A land-grabber’s loophole

Published on Food Crisis and the Global Land Grab, this analysis was prepared by COHA Research Associates Paula Lopez-Gamundi & Winston Hanks, August 8, 2011.

  • Due to the global food crisis, a trend has developed in food-insecure countries to outsource food production to lesser developed countries.
  • Current stipulations regulating the purchase of farmland by foreigners can be undermined by renting land.
  • Exemplifying this trend, the Río Negro-Beidahuang agreement was signed without the consent of the indigenous residents of the region and may threaten the environment.
  • Latin American governments should focus on developing sustainable food programs for their own populations; this will include protecting the inherent territorial rights of their indigenous groups and safeguarding their environment.

The acuteness of the global food crisis has forced overpopulated and arid countries, such as China, India, Saudi Arabia and Egypt to desperately scour the globe, looking for land on which to cultivate their staple crops.

In an effort to secure food sources and financial returns, food insecure governments are increasingly outsourcing their food production to more fertile and usually less-developed countries, including Pakistan, Uganda, Argentina and Brazil. While some of these land-selling states have welcomed the foreign revenue, others have begun to rightfully resist these “agrifood” agreements.

The MERCOSUR (Mercado Común del Sur) countries of Argentina, Uruguay, and Brazil have decided to regulate foreign powers’ ability to purchase large tracts of land. In response to these mild initiatives, various foreign corporations have begun to set up negotiations to rent, rather than purchase, arable land from less-developed countries, treating land usage rights as merely one more commodity: … //

… Respect Thy Neighbor:

Though Paraguay, Uruguay, and Bolivia are also experiencing their own land-grab phenomena, a large portion of their business partners are not from overseas. Drawn by cheaper land and reduced exportation taxes, Argentina and Brazil are buying adjacent lands from their neighbors in order to build up their respective soy empires.

In Paraguay, Argentine firms and individuals own about 60 percent of the 3 million hectares of land used to cultivate soy. Furthermore, as of 2010, foreigners own 19.4 percent (7,889,128 ha) of all Paraguayan land. Uruguay’s status is equally eye-opening: Argentines own almost all of the 500,000 ha of Uruguayan soil designated for soy cultivation, while foreigners own a total of 5.5 million ha of territory, or 25 percent of the country’s total arable land [21]. This unsettling trend continues in Bolivia, where foreign agribusiness investors own or rent over one million ha of the nation’s land: Brazilian investors claim 700,000 ha; the Argentine’s, 100,000 ha; Middle Easterners and Japanese, 200,000 ha. Due to the threat of agrarian reform, it is possible that many of these agribusiness transactions are not even publicly registered, leaving many lands unaccounted for by the Bolivian government [22].

Initiatives to slow the transfer of land to foreigners have proved futile thus far. Paraguay ratified the toothless Law 2.532/5 in 2005, which prohibits the sale of land to foreigners, except those from neighboring countries in areas within 50 kilometers of the border [23]. Furthermore, after 15 years of agrarian reform, Bolivia has yet to restrict the “foreignization” of land through any legislative means.

Uruguay has also shown limited promise in establishing restrictive legislation. Uruguayan Senator Jorge Saravia publicly announced his plans to submit a report to the current president, José Mujica, concerning the sale of land to foreigners [24]. Although former Frente Amplio President Tabaré Vázquez failed to rally support for a bill that restricted the transfer of lands to foreigners, the Frente Amplio (Broad Front) coalition’s current domination of the Uruguayan Assembly sustains hope for the initiative’s eventual success. No current or past legislation in the region discusses restrictions for leasing land.

The Looming Prevalence of Land-Grab Loopholes:

Restrictive legislation on the selling of land will continue to be null and void so long as foreigners can rent farm land. Regardless of any progress in creating legislation against the transfer of lands to foreigners, all efforts may be undermined by a Beidahuang-like contract, or the ‘leasing loophole’.

Unfortunately, Argentina is not the only country in the neighborhood that has back-tracked by utilizing the lease loophole. As one of the world’s largest agriculture exporters, Brazil has interest in protecting its agriculture sector from foreign speculation. Last year, the attorney general’s office began to enforce the Brazilian real estate law to restrict and oversee foreign land grabbing. Prompted by 2010’s USD 15 billion loss of foreign direct investment, Brazilian president Dilma Rousseff is desperately looking for ways to relax restrictions on foreign investment. Rousseff and her agriculture minister, Wagner Rossi, are contemplating leasing land out to foreign companies to circumvent the current restrictive legislation against the purchase of land, thus ushering in a new era of neo-colonialism [25].

Food for Thought:

The heads of indigenous people and innocent citizens of underdeveloped regions, such as the Río Negro, oftentimes comprise the steps to the stairway of economic success. While the Beidahuang-Río Negro agreement will provide China with a source of sustenance for the next 20 years, Argentina’s soil fertility and national sovereignty will suffer. Without strong legislation that restricts the quantity of land available to foreigners, without regulations that protect the integrity of their land and water sources and without institutionalized representation of indigenous interests, Latin American countries may quickly fall down the slippery slope of foreign speculation and domination.

The redirection of food markets is particularly urgent for countries such as Bolivia, where 23 percent of the population is listed as undernourished by the Human Development Index [26]. Understandably, these MERCOSUR countries want to lure new investors, but their governments should also invest in the domestic agricultural sector to spur food production for local markets. Initiatives to increase production on domestic farms should come from the state itself. The Alliance Against Hunger and Malnutrition has suggested that agro-ecological initiatives improve domestic crop production by significantly reducing rural poverty, protecting farmers from the volatility of prices on the world market, and cutting out state subsidies on foods in local markets [27]. Essentially, the governments of these countries should teach domestic farmers new advanced techniques and allow for fair competition in order to promote self-sufficiency.

Until they can secure food for their own populations, countries such as Paraguay, Bolivia, Uruguay, and Argentina should strive for sustainable agrifood agreements that stimulate job creation and benefit, rather than harm, their own people. Instead of allowing their lands to be exploited by multinational corporations, these Latin American countries must wean themselves off foreign demands and make their own food security their top priority. (full text and References 1 – 27).

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