BETTING ON WORLD AGRICULTURE US PRIVATE EQUITY MANAGERS EYE AGRICULTURAL RETURNS BETTING ON WORLD AGRICULTURE US PRIVATE EQUITY MANAGERS EYE AGRICULTURAL RETURNS ACKNOWLEDGMENTS Authors: Caroline Bergdolt and Anuradha Mittal The Oakland Institute is grateful for the valuable support of its many individual and foundation donors who make our work possible. Thank you. The views and conclusions expressed in this publication, however, are those of the Oakland Institute alone and do not reflect opinions of the individuals and organizations that have sponsored and supported the work. The Oakland Institute is also thankful to the fund managers who accepted to share information and data for this research and appreciate their contribution towards increased transparency in the current wave of land investments. Design: amymade graphic design, [email protected], amymade.com Editor: Melissa Moore Publisher: The Oakland Institute is a policy think tank dedicated to advancing public participation and fair debate on critical social, economic, and environmental issues. Copyright © 2012 by The Oakland Institute The text may be used free of charge for the purposes of advocacy, campaigning, education, and research, provided that the source is acknowledged in full. The copyright holder requests that all such use be registered with them for impact assessment purposes. For copying in any other circumstances, re-use in other publications, or translation or adaptation, permission must be secured. Please email [email protected] The Oakland Institute PO Box 18978 Oakland, CA 94619, USA [email protected] www.oaklandinstitute.org ABOUT THIS REPORT This report was researched between March and September 2012. Research involved an analysis of public sources and interviews with fund managers. Public sources include: • Company websites • General press • Financial press, blogs, and forums • Research and international organizations, such as GRAIN, the Food and Agriculture Organization (FAO), the International Institute for Environment and Development (IIED), Meriam Research and CRBM, the Or- ganization for Economic Cooperation and Development (OECD), and the World Bank, which have provided some overviews of the growth of land investments in publications readily available to the general public • Government documents available to the general public, such as Form Ds • Non-governmental organizations and advocacy groups In addition, funds were contacted to confirm basic fund data and obtain additional information regarding their social and environmental practices. A full note on the research methodology is presented at the end of the Executive Summary. TABLE OF CONTENTS LIST OF ACRONYMS .................................................................................................................................................... 5 PREFACE ........................................................................................................................................................................6 INTRODUCTION ... ........................................................................................................................................................7 FUND PROFILES Fund Managers Who Partially or Fully Responded to OI Amerra Capital Management LLC. ............................................................................ .............................................17 Chess Ag Full Harvest Partners LLC........ ...............................................................................................................19 Farm Lands of Africa Limited............... ......................................................................... ..........................................21 Galtere Ltd.............................................. .................................................................................................................25 UBS Agrivest........................................................ ....................................................................................................30 Fund Managers Who Did Not Respond to OI Altima..................................................................................... ............................................................................ ......33 Black River Asset Management LLC........................................ ...............................................................................36 Ceres Partners............................................................................ ............................................................................38. George Soros.............................................................................. .......................................................................... ..40 Gladstone Companies .............................................................................................................................................42 Global Environmental Fund...................................................... .......................................................................... ...44 GMO LLC ................................................................................................................................................................ 46 Hancock Natural Resources Group........................................... .............................................................................47 Herakles Capital/Agriculture...................................................... ............................................................................ 49 International Farming Corporation.......................................... ...............................................................................52 NCH Capital.............................................................................................................................................................54 Ospraie Management LLC........................................................... ...........................................................................56 Paine & Partners LLC (P+P)...................................................... ............................................................................ ..57 Passport Capital LLC.................................................................. .............................................................................59 Pharos Financial Group.............................................................. ............................................................................61 Prudential.................................................................................... ......................................................................... ..64 Rural American Fund.................................................................... ...........................................................................65 TIAA-CREF/The Westchester Group........................................... ........................................................................... 66 ENDNOTES ................................................................................................................................................................................. 69 LIST OF ACRONYMS TERMINOLOGY AUM Assets Under Management ESG Environmental, Social, and Governance [criteria] ESIA Environmental and Social Impact Assessment GE Genetically Engineered GMOs Genetically Modified Organisms Ha Hectares IRR Internal Rate of Return M&As Mergers & Acquisitions NGO Non-Governmental Organization SRI Social Responsible Investing (or Investments) UNPRI United Nations Principles for Responsible Investments INSTITUTIONS AND ORGANIZATIONS AfDB African Development Bank AGRA Alliance for a Green Revolution in Africa CDC Commonwealth Development Corporation CFTC Commodity Futures Trading Commission FAO Food and Agriculture Organization of the United Nations FSC Forest Stewardship Council IFC International Finance Corporation NAFO National Alliance of Forest Owners OECD Organization for Economic Cooperation and Development MIGA Multilateral Investment Guarantee Agency OPIC Overseas Private Investment Corporation RSPO Roundtable on Sustainable Palm Oil SEC Securities and Exchange Commission RESEARCHED INVESTMENT FUNDS AND ENTITIES AOWAF Altima One World Agricultural Fund FLA Farm Lands of Africa Limited GASFF GEF Africa Sustainable Forestry Fund GEF Global Environment Fund GMO Grantham, Mayo, Van Otterloo & Co Renewable Resources LLC HAIG Hancock Agricultural Investments HNRG Hancock Natural Resource Group HTRG Hancock Timber Resource Group IFC International Farming Corporation OSO Ospraie Special Opportunities PAI Prudential Agricultural Investments P+P Paine & Partners SGSO SG Sustainable Oils Cooperatif TIAA-CREF Teachers Insurance & Annuity Association – College Retirement Equity Fund WAAIF West Africa Agricultural Investment Fund The Oakland Institute BETTING ON WORLD AGRICULTURE | 5 PREFACE Dan Apfel Executive Director, Responsible Endowments Coalition Over the last two decades, the investing world has as norms and laws change, an investment’s ethical and even changed dramatically. Across the spectrum of asset legal implications have become just as important as the owners, investment officers have been searching the world financial risk, if not more so. for outperformance: returns above the average. These are challenging times for investors. Pension funds have As a layperson, it is nearly impossible to gain much increased payouts while governments