Jul 15, 2010
Brazilian Justice Dept. Trying to Determine How Much Farmland Owned by Foreigners
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
There has been a lot of concern recently in Brazil about farmland being purchased by foreign individuals and foreign governments. The Brazilian Congress is considering legislation which would limit the amount of land a foreigner can purchase, but before legislation can be passed, the Brazilian Justice Department is trying to determine just how much land has been purchased by foreigners.
There have been laws on the books in Brazil limiting foreign ownership of farmland since 1971, but the laws became very murky in 1998 when Brazilian holding companies were allowed to be formed even though it was foreign capital that set up the holding company. Incra, the National Institute of Colonization and Land Reform, only registers land purchased by foreign individuals or foreign companies, but today much of the land is being purchased by Brazilian holding companies using foreign capital. These holding companies were not required to be registered as foreign companies even though Brazilian capital may only account for 1% of the entire enterprise. This, in a sense, hides who is the true owner of the land and allows these companies to skirt the intent of the law.
In an attempt to measure the true extent of the problem, the Brazilian Justice Department has notified title offices in Brazil that deal with real estate that they must notify the federal government every three months as to how much land has been purchased by foreign individuals, foreign governments, foreign companies, and most importantly, Brazilian companies who have been financed by foreign capital.
Foreign purchases of farmland are concentrated in the agricultural expansion states of Mato Grosso, Minas Gerais, Mato Grosso do Sul, and Bahia. Incra records indicate that 34,300 prosperities have been registered as foreign owned which amounts to a total of 4,300,000 hectares.