CPPIB to cease farmland investments, sell portfolio – report

The Canada Pension Plan Investment Board is reportedly ceasing further investments into farmland to instead focus on agribusinesses elsewhere in the supply chain, as it mulls a sale of its existing farmland portfolio, Reuters first reported.

A pension spokesperson called the report “speculation”, but also declined to confirm or deny it. “CPPIB annually updates progress on strategy, including the repositioning of any program,” he wrote in an emailed statement to Agri Investor.

A reposition of the agri portfolio would not be a total surprise. The pension began scooping up farmland in 2013 with a purchase of 115,000 hectares of Saskatchewan farmland, which led to years of haggling with local farmers and a series of regulatory reviews from the government.

In early 2015, Agri Investor noted that the agri-heavy province was again reviewing regulation surrounding institutional investment into farmland and that CPPIB in particular was on its radar.

Later that year, the government reportedly conducted a survey by which 87 percent of more than 3,200 respondents said they were against foreign ownership of local farmland and 75 percent were opposed to ownership by Canadian pension funds. The government ultimately banned foreign investors but stopping short of barring Canadian entities; it also banned further pension ownership of farmland, but decided against retroactively penalizing CPPIB.

Aside from avoiding further controversy, a refocus on agribusiness could represent a natural transition following CPPIB’s purchase of a 40 percent stake in Glencore Agri, owner of Canadian grain handler Viterra, last year. Glencore’s agri operations include production, storage, transport and marketing of grain, oilseeds, cotton and sugar, and a further shift into these supplemental agri businesses is less likely to rattle local farmers fearing institutional competition.

A cessation of the pension’s farmland investing also begs the question of whether current farmland assets would be liquidated. The statement from the CPPIB spokesperson noted: “Every dimension of our strategy is designed with a view to serving the best interests of multiple generations of beneficiaries, affecting our investment horizon, performance expectations, scalability, asset mix, risk appetite and holding periods.” 

The pension, which oversees the savings of 20 million Canadians, held C$298 billion ($218.7 billion; €201.2) under management as of the end of 2016.