TIAA-CREF

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.

The Swedish National Pension Fund is teaming up with US institutional investor TIAA-CREF to buy farmland in Australia.

The Second Swedish National Pension Fund (AP2) will invest $250 million in a joint venture with a US pension fund and financial services provider to buy farmland in the United States, Brazil and Australia.

Swedish pension buffer fund AP2 and US pension fund manager TIAA-CREF have formed a joint venture to invest at least US$500 million in farmland in the US, Australia and Brazil.

Video of the Panel: Can Funds and Financial Institutions promote good land-based investment practice? Featuring represetatives of Rabobank, Emergent Asset Management, TIAA-CREF and Galtere Ltd).

The big asset manager is bullish on farmland, citing 10% returns.

TIAA is among the largest institutional investors in agriculture, with investments in more than 400 farms in North America, South America, Australia, and Eastern Europe as part of its General Account.

TIAA-CREF owns agricultural land in the US, Australia, Brazil and central and Eastern Europe, most of which is leased out.

Pension funds are deepening their commitment to farmland, upping investments by billions of dollars and moving to active strategies, as a hedge against potential inflation and to diversifty from riskier investments.

"In the age of derivatives and evaporating valuations, farmland is gold with a cash flow."

As world population expands, the demand for arable land should soar. At least that's what George Soros, Lord Rothschild, and other investors believe.

The debate over foreign investment is set to expand from the mining industry to agriculture as overseas investors pour billions of dollars into Australian rural properties considered by some to be strategic national assets.