Musk, Bill Gates, Bezos, why do these American billionaires buy land when they make money?

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2024-06-28 12:57Creator in the field of finance and economics

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01 The reason why American tycoons such as Elon Musk, Bill Gates and Bezos bought land is that the quality of the land is superior and unmatched in the world.

02However, the amount of land purchased by Chinese in the United States is relatively small, with USDA data showing that Chinese corporate entities own 349,000 acres of land in the United States, of which less than 1,400 acres are agricultural land.

03 American landowners enjoy high subsidies and skyrocketing land prices, such as Bill Gates, who harvested about $4.3 billion in agricultural subsidies through land in 2021.

04Due to the increase in land prices and the redistribution of large areas of land in the United States, more and more large consortia and landlords are buying land through competitive bidding transactions.

05 In general, the rich Americans have benefited from superior land conditions and policy protection when they buy land, while the number of Chinese buying land in the United States is relatively small.

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In many cases, public figures fade out of the field of public opinion, which does not mean that they have really retired.

In January this year, the authoritative American magazine "Land Report" published a piece of information.

Chen Tianqiao, China's former richest man, owns land in Oregon, USA, causing dissatisfaction among many American politicians.

U.S. Congressman Ashley Sinson said, "We shouldn't allow Chinese to buy another acre of U.S. farmland." ”

In fact, the United States has superior land conditions, which are unmatched in the world, and have long been in the pockets of the rich of various countries.

Why is it not allowed to be bought by Chinese until now?

The Chinese who owns the most land in the United States is Chen Tianqiao, one of China's former richest men and the founder of Shanda Games.

The land is located in the westernmost part of Oregon and totals 198,000 acres.

The most valuable part of the story is the Bull Springs Skyline Forest, a 32,000-acre forest that produces ponderosa pine, which is mainly used for furniture panels.

Bull Springs Skyline Forest

When he bought the Oregon forest land in 2015, he spent $85 million.

没过多久其中的“Bull Springs Skyline Forest”地块的价格，就疯涨到1.27亿美元。

In the United States, being a landlord is a beautiful thing.

According to media statistics, the median annual income of farmers in the United States is $30,000, while the median income of landlords is $90,000.

Landlords managed the land in a centralized, mechanized way, and contributed a significant proportion of jobs and revenues to the United States.

However, the word "landlord" was placed on Chen Tianqiao's body, and many people were still surprised.

Chen Tianqiao was once the godfather of online games in China, and his reputation in China is mixed.

Looking back at 2002, the size of China's online game market was only 910 million, and the "Legend" he represented accounted for 680 million of them.

Chen Tianqiao has promoted the scale and payment of online games in China.

But there are always people who say that it was he who used the "spiritual opium" of "Legend" to ruin a generation of Chinese people.

In the end, Chen Tianqiao sold Shanda Games and retreated to Singapore.

In the years since his retirement, Chen Tianqiao has not stopped accumulating wealth and asset layout.

Buying Oregon land is an important step.

But the joy of asset appreciation was quickly doused by politicians.

On January 12 of this year, a U.S. senator from Montana, Jon Test, wrote a letter to the U.S. Secretary of the Treasury and the Secretary of Agriculture, asking them to "track, review, and restrict" Chen Tianqiao.

U.S. politicians have a long history of fear and resistance to Chinese buyers.

Last year, Iowa Congressman, Jonny Ernst, publicly pointed out that the land bought by the Chinese is about the size of his home state of Iowa.

Iowa's governor, Kim Reynolds, was even more alarmist:

"China is becoming increasingly aggressive, and buying American land is one of the many ways they are waging this new war."

Did the Chinese really buy a lot of American land?

Let's look at the data.

According to a report released by the USDA in December 2022, Chinese corporate entities own 349,000 acres of land in the United States.

The agricultural land is even smaller, at less than 1,400 acres.

All the land bought by the Chinese combined, even less than 1.12% of the land in Iowa (36.0255 million acres).

After clearing the fog of information, the truth about the Chinese on American soil emerged:

"China owns almost no farmland in the United States."

This is not something we say in our mouths.

That's what Bruce Sherrick, a professor of economics at Linoy University, said.

In the United States, a real landlord often has history and expertise, and it is really not something that can be bought with money.

Many of the big landowners we see in the United States today have been passed down from generation to generation, and their history can be traced back to the early days of the United States.

Their criteria for choosing land are similar to those for us when we look for a job: more money, less work.

Those who can plant trees do not graze, and those who can graze do not farm.

So at least 8 of the top 20 landowners in the U.S. are mainly engaged in forestry, 4 are engaged in ranching, and 3 are mainly planted.

For example, the Stimson family, which owns 550,000 acres of woodland, began to own woodland in the early days of the United States, and has gone through six generations of management and expansion to establish the oldest integrated wood products company in the United States.

And the real largest landowners in the United States, the Emerson family, owns 2.411 million acres of forestry land, equivalent to 8,880 standard football fields, which is larger than the Yellowstone National Forest in the United States.

The woodland that the Emerson family once opened for people to walk

Using this vast forest, the Emerson family built 18 lumber processing plants and is the second-largest lumber producer in the United States.

The Kenneth Ford family also bought a piece of woodland in Oregon in 1936 and expanded it to 600,000 acres in 85 years.

Of course, there are ranchers of the rank of Thomas O'Connor, the "Texas Cattle King", with a land area of 587,800 acres.

Now the beef and milk he produces each year are entering the international market through the U.S. trade network with greater demand and higher prices.

Thomas O'Connor 的牧场水域

The main reason for the strength of American landowners is, of course, the superior quality of American land.

On the map, half of the United States is plains, more than four times the size of China's plains.

But at the time of its founding, the population of the United States was small, and most of the land in the West was unused.

So since 1854, the United States has been trying to sell land at low prices, and the cheapest "30-year unsold land" is as low as 12.5 cents per acre.

U.S. Fiscal History

This simple and crude way made the first generation of America's rich people feast.

In 1862, during the American Civil War, the Lincoln administration promulgated the Homestead Act, as long as the American citizen over the age of 21 paid $10 to apply for a 160-acre land, if he could prove his output on the land within 7 years, he could obtain freehold.

So at that time, Americans could own land no matter how poor they were, as long as they were willing to work.

After more than 160 years of development, this huge land of 9,831,500 square kilometers has formed its current pattern.

In the picture above, yellow is the area where cattle and sheep are raised, green is the area where trees are planted, and brown is the area where farmers are farming.

In the development of the United States, the landlords have played a lot of roles.

Therefore, post-transformation landlords like Bill Gates are not in the mainstream of the American landlord class.

They don't know how to farm, so they can only hand over the land to asset companies for management, and their annual operating expenses are extremely high, their output is not as good as that of old landlords, and they do not provide much employment.

As of 2021, Gates owns 269,000 acres of prime farmland in 18 states, the same area as Hong Kong.

Many people feel that handing over this land to him is a waste.

Another example is Jeff Bezos, the founder of Amazon.

He has ranches in Texas with a combined land of 420,000 acres, 1.5 times the size of Bill Gates.

But one of the high-quality cornfields was actually used by him for rocket launch tests, with a total area of 165,000 acres.

As long as the land area is large enough, how to operate it is actually very free.

Musk has also bought thousands of acres (at least 3,500 acres) of pasture and farmland in Bastrop County, Texas, almost four times the size of New York's Central Park.

And under the protection of the American policy, the landlords also lived quite well.

As the world's largest agricultural country, the United States has about 2.2 million farms and accounts for about one-fifth of the world's total grain production.

Therefore, the landlords in the United States have always enjoyed a lot of preferential treatment and support.

In addition to regular forestry, agriculture and animal husbandry, they have at least two significant additional incomes.

1. High subsidies

In order to ensure the income of the agricultural population in the United States, the United States has long provided high subsidies to farmers.

The subsidy bill is amended every five years, and in the event of a major event, it is directly financed and even given cash to farmers.

In 2018, the Trump administration led the trade friction with China, imposing 10% tariffs on $300 billion worth of Chinese goods.

One of China's responses has been to reduce U.S. agricultural imports by 20 percent.

For example, soybeans.

In 2018, China bought about 60% of U.S. soybeans.

Between September 2018 and May 2019, U.S. soybean exports to China fell by 75%.

Exports are falling, and American farmers are miserable.

Mark Watten, president of the North Dakota Farmers Union, said, "This is killing us. ”

In order to care for agriculture, the U.S. Department of Agriculture proposed an aid policy in 2019, planning to subsidize farmers nationwide by $28 billion for two consecutive years.

But it grossly underestimated the huge blow to U.S. agriculture from shrinking demand in the Chinese market.

In 2020 alone, USDA provided $46.5 billion in subsidies.

Changes in the proportion of U.S. federal government subsidies to total farmers' income

This money is still a drop in the bucket for farmers who actually farm the land.

But for those big landowners who have land but don't need to grow their own, it's a windfall.

According to media estimates, in 2021 alone, Bill Gates will receive about $4.3 billion in agricultural subsidies on land.

2. Soaring land prices

From 1998 to 2005, the number of farmers in the United States fell by nearly 500,000.

The number of farms in 2022 is also more than 9,000 fewer than the previous year.

Land is being redistributed on a massive scale.

In recent years, inflation in the United States has been severe, and land has become a high-quality asset to resist inflation.

Therefore, more and more large consortia and landlords are buying land through companies and institutions through bidding transactions to expand their land area.

Even in Iowa, where companies are restricted from buying farms, the ratio of institutional and investor bids has risen to 35 percent.

This has triggered a massive increase in land prices in the United States.

According to the data, the average farm price in the United States in 2022 is $3,800 per acre, an increase of $420 from 2021.

The better the land, the faster the price will rise.

In Iowa's corn belt, farm land is $9,400 per acre, nearly three times the national average for farmland.

One of them, a 55-acre plot of soybeans + corn, was sold for a sky-high price of $26,250 per acre.

Like house prices, soaring land prices can make a group of people move from class to class.

Of course, it is the rich who benefit the most.

Wealthy, Wealthy.

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