Argentina Land Laws become more flexible

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Argentina Land Laws become more market-friendly 

 Argentina’s government has recently amended the Land Laws by decree in order to promote further foreign investments in farmland which in the past has been in the too hard basket for agricultural investors and farm production companies and individuals.

Changes to the Rural Land Law proposed last week by the government to promote the increased investment and development in farmland. With the elimination of the Financial Information Unit the Argentine Tax department (AFIP) now allows foreign companies to structure farm ownership such as farm syndicates etc in a way to allow more efficient ownership by foreign and local investors.

Legislation passed in late 2011 to regulate the acquisition of rural land by foreigners established a 15% limit on how much land could be owned by foreign investors. Foreigners Investors currently control 6.1 % of the country’s farmland—roughly 16 million hectares. Driven by the need to attract new investment capital into agriculture the government passed a decree last week paving the way for the Rural Land Act, which would make it easier to facilitate the sale of land to foreigners.

Currently, there is very little agricultural land owned by foreigners in Argentina unlike the neighbouring countries which have benefited greatly by the restrictive past Argentine regulations by having potential investors go there instead. In particular Uruguay, Chile, and Paraguay which have been able to modernise their agriculture at Argentina’s expense.

The latest official statistics show that North American investors own most land that is owned by foreigners, with almost three million hectares, followed by Italian and Spanish investors. In fourth and fifth place is Switzerland and Uruguay.

In order to promote foreign investment, and as a prelude to more changes in current laws, President Macri’s progressive government has removed the regulatory hurdles for foreign entities or individuals seeking to acquire rural land.

The earlier Law had established that foreign investors wishing to acquire farm land in the country must first obtain a certificate of authorization from the Land Registry which invited corruption to get it.

According to the old law, foreigners could only own 15 % of the Argentina’s land and foreign companies could not own rural land containing major bodies of water ( lakes and rivers ). Plus only a maximum of 1,000 hectares could be owned in each province which proved impractical when you think that in many provinces the land is so undeveloped that it remains in fallow as it is not economic to farm in its present state.

The government latest decree did not change all these restrictions. However, it did open the door for the transfer of shares to foreigners whilst the only requirement is now to inform the Registry, without any need to obtain a certificate of authorization.

If the company or individual exceeds the limits outlined in Article 10 of Law 26.737 (restrictions related to bodies of water and the 1,000-hectare limit in core areas), it has 90 days to adhere to the law by transferring land to subsidiary companies or by changing the type of farm production.

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Post available in: English