Why Bill And The Mega-Rich Are Buying Farmland

While trying to track down who recently purchased 14,500 acres of choice farmland in Washington state’s Columbia River Basin, researchers at The Land Report were surprised to find out the new owner was Microsoft founder Bill Gates.More surprising, however, was finding out that Bill and Melinda Gates own more private farmland than anyone else in the United States—to the tune of 242,000 acres. That’s a lot of land for this re-invented Farmer Bill and it begs the question: Why do Bill and Melinda Gates own so much farmland?

Diversifying the Gates Investment Portfolio

As of January 2019, according to Investopedia and the Bloomberg Billionaires index, Bill Gates is the third-richest person in the world, with a net worth of $132 billion, behind both Elon Musk ($197 billion) and Jeff Bezos ($182 billion). What do these mega-billionaires do with all their money? Needless to say they give a lot of it away through philanthropic activities - but by and large, they’re investing it.Starting in the mid-1990s, Bill and Melinda Gates wanted to diversify their investment portfolio to be less reliant on their stake in Microsoft. Over the past decades, the Gates estate has been buying up a lot of farmland, as well as a range of other asset classes.

This isn’t unusual in and of itself. Choice farmland is often a solid investment opportunity that can provide steady, non-correlated returns, which is why a lot of private farmland is owned by companies looking for that kind type of thing, including pension plans, life insurance companies like John Hancock, and so on.But what is Bill really up to with all this farmland?

Encouraging Sustainable Practices in Agriculture

There is no shortage of conspiracy theorists with all sorts of outlandish ideas about what rich people are really up to, but we’re not interested in going down any of those rabbit holes. Besides enjoying the returns on their investments into private farmland, it seems pretty clear that part of what Bill and Melinda Gates are doing is furthering their philanthropic aims to make the world a safer, healthier place for everyone.The Bill and Melinda Gates Foundation has put billions of dollars into anti-poverty efforts and better healthcare and well-being for people everywhere. The foundation has been deeply involved in fighting both polio and malaria, Ebola, and more recently the novel coronavirus. But it’s also safe to say sustainable agriculture is becoming increasingly important to Bill Gates.On the philanthropic side of the equation, the Bill and Melinda Gates Foundation has a new initiative called Gates Ag One, which “…aims to speed up efforts to provide smallholder farmers in developing countries, many of whom are women, with access to the affordable tools and innovations they need to sustainably improve crop productivity and adapt to the effects of climate change.”Of course, not everyone is on board with Bill's ag initiatives. Gates Ag One has been referred to as a 'recolonization of agriculture' due to its top-down ownership structure and the introduction of globalized crops and farming techniques. Gate's apparent commitment to sustainability has been derided by many as a brazen attempt to bolster his own image while accumulating even more wealth.

On the investment side of the equation, much of the Gates fortune is invested through a company called Cascade Investment LLC, so that would be the entity that now owns all that farmland. One of the many entities within those investments is Cottonwood Ag Management.This subsidiary is an inaugural member of the 13-member Sustainable Agriculture Working Group of Leading Harvest, a sustainable agriculture organization. It has launched a new Farmland Management Standard “…created by and for all stakeholders across the agricultural value chain—from farmland owners to companies to communities” to advance agriculture from the ground up, sustainably.Sustainability may well be a sincere concern for Gates. He’s certainly dedicated an immense sum of money to it in other areas. But when you own farmland, sustainability is a crucial factor in the investment equation. The longer your farm assets can produce, the more overall return you’re going to realize. So, anyone with long exposure to agriculture should show a serious interest in sustainability.

Should We Concerned that Bill Gates Owns So Much Farmland?

The answer to this question is both yes and no. When critical assets such as farmland become increasingly controlled by fewer and fewer people, there is always a cause for concern and vigilance. Will the farmland be managed well over the longest term possible?Given the facts about what Farmer Bill appears to be interested in as far as advancing sustainable agriculture, there doesn’t seem to be much cause for concern. The phrase “doing well by doing good,” comes to mind, and for all intents and purposes that’s what Bill and Melinda Gates appear to be doing.However, there is still reason to pause and consider another angle. If all the private farmland gets snatched up by the mega-rich billionaires of the world, where does that leave everyone else who wants to do well by doing good through sustainable agriculture investing? Not everyone can deploy capital on the scale that Gates can.You might not have billions to spend on it, but with Farmfolio’s opportunities, you can access the same asset class as Bill Gates. Our goal is to democratize agriculture investing, allowing more people to participate in the development of sustainable, socially responsible agriculture and providing access to the space’s unique benefits of long-term yields and appreciation.