Social justice group objects to size of Cargill's land holdings in Colombia

  • Article by: MIKE HUGHLETT , Star Tribune
  • Updated: September 27, 2013 - 4:53 AM

A Cargill-owned entity now has nearly 130,000 agricultural acres in Colombia, where farm size is limited. Not fair, says the group Oxfam.

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Black River’s investment in Colombia includes 200 employees raising corn and soybeans for the domestic market on about one-fourth of its holdings.

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A Cargill-owned investment firm has stitched together huge holdings of farmland in Colombia, a move that social justice group Oxfam says violates the “spirit” of Colombian law and its goal of distributing land to smaller farming operations.

But Minnetonka-based Cargill Inc. says that its Colombian farm project complies with the South American country’s laws and that it sharply disagrees with Oxfam’s conclusions, which are being released in a report Friday.

Cargill, an agribusiness giant and one of the world’s largest private companies, rarely invests directly in land. The company’s Colombia holdings were acquired by Cargill’s Black River Asset Management, a large private equity outfit primarily focused on financial markets.

Corporate purchases of farmland globally have been growing in recent years, as agricultural assets are generally seen as sound investments; feeding the world is a challenge that’s not disappearing anytime soon. In Colombia, Oxfam noted, Cargill’s investment isn’t the only case of large-scale land acquisition.

Black River bought 39 properties between 2010 and 2012 in Colombia’s eastern Altillanura region, according to Oxfam. Its holdings span 129,918 acres, which is six times larger than Manhattan and well beyond the maximum size for family farms in that area of Colombia (4,263 acres), the Oxfam report said.

Concentration of land ownership in Colombia is among the highest in the world and the issue has helped fuel decades of armed conflict, complicating any efforts for land reform, said Chris Jochnick, Oxfam’s director of private sector development.

“Cargill’s mass purchases of land puts Cargill squarely on the wrong side of that challenge,” Jochnick said.

Cargill made “investments in good faith,” said company spokeswoman Lori Johnson, adding that Black River did two years of due diligence before starting the project.

The Colombian project is Black River’s largest investment in agricultural land, but it’s only a“small part” of its $6 billion portfolio, according to Cargill.

Oxfam focused on Black River’s Colombia investment because of its size and because of Cargill’s stature. “It is illustrative because its national impact could be very significant, given the size of the corporation and the large amount of land it acquired,” the Oxfam report said.

Black River bought the land through 36 separate shell companies, particularly in Vichada, which borders Venezuela, the Oxfam report said.

Cargill’s Johnson said such a corporate structure — multiple purchasing companies — is common in real estate deals. Cargill bought the land from “willing sellers,” she said.

The company spent $38.5 million on the land, paying $1,976 per acre on average, the Oxfam report said. Before 2006, the average purchase price in the area was $59 per acre.

Cargill declined to say how much Black River has invested in the Colombia project, but it’s a major undertaking.

The Vichada region is desolate and has relatively poor soil; much of the land was used for cattle grazing. Black River treated the soil to reduce its acidity and built the infrastructure — grain elevators, roads, a power supply — needed for a large farm, Cargill officials say.

“This is an area that now has daily bus service,” said Lisa Clemens, a Cargill spokeswoman.

About one-fourth of Black River’s Colombian holdings have been converted to cultivated land. The operation employs about 200 people, and Black River’s corn and soybean crops are sold into the domestic market, Cargill officials say.

Oxfam is a network of international group of 17 organizations in more than 90 countries. The organization, which focuses on global poverty issues, isn’t judging Cargill’s use of its land, Jochnick said.

“It’s quite possible it’s a productive use, a use to address national food security,” he said. “But the Colombian government has set a policy to favor small holders and limit large acquisitions.”

About 80 percent of the land in Colombia is in the hands of 14 percent of landowners, and that concentration has been growing — despite the government’s policy, the Oxfam report says.

Land concentration has long been a key complaint of the Revolutionary Armed Forces of Columbia, or FARC, a leftist guerrilla group.

FARC and other paramilitary groups have a presence in the Altillanura region, and it’s also home to “illicit” crops, the Oxfam report said.

Black River invited Oxfam to visit its Colombia farms, but the group declined. “It was disappointing they did a report on our operation and refused to visit,” Johnson said.

Oxfam didn’t need to visit because the issue involved land sales, not how the land was being used, Jochnick said.

Plus, he said, Oxfam policy prohibits its workers from going into “dangerous” areas like Vichada.

“There really was no need for us to imperil our staff,” he said.

 

Mike Hughlett • 612-673-7003

 

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