At an agriculture investment summit in London on Wednesday, leading U.S. and European pensions funds said few assets remained immune from whipsawing markets, prompting institutions to look at farmland.
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.