Sovereign Wealth Fund Institute

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According to the press release, “The Guardians of New Zealand Superannuation have today announced the appointment of FarmRight as an investment manager and the acquisition of a dairy property in West Otago as the first concrete steps in executing their Rural Land strategy.

The dairy property is in West Otago – approximately 100km west of Dunedin – and the Guardians are the sole, 100% purchaser.  FarmRight is an independent dairy-farming management and consultancy company with offices in Lumsden, Lincoln and Otorohanga.  FarmRight’s portfolio contains 42 dairy farms covering more than 12,000ha and 34,000 cows.  The Guardians’ General Manager, Investments, Matt Whineray, said that FarmRight had been appointed as a manager under the Rural Land Strategy because of its experience, track record; and its strengths in risk management and in adding investment value through making operational improvements to dairy farms.

“We have appointed FarmRight after an extensive due diligence process, which included assessments of their ability to manage, among other things, profitable pasture-based farming systems, costs, health and safety, animal welfare, environmental compliance, and financial budgeting and reporting to the standard we require,” Mr Whineray said.

The Guardians of New Zealand Superannuation have today announced the appointment of FarmRight as an investment manager and the acquisition of a dairy property in West Otago as the first concrete steps in executing their Rural Land strategy.  The dairy property is in West Otago – approximately 100km west of Dunedin – and the Guardians are the sole, 100% purchaser.  FarmRight is an independent dairy-farming management and consultancy company with offices in Lumsden, Lincoln and Otorohanga.  FarmRight’s portfolio contains 42 dairy farms covering more than 12,000ha and 34,000 cows.

The Guardians’ General Manager, Investments, Matt Whineray, said that FarmRight had been appointed as a manager under the Rural Land Strategy because of its experience, track record; and its strengths in risk management and in adding investment value through making operational improvements to dairy farms.

“We have appointed FarmRight after an extensive due diligence process, which included assessments of their ability to manage, among other things, profitable pasture-based farming systems, costs, health and safety, animal welfare, environmental compliance, and financial budgeting and reporting to the standard we require,” Mr Whineray said.”

Source: NZSF Press Release

Farmland and agro-industrial assets are increasingly becoming a vital part of a sovereign wealth fund’s portfolio, especially funds in the MENA region. One part is strategic, and the other part is the investment upside in purchasing stakes in these types of inflation-protected assets. Food inflation is on the rise, coupled with a growing, hungry world population. Several SWFs invest in agriculture and food production through either their own specialized subsidiaries or by directly investing in a company that has expertise in that space. By investing in a company rather having a sovereign governmental entity buy land or food companies directly, it adds an additional layer of protection from political risk. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

According to Reuters, “Qatar is in preliminary talks with the governments of Argentina and Ukraine to buy farmland for cereals production, the head of the Gulf Arab state’s national food security programme said on Wednesday.

The deals would be worth “$100 million-plus each”, Mahendra Shah told Reuters in an interview. They are part of Qatar’s drive to secure its food supplies by investing in agricultural projects abroad.

Qatar imports 95 percent of its food and has only two days’ worth of water reserves. So it relies heavily on imports and is constantly looking at options to gain additional food and water resources through Hassad Food, the agricultural arm of its sovereign wealth fund. “We have done deals in Brazil and Australia and now we are in negotiations with Argentina and Ukraine,” said Shah, director of Qatar National Food Security Programme. “These are countries that are willing to sell their land to grow cereals,” he said.

As criticism has mounted over the past two years of so-called “land-grab” deals, where rich food-importing countries buy land in poorer nations, Qatar had focused on richer countries with more abundant land and stronger legislation, where its investments would be less controversial, Shah said.

He also said Qatar was keen to develop partnerships with target countries, which would foster their development and improve the livelihoods of local farmers. “I think a lot of countries are rethinking their strategy. If you are being criticised for transferring food insecurity from your own country to another one, then you may want to go where there is less criticism,” he said.”

Read more: Reuters

According to the press release, “OP Financial Investments Limited (“OP Financial” or “the Group”), is pleased to announce that on 25 August 2010 a limited partnership was formed with China Investment Corporation (“CIC”), both through wholly owned subsidiaries, with the principal purpose to invest directly or indirectly in the production, processing, transportation and trade of agricultural crops on a trial basis in Kazakhstan. Total paid up capital of US$ 16.5 million was received on 21September, 2010 to fund preliminary trials. CIC and OP Financial have injected US$15 million and US$1.5 million respectively to the project, led by Zhang Weidong, Deputy CEO and head of OP Financial’s private equity team.

As the General Partner, OP Financial shall manage and introduce technology partners to the project. This is OP Financial’s second arrangement with CIC to date.

Mr. Zhang Gaobo, CEO of OP Financial, said, “We are pleased to continue our partnership with CIC with this new project in Kazakhstan. The agriculture industry is becoming increasingly important, especially in light of growing global demand for food. Kazakhstan is a leader in energy such as oil and gas, but with technology and implementation of global best practices, we believe it can be a leading player in the agri–sector as well.”

Source: Press Release

According to Reuters, “Hassad Food, owned by Qatar’s sovereign wealth fund, plans to acquire a sugar project in Brazil, the state-run Qatar News agency said, citing the firm’s chairman.

Qatar, like other Gulf states, imports the majority of its food requirements, and securing future food supplies is seen as a priority by the government.

The acquisition in Brazil is expected to take place in two months time, Nasser al-Hajri told QNA, giving no further details of the project.

Around 70 percent of the sugar is planned to be shipped to Qatar for domestic use, while the remaining 30 percent will be used to produce bio-fuels, QNA said.”

Source: Reuters

According to NZ Interest, “The New Zealand Superannuation Fund could potentially partner in the buy up of clusters of farms as it moves to invest between NZ$300 million and NZ$500 million through its rural land strategy over the next three to five years.

In an interview with interest.co.nz Super Fund CEO Adrian Orr emphasized the rural push was a global, rather than merely New Zealand, one. However, he noted New Zealand was one of the best farms in the world so should “get a slice” of the investment.

Orr, former Reserve Bank deputy governor and head of financial stability, said the rural strategy was largely driven by riding the wave of global population growth, demand for protein and scarce resources. Created by the previous Labour-led government to help offset the burden of paying universal superannuation to a generation of retiring baby boomers, the Super Fund’s value stood at NZ$16.71 billion as of April 30.

Asked whether the 16 Crafar farms being sold by receivers KordaMentha or Dairy Holdings Ltd, the dairy farming business controlled by Allan Hubbard the owner of struggling South Canterbury Finance, might be of interest, Orr said it was too early to rule out anything.

“We don’t mind clusterings of farms because as part of a global portfolio it doesn’t have to be diversified just to New Zealand,” Orr said. “It (the Super Fund) is diversified globally.”

The Super Fund was currently working towards selecting managers who would have their own capital in the game and oversee the rural land investment.”

Read more NZ Interest