BRASILIA, (Reuters) – Brazil has closed a legal loophole used by foreigners to buy farm land, a change of rules that is fueling uncertainty among agricultural investors in one of the world’s leading food exporters.
“We simply applied the law,” Attorney-General Luis Inacio Adams told Reuters on Wednesday. “Foreigners can buy land up to a certain limit and they can create (minority) partnerships with Brazilians.” Buying local companies with land holdings has allowed foreigners to bypass a law limiting the size of their direct land purchases.
In August, the government interpreted the law to mean that only Brazilian-controlled companies could buy unlimited tracts of land, while foreigners could only do so as minority partners, thus limiting purchases by subsidiaries of foreign firms.
Last week Adams instructed local authorities to reject all foreign purchases of majority stakes in Brazilian companies that own farm land. This is likely to reinforce apprehension by investors, whose land purchases have slowed since former President Luiz Inacio Lula da Silva warned against foreign land deals.
Under a 1971 law foreign firms are allowed to buy no more than 50 modules, which range in size from 250 hectares (620 acres) to more than 5,000 hectares (12,350 acres), depending on the region of the country.
Last month Agriculture Minister Wagner Rossi said the government would try to ease restrictions on foreign land purchases when put to productive use, but restrict speculative purchases.
