GRAIN — Harvard’s billion-dollar farmland fiasco


Harvard’s billion-dollar farmland fiasco

GRAIN and Rede Social de Justiça e Direitos Humanos | 06 September 2018 | Land, Publications

Read an article based on this report on Bloomberg Business Week.

One of the world’s major buyers of farmland is under fire for their involvement in land conflicts, environmental destruction and risky investments. A new report by GRAIN and Rede Social de Justiça e Direitos Humanos1 presents, for the first time, a comprehensive analysis of Harvard University’s controversial investments in global farmland.

The report finds that:

  • Harvard’s endowment fund has spent around $1 billion to acquire control of an estimated 850,000 hectares of farmland around the world, making the University one of the world’s largest and most geographically diverse farmland investors.
  • Harvard’s farmland acquisitions were undertaken without proper due diligence and have contributed to the displacement and harassment of traditional communities, environmental destruction and conflicts over water. The consequences of these deals are particularly dire in Brazil, where Harvard’s endowment fund has acquired nearly 300,000 hectares of land in the Cerrado, the world’s most biodiverse savannah.
  • Harvard’s opaque farmland investments resulted in windfall remunerations for its fund managers and business partners but have failed as an investment strategy for the university.

The report urges Harvard’s students, faculty and alumni to:

  • Demand that the University’s endowment fund ceases all its investments in farmland;
  • Take immediate measures to resolve all land conflicts associated with its current land holdings, and
  • Ensure that affected communities are adequately compensated for damages.

* * * *

Harvard’s splurge on global farmlands

Harvard University began buying farmlands in the immediate aftermath of the financial and food price crises of 2007 and 2008. It was one of several endowments, pension funds and other institutional investors that started to acquire farmland in the wake of the subprime crisis and the collapse of the housing market in the United States and Europe. While New York-based Teachers Insurance and Annuity Association (TIAA) took the lead in farmland acquisitions among pension funds, Harvard -with its $37.1 billion endowment fund- quickly established itself as the leading farmland buyer among universities (see Table 1).3

Table 1: Top US university endowment funds investing in farmland

Endowment Assets under management ($bn) Current allocation to natural resources ($mn) Farmland locations
University of Texas Investment Management Company 40.3 4,978 Australia, Latin America
Harvard Management Company 36 4,644 Africa, Oceania, Latin America, US
Princeton University Investment Company 21.7 3,625 Unknown
Stanford Management Company 29.1 2,301 Unknown
Yale University Endowment 25.4 2,007 Unknown
University of Michigan Endowment 9.7 700 Unknown
Emory University Endowment 4.6 642 Unknown
University of Pennsylvania Endowment 10.7 642 Unknown

Source: Perqin, August 2017,

Harvard had already made major moves into the acquisition of global timberlands,4 so farmland was not an entirely new investment for the endowment and could fit in easily amongst its natural resources portfolio. The timber investments also provided contacts around the world, and a land investment model of offshore shell companies and obscure subsidiaries that could be replicated.

The University began by buying farmland in Brazil, South Africa, and New Zealand in 2008. Then came a major investment in Russia and Ukraine, followed by several farm purchases in Australia and the United States. By June 2017, Harvard had injected over US$ 930 million into its various farmland subsidiaries and had acquired control of over 850,000 hectares of farmland around the world, making the University one of the world’s top farmland buyers.5


Global farmland acquisitions by Harvard Endowment Fund
An opaque corporate structure

Harvard’s farmland acquisitions are channeled through complex company structures, making it difficult to ascertain its specific farmland holdings. Even the fund’s own Board of Overseers does not have a clear understanding of the farmland that the fund owns and manages.6

At the top of each farmland investment structure is one of the Boston-based, tax-exempt subsidiaries that manage different parts of the endowment’s investments. Those subsidiaries involved in farmland acquisitions are Blue Marble Holdings, Phemus, Demeter and Harvard Private Capital Realty.

Information contained in the tax filings of these Boston subsidiaries shows that Harvard channeled money for farmland investment through these companies to other subsidiaries registered in tax havens, such as the US state of Delaware or the Cayman Islands, and with obscure names, such as Guara LLC or Granary Investments.

From these tax haven companies, the money then flowed to subsidiaries in the target countries, which are managed by various local operators active in agribusiness and land acquisitions. These local business groups identified the lands, made the purchases and managed the farms. Harvard paid them millions of US dollars in fees for their services (see Box: Harvard’s nebulous farmland network).

Conflict and controversy

Harvard followed the path of other institutional investors that have acquired farmland; focussing on countries seen as less risky but with the potential for high returns. This did not, however, keep the University’s investments free of conflict or risks.

In Australia, a report by the Office of Environment and Heritage found that, in 2015, Harvard’s subsidiary had destroyed aboriginal burial sites and removed native vegetation without a permit on farmland it acquired in New South Wales. The Harvard-owned farm company reportedly failed to carry out an Aboriginal cultural survey before ploughing up the fields, despite the existence of dozens of sensitive sites being evident.18

In South Africa, Harvard acquired farms where the former black workers and their families had been granted rights of occupation under the post-apartheid land reform. Conflicts with the local communities are detailed in a report by a researcher who worked with Harvard’s South African farm manager, RussellStone.19 According to his report, once Harvard took over these farms in 2011, the managers moved to restrict the land use rights of these families, including for grazing their cattle and accessing family burial sites. Harvard’s farm managers are said to have pressured the families to sign a code of conduct and to have imposed a system of rules and penalties that could lead to the expulsion of a family if not adhered to. Tensions on the farm are reported to have escalated thereafter, to the point where Harvard was worried that it might cause unwanted international attention.

According to the same report, Harvard insisted that RussellStone find a mediated solution, despite RussellStone’s assurances that such tensions with occupant families were a normal part of large-scale farming in South Africa. The University sent a mediator to offer to relocate the families to other lands, but the families rejected the offer saying the lands offered were of poor quality and far from essential services. Frustrated with the situation and wary of the repercussions for its international image, the University is reported to have directed RussellStone in 2014 to sell all of its farmland holdings on which there were “occupant” families.

Harvard has also waded into conflicts with its US farmland deals. According to its tax filings, since 2012, the University has invested over US$115 million into acquiring land in California and establishing vineyards. These farms, in the Paso Robles region and Cuyama Valley, are located in areas where water shortages are threatening the viability of agriculture.20 Local residents and farmers worry that Harvard’s vineyard projects will jeopardise their access to water, and accuse Harvard of using devious tactics to make a financial play on control over the remaining water resources.

Cindy Steinbeck, whose family has farmed wine grapes in the area for decades, is leading an effort by several hundred other landowners in the area to secure their access to groundwater. In a letter to the CEO of the Harvard Management Company in March 2016, she wrote:

“The local perception, right or wrong, is that Harvard has been doing the following: making purchases using multiple layers of disregarded entities such that it would be difficult for the layperson to trace the purchase back to Harvard; using agents to push for formation of a local water district that would allow Harvard’s properties to ultimately benefit from government grants and taxpayer funds; inducing certain property owners to sell with offers that are many times the going market rates and using this method to acquire properties that contain public water infrastructure; and generally not being forthcoming with the local populace about how these investments could affect the most vital of resources—all in the name of returns on investment.”21

* * * *

Making amends

Harvard’s farmland deals should be a cautionary tale for institutional investors currently contemplating getting involved in the sector. The risks Harvard’s fund managers took have not paid off financially for the University, and have instead left it with a legacy of land and water conflicts to deal with. While Harvard has been rethinking its farmland investment strategy over the past year and trying to sell off some of its farms, the University has yet to announce any moves to restrict future farmland deals nor to introduce new internal rules, guidelines, or systems of oversight for such investments.52 The priority that it continues to place on its controversial farmland investments in Brazil is further demonstrated by the fund’s hiring of the architect of TIAA’s Brazilian farmland investments to head its natural resources portfolio, in August 2016.53

Harvard’s students, faculty and alumni should demand a full, independent assessment of Harvard’s global farmland acquisitions. This should include an accounting of how much was spent acquiring the land, including the payments to fund managers and business associates, and how much has been returned to the fund through on-farm production and farm sales. It should also involve an inventory of the damages caused to local communities through displacement, conflicts, chemical pollution and environmental destruction, as well as clear recommendations for how Harvard can best compensate these communities. Harvard should not be allowed to relinquish its responsibilities by simply selling off its farmlands to another company or outsourcing its farmland acquisitions to external managers.

Harvard was one of a small number of institutional investors that pioneered the move into global farmland investing after the 2008 financial crash. These corporations, more than any other, are responsible for having made farmland a new “asset class” for financial investors who are eager to find real assets, or so-called “alternatives”, that they can buy to hedge against volatility in the stock markets. With real estate and stock markets once again at highly inflated levels, the same tendencies we saw post-2008 could reappear, generating a new rush of risky farmland investments by institutional funds, and another spike in land conflicts. Harvard University can help make amends. by declaring an end to its global farmland acquisitions.

…(read more).

PDF of Full Report

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