Funds flow toward farmland as experts eye deals

by Carey Gillam

  • Bunge eyes investment fund for South America
  • Dow Chemical pension group seeks returns in row crops

NEW YORK, May 7 (Reuters) - As economic fears spark riots in Greece and stock market sell-offs, a range of institutional and corporate interests said this week they were moving money into what they see as the relative safety of global farmland.

From company players pushing pension dollars into farmland to private equity looking for ownership in food production, the relative safety and upside opportunity tied to food and biofuel production was a key theme for investment experts who gathered in New York this week to explore opportunities in agricultural investing.

“It is about safety. Farmland is a great place to store our wealth,” said Charles Allison, managing director of Prudential Agricultural Investments (PRU.L), which has $3.2 billion in assets under management.

Among the players moving aggressively into farmland investment is AMERRA Capital, a one-year-old investment manager coming to the market this month with a new farmland fund. AMERRA is backed in part by the Macquarie Group (MQG.AX) global financial services firm.

“I’m very excited and very keen about the opportunities we see in the marketplace,” said AMERRA principal Craig Tashjian.

Global agribusiness and food company Bunge Ltd (BG.N) is also setting up an investment fund that will focus on farmland. Bunge would not provide details but individuals familiar with the project said the fund would focus on South America, a hot spot for agricultural investing interest and a key market for Bunge, which is working to expand its sugar and ethanol-related holdings.

An estimated 35 to 40 percent of new investment capital flowing into the sector now is directed at South America, principally Brazil, according to Philippe de Laperouse, managing director for HighQuest Partners, a strategic advisory and management consulting firm.

The pension fund within Dow Chemical DOW.N, whose DowAgroSciences is a global agricultural input provider, is likewise pushing investments in agriculture.

Ken Van Heel, global director for alternative investments at Dow, said Dow’s pension group recently added farmland as a real asset investment and was working to expand that rapidly through farm acquisitions in the United States aimed at annual returns of 8-12 percent.

Van Heel said Dow particularly likes corn and soybean farms in the U.S. Midwest.

“We are looking for diversification for the pension fund, and an inflation hedge,” Van Heel said.

Cargill [CARG.UL] subsidiary Black River Asset Management, which has $6 billion in assets under management, primarily third-party capital, is growing its private equity business with a focus on food production and agricultural investments, particularly in Asia, said Black River managing director Rich Gammill.

Black River’s first food-focused food should close this summer, Gammill said, and will include investments in dairy farming in Asia and aquaculture in Central America and South America.

And at Franklin Templeton Real Estate Advisors, a global real estate multi-manager that is expanding into real assets funds, a fresh focus is on identifying and securing professional farm management.

Joyce Shapiro, managing director real assets for Franklin Templeton Real Estate Advisors, said she was building a team focused on real assets, including farm management, as higher returns can be had from investing with managers directly operating farm properties.

“There is going to be a very large marriage of professionalism and capital in the farm space,” Shapiro said.

(Reporting by Carey Gillam; Editing by Marguerita Choy)