Foreigners have an eye for Brazilian land. Photo: Pública

Foreigners have an eye for Brazilian land. Photo: Pública

“The acquisition of local land by foreign government and foreign firms is a centuries-old process in much of the world. But we can detect specific phases in the diverse histories and geographies of such acquisitions. A major such shift began in 2006, marked by a rapid increase in the volume and geographical spread of foreign acquisitions.”

That’s how the Dutch-American sociologist Saskia Sassen, a professor at Columbia University and the London School of Economics, begins the second chapter of her 2015 book, Expulsions.

The process Sassen describes is based on different surveys, using multiple methodologies, that have detected a growing presence of foreign capital in land acquisition – Brazil included. Data from 2016 compiled by Land Matrix, a platform that monitors big land acquisitions, reveals that between 2000 and 2015, over 42 million hectares were dealt by foreign companies across the world – especially in the southern hemisphere. Out of this total, 26.7 million hectares were effectively bought, totaling 1,004 transactions over that 15-year span.

Brazil is among the top five countries in terms of surface involved in such transactions, alongside Russia, Indonesia, Ukraine, and Papua-New Guinea. Together, land dealt in those countries accounted for 46 percent of arable land purchases surveyed by Land Matrix.

Using another methodology, the NGO Grain has found that 28.9 hectares of land were dealt in 79 countries since 2008, in a process internationally known as “land grabbing.”

</p> <h3>Grabbing Brazilian land</h3> <p>In Brazil, Mato Grosso and the Matopiba (an acronym to designate the states of Maranhão, Tocantins, Piauí, and Bahia) are the most sought-after regions for big acquisitions, according to Márcio Perin, from Informa Economics IEG/FNP, a consultancy firm.</p> <div id="attachment_4627" style="width: 899px" class="wp-caption aligncenter"><img aria-describedby="caption-attachment-4627" class="wp-image-4627 size-full" src="" alt="what is matopiba? land grabbing brazilian land" width="889" height="831" srcset=" 889w, 300w, 768w, 610w" sizes="(max-width: 889px) 100vw, 889px" /><p id="caption-attachment-4627" class="wp-caption-text">The MATOPIBA region</p></div> <p>The Matopiba is a region dominated by the ‘cerrado’, a savannah-like biome, and is considered to be Brazil’s last agricultural biome. It was delimited by the Brazilian Agricultural Research Corporation (Embrapa) and the National Institute of Colonization and Agrarian Reform (INCRA) as the site for an agricultural development project sponsored by Senator Kátia Abreu (PSD-Tocantins). In May 2015, then-President Dilma Rousseff signed a decree creating the Matopiba project.</p> <p>The region assembles conservation units, indigenous lands, and traditional ‘cerrado’ communities affected by the sudden valorization of the land and <a href="">intensive crop farming</a>. Land speculation and agribusiness expansion in the region, as well as human rights violations that result from that process, came into light in February 2018 after a report by the <a href="">Justice and Human Rights Social Network</a>.</p> <h3>Food prices</h3> <p>Rising food prices and the 2008 global financial crisis are among the leading factors for companies’ interest in land located in the southern hemisphere, according to specialists like Devlin Kuyek, a researcher at Grain. “That’s related to the food price crises of 2007 and 2008, and the international crisis, which began soon after,” he explains.</p> <p>“The hike in food prices has encouraged developed countries, dependent on food imports, to incentivize companies to acquire land in other continents – to produce food. Players in the financial market are motivated to seek land as an alternative to the volatile stock market.”</p> <p>The rise in food prices mentioned by Kruyek was identified by the Food and Agriculture Organization of the United Nations (FAO). Between 2000 and 2008, grain prices nearly tripled, according to the institution. The Oakland Institute has different figures – 83 percent – but also points to an upward trend. “Land has always been seen as a low-risk asset,” says Márcio Perin. As with gold and works of art, land “is traditionally seen as a good investment for the future.”</p> <h3>Government aid to producers</h3> <p>According to Sérgio Pereira Leite, an economics professor at the University of Campinas, land grabbing in Brazil is unique because of the country’s decades-long stimulus policy for agribusiness. “During the 1970s and 1980s, the Brazilian state has handed out subsidized credit. Real interest rates were negative – that is, lower than inflation. In essence, landowners were getting cash transfers from the state,” he says.</p> <p>To profit from the government’s generosity, it was necessary to be a rural producer, which attracted multiple actors, including sectors with no prior agricultural background, to form agricultural conglomerates. With some changes, such policies were kept around in subsequent decades by governments of different political leanings, thus attracting investors to the country.</p> <div id="attachment_4629" style="width: 1034px" class="wp-caption alignnone"><img aria-describedby="caption-attachment-4629" class="size-large wp-image-4629" src="É-CÍCERO-DA-SILVA-AGÊNCIA-PÚBLICA-1024x682.jpg" alt="brazilian land JOSÉ CÍCERO DA SILVA AGÊNCIA PÚBLICA" width="1024" height="682" srcset="É-CÍCERO-DA-SILVA-AGÊNCIA-PÚBLICA-1024x682.jpg 1024w,É-CÍCERO-DA-SILVA-AGÊNCIA-PÚBLICA-300x200.jpg 300w,É-CÍCERO-DA-SILVA-AGÊNCIA-PÚBLICA-768x512.jpg 768w,É-CÍCERO-DA-SILVA-AGÊNCIA-PÚBLICA-610x406.jpg 610w" sizes="(max-width: 1024px) 100vw, 1024px" /><p id="caption-attachment-4629" class="wp-caption-text">Soy fields in the Matopiba region. Photo: Pública</p></div> <p>Sérgio Leite also points to a process of “agricultural financialization” in which the value is not in production, but commodity speculation. “Today, it’s all about betting on the potential financial gains. That has been more and more associated with the expectations of real gains, giving a financial speculative dimension to crop farming,” he explains, giving as an example trade on futures at the Chicago Stock Exchange. “If you analyze data published in a 2010 World Bank report, there was already a brutal hike in transactions related to this financial dimension.”</p> <p>This strategy has attracted market moguls, like George Soros, to the agricultural sector. The Hungarian-American mega-investor is involved in energy production projects from sugarcane biomass in Mato Grosso do Sul and Tocantins.</p> <p>According to a December 2017 survey from Grain, cited by the website <em>De Olho Nos Ruralistas</em> (literally translating as ‘Keeping an eye on landowners’), foreign groups obtained roughly 3 million hectares of Brazilian land.</p> <p>“China is a paradigm: it is an immense country from the spatial perspective, but without much available land to provide for its food consuming market. That’s why it is on an international quest for soybeans – especially to use as animal food,” explains Leite. In Brazil, Chinese investors have brought capital to Brazil’s Universo Verde Agronegócios, a subsidiary of the Chongqing Grain Group.</p> <p>Consultant Márcio Perin cites other reasons for the international interest in Brazil, such as the country’s increasing productivity. “The level of professionalization in Brazil’s agribusiness has exponentially improved over the last 10, 15 years,” he states. Perin also mentions the increasing value of Brazilian land as a determining factor.</p> <p>Consultancy firm Informa Economics IEG/FNP has monitored land value in the Matopiba over the past 15 years. The price per hectare has astounding real valorization rates (after inflation). On average, land in Tocantins has gone up by 273 percent since 2003 (from BRL 1,245 to 11,000 per hectare). In Uruçuí, Piauí, the price per hectare jumped from BRL 1,308 to 8,000 – a real valorization of 7 percent a year.</p> <h3>Agricultural real estate agencies: Radar’s case</h3> <p>The rapprochement between producers and the so-called ‘fictitious capital’ was detected by researcher Fábio Teixeira Pitta in 2011. Back then, he delivered a report – his doctoral thesis – along with researchers Carlos Vinícius Xavier and Maria Luísa Mendonça to the NGO Justice and Human Rights Social Network.</p> <p>They investigated the merger between Brazil’s sugarcane producers Cosan SA and Shell. Their research pointed to the decisive role played by Radar Propriedades Agrícolas SA in Cosan’s expansion. At the time, Radar had already dealt over USD 400 million and administrated 70,000 hectares of Brazilian land.</p> <p>Created in 2008 by Cosan and the Teachers Insurance Annuity Association, Radar is a real estate agency for agricultural properties that manages the pensions of 5,000 public servants in 15,000 American institutions. TIAA is one of the world’s largest investment funds, with over USD 1 trillion in assets and USD 37 billion in revenue in the 2016 fiscal year.</p> <p>Today, Radar owns 670 properties in nine Brazilian states – including the four in Matopiba – which total 280,000 hectares. It’s a portfolio of BRL 5.7 billion.</p> <p>The researchers connected to the Justice and Human Rights Social Network dug into Radar’s rise during the worst years of Brazil’s sugarcane cropping. Between 2008 and 2014, 44 plants had gone bankrupt, 33 were in judicial recovery (a step before bankruptcy), and 80,000 people had been laid off.</p> <p>“After the commodities boom led to the expansion of intensive crop farming– especially for soybeans, sugar, and corn – land got more expensive and became an asset on its own, working as a stock for investors,” explains Pitta. “The recipe is simple: you buy the land, wait for it to gain value, and sell it. That was Radar’s case.”</p> <h3>Stagnant market</h3> <p>Back in 2010, then-Solicitor General Luís Adams issued a report reestablishing limits for Brazilian land acquisition by foreigners. These restraints had been put into place by the Solicitor General’s Office itself in 1994. The decision reinforced the rules created in 1971, limits the dimensions of the land that can be bought, and demands an authorization from the Ministry of Agriculture to implement agricultural projects.</p> <p>Land ceased to gain value at such a fast pace. Investments, inevitably, became scarcer.</p> <p>Other factors have contributed to a calmer land-grabbing market, such as the fall of commodities prices and the increase in value of the U.S. Dollar – not to mention the political crisis that has haunted Brazil since 2014. “Since then, big acquisitions haven’t really occurred,” says Perin. Still, prices remain relatively stable, albeit a slight drop in real value.</p> <p>It’s not a coincidence that the Rural Caucus wants, as one of its top priorities, to allow foreigners to buy Brazilian land. One project making rules more flexible has already been approved by the Senate.

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MoneyMay 29, 2018

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BY Ciro Barros (Agência Pública)

Barros is a reporter at Agência Pública