Newspaper article THE JOURNAL RECORD

Time Has Come for Pension Funds to Be Used for Purchase of Farmland

Newspaper article THE JOURNAL RECORD

Time Has Come for Pension Funds to Be Used for Purchase of Farmland

Article excerpt

Pension funds, which used to be cautiously invested in stocks and bonds, moved into commercial real estate in substantial ways only a few years ago. Now, says Dean LeBaron, it is time for them to start buying farmland.

The idea of buying farmland when American farmers still bitterly remember the crash in farm values in this decade, and the bankruptcies that resulted, is typical of LeBaron, a money manager who has often marched to a different drummer in the 20 years he has run Batterymarch Financial Management.

Sometimes that drummer has produced outstanding results for Batterymarch, as it did last year, when the company made a lot of money investing in equities in Brazil, an area LeBaron still sees as cheap.

In other years, when the Wall Street consensus has been closer to accurate, Batterymarch accounts have trailed dramatically in the performance sweepstakes.

On average, the company has done better than the market, reporting a compounded annual gain of 14.1 percent since 1970, compared with 10.5 percent for Standard & Poor's 500.

Batterymarch will announce Thursday that it has acquired Agrivest, a Connecticut-based manager of farmland. That company, spun off from the Connecticut Mutual Insurance Co., still mostly manages the insurer's portfolio of farmland.

``It's been very difficult to get pension managers interested'' in farmland, said James McCandless, an executive vice president of Agrivest.

``Here is this vast real estate component which is almost entirely unrepresented in American pension portfolios,'' LeBaron said.

``Similarly, there is a desire on the part of overseas investors to put money in the United States, and invest in the dollar sector for the long term, but there are concerns about the day-to-day volatility of the U.S. stock market.''

LeBaron said he thinks farmland represents a much better investment than office buildings, whose prices ``have been bid up to pretty high levels by pension funds and Japanese buyers.''

He said he thinks farm prices nationally bottomed about 18 months ago.

``Although we had a fairly well advertised drought last year, farm appraisals and farm rents seemed curiously unaffected,' LeBaron said.

If pension funds were to become major buyers of farmland, it would reflect a revolution in the farm economy, where the family farmer has long expected to own his own land, and the idea of a farm landlord, as LeBaron noted, brings the image of a man with ``a big mustache'' demanding payments from an impoverished sharecropper. …

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