Report reveals massive pension fund investment in farmland

Report reveals massive pension fund investment in farmland

Money from pension funds has fueled a massive investment in farmland over the past decade, with negative consequences for rural communities.
This is the message of a new report by international non-profit organization GRAIN. It analyzed public documentation and relevant journals and identified 76 public and corporate pension funds with investments in farmland, managed either in-house or by external fund managers. It estimates that these pension funds have allocated a combined $15 billion to farmland investments over the past ten years. The results compare with those of industry sources, such as a study published in 2016 by financial analyst company Preqin which identified 100 unlisted agriculture/farmland-focused funds that had closed since 2006, raising approximately US$ 22 billion. “Pension funds have quietly taken over large swaths of farmland in Australia, Brazil, Canada, Chile, Eastern Europe, New Zealand, and the United States, and are considering investments in other countries,” GRAIN warns. “This unprecedented take-over of farmland by financial companies has major implications for rural communities and food systems, and must be challenged.”

According to the organization, the pace of the global farmland grab has slowed over the past seven years. Community resistance, bad press and investor incompetence have all played a role in reducing the scope and number of large-scale farmland deals in most parts of the world. “But the phenomenon has not gone away, and, unfortunately, within the financial sector, farmland has become an ‘alternative’ option for managers looking for diversification and new income streams,” says the report. “Pension funds, more than any other financial actor, are responsible for making this happen. Without cash injections from pension fund managers, most of the farmland funds in operation today would not have survived or come into existence.” GRAIN’s data shows that most of the money going into farmland is coming from North American and European pension funds, with the pension funds from the United States outpacing those of any other country. The “Dallas Police and Fire Pension System” invested around 162 million dollars in the in the acquisition of farms of row crops and apples and nuts across the US, or the “Teachers Retirement System of the State of Illinois” invested 79 million dollars in Black River Agriculture Fund 2, a $587 million own-and-operate farmland fund created by Cargill, which is so far known to have acquired a sugar mill operation in Brazil and several farms in Australia.

The report reveals that pension funds have confined their farmland acquisitions to North America, Europe, Australia, New Zealand and parts of South America where there are functioning land markets and sufficient infrastructure for commodity exports. “Pension funds, both foreign and domestic, have quietly taken over huge swaths of farmland in the US, Australia and other industrial countries, without much pushback, even though the implications for rural communities are significant. We estimate that the amount of money pensions funds are currently putting into US farmland is enough to buy roughly 1 in 10 of the farms expected to come on the market in the US over the next five years.” GRAIN says pension funds are more averse to investing in Africa and other places where lands are less privatized, the infrastructure is less developed and they are more liable to accusations of land grabbing. In those parts of the world, most large-scale land deals are being carried out by agribusiness companies. But some pension funds are also prepared to take a risk. Brazil, for example, is a major target for pension fund farmland acquisitions, yet it ranks highest in the world for land conflicts.

GRAIN’s list also includes high pension fund investments by TIAA (Teachers Insurance and Annuity Association). TIAA has built a mini-empire of farms around the world, with cash supplied by numerous pension funds from different countries and sectors, from civil servants to doctors. Most of TIAA's farmland investments are overseen by its asset investment management arm Nuveen and operated through various subsidiaries. Nuveen stated in 2017 that TIAA's farmland portfolio covers 600,000 ha, of which 43% is in Brazil, 40% in Australia, 15% in the US and the remainder in Poland and Chile. Nearly all of these farms produce grains, oilseeds and sugarcane. According to GRAIN, TIAA’s public response to clear evidence that it was contributing to environmental destruction and land grabs in Brazil was to deny it, and then add a few extra pages to its responsible farmland investment report.

GRAIN says more needs to be done to expose the impacts pension fund investment in farmland is having in the US and other industrial countries. Not only because of how it affects rural communities in these countries, but also because, if these investments are not challenged, pension funds will be emboldened to make riskier farmland purchases overseas. “The stage is set for a massive transfer of land from small farmers to financial corporations – in the near total absence of public debate and regulation,” warns GRAIN. It says urgent action is needed in the face of today’s unprecedented take-over of farmland by corporate actors and financial speculators. “Leaving it to these companies to police themselves with voluntary guidelines is a recipe for disaster,” the report concludes.