Nov 10, 2010
Foreigners Face New Restrictions on Land Purchases in Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
During the last two and a half years, foreign investors have purchased 1,152 properties in Brazil totaling 515,000 hectares. This is the equivalent to the area of 22 soccer fields being purchased per hour by non-Brazilians. This information was gathered by The Folha de Sao Paulo, a newspaper in Sao Paulo, who analyzed records from Incra (The National Colonization and Agrarian Reform Institute) from November of 2007 to May of 2010. They looked at purchases made by individuals, companies, as well as purchases made by Brazilian companies that are controlled by non-Brazilians.
During the period analyzed, the largest amount of land purchased by foreigners was in the states of Minas Gerais and Amazonas and these two states accounted for 60% of all the land purchased during the period studied. The state of Sao Paulo is the state where the most number of individual properties were purchased. In the state, 867 individual properties were purchased by foreigners during the period, or an increase of 75%.
Mato Grosso is the largest agricultural state in Brazil and purchases of land in that state were mainly for the production of soybeans and reforestation projects to produce pulp and charcoal. The state of Mato Grosso has the largest total area owned by foreigners, 1,299 properties totaling 844,000 hectares.
In Sao Paulo, the purchases were made in order to increase the production of sugarcane. The companies that build the sugar/ethanol mills try to purchase many small properties within a radius of 10-20 kilometers from the mill. They do that in order to control the technology used to produce the sugarcane and to better control the quality of the sugarcane itself.
President Lula and the Brazilian Congress are continuing to develop new regulations concerning foreign ownership of land in Brazil. They don't want to eliminate foreign investment in Brazil, but they also do not want to see a large chunk of their best farmland in the hands of non-Brazilians, especially foreign governments such as China. The final version of the regulations is expected to be presented to Congress before the end of year.
One aspect of the new regulations is already known and that is new limitations on foreign ownership of land on the Brazilian coastline and on the frontiers with its neighboring countries. The old regulation stipulated that foreigners could not own land within the distance of a cannon shot from the border. The new requirement will put restriction on foreign ownership of land within 150 kilometers of the border.