Agriculture as an asset class: reshaping the South African farming sector

According to portfolio managers, agriculture in general, and farmland in particular, can be considered an emerging asset class. Specialized financial vehicles, such as private equity and mutual funds, are emerging and competing to attract potential investment in this asset class. In recent years, there has been significant development of such vehicles targeting South Africa’s farming sector. These innovations are led by a group of market intermediaries (e.g. asset managers or consultants) who endeavour to “re-shape” South African farmland as an opportunity for institutional investors. These “pioneers” engage in a multifaceted mediation process between global financial investors on one hand, and the South African agricultural sector on the other. Drawing upon an empirical study of such intermediaries in South Africa, this paper analyses the concrete mechanisms that facilitate this particular form of commodification. The paper presents and compares the intermediaries, giving particular attention to their structure, governance mechanisms and asset allocations within this “market in the making”. It describes how intermediaries develop different paths of asset valorization to unlock the “financial value” of South African farmlands (i.e. “liquifying”, standardizing, neutralizing, and depoliticizing agriculture as an asset). But, it also highlights some of the difficulties faced in the process of translating between international investors and local managers, questioning the “land-asset fiction” that is materializing through the subordination of farmland to the needs of financial society.