Agrarian structure, foreign land ownership, and land value in Brazil

By Sérgio Sauer and Sergio Pereira Leite

The recent world “rush for farmland” has targeted Latin America in general and Brazil in particular, with a huge increase in foreign investments on land purchase, including the financial enterprises of the last decade. Even with a very illiquid market, land deals and foreign investments in agribusiness are not new in Brazil, but they have increased considerably after 2002. According to some field researches, the most recent investments are related to the production of grains (especially soybean) and sugarcane (to obtain sugar and ethanol), resulting among other consequences in a great increase of land value in some regions of Brazil. Such land rush has led the Brazilian government to reestablish a legal mechanism to “control” foreign investment in land deals. But the National Institute for Colonization and Agrarian Reform (in the Brazilian acronym, INCRA) has registered a large number of land titles in the name of Brazilian companies, and it seems that there is an ongoing cheating process in these land deals.

Thus, based on data of INCRA’s registration files, this article discusses the recent process of foreign investment in land purchase in Brazil, looking especially for the main causes of the investments and their main consequences, including land value and social impacts. The research will analyze the appreciation of land value in some regions, relating it with the recent investments in agricultural production in these regions.

It is important to acknowledge that the land value impacts directly on several public policies, such as the agrarian policies, as it is a determinant element in the governmental budget. It also deepens the land conflicts and is becoming a new cause for blocking the governmental policies and action in the process of recognition of the territorial rights of Indigenous peoples and communities of former African-descendant slaves. The article then reflects about the limitations and problems of the legal path taken by the Brazilian government and some popular proposals, such as the recent mobilization to set a ceiling (“limite máximo”) for land ownership in Brazil.