April 23, 2015

In 2010, at the urging of the country’s farmers, Brazil adopted restrictions on foreign ownership of agricultural land in response to record-high global commodity prices, and China and Saudi Arabia seeking large overseas land acquisitions for agricultural production to meet domestic demand, and the sourcing of iron and precious metals.

The Sociedad Rural Brasileira (SRB), which represents medium and large scale farmers in the country, has launched a legal campaign to make Brazil’s agricultural land available for purchase by foreign commercial investors and possible sovereign wealth funds. The campaign has since gained the support of the IBA wood and pulp industry group.

Overseas investments in Brazil’s agricultural land between 2002 and 2008 have been estimated by the central bank to total $2.4 billion, but in 2013 Reuters reported that as much as two thirds of announced Chinese agricultural investments in the country had failed, and last year reports circulated stating that the Chinese state-owned Chongqing Grain Group made no progress on its planned $2 billion soy crushing and exporting project in Bahia. Reports such as these turned a spotlight on the prosperity and viability of large foreign agricultural projects in the country.

The SRB counters however, that the restrictions currently in place are making foreign companies much more cautious about investing in, and expanding within the Brazilian sector.

Farmers groups, which call the restrictions unconstitutional, have filed a case with Brazil’s Supreme Court challenging the rules. If successful, any change to the regulations will need to be carried out through new legislation in Brazil’s Congress.

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