TIAA-CREF, U.S. Investment Giant, Accused Of Land Grabs In Brazil November 17th, 2015
Courtesy of the New York Times, an article on TIAA-CREF’s forays into the Brazilian agriculture:
As an American investment giant that manages the retirement savings of millions of university administrators, public school teachers and others, TIAA-CREF prides itself on upholding socially responsible values, even celebrating its role in drafting United Nations principles for buying farmland that promote transparency, environmental sustainability and respect for land rights.
But documents show that TIAA-CREF’s forays into the Brazilian agricultural frontier may have gone in another direction.
The American financial giant and its Brazilian partners have plowed hundreds of millions of dollars into farmland deals in the cerrado, a huge region on the edge of the Amazon rain forest where wooded savannas are being razed to make way for agricultural expansion, fueling environmental concerns.
In a labyrinthine endeavor, the American financial group and its partners amassed vast new holdings of farmland despite a move by Brazil’s government in 2010 to effectively ban such large-scale deals by foreigners.
Photo
A farm in Mato Grosso State in the cerrado, the vast savanna on the edge of the Amazon rain forest that is being razed for agricultural expansion.
While the measure thwarted the ambitions of other foreign investors, TIAA-CREF pressed ahead in a part of Brazil rife with land conflicts, exposing the company and its partners to claims that they acquired farms from a shadowy land speculator accused of employing gunmen to snatch land from poor farmers by force.
The documents offer a glimpse into how one of America’s largest financial groups took part in what some in the developing world condemn as land grabs. Responding in 2010 to surging international interest in the country’s land, Brazil’s attorney general significantly limited foreigners from carrying out large-scale farmland acquisitions.
Investors sometimes view such deals as a way to diversify their portfolios. But some government officials and activists contend that they uproot poor farmers, transfer the control of vital food-producing resources to a global elite and destroy farming traditions in exchange for industrial-scale plantations producing food for export.
“I had heard of foreign funds trying to get around Brazilian legislation, but something on this scale is astonishing,” said Gerson Teixeira, the president of the Brazilian Association for Agrarian Reform and an adviser to members of Congress, referring to the documents about TIAA-CREF’s farmland deals in Brazil.
Some of the findings are in a new report by researchers from Brazil’s Social Network for Justice and Human Rights, and Grain, an organization based in Spain that tracks global land purchases.
TIAA-CREF’s disclosures show that its farmland holdings in Brazil climbed to 633,391 acres at the start of 2015, up from 257,877 acres in 2012, around the time when it began ramping up deals through a venture formed with Cosan, a Brazilian sugar and biofuels giant.
Stewart Lewack, a spokesman for TIAA-CREF, agreed to review various aspects of the complex structuring of these deals but declined to discuss the farmland acquisitions on the record. He arranged further discussions with executives at Cosan, which is controlled by Rubens Ometto, a billionaire whose family has been in the sugar industry since the 1930s.
“Cosan has a 70-year history managing farmland in Brazil and is committed to high standards of responsible investing through the entities it controls,” a spokeswoman for Cosan said in a statement.
The two companies began buying farmland in Brazil in 2008 after forming a venture called Radar Propriedades Agrícolas, 81 percent owned by a TIAA-CREF unit and 19 percent by Cosan. While Cosan tells the Brazilian authorities that it controls the venture through its seats on the board, TIAA-CREF lists Radar among its “majority-owned affiliates.”
Then came Brazil’s 2010 crackdown on farmland acquisitions by foreigners, which unfolded at a time of growing resource nationalism here, highlighted by efforts to assert greater control over the energy industry.
In agriculture, the shift involved limiting the sale of farmland to foreigners to about 12,000 acres, barring them from owning more than 25 percent of the land in any municipality and putting limits on the Brazilian subsidiaries of foreign groups.
“These moves slammed the brakes on foreign investment in Brazilian land,” said Kory Melby, an American who advises investors in Brazilian agriculture.
But instead of scaling back, TIAA-CREF intensified its acquisitions of Brazilian farmland, focusing largely on a frontier in the northeast states of Maranhão and Piauí. In 2012, the company started a global fund focused on buying farmland in Brazil, Australia and the United States, drawinginvestment from Swedish and Canadian pension funds.
José Minaya, a TIAA-CREF executive overseeing the group’s farmland holdings, defends such investments, saying they are a way to acquire a “finite resource” at a time of growing global food demand.
“Brazil offers us diversification by crop and by climate,” Mr. Minaya told investors in a video about buying farmland in Latin America’s largest country.
Because of the 2010 limits on foreign investment, TIAA-CREF and its Brazilian partners created a financial venture to buy farmland. The American group holds a 49 percent stake, with Cosan holding 51 percent, according to Brazilian regulatory filings.
While the new venture appears on paper to be a separate company, in practice it seems to be largely indistinguishable from the previous one. They share many of the same employees and senior executives, who work out of offices on Avenida Juscelino Kubitschek here in São Paulo, according to people familiar with the operations.
Moreover, the financing for the farmland acquisitions come largely from TIAA-CREF subsidiaries in a type of loan that can be converted into stock, according to regulatory filings. The researchers at Grain argue that this corporate structure makes it possible for TIAA-CREF to conceal the control it exercises over the farms acquired.
“They can say what they want about control, but the issue is that” these structures “have only been created to serve the purpose of channeling funds from TIAA-CREF into Brazilian farmland,” said Devlin Kuyek, a senior researcher at Grain.
In a statement, Cosan disputed that view. “In all its acquisitions,” the venture “strictly follows the legislation in effect,” the company said.
Activists do not accuse TIAA-CREF and Cosan of stripping away the forested savannas themselves. Instead, they say the companies bought land that had already been cleared and obtained by speculators who may have used ruthless tactics.
Grain’s report tracks how TIAA-CREF and Cosan appear to have acquired several farms controlled by Euclides de Carli, a shadowy business figure described by Brazilian legislators, scholars and uprooted farmers as one of the most powerful “grileiros,” or land grabbers, in the states of Maranhão and Piauí.
Grileiros, a term that roughly translates as “cricketeers,” are known for their bureaucratic sleight-of-hand, fabricating land titles by placing them in insect-filled bins to make them seem antique. Some grileiros also force people off their land in a variety of ways, including intimidating land-rights activists and even killing poor farmers.
In Mr. de Carli’s case, Brazilian scholars have described how he pushed dozens of families off their farms, using tactics like destroying crops and burning down the home of a community leader. A prominent legislator in Maranhão has also accused Mr. de Carli of orchestrating the killing of a rural laborer over a land dispute.
Mr. de Carli, who has been the focus of official investigations into his land purchases, did not respond to requests for comment. In a statement, Cosan acknowledged that its venture with TIAA-CREF had bought farmland controlled by Mr. de Carli, but insisted that an exhaustive review at the federal, state and municipal levels had not found “any criminal suit in the name of Mr. Euclides de Carli.”
“The evaluation conducted,” Cosan said, “needs to observe official documents and information that ground the safety of the acquisition.”
But prosecutors familiar with Mr. de Carli still expressed surprise that prominent investors would pursue such deals when a simple Internet search reveals a long list of illegal land-grabbing accusations against Mr. de Carli.
“Euclides de Carli is one of the principal grileiros of Brazil’s agricultural frontier,” said Lindonjonson Gonçalves de Sousa, a prosecutor who has investigated Mr. de Carli’s land deals. “It should be no secret to anyone that he figures prominently in the land conflicts of the region.”
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Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race. Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm. Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm. It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.
Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land. Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas. Monty writes about freshwater scarcity issues at www.waterpolitics.com and frontier investment markets at www.wildcatsandblacksheep.com.
