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Is Your Pension Funding Land Grabs?
New report investigates the shadowy world of agricultural investment
Is your pension funding African land grabs? Or plantations of genetically modified crops? A new report on the shadowy and highly unregulated world of agricultural investment published Tuesday by the Oakland Institute focuses on the funds, endowments and private investment firms behind the practice.
"Betting on World Agriculture" (pdf) looks specifically at the investment vehicles that are capitalizing on the growing food crisis by buying up private land and farm assets, "to resell them at a superior market return after an agreed period of time and/or to generate cash from rents." Reporting on their practices, the report states:
For the most part, [the funds'] projections emphasize growing populations, growing demands for grains or fuel, or changing economic cycles and the need for wealthy investors to reap the benefits of declining resources. Their investment thesis relies on securing and consolidating already productive and well-watered pieces of land at the lowest cost possible, and making a profit from land appreciation and most likely land transformation/conversion. Once these lands are secured through ownership transfers, longterm leases, or local partnerships, fund managers seek to scale agricultural operations up by leveraging agricultural inputs (e.g. genetically engineered seeds, fertilizers, agricultural chemicals, machinery) and water resources. The end objective is almost always to primarily serve global markets, and not domestic ones.
The Oakland Institute estimates that the private financial sector has already invested between $10 to $25 billion in farmland and agriculture in recent years, adding that "given current investment trends, this amount might double or triple in the coming years."
The report repeatedly emphasizes that actual "information regarding agricultural and land investments is highly inaccessible, densely layered, and hidden from the public." Operating through "onshore and offshore partnerships," the base of operations for these funds are "typically located in the tax havens of Delaware and the Caribbean Islands."
"There remains a critical lack of understanding about how investments are implemented on the ground, and the reluctance of fund managers to disclose basic information including their environmental policy"
"There remains a critical lack of understanding about how investments are implemented on the ground, and the reluctance of fund managers to disclose basic information including their environmental policy or indicators raises concerns regarding their actual practices," the report says.
In addition to more traditional investment vehicles, researchers also investigated "grabs" funded by agribusiness companies with their own private investment structures. Mother Jones reports:
Some of the funds explicitly promote growing genetically modified crops. In at least a few cases, the report finds, the funds partner with food and agriculture giants like Monsanto, Cargill, and DuPont, and not exactly by coincidence. Among the investment fund managers listed in the report are former executives and traders at Monsanto and Cargill. Cargill has two of its own private investment firms.
Confirming their "notoriously opaque" reputation, of the 23 companies profiled—which includes big names like UBS, Soros Fund Management, Global Environment Fund, Prudential, TIAA-CREF and Harvard University's endowment—only five responded to the Institute's request for interviews. The report is based on those conversations as well as a review of company websites, media reports, research papers, and government documents.
Some of the other findings include:
- Over ten percent of Harvard's $32 billion endowment includes holdings of forests, farms, and other natural resources in Brazil, New Zealand, and Romania. Harvard's endowment "has been eyeing timberland, farmland, infrastructure, energy, and water-related investments in anticipation of growing global demand," the report says, citing fund CEO Jane Mendillo.
- In 2010, Soros Economic Development Fund launched the West Africa Agricultural Investment Fund with the Lundin Foundation and Alliance for a Green Revolution in Africa and is promoting the use of GMO crops on the continent.
- Altima Fund, which is run by former Deutsche executives, has about $850 million (40% of their portfolio) invested in agriculture. Their portfolio companies "plan to harvest 2.5 million acres in South America, Central and Eastern Europe, Australia, and Africa," the report states. As Altima partner Joseph Carvin told a group of investors in 2009: "My boss wants to create the first Exxon Mobil of the farming sector."