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Brazil to allow foreign farmland ownership

Avatar Posted on: 2017-02-16 3:20 PM
The Government of Brazil says it is pushing ahead with plans to change its laws to allow foreigners buy farmland, in a move widely backed by investors and opposed by land rights campaigners.

"We will announce the changes in the next 30 days," Brazilian Finance Minister Henrique Meirelles said on Wednesday night in an interview with GloboNews television.

Agribusiness is one of the fastest growing sectors of Brazil's economy and Meirelles said its continued success requires more investment.

He did not say what kind of legal changes would follow to allow foreign investors to buy farmland in Latin America's largest country or detail any other specifics about the shift.

Investors had been pushing for the changes. Currently, foreigners cannot buy farmland outright so they take a minority stake with local firms in order to gain exposure to a sector.

"Before 2010, we were buying land freely with foreign capital," an official with a Rio de Janeiro-based investment fund told the Thomson Reuters Foundation. He spoke on condition of anonymity as he is not authorized to speak to the media.

The government enacted the prohibition in 2010 amid concern that funds from Asia and the Middle East were buying too much land, the investor said ahead of Meirelles' announcement.

It's unclear how much capital will flow in once the changes take effect, said Philippe de Laperouse, director of global agriculture for the U.S. advisory firm Highquest Partners.

But investors who want stable, long-term returns such as pension funds and sovereign wealth funds are likely to enter the sector, de Laperouse said.


Mired in a deep recession, agriculture has been one of Brazil's few economic bright spots. The country is the world's largest producer of coffee, sugar, soy and orange juice, and is already one of the world's top farm exporters. Ministers say there is room for growth, too.

Supporters of the changes say foreigners will bring much-needed capital into the farming sector and note that Brazil - as the world's fifth largest country - has ample land to sell. Critics argue that foreign farm sales will increase land speculation, hurt environmental protection efforts and force local farmers and indigenous people off territory they have lived on for generations.

When it comes to respecting property rights, Brazil ranks 64 out of 128 countries, according to the International Property Rights Index, a tracking group based in Washington, D.C. Brazil does not have a single, unified land registry and the problem of fraud or unlawful registration of property - known locally as "grilagem" - is widespread in some areas, local prosecutors and analysts said.

"There are a lot of shady dealings going on with respect to the land," said Gabriel Ondetti, professor of political science at Missouri State University in the United States.

"It may be the case that foreigners are less able to distinguish between legal and illegal pieces of land," Ondetti told the Thomson Reuters Foundation. "Even if they (investors) want to do things legally they could get involved with properties that are fraudulently registered."

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