Veto to foreigner is a defensive strategy

The Japanese, followed by Italians, Uruguayans and Argentines, are the biggest farmland investors in Brazil, according to the study.

Valor Econômico | 22.06.10 | Português | translated to English by GRAIN

By Mauro Zanatta

The decision to forbid the purchase of Brazilian land by foreigners must be seen within the context of the increase in world demand for natural resources, with the water shortage and the food crisis, and the increase in the price of land and the impact of this on the access of poor families to the land. “We are going to prepare a PEC [Proposal for a Constitutional Amendment] to make it clear to investors that they can invest in any sector except land”, Guilherme Cassel, the Minister for Agrarian Development, told Valor.

The PEC will make it possible to annul retroactively land titles registered by foreigners after a date to be established by a group of ministers who are studying the issue. “Land isn’t any old issue. Land has to fulfill a social function. How can we demand that of a foreign fund if it has bought half of the north of the country?” asked Cassel. “What we are doing isn’t harming capitalism. It is an issue that has been growing in importance and we mustn’t be afraid of facing it. It is an issue on which we speak with a common voice, from Kátia Abreu [president of the National Confederation of Agriculture] to João Pedro Stédile [MST leader]”, he said.

Private equity funds and hedge funds, whose assets are worth more than US$10bn, have become increasingly aggressive in their land investments in Brazil. One quarter of the 120 leading corporate investors have a foothold in Brazil, according to an investigation carried out by the Spanish research and analysis NGO, GRAIN.

To put an end to the “indiscriminate advance” of these funds, the government has drafted a “code of conduct” to be followed by foreigners. The rules include transparency in negotiations (“informed consent”), respect for existing land rights, sharing benefits with local communities, environmental sustainability, and adherence to national trade and food security policies. .

“This is a problem that we need to discuss. Because it is one thing to see a foreign citizen come, buy a sugar mill or buy a factory. But is another thing for him to buy the land that supplies produce for the sugar mill, or buy the land that produces soya or minerals,” warned President Lula when he announced the 2010/11 Harvest Plan.

The government has identified strong concentration of foreign capital interest in the Centre-West of the country. Data from an unpublished study shows that 53% of land purchased by foreigners is located in this region. Of this total, about 3.4m hectares (83.4%) is accounted for by 5,600 large and medium-sized properties. The 100 largest properties in foreign hands cover 763,200 hectares. The largest single property covers 31,300 hectares.

Most of this land was acquired after 1980 and 84% was registered as large and medium properties. The Japanese, followed by Italians, Lebanese, Uruguayans and Argentines, are the biggest investors, according to the study.

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