TEXT OF INTERVIEW

Bob Moon: World leaders are calling for urgent action to save millions who could go hungry because of soaring food prices. They capped a UN summit with a pledge to break down trade barriers and promote more agricultural production. They also pressed for international aid to farmers who need seed and fertilizer for the approaching planting season.

There's word today of a new twist on this global food rush: a report that investors are now going beyond buying food and grabbing up farms around the world.

We're joined by Diana Henriques, a writer for the New York Times. Thanks for talking to us.

Diana Henriques: Happy to do it, Bob.

Moon: We've been talking a lot here at Marketplace about the run on commodities. Now it looks like there's a run on farmland. What's going on here?

Henriques: Well, obviously commodities have been the hot asset class. Investment so far has been largely in the financial sector, though: index funds, futures contracts. What we're seeing now is large institutional investors, some hedge funds, backed by some hedge fund money or insurance money who are buying into the farm infrastructure -- not just farmland but grain elevators, fertilizer depots, other components of producing food.

Moon: I have to say that when I read your story, some of the people quoted in the story sounded as though buying all this farmland is an act of benevolence here. They're only interested in creating more supply and everybody wins, but they're in this to make money, right?

Henriques: They certainly are in it to make money and you can look at what's happened to farmland around the world to see what has attracted them. Brazilian farmland, which is one of the hotter markets, it's big growth was a few years back, but even so, year over year, April, Brazilian farmland is up by about 16 percent. Now that's a pretty good annual return and you can find much better ones in New Europe, in Australia and even now in the States. A big hedge fund in Connecticut has recently closed on a $52 million deal for farmland in Nebraska. So they still see bargains to be had and obviously what they're looking for is profit.

Moon: So what's the danger that in all this flood of money, we have too few people controlling too much?

Henriques: Well, a concentration of assets, I think, is perhaps not as dangerous as the overall impact of lots of money flooding in and then flooding out. Long-timers in the market are concerned that, as one said, farmland can be a bubble just like Florida real estate. If a lot of financial money pours in, drives up land prices, drives up property taxes, drives up farm rents, it can have a very distorted effect on agriculture only to have them turn around and pour out again when some other asset class becomes more attractive.

Moon: Well, that's the downside. What are the possible benefits here?

Henriques: Well, some of the investors fall in the class of socially responsible investors, those whose clients are public pension funds or endowments or philanthropies who are aimed at public betterment. They have some very ambitious plans for their farmland investments: consolidating little subsistence farms into those than can better use high technology and fertilizers and raise production, and even just more basically, these grain elevators have been under tremendous pressure because of the volatility in the markets so having some of this important infrastructure in strong hands, in the hands of big financial outfits who that can the credit they need to keep things running smoothly, could be a big plus as well.

Moon: Well, good or bad, it appears this is already upon us. Is this the next big thing here?

Henriques: It looks like it is. There are not a lot of big hedge funds that are in this game yet, but certainly more are coming in every week. Now, the dike that's holding back a bigger flood is liquidity. If you're invested in these big structures like farmland and grain silos, you don't turn those over very quickly, so what we're going to see first is a big investment fund whose investors are willing to be more patient, and then we'll see how many of those there are and what impact they have on the values.

Moon: This story from Diana Henriques is in today's New York Times. Thank you for joining us.

Henriques: Happy to be here.