The Financial Times reported this week that TIAA-CREF is developing a new “investment vehicle” that will bet the retirement funds of millions of American on the rising price of farmland around the world.
Sweden's SEK216bn (€24bn) buffer fund AP2 and TIAA-CREF have increased commitments to an agricultural property company launched last year to $2bn (€1.6bn), attracting interest from several Canadian investors.
Financial services group TIAA-CREF said it is partnering with Canadian and European money managers to form a $2 billion global farmland investing company to capitalize on the growing demand for grains and other agricultural products.
While agricultural land has the potential to provide a source of long term fixed income, the hurdles are enormous. Extreme illiquidity and sensitivity to geo-political risk mean that diversification of holdings and careful selection are key.