Global AgInvesting | 13 December 2021
US Agriculture partners with Kempen to exact strategy of SDG farmland fund in the US
By Lynda Kiernan-Stone
In April 2021, the Netherlands-based Kempen Capital Management (Kempen) announced the launch of the SDG Farmland Fund – a new investment solution to offer institutional investors global access to farmland as an asset class while also contributing to the achievement of UN Sustainability Development Goals 2 (zero hunger), 6 (clean water and sanitation), 12 (responsible consumption and production), 13 (climate action), and 15 (life on land).
Formed in partnership with Stichting Pensioenfonds PostNL, the fund aims to offer attractive return on investment while actively promoting a fundamental shift toward greater sustainability in food production. To quantify this achievement they have identified concrete and measurable indicators (KPIs) in climate change, soil health, biodiversity, water quality, and resource allocation.
“The asset class of ‘agricultural land’ is pre-eminently suited to deliver a positive contribution to the pension fund’s sustainability goals,” said René van de Kieft, chairman of Stichting Pensioenfonds PostNL and member of the investment committee, upon the fund’s launch. “Particularly in the field of climate change and biodiversity, there is room for great progress and we, as a pension fund, would like to make an active contribution towards this goal.”
“With the help and support of Kempen, our fiduciary manager, we critically reviewed all options for implementation in the past year,” continued van de Kleft. “Based on the outcome of this screening, we have selected three investments, including the initiative to leverage the SDG Farmland Fund to make an active, positive contribution to the achievement of both our investment goals and our sustainable development goals.”
Cornerstone Investment Down Under
Within six months of its launch, the SDG Farmland Fund made a foundational investment in Australia, making a cornerstone capital commitment of A$50 million (US$37.6 million) in the Transforming Farming Platform – a new sustainable farming initiative to be managed by Gunn Agri.
The platform will include mixed farming assets spanning the major cropping regions of Australia, focusing on capital investments in underperforming small-to-medium sized farms with the goal of lifting productivity and the optimization of land use.
To do this, this science-led initiative will avail itself of expert advice from leading agronomists and environmental advisors, including Australia’s CSIRO, to facilitate the adoption of data-driven practices such as regenerative farming methods and the latest land management. Leveraging data from the CSIRO, including data from their Yield Gap research, the platform will examine cropping systems, crop variabilities, and weather and soil data to transform farms into productive and resilient operations with improved yields, reduced carbon emissions, and with the ability to sequester carbon.
Brad Wheaton, portfolio manager, Gunn Agri, said, “As agricultural asset managers for institutions there is complete transparency in our financial performance. What is ground-breaking here is that we have embedded the same accountability in the delivery of soil carbon, carbon in vegetation, emission reduction, biodiversity and other sustainability measures.”
US Agriculture in the U.S.
Sustainability, transparency, and accountability are key tenants for impact investors such as Kempen, who has partnered with US Agriculture, an investment firm focused on acquiring and managing quality farmland assets, to help advance their shared sustainability goals in the U.S.
“The Kempen team shares our passion for agriculture and understands the multitude of challenges U.S. farmers face producing and supplying the world’s food, fiber, and fuel,” said David Martin, managing director, US Agriculture.
US Agriculture brings a deep expertise in farmland and a network of farmers who are strongly dedicated to sustainable farming practices as they strategically grow their operations.
For each of these portfolio properties, US Agriculture creates a sustainability plan that includes meaningful impact goals that are quantified and reported on an annual basis.
“Despite the distance and global pandemic, Kempen’s team has been very involved in understanding our plans to make individual properties better,” said Clint Leman, CFA, US Agriculture’s director of Portfolio Management. “We’re committed to working with farmers who know profitability and sustainable farming practices are not mutually exclusive. And that’s critical to improving the soil, water, and air on and around the properties we manage.”
During the early days of 2021, US Agriculture enrolled all its acres in the Leading Harvest – an organization consisting of stakeholders across the agricultural value chain that together have created a new entity providing the first scalable, industry-wide universal sustainability standard that can be applied across all crops and geographies to address issues from climate change to biodiversity, and the resilience of cropland and communities.
“Consumers, investors and the supply chain have become increasingly interested in how their food is grown and sourced,” Oliver Williams, senior managing director, global head of Agricultural Investments HNRG and chairman of Leading Harvest, told GAI News in 2020. “At the root of this interest is a strong desire for a product that is grown to meet the needs of today without jeopardizing future generations’ ability to grow their food and meet their own needs. Yet current sustainability metrics vary widely across regions and operations.
“As the inaugural board chairman, I’m proud to be a part of an organization that both recognizes the hard work farmers do to practice sustainable agriculture and also brings greater transparency, adaptability and scalability to agricultural sustainability efforts.”
This partnership with Kempen will enable US Agriculture to accelerate this commitment to promoting more sustainable outcomes for all parties while also ensuring resources are being preserved for future generations.
“We are one part of Kempen’s global management team and are thrilled to collaborate with other sustainable-minded farmland managers,” said Martin. “Kempen’s long-term and global perspective, coupled with a commitment to invest in technologies and enhancements that will improve soil, water, air, and humanity in general, aligns well with US Agriculture’s purpose to improve our world through excellence and continuous improvement.”