Argentina: Closing The Door On Foreign Landowners

Via The Financial Times, a report that Argentina’s congress has voted to cap an important source of capital for innovation: foreign land owners.  As the article notes:

Emboldened by a sweeping electoral victory in October, President Cristina Fernández Kirchner quickly launched the ambitious Strategic Agrifood and Agrindustrial Plan (PEA) claiming that by 2020 Argentina will increase cultivable land from 34 to 42m hectares and boost production of grains and beef with the aid of technological and scientific development.

It appears, however, that strategic concerns are trumping economic rationale. Argentina’s lower house just passed by an overwhelming majority (153 to 23) a presidentially proposed bill this morning limiting foreign ownership of rural land to 15 per cent, of which no more than 30 per cent can be held by individuals of the same nationality. It also impedes the same person or company from owning more than 1,000 hectares in the fertile Pampas region. So, what’s the beef?

Kirchner and supporting congressional delegates have argued that land is a strategic, non-renewable resource that should remain in the hands of Argentineans. Water and food shortages around the world coupled with sky-high commodity prices give this perspective merit.

That doesn´t necessarily mean that the new measure is feasible or worthwhile. Since the president proposed the bill in April there has been noise about the fact that no one really knows how much land foreigners actually hold in Argentina. There is currently no centralised database on foreign land ownership in the country. The bill itself establishes the process for conducting a land survey to help solve this deficiency.

It isn’t even clear whether the current level of land concentrated in the hands of foreigners exceeds the established 15 per cent maximum. According to a March 2011 report by the conservative local think tank, Fundación Pensar, there are no quality statistics on foreign land ownership and estimates range from a minimum of 5.8m to 17m hectares, representing between 3.4 to 9.9 per cent of Argentina’s total agricultural land.

There is the risk, therefore, that the measure will only make foreign land purchasing and registration more cumbersome, thereby limiting foreign capital for agricultural modernization – and hindering the recently announced modernisation plan.

Argentina is not alone with its crackdown on foreign land ownership. Similar measureshave been under consideration in neighboring Brazil and Uruguay.

The Brazilian congress is currently reviewing a bill that will limit purchases by foreign-owned companies to 5,000 hectares, while foreign individuals would be limited to 2,500 hectares. The Brazilian Congress, however, could exceptionally approve larger purchases if deemed in the interest of Brazilian development. In Uruguay, President Mújica has also asked legislators to come up with a proposal to limit foreign land purchases, while a bill presented by former President Tabaré Vázquez in 2010 impeding foreign ownership of land along a 20 km strip along the country’s border is still pending.

The new law is not without its dissenters. For one, it departs from a long-established constitutional right for foreigners to acquire land in the country. Article 20 of the Constitution expressly establishes that foreigners enjoy all the civil rights of citizens including owning, buying and selling property.

Quite cunningly, the Chinese appear to have found a way around this new legislation. In the Patagonian Rio Negro Province, a Chinese state company, Heilngjiang Beidahuang State Farm Business Trade Group CO. LTD, signed an agreement with the provincial government late last year to lease 320,000 hectares of land for 20 years to ensure the production of foodstuffs for export to China. The obstacles inherent in the new legislation may prompt similar schemes by the Chinese and others in the future.

This entry was posted on Sunday, December 18th, 2011 at 9:01 pm and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at and frontier investment markets at