Brazil To Lift Limits On Foreigners’ Owning Of Land

Via Reuters, a report on Brazil’s revised rules on foreign ownership of land:

Brazil’s government plans to lift current limits on foreign ownership of agricultural land, Secretary of Investment Moreira Franco, the person behind privatization for the new administration, told Reuters on Wednesday.

Franco called the restriction on sales of agricultural land to foreign individuals and companies “nonsense” and said interim President Michel Temer will reconsider the issue.

The restriction was adopted in 2010 by former President Luiz Inacio Lula da Silva.

“The government will discuss the issue, see how it can solve this. It is something completely unreasonable,” said Franco.

Lula’s administration was concerned at that time that countries such as China could take control of large segments of arable land in Brazil.

Rules overseeing deals were changed to limit the amount of land foreign investors could buy. Formalities with documentation were increased, making deals much more complex.

But without foreign lenders able to receive land as collateral if local borrowers defaulted, the restrictions began to limit international credit, especially in the agricultural sector.

Companies in Brazil’s commodities sector have long defended a review of the rules, to allow for more investment to flow into the country, especially in the timber industry.

Pulp and sugar industries are among those defending the end of restrictions.

Moreira Franco also spoke to Reuters about the financially distressed, federal power holding company Centrais El├ętricas Brasileiras SA (ELET6.SA), or Eletrobras.

He said the government is still evaluating what actions to take regarding the company’s financial woes, but confirmed Eletrobras plans to sell some assets such as its power distribution subsidiaries.

“We will have to find a solution for Eletrobras,” he said.

The company has not posted an annual profit since 2012 and is asking for at least 32 billion reais from the government as compensation for the early renewal of operating licenses in 2013 that sharply reduced its revenues.

Moreira Franco did not want to define possible rates of return over investment in projects Brazil intends to auction off to private investors.

But he said the government has no intention of continuing to subsidize credit lines provided by development bank BNDES, thus reversing policies of the previous administration of suspended President Dilma Rousseff.

“The government has no conditions to do that. It is not a question of my or the government’s desire, it’s just the reality,” he said.



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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 www.waterpolitics.com and frontier investment markets at www.wildcatsandblacksheep.com.