What impact will Brazil’s plan to allow foreign ownership of land have?

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Brazil’s plan to allow foreigners to buy large tracts of farmland to spur growth in South America’s biggest country is being closely monitored by foreign investors, such as pension funds looking for stable, long-term returns, experts say.

Currently, foreigners must partner with domestic investors who retain a majority stake in order to buy Brazilian land.

The proposed changes were announced by the government led by President Michel Temer, who assumed power in August following the impeachment of his predecessor, Dilma Rousseff, over budget accounting irregularities.

It remains unclear when the proposed changes to the land law, which are currently before Congress, will take effect.

Supporters of a relaxation of laws on land ownership say the reform would boost Brazil’s recession-hit economy and increase food production.

Opponents fear the change could lead to the displacement of small farmers who produce most of the food consumed in Brazil as lead to further deforestation. Land deals, they say, would not be transparent and easily monitored.

Here are the views of some experts who have been monitoring the proposed changes:

JEAN BLAYLOCK, POLICY OFFICER AT GLOBAL JUSTICE NOW, A LONDON-BASED CAMPAIGN GROUP

“These changes send a very worrying signal that the Temer government could be about to undermine the achievements in reducing hunger of the Fome Zero (Zero Hunger) program.

The most important investors in agriculture are farmers themselves, whose actual investment dwarves that of foreign investors.

Land law needs to protect and strengthen the rights of local communities and farmers, especially small-scale farmers, rather than chasing illusory foreign investment – which all too often only benefits elites.”

Brazil's plan to allow foreigners to buy large tracts of farmland to spur growth in South America's biggest country is being closely monitored by foreign investors.
Brazil’s plan to allow foreigners to buy large tracts of farmland to spur growth in South America’s biggest country is being closely monitored by foreign investors.

PHILIPPE DE LAPEROUSE, DIRECTOR OF GLOBAL AGRICULTURE PRACTICE FOR HIGHQUEST PARTNERS, A U.S. INVESTMENT ADVISORY FIRM

“Brazil will have opportunities because of this (possible) change in land law, but it’s also a distressed situation. It lowers the barrier for foreign investment to come in. It reduces an impediment.

There were ways foreign investors addressed that before: by having a Brazilian partner control 51 percent and foreign investors controlling 49 percent.

People will have to have a strong stomach to get in (invest) because of the political situation. Over the long term, land has been a good asset to hold as part of a portfolio to even out volatility and returns.”

JULIANO ASSUNCAO, ECONOMIST AND DIRECTOR OF CLIMATE POLICY INITIATIVE (CPI) IN BRAZIL

“From an economic point of view, removing investment barriers is a no-brainer.

Brazil has a wide set of policies and regulatory instruments that it can use to mitigate concerns about national sovereignty and environmental and property rights protection, so blocking investments seems a very dramatic and inefficient way of dealing with these problems.

Foreign investment can help the country improve productivity in the agricultural sector. The new Forest Code and the labor legislation establish a set of conditions that, if implemented and enforced, can avoid social and environmental damages.”

FREDERIC MOUSSEAU, POLICY DIRECTOR AT THE OAKLAND INSTITUTE, A CALIFORNIA-BASED RESEARCH ORGANIZATION

“Lifting current limitations to foreign land ownership in Brazil will just exacerbate extreme concentration of land in the country, where a mere three percent of the population owns over two-thirds of the arable land.

It will also give way to further land grabs in a country where already millions are landless, and small farmers and indigenous communities continue to lose land and resources to logging companies and agricultural businesses.

Those who dare to claim their rights and resist are intimidated, repressed, and killed. Indigenous communities like the Guarani have lost nearly 95 percent of their traditional territories to industrial sugarcane and soy plantations.

Attracting more large-scale investment into Brazilian land will not bring development but result in further plundering of natural resources, destruction of the environment, and exploitation of the rural poor.”

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Rafael Berti is an entrepreneur with long international experience in e-commerce sales and management. He is an aficionado for technology and loves assisting other businesses willing to step into Latin America, providing consulting services from his firm, Biassa.

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