Touch the Soil News #351
A landless farmer farms land owned by someone else. When you pay your insurance premiums, insurance companies build-up huge cash reserves that they invest. Some of those monies are now funneling to investors who want to own farmland.
MetLife has been one insurance company (along with John Hancock) that has specialized in lending money to farmers to buy and own farmland. Farmers in the past often had debts on their balance sheets to MetLife for a farm mortgage loan.
MetLife is a publically owned company that has stockholders and its stock is traded on the New York Stock Exchange as MET. MetLife has total assets of $450 billion with lots of experience in financing farmland.
Over the past few years, several companies have emerged – that are not farmers – but whose sole purpose for existing is to own farmland. They rent farmland back to farmers and may resell the farmland later when it appreciates. One of these companies is Farmland Partners.
Farmland Partners now owns 258 farms totaling 108,163 acres. The company recently announced that they had reached a deal with MetLife. MetLife is going to make mortgage loans to Farmland Partners for the purpose of buying and owning farmland.
Farmland Partners is just two years old and has averaged buying 4,500 acres a month for the last 24 months.
Case in point – MetLife is giving Farmland Partners a series of loans totaling $127 million to help finance more farmland ownership. On the heels of this new financing arrangement, Farmland Partners just bought another farm in Louisiana – 7,400 acres for $31.8 million ($4,298 per acre).
To put it into perspective, Farmland Partners sells stock to raise money, it has earnings to raise money and now it has additional funding from MetLife to raise money – all for the purpose of owning and controlling more farmland. The farmland purchased is leased back to farmers who work the land but don’t own the land.
So the next time you pay your insurance premiums, some of those dollars may be invested in farmland and ultimately raise the cost of your food to pay farmland speculators and non-farmer owned administration and management costs. Makes a person think about the value of their own yard as a farming asset.
Following is a short video clip by Farmland Partners CEO Paul Pittman: