Pension Funds: Key Players in the Global Farmland Grab

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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. 1 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.

Pension funds currently juggle US$23 trillion in assets, of which some US$100 billion are believed to be invested in commodities. Of this money in commodities, some US$5–15 billion are reportedly going into farmland acquisitions. By 2015, these commodity and farmland investments are expected to double.

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. In other words, pension funds 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.

The size & weight of pensions

Today, people’s pensions are often managed by private companies on behalf of unions, governments, individuals or employers. These companies are responsible for safeguarding and “growing” people’s pension savings, so that these can be paid out to workers in monthly cheques after they retire. Anyone lucky enough both to have a job and to be able to squirrel away some income for retirement probably has a pension being administered by one firm or another. Globally, this is big money. Pension funds are currently juggling US$23 trillion in assets. 2 The biggest pension funds in the world are those held by governments, such as Japan, Norway, the Netherlands, Korea and the US (see Table 1).

Table 1: World’s top 20 pension funds (2010)

Rank

Fund

Country

Total assets (US$ millions)
1 Government Pension Investment Japan

1,315,071
2 Government Pension Fund–Global Norway

475,859
3 ABP Netherlands

299,873
4 National Pension Korea

234,946
5 Federal Retirement Thrift US

234,404
6 California Public Employees US

198,765
7 Local Government Officials Japan

164510
8 California State Teachers US

130,461
9 New York State Common US

125,692
10 PFZW (now PGGM) Netherlands

123,390
11 Central Provident Fund Singapore

122,497
12 Canada Pension Canada

122,067
13 Florida State Board US

114,663
14 National Social Security China

113,716
15 Pension Fund Association Japan

113,364
16 ATP Denmark

111,887
17 New York City Retirement US

111,669
18 GEPF South Africa

110,976
19 Employees Provident Fund Malaysia

109,002
20 General Motors US

99,200

Source: Pensions & Investments, 6 September 2010, P&I/Towers Watson World 300      

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Regenerative Organic Agriculture Puts Soil Health Front and Center

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Author: Lisa Marshall

On Oct. 21, 2002, a New York Times editorial proclaimed: “Today marks a milestone in American farming.” The newspaper lauded the long-awaited implementation of the U.S. Department of Agriculture’s National Organic Program (NOP), which defined the word organic and established—for the first time—who could and could not use it legally. The real value of the program, the Times argued, was not in any added health benefit of organic food itself (that had yet to be scientifically validated), but rather in its emphasis on soil preservation. “In an organic system … the soil grows richer and richer, more and more fertile. It does not blow or wash away,” the editorial explained. “Buying organic food is a way to support the health of the soil itself. For that alone, it deserves our support.”

Fast-forward 13 years and organic has no doubt been a success. Sales of products emblazoned with the USDA Organic seal soared to $39 billion in 2014, up 11 percent, according to the Organic Trade Association. But with that success, and the accompanying influx of industrial-scale organic producers, has come concern that the NOP, while an important step forward, does not go far enough to achieve that foundational mission. “I am a huge fan of organic, but unfortunately, the National Organic Program is not sufficiently focused on soil health,” says industry veteran Tom Newmark, whose former company, New Chapter, was the first supplement brand to obtain the organic seal. “There is an international movement afoot today that says it’s time to take things a step further.”

Newmark is among a growing number of vocal advocates for so-called “regenerative agriculture,” a catchall phrase describing farming systems that not only protect existing soil from prohibited chemicals and other inputs (as the NOP does) but also promote soil generation. Advocates say abundant, healthy soil—which can act as a carbon sink—is a key but oft-overlooked solution to addressing global climate change. Some farmers take the term regeneration a step further, seeing it as their obligation to regenerate not just the soil and the forests that spring from it, but also the communities that rely on it and—in the case of Biodynamic agriculture—the “life force” within in it.

While some organic farmers are indeed regenerative farmers, Newmark says many are not. He argues that, although legal under NOP, the heavy tilling, monocropping, use of nonorganic chemicals and other practices some large-scale industrial organic operations rely on are hardly good for the soil.

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Why The Keyword In Farming Startups Is ‘Regenerative’

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Author: Charlotte Parker

Home to leopards, zebras, hippos and elephants, Zambia’s Luangwa Valley is known for its sprawling wildlife sanctuaries. But it’s also where Dale Lewis, founder of Community Markets for Conservation (COMACO), helps transform hungry farmers — who poach on the side to supplement their income — into wildlife protectors. In exchange for honoring a “conservation pledge” to stop killing certain animals for money and use sustainable farming practices, the company’s 61,000 farmers, all of whom work on a small scale, receive up to 20 percent more than the standard market price for their corn, soy and honey, which are then used to create a line of food products that are flying off Zambian supermarket shelves.

As it turns out, COMACO is just one of a growing number of both nonprofit and for-profit enterprises that are taking a new look at the agricultural sector and finding that farmers can renew the land they use — and their livelihood that they draw from it. There’s Honey Care Africa, a for-profit franchise that works with farmers across East Africa to supplement their income through honey production while increasing crop yield with pollination help from their honey bees, as well as the Timbaktu Collective, which helps farmers in a drought-prone region of India sell products grown with traditional water conservation practices. Oh, and don’t forget Peepoo — yep, you read that right — a system that converts sanitation waste from poor urban neighborhoods, refugee camps and disaster relief sites around the globe into nutrient-rich fertilizer for farmers with poor soil quality.

These regenerative agricultural practices, as they’re known, have been developed in response to a growing list of problems plaguing farmers and rural workers around the world: land degradation, drought, crop disease and unpredictable market prices, to name a few. Of course, climate change isn’t helping on any of these fronts. But the trend is also being driven by the growth of B Corps — think of them as certified do-gooder businesses — and other companies that are under pressure to show responsibility for the planet, says Daniela Ibarra-Howell, co-founder and CEO of the Savory Institute, a nonprofit that promotes large-scale restoration of the world’s grasslands through a regenerative practice known as holistic management.

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Can Carbon Farming Make the Carbon Tax More Politically Palatable?

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Author: Edward B. Barbier 

Australia has launched a carbon tax initiative together with the Carbon Farming Initiative (CFI). Under CFI, the government will buy carbon credits from farmers and land managers who save carbon by storing carbon or reducing greenhouse gas emissions on the land. Australian farmers are exempt from most of the carbon tax but are eligible for the carbon credits in CFI. The double initiative could be useful in gathering support from Australia’s farm lobby for the controversial carbon policy, but questions remain about market approaches to climate change mitigation.

In mid-July, I participated as a keynote speaker at University of Sydney’s 2012 Research Symposium on Soil Security.

A major topic at the Symposium was carbon farming, which is a payment scheme that allows farmers and land managers to earn credits by storing carbon or reducing greenhouse gas emissions on the land. These credits can then be sold to pay for the various carbon storing activities.

Since late 2011, Australia’s government has operated such a scheme, called the Carbon Farming Initiative.  Under the auspices of the CFI, the government has launched the Carbon Farming Futures plan, which will provide AU$429 million over the six years to encourage carbon farming across Australia.  Under the plan, the Government will buy carbon credits from farmers and landholders who undertake carbon-saving measures such as storing carbon and revegetation.  There are many ways in which Australian farmers might eventually earn credits for storing carbon, including planting trees, reducing livestock methane emissions, and managing natural habitat, but Australian farmers seem most curious about earning credits from altering existing cultivation and farmland management so that the soils hold more carbon.

Also while I was in Sydney, the Australia Government officially launched its carbon tax initiative.  Emitters will initially pay a price of AU$23 per metric ton of carbon.  The price will increase gradually until 2015, when Australia will shift to a trading scheme that will let the market set the cost.  Interestingly, however, Australian farmers will not have to pay for their current emissions of carbon, such as methane released by farm animals or carbon emitted from the soils through cultivation.  Gasoline for farm vehicles is also exempt from the carbon tax.  But because the carbon tax impacts Australia’s entire transport sector, farmers will soon be paying higher transportation costs for marketing their produce and bringing bulk inputs to the farm.

However, Australian farmers could be the big winners from the country’s new carbon policy: exempt from much of the carbon tax but eligible for carbon credits if they participate in any of the resulting CFI schemes.  This could be a “win-win” politically for the Australian government, as they may get a powerful political force – Australia’s farm lobby – to support the new carbon policy while at the same time justifying a new subsidy for Australian farms on environmental grounds.  Governments in the rest of the world, including in the carbon tax-phobic United States, may watch this Australian initiative with interest.  Who knows, one could even see in the near future French farmers protesting in Paris and Brussels demanding  that the EU adopt Australia’s carbon policy, or a strong “carbon farm” lobby emerge in the US Congress to demand a similar policy be instituted in the next US Farm Bill.

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Top 10 Carbon Market Predictions for 2015 from The Climate Trust

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Author: Kasey Krifka

The Climate Trust, a mission-driven nonprofit that specializes in climate solutions, with a reduction of 1.9 million tons of greenhouse gases to its name, announced its second annual prediction list of 10 carbon market trends to watch in 2015.

The trends, which range from increased climate change adaptation measures at the state and city-level to new protocols for agriculture and forestry, were identified by The Climate Trust based on interactions with their diverse group of working partners—government, utilities, project developers and large businesses.

“We’re excited to once again look at the overall market with fresh eyes and identify areas of potential movement and growth,” said Dick Kempka, vice president of business development for The Climate Trust.

  1. Allowance and offset demand will increase in 2015. The second compliance period for California’s cap-and-trade system began the first of this year. Distributors of transportation fuel and natural gas have officially joined the ranks of other capped, covered entities, and with the addition of these fuel distributors, the emission cap immediately more than doubles in size. As a result, The Trust predicts that cost containment mechanisms such as offsets and banking will become much more significant components of the cap-and-trade system. A recent whitepaper estimates the current market value at $2 billion annually, and anticipates that this will increase to $4 billion in 2015. To date, the California market has largely been viewed as an operational success, however, some have suggested the system has not yet experienced stresses that could result from drastic and unplanned energy use spikes—escalations triggered by weather events such as drought, hot summers, and cold winters. The Trust believes that the introduction of transportation fuels under the cap, coupled with allowance uncertainty and shortage of offsets, are likely to increase the demand for both allowances and offsets in 2015.

Keep reading on the Climate Trust