Bullish on Ag Land

Betting the farm
As world population expands, the demand for arable land should soar. At least that's what George Soros, Lord Rothschild, and other investors believe.

By Brian O'Keefe, senior editor
Last Updated: June 11, 2009: 10:26 AM ET

(Fortune) -- On a sunny Friday morning, Shonda Warner and I are in her red Toyota pickup heading southwest on Highway 61 out of Clarksdale, Miss., on our way to see one of her farms. While her black standard poodle, Walter, naps in the back seat, she's explaining the pitfalls of being an institutional land investor.

"It's really hard to buy property at the right price," says Warner as we roll past the famous crossroads where Robert Johnson is said to have sold his soul to the devil to get the secret of the blues. "Half of all farmland that trades in the United States never sees a broker. We believe you've got to have a lot of local knowledge of the marketplace. Farmers are smart and they talk. And if one Town Car full of Wall Street types rolls into town and makes a bid, suddenly all of the prices go up."

A Nebraska farm girl who went on to a globetrotting career as a derivatives trader for Goldman Sachs (GS, Fortune 500) and then as a hedge fund executive in London, Warner, 45, is back on the farm pursuing what she believes is a huge moneymaking opportunity. Two years ago Warner launched an investment firm, called Chess Ag Full Harvest Partners, with a fairly simple underlying strategy: Buy undervalued farmland in the U.S. and profit from the coming global agriculture boom. Read More

There are several ways to look at this from a farmer’s standpoint. One might be that this group is taking farmland away from the actual farmers that need it. Along with that, it might make it tougher for a younger farmer to get involved. But there is also the viewpoint that this group is keeping farmland out of the hands of developers and is helping preserve open space. But maybe the best message to take home from this story is that there are people out there that realize how important agriculture is and the vital role it plays in our society. If agriculture disappears, so does our country. In the end, we can all agree on that.