By James B. Meigs
Late last year, Eric O’Keefe was researching a mysterious recent purchase of 14,500 acres of prime Washington state farmland. His magazine, The Land Report, tracks major land transactions and produces an annual list of the 100 biggest US landowners.
Sales of more than a thousand acres are “blue-moon events,” O’Keefe noted, so this one stood out. And Eastern Washington has some of the richest, most expensive farmland in the country. But the purchaser of record was a small, obscure company in Louisiana.
“That immediately set off alarm bells,” O’Keefe says.
He assigned his research team to dig a little deeper. Soon they came back with the answer: The Louisiana company was acting on behalf of Cascade Investment LLC, the secretive investment firm that manages most of the huge fortune belonging to Bill Gates.
O’Keefe knew Gates had been acquiring farmland for years, mostly through various Cascade subsidiaries. The mogul’s holdings include large tracts in Illinois, Iowa, Louisiana, California, and about a dozen other states. With the Washington state acreage and other recent additions to his portfolio, O’Keefe calculated, Gates now owns at least 242,000 acres of American farmland.
“Bill Gates, co-founder of Microsoft, has an alter ego,” O’Keefe wrote: “Farmer Bill, the guy who owns more farmland than anyone else in America.”
The Land Report scoop made headlines. Many stories focused on Gates’ longstanding interest in climate change and sustainability and suggested those concerns might be driving the land purchases. Newsweek called him a “sustainable agriculture champion.”
Those stories dovetailed with earlier reports about Gates’ large land acquisitions in Arizona. Most notably, in 2017, the Gates-affiliated Mt. Lemmon Holdings invested in some 40 square miles of “transitional” land on the western fringe of the Phoenix sprawl. (According to The Land Report, Gates owns about 27,000 acres of non-agricultural land, in addition to his farm holdings.)
Some partners in the Arizona project issued a press release touting plans to build “a forward-thinking community … that embraces cutting-edge technology.” There was talk of “high-speed digital networks” and “autonomous logistics hubs.” That was all it took for many in the media to conclude that Gates was personally engineering the city of the future.
“Bill Gates has started laying out his plans for creating a ‘smart city’ in Phoenix, Arizona,” science-news outlet Futurism wrote. This high-tech metropolis “could be both a breeding and testing ground for futuristic technologies.”
In reality, the idea that Bill Gates was single-handedly reinventing farming — or designing cities of tomorrow — was almost entirely speculation.
“There’s a tendency in the media to personalize this,” O’Keefe says. “People want to know, ’Why does Bill Gates want all this land?’ ”
But hyper-wealthy people like Gates don’t make every decision personally, O’Keefe notes. “He has very competent investment managers.”
Given that Gates is the third-richest person in the world — with an estimated net worth of $132 billion, he falls in behind Tesla founder Elon Musk and Amazon’s Jeff Bezos — those money managers have their hands full.
Investment guru Michael Larson, who has worked with Gates since 1994, runs the Washington-based Cascade Investment, as well as supervising the Bill and Melinda Gates Foundation’s nearly $50 billion endowment.
“The arrangement is simple,” The Wall Street Journal wrote in a 2014 profile. “Mr. Larson makes money, and Mr. Gates gives it away.”
Larson and his team are famously tight-lipped. Cascade employees almost never speak to the press. According to the Journal, they are even discouraged from using Facebook and other social-media platforms. (Through a spokesperson, the company declined to comment for this article.)
Larson sees to it that Gates’ wealth is sensibly, even conservatively, invested. According to public records, the billionaire’s portfolio includes shares in Warren Buffett’s Berkshire Hathaway conglomerate, a Coca-Cola bottling company, and the tractor manufacturer Deere & Co., among other non-flashy investments.
Larson also makes sure Gates keeps his eggs in a wide variety of baskets. His portfolio is diversified, in other words. And that’s where the land purchases come in.
Most of us imagine farmers tilling the soil that has been in their families for generations. But many farmers lease at least some of the land they cultivate. According to Bruce Sherrick, a professor of agricultural economics at the University of Illinois at Urbana-Champaign, about 60 percent of row-crop farmland in the Midwest is leased. The landowners can include investors like Gates.
For investors who know what they’re doing, agricultural land offers financial stability in uncertain times.
“Farmland has had a remarkably consistent ability to hedge against inflation,” Sherrick says.
And it tends to be “negatively correlated” against other investments, he adds: If the stock market is going down, the return on farmland is likely to be going up.
But farmland isn’t easy to buy.
“You can’t just say, I’ve got $30,000 saved up and I want to buy some farmland,” Sherrick notes. Large investors usually work with expert advisors to help them acquire and manage their agricultural holdings.
According to press reports, Gates’ farmland empire is mostly managed by a Cascade subsidiary called Cottonwood Ag Management. But the details are murky, and there is no evidence that the billionaire’s farmland-buying spree is driven by anything more than a desire to have a well-diversified portfolio.
“When Ted Turner bought his Flying D Ranch in Montana in 1989, that was his personal passion,” O’Keefe says. “Bill Gates’ land purchases look to me more like sensible long-term holds run by experienced asset managers.”
The same logic likely holds for Gates’ Arizona acquisitions. The largest parcel, a proposed 24,800-acre development known as Belmont, might someday contain 80,000 homes, along with offices, retail, industrial and logistics facilities. At least that’s what the developers partnered with Gates’ investment group have promised.
For now, though, all that “smart city” talk is more than a little premature. As Slate financial writer Henry Grabar concluded, the proposed town of Belmont is “not a city, nor is it ‘smart,’ nor does the Microsoft founder appear to be involved in any meaningful way.”
But, while Belmont might not be a smart city, it still looks like a smart investment.
The region west of Phoenix is booming. The nearby community of Buckeye has grown more than tenfold in the last 20 years. And the Belmont property is located along Interstate 10, the region’s major east-west artery, making it an excellent location for Amazon-style warehouse complexes.
There’s also a proposal to build a new interstate linking Phoenix to Las Vegas. That proposed superhighway would run across a 5-mile stretch of the Belmont property. The project isn’t yet funded. But if it ever gets built, it would boost the value of Gates’ land dramatically.
Today, the Belmont tract remains mostly empty desert. Most likely, it is just one more asset in Gates’ vast portfolio, quietly appreciating in value while the billionaire himself remains at arm’s length.
People involved in the Gates financial empire stress that the family’s philanthropic endeavors are kept separate from their investments and business ventures. But some of the software pioneer’s investments do reveal his grander goals.
Gates — who stepped down from day-to-day involvement with Microsoft in 2008 — has long been looking for ways to help the world’s poorest and to address the planet’s environmental challenges.
In 2006, he helped launch TerraPower, a company developing a new type of compact, ultra-safe nuclear reactor. In a recent episode of “60 Minutes,” Gates explained that zero-carbon energy sources like nuclear power are vital in reducing the emissions that warm the atmosphere.
“Without innovation, we will not solve climate change,” Gates said. “We won’t even come close.”
Since 2016, Gates has led Breakthrough Energy Ventures, a venture-capital fund that invests in clean-technology startups. The fund recently raised $1 billion, which it is pouring into companies developing hydrogen-fueled airplanes, zero-carbon building materials, and other green innovations.
His environmental bent also extends to farming. Gates has invested in Impossible Foods and Beyond Meat, two companies producing beef substitutes, including the Impossible Burger. In his new book, “How to Avoid a Climate Disaster,” Gates explains why raising beef cattle causes more harmful emissions than other forms of agriculture. He hopes plant-based substitutes will allow us to “cut down on meat eating while still enjoying the taste of meat.”
And the Bill and Melinda Gates Foundation recently launched a new division known as Gates Ag One. It aims to help poor farmers, especially in Africa and South Asia, get the “tools, technologies, and resources they need to lift themselves out of poverty.” If each acre can produce more food, that’s good news for farmers. But it also means we can devote less of the planet’s surface to farmland, which is good news for forests and ecosystems.
Meanwhile, American agriculture today is being transformed as farmers employ new technologies and Big Data to help them manage their crops. That can mean better yields with decreased use of fertilizers and pesticides. Which in turn means less impact on the environment.
Farms also have a role in fighting climate change. With proper techniques, the carbon from decaying plant matter can be kept safely in the soil, rather than entering the atmosphere in the form of carbon dioxide.
A new coalition of farmland owners, operators and environmental groups is working to come up with verifiable standards for sustainable farming. The group is called Leading Harvest, and the Gates-linked Cottonwood Ag is one of its founding members.
Leading Harvest envisions a kind of sustainability seal of approval certifying that a given farm meets environmental standards. The program could be an economic boon for farmers.
“In the future, farmers will be paid for sustainability,” says Sherrick, who sits on the group’s board. There will be incentives for things like using less water, fewer chemicals, and storing more carbon.
The group’s founding members are expected to spearhead the rollout of the new standards on their own lands.
Whether or not Gates personally directed Cottonwood Ag to get involved in the Leading Harvest project, the move makes both environmental and business sense.
“The new green economy will mean new opportunities for land owners,” O’Keefe believes.
“Farming is all of a sudden part of the solution and not just part of the problem,” Sherrick adds. He sees Gates’ involvement — even if indirect — as crucial in encouraging the industry to embrace the new sustainability standard.
If the nation’s largest farmland owner can show that farming can be both sustainable and profitable, that will make a big difference.
“People are going to pay attention to what Bill is doing,” Sherrick says.
James B. Meigs is the co-host of the “How Do We Fix It?” podcast and the former editor-in-chief of Popular Mechanics.