South American Real Estate News
/ All S. A. Country Categories en / Brazil makes it easier for foreigners to buy farmland again

Brazil makes it easier for foreigners to buy farmland again

The chairmanship of the Agriculture Caucus in Brazil’s Chamber of Deputies  aims to turn back the clock on the rules concerning foreign ownership of his country’s farmland.

Five years ago, Brazil’s Attorney General Office issued a new interpretation of an old, business-friendly rule that made it harder for foreign companies to buy the country’s farmland. They did it in reaction to growing concerns that foreigners were slowly taking over that vital national resource. Frustrated and well-meaning activist groups were buying up vast swaths of the Amazon in order to prevent deforestation.

The loophole

Brazil’s eagerness to attract foreign investment brought about a rule that said something deceptively simple: all Brazilian companies must be treated as equals. Sounds straightforward enough, right? But what if a company is duly registered in Brazil, but is 99% owned by another, overseas, company? Well, no matter how much foreign ownership it has, that company is considered a Brazilian company like any other, and can buy and sell land as it pleases.

That loophole didn’t matter much when commodity prices trudged along at rather low but steady rates. But when prices shot up, U.S. and other farmers joined European environmentalists in snapping up land, though their aim was to work it and not to leave it pristine. They began setting up Brazilian companies 99% owned by their home country farming companies and corporations.

Land reform

This is a country with an active land reform effort. If you don’t pay your taxes or don’t produce up to the amounts published in an official index, your Brazilian farm can be confiscated, carved up into small plots, and distributed to those who don’t own any farmland. The idea of foreigners buying farmland and holding title to vast tracts of the Rainforest, was anathema.

So the attorney general acted. Individual foreigners buying any more than a smallish tract, and all foreign corporations, would need permission ahead of time to buy Brazilian farmland.

Unfortunately that policy went over like a led balloon. Brazil, once a rising economic star and a parking lot for zillions of world investment dollars, is now facing its own growth challenges.

Just like in the old days, Brazil now needs to fight to attract foreign investment rather than lie back and bat its eyelashes like it did when economic times were so good.

Under the new, strict rules, the flow of dollars into Brazil in the form of farmland investment has slowed to a trickle, and Montes says, “We shot ourselves in the foot” with the new interpretation of the foreign land investment legislation.

So he is introducing a bill to allow foreign companies to buy farmland again without the previous-approval restriction. State-run companies and investment funds would still be given the cold shoulder, but Marcos wants to call back the old days, when investors were pumping money into Brazil’s Ag sector and politicians not only kissed babies, but embraced foreigners in the park.

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.

www.gatewaytosouthamerica.com

(Visited 60 times, 1 visits today)
Gateway to South America

About Gateway to South America

Gateway to South America was established in 2006 as a single office in Buenos Aires. The company has since expanded into a vibrant regional network, servicing the Southern Cone communities of Argentina, Brazil, Chile, Paraguay, Peru and Uruguay with professional real estate services. Founded by Geoffrey McRae a New Zealander who maintains an active role in the business it has developed into an International team that has a well-deserved reputation for strong local knowledge, experience and professionalism. I hope you enjoy reading our news site. Please share it on your social media below.

Make a comment on this post

Your email address will not be published. Required fields are marked *