been okay. So, at present, it’s the right decision. (Sheep breeder, 2012)

The agricultural rationale presented by Liam precisely mirrors the discursive construction of investment incentives presented by financial actors themselves. The necessity and insecurity of food have been employed as underlying investment logics by investment funds such as Macquarie, which posit Australian agriculture as being particularly well placed to profit from these postulated trends (Larder et al. 2015). Resonating with the figure of the “globally engaged farmer” who takes up the neoliberal challenge of global competition on “free” markets and seeks to take advantage of the opportunities globalization offers (Cheshire and Woods 2013), the Wilsons believe they are in a position to capitalize on developments on global food markets and to benefit from future global food shortages. In this way, the mind-set of some Australian farmers who are global players in their fields has come to closely reflect the perspectives and calculations of agri-businesses in the corporate world. In other words, some farmers in Warren display a considerable degree of financial literary, as will be suggested in the following section.

Farmers and financial actors in partnership

Magnan (2015) and Sommerville and Magnan (2015) have reported that farmland investment funds see themselves as “financial partners” for farmers seeking to expand their operations, particularly where farmers are unable or unwilling to get bank financing. We found this narrative of the financier-farmer “partnership” in evidence among the farm family entrepreneurs—the “globally engaged” farmers—we interviewed. In such cases, financial actors provided a new opportunity and attractive strategy for farmers to raise capital, increase their flexibility, and remain viable in a tight land market. For example, on top of their original and already large holdings, the Wilsons lease an additional 35 % of their operated land. For this lease, the Wilson’s have established a tenant relationship with a financial actor in recent years. As Liam Wilson explains, it was most important to negotiate the percentage of the rental increase in relation to the cost of living index as “with [this firm], you have to be careful of that.” Rental increases were set at around 5 % per annum. He elaborates upon his reasoning behind this calculation as follows:

L.W.: Well obviously, I’d like a flexible model but in the three places that we lease, even the private people have said, we’re on a fixed minimum rental and it goes up CPI [consumer price index] each year, regardless of whether we’re making money or not. Interviewer: That doesn’t suit you as someone who’s leasing land? L.W.: But if you look at your obligations if you borrow the money from a bank to buy a new farm, you don’t have any flexibility of whether you pay the bank or not. You have to pay. Per million dollars, you have a borrowing cost of 6 % or 7 % and you have to pay your interest. (Sheep breeder, 2012)

Based on these considerations, leasehold land is attractive to the family company’s board because it enables them to increase their operations while at the same time achieving a greater degree of flexibility in comparison to land purchases based on bank borrowings:

All our leases are short term, so that if the company, or the family, decide that they want to get out of that much exposure to agriculture, they can give up the leases in the next two years and they don’t have that obligation. Also, the other thing is that, if you own all your land, sometimes when you want to sell a property, the market is stagnant, there’s a drought or there’s low commodity prices, and there isn’t a market—as in the case of irrigation farms for the last 10 years. (Sheep breeder, 2012)

In this way, leased land allows the family to reduce its exposure to market and weather fluctuations at short notice, a flexibility denied to landowners due to the tendency of land markets to stagnate in response to external conditions such as drought (Pritchard et al. 2012a). As can be seen from the above quotes, complementing the financial reasoning regarding his position to supply global food markets, Liam employs financial language to explain the calculations behind the leasing arrangement. In this way, he demonstrates a profound “financial literacy” that has become an essential part of his everyday farming operations.

While no standard definition of financial literacy exists, it has been suggested as referring to the understanding of key financial concepts as well as the ability and confidence to manage finances through appropriate short- and long-term decision-making (Remund 2010, p. 284). As Williams (2007) notes, proponents have promoted financial literacy education as a form of consumer empowerment in the sense of reducing barriers to participation in markets and improving the accessibility of relevant information. From a more critical perspective, the notion of financial literacy has been addressed in the debates on financial subjectivities (Hall 2011), examining the various ways in which individuals are becoming increasingly tied into the international financial system. Research has focused on the emergence of “investor subjects” under neoliberalism: individual security is seen to have shifted away from state-based supports and on to financial markets (Langley 2006, 2008; Finlayson 2009). Here the social and spatial spread of financial knowledge is uneven, which has implications for financial exclusion (Leyshon and Thrift 1998; Leyshon et al. 2008). Unevenness relating to financial literacy is unlikely to be a new phenomenon among farmers, but in light of the new interest of investment funds to gain exposure to farmland, financial literacy emerges as an important differentiating factor in how farmers interact with financial actors. Contrary to the loss of power associated with formal subsumption of family farms, where farmers are “squeezed” in their contractual arrangements with more powerful actors (Pritchard et al. 2007), those farmers commanding a large scope of action, such as farm family entrepreneurs, viewed the opportunities the new landowners provided them as being good for business.

The increased demand shown by the financial actors was further described as positive by this group of farmers because it underpinned the value of their existing real estate and agricultural assets. While this may seem illogical at first, given the same demand is often blamed for excluding family farmers from land markets, it reflects the preferences of globally engaged farm family entrepreneurs, where flexibility and responsiveness to markets are valued above traditional notions of landownership (Bryant 1999; Pritchard et al. 2007; Cheshire and Woods 2013).

Unease about financial actors

The entrance of financial actors was not accepted unconditionally and a number of reasons emerged for the ambivalence, concern or—in some cases—unease expressed by interviewees. Continuing the theme of visibility introduced above, we suggest the “invisibility” of financial actors—most notably represented by the degree of secrecy and lack of transparency surrounding land deals—played a significant role in eliciting these responses. Concerns also related to a shift of the perceived power balance between “corporate” and “family” ownership as well as, in the case of Hassad, the issue of food security.

Secrecy of land deals

Some interviewees felt there was a level of secrecy surrounding land deals. This invisibility affected trust and community cohesion, a finding that resonates strongly with the community implications of land acquisitions that Desmarais et al. (2015) observed in Saskatchewan, Canada. The “mantle of secrecy” surrounding land deals was created and sustained by both individuals as well as within the community, and further endorsed by financial investors, all pursuing different strategies by maintaining silence. At the individual level it was clear land sales were regarded as somewhat delicate and, therefore, not matters that were openly addressed or discussed in public. Large sums of money are transferred in land sales and it is a faux pas to share this with the community. In addition to these social norms relating to land exchange and secrecy, our informants interpreted the secrecy around the recent land deals as a tactic deliberately used by the financial firms. One family farmer noted that when the major land deals took place there was a general sense that all three investing firms were strategically operating “below the radar”:

There was a feeling put around. […] They were very clever. It’s a bit like relying on the rumor mill. Unknown sources get this feeling going that [a certain company] is actually looking around the valley. And then, “oh well such and such is selling to them” … and you approach them and ask if they ended up finalizing a sale and they say no. There was an expression of interest but it never progressed further than that. (Grazier, 2012)

The resulting rumor mill was further described as a means of shifting people’s thinking from “not even being interested in selling” to “there might be an opportunity,” especially if people were under financial pressure. At the same time, the fact that land deals were always done for undisclosed amounts was seen as a means to avoid the spread of information—if amounts were made public the farmer “next door” could say “I want the same or more.” This strategy is arguably related to the negotiating power gained by potential buyers in not making publicly available the cost of the sales, sustained in most cases by requiring sellers and tenants to sign confidentiality agreements.

The presence of rumors in the community generated a general atmosphere of distrust mixed with jealousy associated with the fear of potentially “missing the opportunity of your lifetime” by not selling to one of the new entrants. It appeared that this strategy was successful as its effect was to undermine community cohesion rather than to inspire solidarity. Asked whether there had ever been an initiative for cooperation between landowners to undercut the secrecy tactic by establishing transparency, one informant replied: “The reality is there is always someone who is under enough financial pressure where they have to consider it. They wouldn’t be responsible to their family and their other commitments if they didn’t” (grazier, 2012). At the same time, the secret nature of the deals was also evidenced with families—including the abovementioned land deal realized by James Thompson. During the five-month long negotiation with the prospective buyer, James refrained from telling his father about the potential sale. In addition to the fear of hurting his father’s feelings if he knew that his son was planning to sell the family’s land, this level of secrecy was also warranted given the size of the deal and the “quiet” way the fund was making local purchases.

More generally, there was a lack of transparency in relation to landownership changes within the community. The local council suggested that while, historically, it would be made aware of any changes to landownership in the shire through publication of transfer lists in council papers, this was no longer the case. As such, the local council relied on word-of-mouth much like the rest of the shire’s residents to keep up to date with such changes. This lack of knowledge about who was buying land in the region is reflective of the wider desire by Australians to know which overseas investors are purchasing farmlands.

Shifting balance between “family” and “corporate” ownership

Due to the divesting of agricultural properties by the Twynam and Clyde Groups, as outlined above, a number of properties changed hands from corporate agribusiness to financial owners. These kinds of common changes to land control between corporate actors were not considered as a threat to the community so long as they did not affect the perceived balance between “internal” (that is family), and “external” (predominantly corporate), ownership. However, “if it started to impact on family farms,” one family farmer said, he would be concerned for two reasons: first, his esteem for the history of family farming in the region; and, second, his appreciation of the “resilience” of family farms. “The family farm is, as I say, more resilient, more inclined to tough out the bad years with the confidence that the good ones will come around” (grazier and representative of the Shire Council 2012). The reference to “resilience” he made can be interpreted as a way to reposition power in the sense described by McManus et al. (2012, p. 21):

[…] “rural resilience” has become popular in recent times, largely as a reaction to the notions of rural decline. It has become associated with enhanced well-being through having adaptive behaviors that permit some level of influence over future directions. In this way it views rural communities as active, dynamic social arrangements rather than passively being left at the mercy of unmanageable external forces.

We suggest the recent years of extended drought—together with the movement of corporate actors out and the movement of financial actors into farming—have reinforced the locals’ awareness of their own stability and resilience on the land. While corporate actors were seen to sell at the first possible opportunity after the breaking of the decade-long drought, family farmers positioned themselves as “stayers” who had “toughened out the bad times” by “tightening the belt” because they “love” the land (grazier and representative of the shire council 2012). These were the kinds of farmers who would “put in the long hours,” working 10 and 12 h days to “get the job done” (grazier 2012). This was often compared to a farm run—but not owned—by a manager who would not necessarily work as hard because they had only a marginal interest in the property.

The active construction of the “resilient family farmer” in contrast to the “out-of-touch” financial actor is a way famers actively negotiated the movements in and out of both corporate and financial actors by inverting the threat posed by the entrance of new and powerful landowners. In fact, this perspective might not be unfounded given that, as Magnan (2015, p. 9) underlines, “scale and professional management provide no guarantee of financial success.” Rather, there is already evidence of significant failures of large financial farming corporations (Plunkett 2015; Kuns et al. 2016). Furthermore, the different temporalities of short-term shareholder expectations and longer time horizons required in agricultural production point to the potential contradictions in aligning the worlds of finance and agriculture (Martin and Clapp 2015; Kuns et al. 2016).

Producing for food security

Lastly, when it comes to Hassad Australia’s investments in particular, interviewees’ responses differed from those expressed towards the other financial actors. They were concerned about the company’s sovereign wealth backing from Qatar and the motive of food security (for a more detailed discussion see Sippel 2015). Here, local perspectives mirrored the political debate at the national level in closely identifying Hassad’s investments with the notion of producing food to enhance its own country’s food security. From this point of view, the company received considerably more scrutiny than the other investors as it is seen not as a business-as-usual operation but as a kind of “exterritorialized” exploitation of Australian resources for food repatriation: “I just do not understand that you can sell something as valuable as land which is a very valuable asset to someone else overseas to produce food […] we won’t get it, it’ll all go back overseas” (female grazier, 2012).

A further concern relating to Hassad’s investments was that of the increasing concentration of land and the resulting competition not only with corporate but also with more powerful state-related actors with sovereign backing. In this way, shifting global power balances between nation states and across established north–south relations are directly negotiated at the local level where, from the perspective of rural residents, land values are inflated and are out of reach of local purchasers.

Discussion and conclusion

This paper has investigated the financialization of farmland in the Australian context and has argued that in addition to identifying the global drivers, financial rationales, and discourses, it is also important to reach a better understanding of how the financialization of farmland takes shape at the local level. This grounding of financialization within the specific contexts of the rural places where financial investments have occurred helps to complement, as well as reposition, the rhetoric and discourses created at the national and global levels. Furthermore, it delivers valuable insights on the interpretations of financial actors at the community level and illuminates the various interactions between farmers and financial actors. Based upon qualitative research conducted in a key area for financial investment in rural Australia, this paper has argued that local perceptions of, and responses to, financial actors can be interpreted along the three key themes of acceptance, accommodation, and unease. While supporting insights from other research conducted in global North agricultural contexts, our study has shed light on a number of mechanisms that characterize the multi-layered relations between financial actors, rural residents, and farmers. Before outlining some questions for further research, it is important to emphasize three key observations.

A first observation is that people involved in this research did not oppose the financial goals of the companies, per se. Critique or feelings of unease were related to other concerns (food security, lack of transparency, and shifting power balances), resonating with findings from another location of financial investment in rural Australia where Sippel et al. (forthcoming) found resistance related mainly to chemical spraying activities—interpreted by locals as those companies “lacking care” and disregarding people’s rights to live in a healthy environment.

A second observation underlines the importance of understanding rural communities as being composed of a multiplicity of potentially conflicting perspectives and interests as well as capacities for action. While some farmers appreciated the increased interest of financial actors in farmland as underpinning the value of their estates, others viewed this as a threat to family farming and an exacerbation of already unequally distributed access to land resources. Moreover, some farm family entrepreneurs have become financially attuned actors themselves and see the opportunities investment funds provide them as a means to increase their farm profitably and flexibility. These new alliances are not an option for those farmers who do not have the required knowledge or whose scale and quality of operations is not sufficient to raise the interest of financial actors. This indicates that the recent move of financial actors into primary production has the potential to further existing inequities between different groups of farmers.

A third observation relates to the implications for the impacted communities. While changes to landownership are by no means a new phenomenon, our research supports Desmarais et al.’s (2015) findings from Saskatchewan, Canada, showing that the recent landownership change towards financial actors has differed from previous changes due to the specific combination of speed, scale, and lack of transparency that characterizes them. In both contexts, they have resulted in feelings of unease at the community level, with claims they have negatively impacted community cohesion.

The paper has underlined the importance of understanding the “local” within national and global settings as well as their mutual connectedness, which should not be ignored when the financialization of farmland is investigated. The restructuring of Australian agriculture in recent decades along neoliberalist/“free market” and productivist, lines has made it an attractive target region for a number of well-established farmland investment funds and asset management companies (Lawrence and Campbell 2014). Australian farmlands were among the first international ventures of these companies. Ironically, this is in the context of Australian investors, themselves, demonstrating considerable reluctance to invest in agriculture. As this paper has shown, national discourses and common understandings of the guiding principles of agricultural investments are equally reflected and (re)produced by rural communities. This study has demonstrated that the financialization of farmland in Australia needs to be further interpreted within the broader research on Australian ruralities and rural ideology. It also needs to compare and contrast financial actors with other corporate-sector actors. And, for comparative purposes, further research could examine the land use changes occurring in farming alongside those associated with mining and forestry.

Arising from this study, it is suggested that three areas in particular deserve further attention by researchers. The first is the notion of financial literacy, which appears to play an important role in mediating farmers’ responses to investment. This is in line with the insights on the emergence of a new category of highly entrepreneurial and globally engaged family farmers that has been identified in recent studies (Pritchard et al. 2007; Magnan 2012; Cheshire and Woods 2013). What are the active roles farmers are playing not only in accommodating financial actors as partners (using them as an alternative means of raising capital and to increase their flexibility) but also in becoming financial actors themselves? This also underlines the opportunities presented to (some) farmers who can take advantage of global processes such as financialization. Second, the comparison between established corporate agribusiness and new financial actors deserves further attention. One aspect is the notion of “good corporate citizenship.” In their public communications, financial actors—like other corporates—have been eager to stress their commitment to local communities and to highlight their social responsibility credentials. It remains to be seen how these will be realized in the future, specifically in those cases where investments turn out to be less profitable or more difficult than expected. A third question relates to the implications for community cohesion. Further context-sensitive research is required to better understand how rural communities negotiate the entrance of financial actors. To reveal the role financialization is playing in restructuring farming and food in an era of global neoliberalism, it needs to be studied by embedding it locally: this is the space where the actual changes and negotiations of landownership control are taking place.


  1. 1.

    This paper presents context-specific insights from an international research project investigating the financialization of agriculture in Australia and further comparative contexts. It has been funded by Australian Research Council Discovery Grants (Project Nos. DP 110102299 and DP 160101318).

  2. 2.

    Twynam Agricultural Group is a family-owned corporation and has been a major rural land holder in Australia for the past three decades. It began divesting its agricultural land and waters holdings around 2007. The divestment included the AUD 303 million sale of water rights to the Federal Government in 2009, followed by a shift into urban and regional property and development (Kitney 2013).

  3. 3.

    Clyde Agriculture is a wholly owned subsidiary of the Swire Group, a UK-based transnational corporation (John Swire and Sons Ltd. 2012). For the last 20 years, Clyde has been a major landholder of agricultural properties in Australia. Like Twynam, following the financial crisis of 2008, the Swire Group began withdrawing from the agricultural sector. According to Clyde, this decision was “based on an exceptional combination of circumstances, including high commodity prices and the best seasonal conditions seen in a decade” (Clyde Agriculture 2011–2012, n.p.). Sources in the region also suggested that the decision was related to losses the company incurred during the drought period and a desire to “realize on the company’s assets” when prices recovered.

  4. 4.

    The equivalent of some 110,000 hectares; this figure was calculated using the publically available sales figures on purchases by these actors alongside data on land holdings gathered during interviews. The number of non-urban hectares used in this calculation was 996,000 hectares (Pritchard et al. 2012b, p. 338). Research further covered Hassad Australia’s land purchases in the neighbouring Narromine shire, where one property has been grouped together from what were originally four properties (two of them previously owned by corporate and two by private owners).

  5. 5.

    All names used for interviewees in this paper are pseudonyms.



We thank the two anonymous reviewers and the editor of this journal for their constructive comments and helpful suggestions. The research presented in this paper was part-funded by the Australian Research Council (Project Nos. DP 110102299 and DP 160101318). The fieldwork was part-funded by an LDPI small grant Dr. Sarah Ruth Sippel received from the International Institute of Social Studies, Erasmus University Rotterdam. Emeritus Professor Lawrence was part-funded by the National Research Foundation of Korea (NRF-2010-330-00159) and the Norwegian Research Council (FORFOOD Project No 220691).


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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  • Sarah Ruth Sippel
    • 1
  • Nicolette Larder
    • 2
  • Geoffrey Lawrence
    • 3
  1. 1.Centre for Area StudiesUniversity of LeipzigLeipzigGermany
  2. 2.Division of Geography and PlanningUniversity of New EnglandArmidaleAustralia
  3. 3.School of Social ScienceThe University of QueenslandSt LuciaAustralia

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