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May 14, 2022 5 Min Read

Bill Gates: Tech billionaire is America's biggest farmer

Why did the tech-mogul buy farmland the size of New York city? Is he really the messiah that some believe him to be?

Back in 2020, a strange activity caught the attention of Eric O'Keefe, editor-in-chief of Land Report (a magazine that lists the 100 largest US landowners every year). It was the furtive purchase of a whopping 14,500 acres of farmland in Washington that raised their antenna. This was a big deal, as even a 1,000 acre transaction is flagged as a once-in-a-blue moon event.

To add to the mystery, the huge purchase was made by a small unknown company in Louisiana. Eric assigned his research team to investigate this transaction, and what they unearthed stunned the internet. The buyer was Bill Gates, the world's 4th richest man in the world.

Unraveling the (Farm) Plot

In a Reddit AMA, when asked why he bought such a massive amount of farmland, Bill Gates commented that investments were not connected to climate. So what's the inside story?

Investigations traced the land purchase to a limited liability shell company that brokered the deal, through a series of shell companies, on behalf of Cascade Investment LLC. This is the investment company that manages the humongous wealth of billionaire Bill Gates.

  • Gates owns an estimated 242,000 acres of farmland across 19 states; part of a larger 269,000-acre land portfolio, with its largest holdings in Louisiana (69,071 acres), Arkansas (47,927 acres) and Arizona (25,750 acres).
  • His well diversified portfolio includes shares in Warren Buffett's Berkshire Hathaway, a Coca-Cola bottling company, and now farmlands.

What does Gates do with all that land?

Did you think that these are crop circles from an alien invasion movie? Hold your horses there, Agent Mulder. That's just 14,500 acres of a potato farm in Washington, owned by Gates. This parcel of land is so massive that it is visible from space. This farm grows the tasty potatoes that are julienned into the famous McDonald's fries.

Some of Gates' land is used by Grimmway Farms, the world's largest carrot producer. Gates also farms soybeans, corn, cotton and rice on 70,000 acres in North Louisiana and 20,000 acres in Nebraska.

Bill has taken the helm at Breakthrough Energy Ventures (BEV), a climate-change-focused firm, where he leads a board that includes Amazon's Jeff Bezos, Virgin's Richard Branson, Tesla's Elon Musk, Alibaba's Jack Ma, SoftBank's Masayoshi Son, and Reliance Industries' Mukesh Ambani.

Their aim is to accelerate an energy transition across every sector of the economy, by investing in visionary entrepreneurs, whose eyes are on climate change.

Why is this purchase a big deal?

In the agricultural sector, a 1,000 acre-transaction is considered to be a rare-occurrence, thus making a single owner holding such a gargantuan land area a very big deal.

  • Farmlands surrounding the Gates' estate are in high demand, with prices ranging between $10,000- $15,000 per acre; much above the state average of roughly $2,000.
  • When Gates bought 10,000 acres of land, he shelled out a cool $12,000 per acre on average.
  • The farming and land conservation communities are worried yet hopeful about what Bill's huge investment in his home state would mean for the farmers and end-users.

“In the United States, the top 100 richest private landowners own more than 1.86% of the total available land.”

Sustainability & Gates' farmlands

Over the years, Bill Gates has addressed the issue of climate change and the need for implementation of sustainable agriculture practices for a better future. Environmental communities are hopeful that Bill Gates' new avatar as gentleman farmer will impact the agricultural sector and climate change in a positive manner.

  1. Fake Meat to decrease Greenhouse gas emissions

    • A study shows that Modern livestock sector contributes more significantly to global warming than the whole of the transport sector.
    • Among livestock species, cattle are responsible for nearly 65 percent of GHG emissions, with a single animal producing more CO2 per year than a Ferrari.
    • Cascade Investment has stakes in plant-based protein makers like Beyond Meat and Impossible Foods which are chiefly alternatives for beef.
    • He proposes that plant-based alternatives will enable us to reduce meat consumption while still enjoying the taste of meat.
  2. Sustainability solutions through non-profits

    • In 2020, the Gates Foundation established Gates Ag One, to provide inexpensive crop productivity solutions to small-scale farmers in Sub-Saharan Africa and South Asia.
    • The Gates Foundation aims to bring investors and farmers together and create an amicable environment to implement sustainable farming methods to fight the climate crisis.
  3. Effective Carbon Sequestration potential

    • Carbon Sequestration captures atmospheric CO2 and stores/ sinks it in carbon pools.
    • Soil is one of the best options available to sequester carbon. To enable this, it would require large expanses of land, similar to what Bill Gates has done.
    • The extensive Gates farmlands can act as a carbon sink and thus a great contribution to fighting climate change

Gates farming practices. A double edged sword?

Is the Gates Foundation farming practice causing more harm than good? He is after all a business magnate whose large farmlands are managed by an investment firm. So, there is a higher chance for the management team to compromise on a few sustainability standards for greater profits from the holdings. The media has exposed some of the questionable deeds of the Gates Foundation that might affect the environment and fellow farmers.

  1. Lack of soil preservation

    • Neighboring farm owners claim that Bill Gates hasn't done anything different from the other landlords to preserve the environment.
    • The large amount of farming activity causes higher water consumption and leaching of fertilizers into the water bodies.
    • This in turn has led to formation of harmful algae bloom and caused drastic fall in marine life and marsh ecosystems.
    • He proposes that plant-based alternatives will enable us to reduce meat consumption while still enjoying the taste of meat.
  2. Imbalance in farmland pricing

    • Large farmlands are made available to wealthy investors at competitive rates, which makes it out of reach of young farmers with limited budgets to own the land.
    • This creates an imbalance in the farming ecosystem as the market and price of the land is decided by a segment that is not involved in farming.
  3. Spurring capitalistic practices

    • Bill Gates is accused of causing two farming trends, i.e, non-farmers/investors influencing farmlands and the other being the slow consolidation of farmland in the United States. When there are fewer small farms, the land is more likely to be owned and operated by non-farming landowners who lease it to farmers.
    • The farmers who lease it for short-term are less likely to follow sustainable agricultural practices, as they aim for quick results over the period!

But why farmland in the first place?

Why has Bill Gates invested in farmland instead of lucrative commercial properties? For one, the billionaire's wealth management is handled by elite investment managers. As part of diversifying the portfolio, Micheal Larson, head of Cascade Investment, has made the smart move of buying huge chunks of land.

Farmland has perennial value because agro-resources are always in demand, creating an inflation hedge. The US is losing farmland at a rate of 2000 acres a day, thus making land a limited resource. History shows that land has always been a stable asset, down the ages, with a heavy spike in value over the decades.

  • Farmland is less vulnerable to unexpected changes, in comparison to other assets such as U.S. Treasury Bond, S&P 500, gold, and Dow Jones REIT Index.
  • According to the USDA, farmland has delivered a positive return every year since 1991, with an average yearly return of 11.5 per cent.
  • When we shrink down to the exact stats, farmland beats all other asset classes in terms of annual growth rate, with respect to volatility.
  • Figure : Annual Growth rate v/s volatility of different asset classes

  • Apart from this, farmland does exceptionally well during inflation, as the value of the property increases. This in turn can cause higher lease rates. Recent statistics show that the farmland owners in the United States rent out 39 per cent of the 911 million acres they own.

Can Gates be pegged as a Messiah at all?

Gates' engagement in farming can become an important cog in persuading the agricultural sector to adopt new sustainability norms. It will make a tremendous impact if America's largest agricultural land owner can demonstrate that farming can be both sustainable and lucrative.

No matter what Bill chooses to do with his land, the world will be now paying closer attention to it.

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