Pension funds in global farmland grab
Public sector pensions from across the globe are helping to drive up food prices by buying up farmland in poor countries as investments. And at least one local government pension fund in Britain is reportedly considering a similar move.
As hundreds of thousands of teachers, lecturers and civil servants strike today in defence of their pensions, the issue of what happens to their contributions is worth considering. A new report from GRAIN, the organisation that works to support small farmers and social movements, is extremely critical of some funds. GRAIN says:
Large scale agricultural land acquisitions are generating conflicts and controversies around the world. A growing body of reports show that these projects are bad for local communities and that they promote the wrong kind of agriculture for a world in the grips of serious food and environmental crises. Yet funds continue to flow to overseas farmland like iron to a magnet. Why? Because of the financial returns. And some of the biggest players looking to profit from farmland are pension funds, with billions of dollars invested.
The big picture shows that:
- the largest institutional investors are planning to double their portfolio holdings in agricultural commodities, including farmland
- they are reportedly going to do it very soon
- the new surge in money will push up global food prices
- high food prices will hit poor, rural and working-class communities hard.
GRAIN estimates that pension funds have $23 trillion in assets, of which some US$100 billion are believed to be invested in commodities. Of this money in commodities, some $5–15 billion are reportedly going into farmland acquisitions. By 2015, these commodity and farmland investments are expected to double.
Pension fund managers see farmland as “a big attraction” for them with what they call good "fundamentals". In this case, rising demand is driven by an increasing world population needing to be fed, and the resources to feed these people being finite.
“They see long-term pay-offs from the rising value of farmland and the cash flow that will in the meantime come from crop sales, dairy herds or meat production,” says GRAIN.
Pension funds in Britain are increasingly looking at getting involved in the farmland grab. According to reports, this includes the Merseyside Pension Fund which covers local government workers in the region. And it’s not as if the fund’s current investments are fine and dandy. The last published accounts reveal substantial investments in such corporations as tax-dodging Vodafone, notorious oil giants Shell and BP and a couple of major pharmaceuticals.
GRAIN wants trade unions to get involved in campaigns for disinvestment in farmland and other agricultural commodities, saying:
Pension funds are supposed to be working for workers, helping to keep their retirement savings safe until a later date. For this reason alone, there should be a level of public or other accountability involved when it comes to investment strategies and decisions.
But there are other questions and issues too. It is a paradox that workers’ contributions to pension funds are used to prop up capitalist corporations through share ownership. At the end of 2008, the latest figures available, show that pension funds owned nearly 13% of shares on the London stock market with funds of £150 billion (insurance companies used customers’ premiums to buy up another 13% by the way). A survey earlier this year showed that UK pension assets now amount to 76% of national income.
Using these funds and assets for social purposes, with new arrangements to ensure that the value of pensions is protected, instead of for profit or speculation in farmland, is surely an aspiration worth fighting for.
30 June 2011