* Investors cite need for more transparency
* Capital still flowing, but off 2009 pace
* Africa controversy makes some investors wary
By Carey Gillam
NEW YORK, April 27 Investor interest in
agriculture is continuing to rise and investment experts expect
to double assets under management in the next three years,
according to a survey.
But several factors, including the lack of transparency of
this still-emerging asset class, are making some investors
"That is one of the main issues," said Bill Kiernan,
director of research for global agriculture investment at
consulting firm HighQuest Partners.
"The whole idea of investing into agriculture as a sector
... is really pretty new and it has been growing pretty fast. So
you have a lot of investment managers out there who are
launching fairly new funds and they have not yet established a
track record. The lack of track record and a lack of benchmarks
in the industry makes some investors nervous."
But they are curious. An estimated 700 people attended the
Global AgInvesting 2012 conference in New York this week,
roughly double the attendance just three years ago at the annual
event. Some 33 percent were investors, 41 percent investment
managers and the rest various industry participants.
Of those attending, agriculture-focused investment managers
with $16.2 billion in assets under management said interest in
the sector is so strong that they expected to add $17.3 billion
to their portfolios over the next three years, according to a
survey of conference attendees conducted by HighQuest.
Diversified investment managers with portfolios of about
$3.6 billion expect another $3.4 billion, according to the
Row crop farmland remains a key areas of interest, as corn,
soybeans and other crops command high prices in the marketplace
amid strong demand for food and fuel.
Investors are also eyeing infrastructure investments such as
storage facilities and transportation operations, according to
Investment managers said rising U.S. farmland prices were
making it harder to find quality land and high returns, and a
lot of capital flow is moving to developing nations.
Africa and Latin America are areas targeted for higher
returns, although there has been increasing opposition to
foreign land investments in Africa.
Opponents of Wall Street "land grabs" in Africa protested
outside the New York conference this week, as an international
group of researchers and representatives from non-governmental
organizations rolled out a database showing that, although the
rush by investor for global farmland has fallen from a peak in
2009, it remains active, and Africa is a top target.
Since 2000 nearly 5 percent of Africa's agricultural land
and been purchased or leased by outside investors, the database
and accompanying reports shows.
Critics charge the land grabs hurt small local farmers and
often alter the use of the land in ways that are environmentally
Such opposition is noted by the investment community.
"It is definitely a concern," said Kiernan. "Putting money
in farmland in the U.S. isn't a big deal. But in places like
Africa it becomes a big issue."
Areas in Europe were seeing interest, including areas in
Ukraine, where rich farmland was drawing U.S. and other
The SigmaBleyzer private equity investor group, through its
agriculture unit, has since 2010 invested in about 180,000 acres
- or 73,000 hectares - to grow wheat and other row crops on five
farms in Ukraine. The group is looking for more, said John
Shmorhun, president of SigmaBleyzer's agriholding Harmelia Ltd.
"The level of competition has increased for sure," said
Shmorhun who traveled from Ukraine to New York to network at the
Many investors said the lack of transparency in the
valuation and performance of farmland is a limiting factor for
investments, as is a lack of seasoned farm managers to
professionally oversee the farmland bought by investors.
Charlie McNairy, CEO and managing partner of the
International Farming Corporation investment management group,
said the market needs at the least, standardized appraisals, to
make it easier for money to flow into the sector.
Jose Minaya, managing director and head of natural resources
& infrastructure investments for TIAA-CREF, said that, with
growing demand for food and fuel, more capital is needed in the
"People need to eat," Minaya added.