Follow the money: how the super-rich drive cropland expansion via direct investments in agriculture

The diffusion of flex-crops, like soy, oil palm and sugar cane, has serious implications in terms of both forest loss and local food security in the Global South. In this context, what is the role of super-rich individuals and their investment decisions?


Three years ago, I travelled to Salta, North-West Argentina, together with my research team. It was the start of a new ERC-Funded research project (INCLUDE) looking at deforestation in the region, historically caused mainly by the expansion of soybeans. We held a workshop with local researchers and practitioners, where my team and I confessed our ambition to understand what could bring deforestation under control. One of the participants, an experienced practitioner, struck me with his comment. He said: “don’t you understand? You cannot stop it” - I replied: “Stop what?” - and he said: “Capital”.

Deforestation in Salta province, Argentina
Deforestation in Salta province, Argentina. Native forests are being cleared by using a massive steel chain, which is passed between two bulldozer driving along each other. The destruction is total. The land can then be used to sow crops or pastures (Photo by Greenpeace Argentina 2014).

It was a revelation for me. During my stay in Argentina, I learnt how a new mode of agricultural production had developed. “Sowing pools” were collecting money from investors and using it to rent cleared land and grow soybeans for the international markets. The high commodity prices ensured rates of return on the invested capital far higher than securities. This type of agricultural expansion was not limited to Argentina, but had come to dominate a large number of countries in the Global South, albeit under different organizational forms. So-called flex-crops (crops like soybeans, or oil palm, which can be deployed for food, feed and other industrial uses) were booming. The traditional agricultural economics’ approach to understanding demand for agricultural land, seemed inadequate. Certainly, crops and inputs prices as well as technology were important. However, the key aspect was that investment in agriculture followed a financial logic: it was driven by the availability of large pools of “idle money” searching for high rates of returns. In this respect, the expansion of flex-crops in the Global South, was consistent with the narrative of critical Marxist scholars. The ideas of Rosa Luxemburg on the geographical expansion of capitalism, and of David Harvey on investments in land as a “spatial-fix” to the over-accumulation of capital, seemed particularly fitting. Capitalism is extremely productive, as it allows the creation of large amounts of wealth, which are very unequally distributed. The global wealth has been estimated at 317 trillion US $ in 2018. In the same year, the wealth of the super-rich (high net worth individuals, with assets of 1,000,000 US $ or more, excluding their primary residence) was estimated at 68 trillion US $ (equivalent to about 80% of the global GDP). This wealth must however be invested or lose its value (as dictated by the laws of competition). As Marx noted “it becomes as completely the property of money to create value, to yield interest, as it is the property of a pear tree to bear pears”.

Rosa Luxemburg
Rosa Luxemburg (1871-1919) wrote extensively about the drive of capitalism to constantly expand geographically in order to productively absorb the surplus-value it creates, or face over-accumulation crises. In her book, The Accumulation of Capital, she notes: “It becomes necessary for capital progressively to dispose ever more fully of the entire globe,….., so as to find productive employment for the surplus value it has realized.”

Armed with these insights, I assembled a dataset covering the period 1991-2014 and spanning across twenty-one countries in South East Asia and Latin America. My assumption was that the large amount of wealth in the hands of the super-rich represented “idle money capital” in search of high returns. Investments in agriculture could indeed play the role of a “spatial-fix” to over-accumulation, particularly in periods of low interest rates. My results show that the inflow of foreign direct investment in agriculture (FDIA) in two regions of the Global South, responds positively to the concentration of wealth in the hands of the super-rich and negatively to short-term interest rates. The FDIA inflow is in turn a key driver of flex-crops expansion, with strong implications for both deforestation and local food security.

These findings are important since they show how wealth concentration among the super-rich has been driving cropland expansion via investment decisions. The results also point to a key distinction between stocks and flows. On the one hand, there has recently been some attention to the environmental impacts of the super-rich conspicuous consumption. On the other hand, it is sometimes noted how the super-rich contribute, through charitable donations, to research or environmental protection. These aspects are certainly relevant. Nonetheless, both charitable donations and conspicuous consumption are usually drawn from the income flow accruing to the super-rich. It is however by investing the stock of wealth at their disposal, that the rich stay rich (or get even richer), and by so doing they can cause extreme environmental harms. Besides drawing the attention to the urgency of addressing wealth concentration in any possible way, this article will hopefully stimulate further research on the link between wealth inequality, investments and environmental degradation.

Go to the profile of Michele Graziano Ceddia

Michele Graziano Ceddia

Assistant Professor, Centre for Development and Environment, University of Bern

I have a PhD in Environmental Economics and my main research interests are in the area of ecological economics and political ecology. I currently work on the issue of agricultural expansion as the main cause of deforestation in the Global South (with a strong focus on Latin America). I am particularly interested in understanding the environmental impacts of inequality, in its various manifestation, and what institutions and governance can do to improve the outcomes.


Go to the profile of Rosemary Hill
Rosemary Hill about 1 month ago

What a great and important paper thankyou so much Michele. Cheers Ro

Go to the profile of Michele Graziano Ceddia
Michele Graziano Ceddia about 1 month ago

Thank you Rosemary! I am very happy you enjoyed the paper and the story behind it.


Go to the profile of Dimitris Christopoulos
Dimitris Christopoulos about 1 month ago

A convincing argument on the effects of the concentration of capital to the few and the role of FDI in deforestation/degradation.  The pronounced effect of capital in the global south is potentially linked to the interpenetration of wealth and politics.  Policies favour the interests of the few and implementation is lax. Land value taxes may indeed be a remedy. A major contribution, thank you.