Barbarians at the barn: private equity sinks its teeth into agriculture

Before the global financial crisis erupted in 2008, there was just a handful of funds catering to investors wanting to get involved in farmland and food production. Valoral, an investment advisor in Argentina, counted seven such funds in 2004.¹ GRAIN identified 55 a few years later.² Today, according to Preqin, a London-based alternative investment intelligence group, there are more than 300.³

Most of these funds are “private equity” funds. That is, they are pools of money injected into private companies that are not listed on stock exchanges (and therefore not subject to public reporting requirements). Private equity funds are managed by small, specialised teams and tend to attract a very specific kind of clientele. As they normally require minimum investments in the millions of dollars, which then get locked up for five to 15 years, this kind of investing is only accessible to pension funds, sovereign wealth funds, endowment funds, family offices, governments, banks, insurance companies and high net worth individuals. This will be changing soon, as the US opens the door for private equity firms to tap into the retirement savings of individual workers, but for now it’s only these big institutions which are involved.⁴

Today, the private equity industry has secured a solid spot on the investment landscape. In 2019, it ranked third among institutional investing spaces, with over US$4 trillion under management (see table 1). This is comparable to the US$4.5 trillion wielded by the world’s development banks, and far outstrips the US$1.5 trillion invested by US and European philanthropic foundations.⁵

Source: compiled by GRAIN, figures rounded

But the reality of private equity investing is not as glossy as Wall Street spin would make it out to be. GRAIN took a look into how it’s operating in the field of food and agriculture today and came out with some important findings.

Today, at least 300 private equity funds are specifically oriented towards food and agriculture.⁷ A subset of these, run by 200 fund managers, are focused on farmland per se (acquiring or operating farms). Other private equity funds, with diversified portfolios, also buy into food and agriculture, but usually on the downstream side (processing, distribution and service). Preqin’s assessment of farmland funds shows a rising number of closings over the years, peaking in 2013 and again in 2019 (see table 2), with a total aggregate capital raised of US$8.4 billion in 2019.

As mentioned earlier, these funds draw capital from institutional investors (see box: How does private equity work?). Workers may despise private equity firms for their brutal buyout practices, but nearly half the money engaged in private equity as a whole (46%), and agriculture and farmland investing specifically (44%), comes from worker pension funds. Most pension funds tied up in agriculture have their headquarters in North America and Europe, with the remainder spread across an assortment of countries in Asia, Africa and Latin America.⁹ Many of the pension funds investing in agriculture or farmland are not yet at their target allocation level for this asset class, which tends to be around 4-5%, which means they still aim to invest further. Whether these funds serve public or private sector retirees, the fact is that nearly half the money going into agricultural investing through private equity is workers’ retirement savings – whether they are aware of it or not and whether their interests are well represented through these investments or not. This points to a potentially huge accountability gap, as there is a lack of transparency around these investments. But it also underscores the frightening fact that pension savings are the biggest pot of money “out there” and they are not necessarily being managed in the interest of workers or the local communities where capital is being deployed.

Private equity funds invested in food and agriculture normally pay out annual “management fees” of 2% on the total capital invested to fund managers, whether the investment succeeds or not. The fund managers also typically take 20% of the profits generated by the fund, either deal by deal or at the end of the fund's lifespan. Given that the fund's managers, or general partners, normally only put in 1-5% of an investment, the payoff for them, in terms of risk, is very high (see illustration). Added to this are quite a number of hidden fees that may be charged to funds or to individual deals, whether legally or not, as well as tax loopholes.¹¹ The general partners may, for instance, receive fees for sitting on the boards of the various companies the fund has taken shares in or charge these companies service fees.¹² Since a notable share of the world’s wealthiest are connected to private equity, it’s reasonable to deduce that the managers, or general partners, do quite well.¹³ But for those who invest, the limited partners, it’s another story. From the data we saw on farmland and agricultural investing, funds differ on returns for investors. Some lose money, many hover around 8-12% per year, some go as high as 40%. By our calculations, the average net internal rate of return (i.e. the annualised return on investment minus fees) for funds investing in agriculture in 2019, by region where the investment goes and just for those cases where data is reported, was 14% in Africa, 12% in Asia, 11.6% in Latin America and 9.9% in North America. (For Europe and West Asia / North Africa there is not enough data.) By comparison, median annualised net returns for private equity as a whole for the last three years is said to be 17%.¹⁴

But these industry-reported figures are contested. Right now, there is a big debate about whether or to what extent investors like pension funds have been “enticed” to go in private equity based on inflated promises, as the returns are not much higher than had they invested in public equity markets. Independent research looking at the period 2006-2019 finds the returns are more like 11%.¹⁵ Calpers, one of the US’ biggest public pension funds, openly states now that their returns, net of fees, have been 10.7% per year. This could be considered comparable to having invested in the stock market through an index fund except it leaves out the fees that Calpers and all other private equity investors paid to the fund managers over the same period, which adds up to a whopping US$230 billion. This is a huge transfer of capital straight into the pockets of a small group of funder managers.¹⁶

The private equity industry is subject to very little regulation or oversight, which is a central part of its appeal to investors (and why it is often anchored offshore). In 2010, the US passed legislation requiring private equity firms managing more than US$150 million to register with the Securities and Exchange Commission, but the SEC has done little to exercise oversight on these companies.¹⁸ In Europe, the EU has also tried to move toward more disclosure and oversight, without rocking the boat, while the UK has promised that Brexit would deliver less regulation.¹⁹ Kenya has no overarching regulation of private equity, while Brazil, India and other countries do not have strong controls either.²⁰ Apart from lax requirements on reporting and disclosure, excessively aloof tax treatment is a huge issue. Fees tapped by investment managers are taxed as income, but profits are taxed at a much lower rate as capital gains. This creates an incentive for managers to forego “fees” and take them as profit payouts. In addition, many payments reportedly go unrecorded and untaxed, and the structure of most funds, which run through multiple subsidiaries in offshore tax havens, can facilitate transfer pricing or tax evasion, as is alleged in the case of NCH Capital's activities in the Ukraine discussed in the annex to this report. Even when authorities catch up with the companies, they tend to settle the matter for an agreed amount without changing rules or practices.²¹

When it comes to political or societal accountability, there is next to none. The industry likes to present its slow adoption of “environment, social and governance” (ESG) credentials and signature of texts like the Principles for Responsible Investing as proof of good conduct. But, as can be clearly seen with their investments in farmland, this is superficial and self-serving.²²

This trend is part of broader process by which the world of finance – banks, funds, insurance companies and the like – is gaining control over the real economy, including forests, watersheds and rural people's territories. This is called financialisation. Apart from uprooting communities and grabbing resources to entrench an industrial and export-oriented model of agriculture, it is shifting power to remote board rooms occupied by people with no connection to farming, much less local concerns, and who are merely in it to make money.

New York-based private equity firm NCH Capital was founded in 1993 by two US businessmen, George Rohr and Moris Tabacinic, active in the privatisation frenzy that followed the break-up of the Soviet Union. They saw a big opportunity in the area’s farmland and, beginning in 2005, established several funds with the idea of leasing or buying up farms for cheap and aggregating them into large-scale, US-style grain and soybean farms.

NCH drew in major investments from US and European pension funds, endowments and foundations, like the Harvard University Endowment Fund, the Dutch pension fund PGGM, and the foundation of eBay founder Jeff Skoll. It then channelled these investments through an opaque, offshore structure running from the Cayman Islands to Cyprus and into a “network of joint venture relationships” with local players to take over farmlands in the Ukraine, Russia and other former Soviet republics.³²

NCH’s most important backer in this venture was the European Bank for Reconstruction and Development (EBRD). Between 2009 and 2014, the EBRD provided NCH’s Cyprus-based holding companies with US$140 million in low-interest loans, and in May 2013 the EBRD took a direct US$100 million equity stake in one of NCH’s farmland funds.³³

According to a Latvian company that was NCH’s main joint venture partner for its Ukrainian farming operations, NCH used the low interest loans provided by the EBRD to its Cyprus-based companies to lend onwards to its joint venture farming operations at higher interest rates.^34,35 It also required these subsidiaries to purchase equipment and supplies from the offshore companies at inflated prices and to sell back grains and other products to these offshore companies at a discount. In cases that are now before the courts in Latvia and the Ukraine, NCH’s Latvian partner alleges the scheme siphoned profits out of the Ukraine joint ventures to the offshore entity, depleting their share in the profits and enabling NCH to evade taxes. Eventually, the Latvian partner says, NCH fraudulently pushed them out of the company and forced them to accept a buy-out for much less than what their shares were worth. Overall, they estimate that NCH's actions cost them US$10 million in lost profits.³⁶

Today NCH claims to have amassed a land bank of 700,000 hectares in Russia and the Ukraine, with other holdings in Romania, Moldova, Kazakhstan, Latvia and Bulgaria.³⁷ It is unclear how NCH was able to skirt the various restrictions on foreign farmland ownership that exist in many of these countries. In Moldova, investigations by RISE Moldova found that NCH was able to exploit a loophole in the country’s prohibition on foreign farmland ownership by hiding purchases of farmland through a Moldovan company that is in fact owned by another Moldovan-registered company entirely owned by one of NCH’s Cyprus-based holding companies.³⁸ This Moldovan company amassed huge areas of farmland for NCH by targeting elderly farmers, vulnerable to selling their lands for cheap.

“They bought everywhere … orchards and vineyards. They offered a low price, around US$500-US$600 per hectare,” says Gheorghe Severin, a land agent from the Moldovan village of Văleni. “People, if left alone, old, without help, without support, they have no choice but to sell and many sold.”³⁹

Kolberg Kravis Roberts, the Wall Street firm that invented the leveraged buyout in the 1980s and became immortalised in the book “Barbarians at the gate”, is one of the world’s biggest private equity groups. (The top four are known as “ABCK” for Apollo, Bain, Carlyle and KKR.) It has concluded some 42 deals in the food and agriculture arena for US$61 billion. Some of these deals have been significant.

The Wall Street giant has chalked up some notable fails, too. It tried to take over Spain's Pescanova, one of the largest fishing companies in the world, when it was going bankrupt in 2013. The same occurred with Birds Eye, the UK's top frozen fish company, when Unilever put it up for sale in 2006. Neither deal pushed through.

It is worth noting that KKR is, directly or indirectly, invested in farmlands though its holdings of Tiga Pilar Sejahtera Foods (60,000 ha of oil palm plantations) and Japfa in Indonesia (100 poultry farms, hectarage unknown), Fujian Sunner Development Company (300 poultry farms, hectarage unknown) in China and Sundrop (20 hectares of greenhouses) in Australia. It is also worth noting that COFCO Meat, Japfa, Modern Dairy and Sunner score as "high risk" companies on the FAIRR ranking of protein producers, meaning they are among the worst performers in terms of sustainability.⁴⁶

In May 2020, KKR announced it was taking its Asian Fund III even further and investing US$1.5 billion through it in Reliance Jio, the Indian telecommunications giant run by Asia’s top billionaire Mukesh Ambani. This gives KKR a 2.3% stake in the company, along with Facebook (10%) and a few other new entrants. As Facebook owns Whatsapp, one of the most powerful consumer platforms in India, Reliance Jio could become a key logistics and payment hub for food retail and delivery in India, potentially taking over the informal sector.

Helios Investment Partners has long claimed to be the largest Africa-focused private investment firm. The size of its funds would appear to support these claims. Its latest two funds, which devote a significant portion to food and agriculture, raised over US$1 billion each. Yet, as with most African-focused private equity funds, Helios has received a big part of its capital from development banks like the Overseas Private Investment Corporation (OPIC) of the US or the UK's CDC Group, which recently pumped US$100 million into the Helios Investors IV fund.⁴⁷ In the words of Henry Obi, the firm’s Chief Operating Officer, “Helios would not be standing here today without OPIC. They gave us our first break in 2004 and now we manage more than $2 billion, investing in all sorts of projects across Africa.”⁴⁸

Helios' two biggest plays in African agribusiness were the acquisition of Louis Dreyfus' West African fertiliser business and the takeover of West Asia and North Africa’s largest hybrid seed company. In both instance, Helios partnered with other investors. The fertiliser business was purchased with Temasek, the investor for Singapore's sovereign wealth fund. The French commodity trader Louis Dreyfus had done little to invest in this sprawling company, once known as SCPA Sivex International, since it acquired it for US$85 million from the French state under a privatisation process in 2011.⁴⁹ But just six years later, the Financial Times reported that Louis Dreyfus sold it to Helios and Temasek for US$200 million.⁵⁰ The new owners have given the company a makeover and a new name (Solevo) and are keen to associate themselves with the rice self-sufficiency campaign of the government of Côte d'Ivoire.⁵¹

The seed company Helios acquired, Misr Hytech, was previously the Egyptian subsidiary of the Proagro Group of hybrid seed companies, which has its headquarters in the US but operates mainly in West Asia, North Africa and India. In this case, the deal was initiated by another private equity group, Lorax Capital Partners – an Egyptian company formed to administer the Egyptian American Enterprise Fund that was established during the Obama administration "to promote policies and practices conducive to strengthening the private sector in Egypt" in the wake of the overthrow of the US's long time ally Hosni Mubarak. The US Congress created this fund to "empower Egyptian entrepreneurs" and to invest "particularly in small- and medium-sized enterprises".⁵² Strange, then, that it would partner with a UK-based private equity firm to take over a US-owned company that is said to be the largest hybrid seed producer in the Middle East.

The story goes that Gary Vaughan-Smith came up with the idea of setting up a private equity fund to buy farmland in Africa while working at a Dutch asset management company during the food and financial crisis of 2007-8. Witnessing how pension funds were running scared for “real assets” that could insulate them from a collapsing stock market, Vaughan-Smith, who grew up in Zimbabwe, saw an opportunity in the fertile and cheap farmlands of southern Africa. “I find it really exciting to be able to bring this sort of investment capital to Africa,” Vaughan-Smith told one pension fund investor magazine.⁵⁴

The private equity firm that Vaughan-Smith would form to lead this venture, SilverStreet Capital, was set up in the UK. Its maiden fund, Silverlands Fund, closed in 2012 with US$214 million, almost half of this coming from Danish pension funds.⁵⁵ The rest was supplied by development banks, like the CDC Group of the UK, OPIC of the US, FinnFund of Finland and the IFU of Denmark. OPIC and the World Bank’s MIGA also chipped in with political risk insurance to cover the fund’s investments.

The fund’s business model is pretty simple. It aims to bring Western industrial agribusiness to Africa by running its own large-scale farms, organising contract production with local farmers and selling hybrid seeds and chicks to farms in countries like Zambia and Tanzania. It does this through numerous subsidiaries, most of which are fully owned by the fund. With so many development banks on board, SilverStreet is highly sensitive to accusations of land grabs and each year it publishes "impact and ESG” reports that are full of examples of how the fund is benefiting Africans.

But one can question how much of the capital “invested” in Silverlands is truly making it to the African continent and staying there. The investors who signed up to the Silverlands Fund, registered in the tax haven of Luxembourg, agreed to pay Vaughan-Smith's firm an annual 2% management fee on the total commitments to the fund, or roughly US$4-5 million every year.⁵⁶ This means that over the fund's lifespan of 10 years, the fund managers will take US$40-50 million from the total pot, allegedly to pay overhead costs, due diligence expenses and monitoring. The African portfolio companies may be a source of additional fees for the fund managers. For instance, the Silverlands Fund is invested in a South African-based company for which Vaughan-Smith sits on the board. In 2019, that company paid him personally over US$14,000 in fees, while another SilverStreet manager who also sits on the board received nearly US$17,000.⁵⁷

The Bill and Melinda Gates Foundation is one of the biggest philanthropies bankrolling the spread of the industrial agriculture model in the global South. They are a lead contributor to the Alliance for a Green Revolution in Africa, and largely underwrite the quasi-public international agricultural research system. Through the Bill and Melinda Gates Foundation Trust, which manages the foundation’s endowment, the couple are also invested in private equity, taking positions in farm and food businesses around the world.⁶²

In Asia, Gates is invested in Stellapps, an Indian start-up that is digitising the country’s massive dairy industry. The company presently works with five million local dairy farmers offering them software and internet related services. In 2018, Gates contributed to a US$14 million round of funding for Stellapps, its first ever equity investment in Indian agriculture.⁶³ Earlier, over in China, Gates was involved in Hony Capital Fund III, which conducted two buyout deals in Beijing’s bustling supermarket sector. In 2009, the fund took a 25% share of the Beijing Merry Mart food store chain for $117 million and an 11% stake in the city’s Wumart Stores chain for $213 million.⁶⁴

In Africa, Gates participated in a fund managed by the Dubai-headquartered Abraaj Group, a US$14 billion private equity “trailblazer” that collapsed in 2018 under a blanket of debt and allegations of fraud. In 2009, Abraaj’s US$105 million Health in Africa Fund took a 49% stake in Gallus, a poultry rearing operation in Tunisia, from which it exited five years later.⁶⁵ In 2009, the fund also paid US$18.7 million for a 10% stake in Brookside Dairy in Kenya.⁶⁶ Brookside is a dairy processing company set up by the country's powerful Kenyatta family, which retained the other 90%. It controls 45% of the Kenyan packaged milk market and exports to Tanzania and Uganda. In 2014, French dairy giant Danone bought a 40% stake in the company, which at the time was harbouring plans to expand. (For instance, in 2016, Brookside took over Inyange, Rwanda’s top food processing company connected to President Paul Kagame’s party.⁶⁷) Today, Brookside is the largest dairy processor in East Africa, buying milk daily from 200,000 farmers and operating in 12 countries. In 2017, before it collapsed, Abraaj's fund also invested in Sonnendal Dairies (Pty) Ltd in South Africa.

How much are investors and private equity firms responsible when things go wrong? Ask that to the dairy suppliers and local employees of Doodhwala in Bengaluru, India.

Omnivore Partners is an Indian venture capital group that funds start-ups across India, especially in the food and agriculture space. They define themselves as “a ‘financial first’ impact investor, seeking to deliver market-rate venture capital returns, while impacting the lives of Indian smallholder farmers and rural communities.”⁶⁹ In 2018, they set up a fund called Omnivore Partners Fund 2 which closed at US$100 million. Participants in the fund include European development banks (Belgium, Germany, Netherlands, Switzerland and UK), affiliates of the insurance giant AXA and the agrochemical leader BASF, and even the Rockefeller Foundation. The fund invested US$2.2 million right away in a company called Doodhwala, the Hindi term for “milk deliverer”.

Doodhwala is a Bangaluru-based outfit created in 2015 to “disrupt” the dairy market by facilitating home delivery of fresh milk through a mobile subscription platform. Consumers would pay a subscription through their phone and Doodhwala would facilitate point to point delivery. By 2018, the company was delivering 30,000 litres of milk daily in three major cities (Bangalore, Hyderabad and Pune) and expected to reach 10 million subscribers by 2021.⁷⁰

In 2019, however, the entire operation went bust. At first, the company fell behind on its payments to suppliers and employees. Then it cut off the phone. Now the Doodhwala founders are nowhere to be found and lawsuits have been filed in court.

As a result of all this, more than 100 employees and 35 milk suppliers have not been paid, including Karnataka Milk Federation (US$128,000 lost), Erden Creamery (US$33,300 lost) and Akshay Kalpa (US$84,000 lost) in Bangalore alone.⁷¹ Customers also lost money and some people are calling it a scam. One supplier says that the fraud occurred when an Omnivore partner was placed on Doodhwala’s Board of Directors.⁷² And yet the investors in the Omnivore fund back in Europe and the US are looking at a 25% net return on their investment.⁷³ Are they aware of how things panned out for the people Doodhwala made commitments to?

Pátria Investimentos is credited as having pioneered the private equity industry in Brazil. But it was just a small player until 2010, when US private equity behemoth Blackstone took a 40% stake in the company. Since then, the firm has launched several private equity funds and attracted billions of dollars in investments from Canadian, European and US institutional investors and development banks. Blackstone’s entry into the company also marked its move into agribusiness, with a focus on Brazil's northeastern “agriculture frontier”.

In 2015, Pátria created the Pátria Brazilian Private Equity Fund III to finance the construction of a controversial shipping terminal in the state of Pará, designed to transport agricultural commodities from deep in the Amazon to the ports of the east coast.⁷⁴ The terminal, which is the largest grain loading and transportation capacity in northern Brazil, is run by Hidrovias do Brasil, a logistics company in which Pátria, Blackstone, Temasek, the pension fund of Alberta, Canada, the World Bank’s IFC and the Brazilian national development bank (BNDEPar) are all invested.⁷⁵ This terminal has been linked to aggressive deforestation of the Amazon for the expansion of agribusiness.⁷⁶

In the south of Brazil, Hidrovias controls 30% of all river transport on the Paraguay-Paraná waterway.⁷⁷ The waterway, pushed by the governments of Argentina, Bolivia, Brazil, Paraguay and Uruguay since decades, is a complex system of commercial navigation serving the region’s extractivist industries, especially mining, soybean and wood pulp. Yet it has been denounced from the beginning for its tremendous environmental, social and economic consequences. Impacts include soil and coastal erosion, loss of tourism opportunities, decline of fish populations, displacement of people due to flooding, human trafficking, loss of biodiversity and invasion of foreign species.⁷⁸

Lack of consideration for such impacts plus other irregularities have led to Brazilian courts suspending Hidrovias’ operating permits for three ports in 2016.⁷⁹ In 2017, one of the silos in the Hidrovias grain port in the district of Miritituba, in Itaituba, gave way because its support base could not bear the weight, leading to another port suspension.⁸⁰ Despite these and other setbacks, Hidrovias do Brasil reported a gross profit of over US$100 million in 2019, up 32% from 2018, and its investors plan to take it public in 2020.^81,82

As with most private equity operators, Pátria is not interested in staying long – just ten years. After that, it plans to sell to the biggest farmers in the area or to foreign companies. “We believe that, in the future, the restriction to foreign investors [to purchase land] will be altered. Maybe not in a year or two, but over the life of the fund this restriction is very likely to be changed, and then we would have the option of selling much larger packages of land to large international investors,” says Wever.⁸⁹

With such big bets on the further opening of the Amazon and the Cerrado to agribusiness, it is not surprising that Pátria and Blackstone have been such ardent supports of Brazilian president Jair Bolsonaro. After his election, Pátria assured their investors that Bolsonaro's government was not a danger to democracy and that it would usher in “improved policies”.⁹⁰ Blackstone, meanwhile, well known for its close connections to top US Republican Party leaders like Donald Trump and Mitch McConnell, was one of the main sponsors of a New York gala hosted in 2019 by the Brazilian-American Chamber of Commerce to celebrate Bolsonaro as its “Person of the Year” during his visit to the US.⁹¹

The favours run both ways. Bolsonaro's government has made Hidrovias a partner for the privatisation and development of hundreds of miles of the national highway BR-163 that transports agricultural commodities from the Amazon to the southeast and that has recently been blocked by protestors of the indigenous Kayapó nation who say the road is spreading Covid-19 among their people.⁹² It appears that Bolsonaro also secured, during his visit to Riyadh in October 2019, a major investment from Saudi Arabia's sovereign wealth fund in two of Pátria's private equity funds.⁹³

Coexca SA is a Chilean pork producer, processor and distributor created in the year 2002. It is now the second largest pork producer in the country, by number of slaughtered pigs, churning out more than 50 million kilos of meat per year.⁹⁴

In 2017, the Danish Agribusiness Fund (DAF) decided to invest US$12 million in Coexca, the largest deal ever in the history of Chilean pork. The DAF is a fund run by a consortium involving the Danish government and a number of institutional Danish investors. It invests in the production, distribution and sales of food in the global South and it is managed by the Investment Fund for Developing Countries (IFU). The IFU is a government-owned private equity firm helping Danish companies invest in the global South, averaging a gross return of 12%. The DAF investment in Coexca was facilitated by an Edinburgh firm called JB Equity Limited, which planned to invest an additional US$40 million in Coexca over the next five years.⁹⁵ “Our union with DAF and JB Equity will allow us to double Coexca’s current pork production capacity and establish a new and modern pig farm in the Maule Region of Chile,” Coexca CEO Guillermo García González said at the signing of the deal.⁹⁶

In 2015, the company began construction of a 1,100 hectare pig farm called “Criadero San Agustín del Arbolillo”, designed to raise 10,000 sows per year in the commune of San Javier, province of Linares, Maule, Chile.

From the beginning, this farm has generated intense conflict with nearby communities, described by Chilean media as “a struggle of little people against giants.”⁹⁷ The surrounding villagers organised a fierce resistance. They objected that the company did not have approval to use the lands where it was building its farm and that it was not complying with the legal obligations that were spelled out in the various permits it was granted related to change of land use, water works and changes in water courses, among others. They also raised concerns about the use of water, as the farm was expected to use five million litres of water per day, which is more than the amount used by the nearby city of San Javier. The villagers questioned why water rights would be authorised for such a highly polluting factory farm that would deplete their own water sources, leaving them dependent on limited water deliveries via municipal trucks.

Yet, in spite of these numerous concerns and the local resistance, the company, thanks to fresh financial backing from DAF and JB Equity, was able to move ahead with the construction of the farm in 2017.

Soon, the impacts were obvious. The local communities, tormented by the unbearable smell and constant presence of flies generated by the farm, pushed on their local authorities to take action. In October 2019, lawsuits were filed against Coexca for operating the San Javier pig farm without the proper environmental clearances and investigations began into the farm's manure treatment system.⁹⁸ The local mobilisation against the farm is the subject of a powerful documentary film called “Bad neighbour” that was released in 2019.⁹⁹

In February 2020, the villagers finally won a ruling from the Court of Talca establishing that the company was violating the people’s right to live in an environment free of contamination in the town of San Javier.¹⁰⁰ A few months later, on 10 June 2020, the Supreme Court unanimously confirmed the ruling of the Talca Court that accepted a claim filed by community members against the corporation for bad odours coming from the pig farm and partially accepted another claim filed by the National Institute of Human Rights against the Ministry of Health, the Superintendent of the Environment and Coexca SA.¹⁰¹

The Regional Chief of Maule, Nadia Gutiérrez, welcomed the Supreme Court's ruling that Coexca has been violating the people’s right to live in a healthy environment, calling it “a triumph for the community of San Javier”.¹⁰² This means that the company must comply with environmental regulations. Is that too much to ask of a Danish government-led private equity project?

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