Pension funds among biggest land investors in poor countries

Research by NGO Grain shows pension funds in Europe and US are major investors in land deals in developing countries

guardian.co.uk, Mark Tran, Friday 1 July 2011

An Egyptian farmer and daughter burn hay in a field in Zagazig, 90kms
north of Cairo. Pension funds are reportedly among the biggest investors
in land deals in poor countries. Photograph: Cris Bouroncle/AFP/Getty Images

Some of the biggest investors in farmland in developing countries are US and European pension funds, according to a report released Friday.

Grain, a research group that supports small farmers, says pension funds - often managed by private companies on behalf of unions, governments, individuals and employers - are investing US$100bn (£62.4bn) in commodities, with some $5bn-$15bn reportedly going into farmland acquisitions.

"We usually read about Gulf states or China investing in farmland, but some of the biggest investors are much closer to home," said Henk Hobbelink, one of Grain's co-founders. "As a percentage of the total funds they manage it is not large, but in terms of their impact on small farmers it has a tremendous impact."

International investment in farmland in developing countries, such as Sudan and Ethiopia, has sparked accusations from Grain and other NGOs of "land grabs" that often fail to deliver the promised benefits of jobs and economic development, while contributing to environmental and social problems in the poorest countries in the world. Grain also says the new surge of money will push up global food prices that will hit the poor and rural communities the hardest.

Figures from the Grain report shows that the three pension funds with the biggest investment in agriculture are from the Netherlands, the US and Sweden. APG, in the Netherlands, (administering the national civil pension fund) has invested euro 1bn (£904m) - 0.5% of total assets under management - Ascencion Health, in the US has invested $1.1bn and AP2 Second Swedish National Pension Fund has invested $500m in grain farmlands in America, Australia and New Zealand. The other big players, according to Grain, are CalPers (California Public Employees' Retirement System), Dow Chemical, New Zealand Superannuation Fund, PGGM, also from the Netherlands, and PKA, from Denmark.

Grain says commodities such as farmland make up, on average, 1%-3% of pension funds' portfolios, with the figure expected to rise to 5% by 2015. Pension funds now hold about $23tr in assets, with the biggest pension funds held by governments.

Research published last month by the Oakland Institute in the US suggested that prestigious universities, with large endowment funds, such as Harvard and Vanderbilt, have invested heavily in African land in the past few years. Much of the money is said to be channelled through London-based Emergent Asset Management, which runs one of Africa's largest land acquisition funds, run by former JP Morgan and Goldman Sachs currency dealers.

As for pension funds, Grain says they may be one of the few "classes of land grabbers that people can pull the plug on, by sheer virtue of the fact that it is their money. This makes pension funds a particularly important target for action by social movements, labour groups and citizens' organisations".

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