Long-term effects of new ownership models in agriculture

Life in the countryside and in villages is changing these years. Traditional value chains and affiliations are changing radically. Agriculture is also undergoing major changes, with financial and generational succession challenges. Both can open the door to major changes in the ownership and ownership circles of agricultural land.

Following the liberalizations of the Agricultural Act in recent years, investors have been able to purchase and operate farms in Denmark without agricultural training, without a residency requirement, and regardless of nationality. A number of very heterogeneous actors have invested in and established food production since then.

It has not previously been investigated in a Danish context whether, and in what way, ownership structure or investment rationale in agriculture affects local development and well-being in local communities. The Centre for Regional and Tourism Research, in collaboration with ethnologist Rasmus Blædel Larsen, is behind the research project and has taken a first step into a complex and socially relevant issue that has not previously been researched much in a Western European context.

The project includes a literature review, analysis of register data, and six case studies, selected to show a spectrum of ownership circles, from small, local agricultural foundations to Danish private equity funds and their foreign counterparts.

The study of Danish conditions indicates that it matters who owns the land. Not so much how, but why they own it. The study points out that investors who have an explicit goal of contributing to development in rural areas have more positive local place-based effects. Multiple bottom lines. In other words, they achieve much of what agricultural policy from the EU and the Danish Parliament strives for: Multifunctionality. This concerns both jobs (how many jobs are created or preserved, and how many hectares it takes to support a job) as well as the introduction of new crops or sales channels; and it concerns collaborations in the local area, as well as local association activities. It also concerns the environment and nature improvements.

Many of the positive place-based effects are achieved by these investors through their direct involvement; others are achieved indirectly, for example through the tenants they choose and the requirements they set for them. The institutional agricultural investors in the study all have a passive investment approach. They have a goal of a stable return and long-term, secure investment. This is reflected in highly efficient and also professionally skilled large-scale agriculture. They operate with one bottom line (financial return), although environmental and social considerations are beginning to gain ground. This means that they prefer investments in modern agriculture as we have known them for many years, just even larger. An investment's local place-based effects have no market price and therefore do not directly affect the owner's (or tenant's) production calculation. A financially oriented, passive, and distant investor therefore has very little incentive to get involved in creating or setting goals for positive place-based effects.

In total, there are 9 separate publications from the project, as well as 3 podcasts (see links below), and a Knowledge Café has been held regarding the project's results.

‍Links to (and descriptions of) podcasts from the project:The Den2radio program series 'Landbrugsmagasinet' focused on the project's literature review in week 19 (2021). The program lasts 12 minutes and is produced by Rasmus Blædel Larsen. Listen to Landbrugsmagasinet here: http://den2radio.dk/udsendelser/landbrugsmagasinet-landbruget-og-lokale-vaerdikaeder/

‍In week 25, 'Landbrugsmagasinet' returned with a broadcast about the project's case study from Samsø. The podcast lasts 48 minutes and is produced by Rasmus Blædel Larsen. Listen to the podcast here: http://den2radio.dk/udsendelser/landbrugsmagasinet-samsmodellen/

‍In week 38, 'Landbrugsmagasinet' dealt with the project's conclusions, based on the synthesis report that was being finalized. The broadcast lasts 32 minutes. Listen to the podcast here: http://den2radio.dk/udsendelser/landbrugsmagasinet-stedseffekter-af-nye-ejerformer-i-landbruget/

‍Links to all reports and notes:

‍Agriculture and local value chains - One-pager

‍Summary_Local effects of new ownership models in agriculture_CRT

‍Synthesis report_Local effects of new ownership models_Broegaard_Larsen_Hedetoft

‍Local effects_case note 1A_foreign_investor_Fanefjord

‍Local effects_case note 1B_Foreign Inv_Ferup

‍Local effects_case note 2_AP-Pension_Jystrup

‍Local effects_case note 3_DØJ_Kliplev

‍Local effects_case note 4_Local agricultural fund_Samsø

‍Local effects_case note 5_Entrepreneurship_Bornholm

‍Broegaard Larsen and Hedetoft_2021_Agriculture and local value chains_literature review