RIO DE JANEIRO, March 18 (UPI) -- Brazil has unveiled plans to toughen rules that govern foreign ownership of land in an attempt to control speculative buying of large tracts of farmland and real estate by foreign investors, including sovereign fund managers.
Officials said the law relating to land purchases by overseas investors would be revised to effect the change.
Massive infusions of capital into the Brazilian economy have pushed up the value of the real, creating a headache for financial regulators and exporters alike. Business leaders said an overvalued real would discourage foreign buyers of Brazilian commodities and goods and make a dent into the country's projected growth.
Brazilian Attorney General Luiz Inacio Adams said revisions to legislation dating to 1971 meant that foreigners wouldn't be able to buy any controlling stake in companies that own vast tracts of land in the country.
He said revisions to the legislation were also aimed at preventing foreign investors from circumventing legal provisions that restrict their direct acquisition of land.
The newspaper O Estado de Sao Paulo said the Attorney General's Office had also sent out the ruling to state commerce councils responsible for the registration of company agreements. It wasn't immediately clear if deals already agreed could be overturned or challenged by courts.
Brazilian legislation has limited the outright purchase of rural farmland by foreigners or companies based abroad for food-security reasons. But foreign investors have often been accused of finding loopholes to acquire more land in the country.
The law set out the limitations outlining that foreigners cannot own more than one-fourth of a county's land area and no single nationality can own more than 10 percent.
The law currently in force provides that foreigners can purchase up to 50 plots, ranging from 250 to 5,000 hectares, depending on the region and soil yield.
Foreign owners own about 1.8 million hectares of land in the country and recently interest in Brazilian land ownership has attracted investors from East Asia and the Middle East. Government data showed that foreign land ownership was steadily on the rise.
Opinion remains divided on foreign investment in land ownership. Some of the pro-market policy makers say they welcome foreign ownership as that is likely to develop Brazilian agriculture, even as most of it may be part of foreign interests' own food security strategies.
Agriculture Minister Wagner Rossi indicated the government would resist large land acquisitions by or on behalf of unwelcome investors, including foreign sovereign funds.
"We need to distinguish properly on the one hand between speculators and sovereign funds, which are a threat to our sovereignty, and on the other side, foreign investors who come with good projects," Rossi told the Financial Times newspaper.
Brazil is the world's largest exporter of coffee and sugar, the second largest grower of soybeans and the third largest exporter of maize. But both the government and business admit there is a business opportunity to make greater use of Brazil's potential to produce more and export more agricultural produce.