Foreign Investors Await Legislative Permission to Purchase Rural Land in Brazil

RIO DE JANEIRO, BRAZIL – According to the one company’s CEO, rural land deals have not yet materialized due to the obstacles established by law 5,709 from 1971, which restricts the size of areas that can be purchased by foreigners. This may change, however.

On Tuesday, December 15th, the Senate passed a bill that changes the rules for the sale of land to foreigners, whether individuals or companies. Consultants believe that the market will heat up considerably should the bill be passed by the Chamber of Deputies and sanctioned by President Jair Bolsonaro.

“There are many investment groups waiting. There was a very big lobby for this to happen, we were watching. Now it’s on the agenda and it’s progressing”, he says.

According to the CEO of Nilo Imóveis, the most targeted locations are Mato Grosso, Goiás, Rondônia, Roraima and the Matopiba region, comprised the largely rural states of Maranhão, Tocantins, Piauí and Bahia. The areas of interest are properties of over 5,000 hectares.

Investors from China and the United States stand out among the interested parties, as well as investment funds from Europe, according to Nilo Imóveis. Ourique says that investing in land in Brazil is an interesting and safe venture, particularly for economies with stronger currencies.

Brazilians disapprove

Nilo Imóveis conducted a number of surveys on social media asking who was for or against the sale of land to foreigners. Some 80% of votes were against this.

In a meeting with the Parliamentary Agricultural Front (FPA), the Brazilian Association of Soybean Producers (APROSOJA BRASIL) declared its opposition to the bill. The organization’s chairman, Bartolomeu Braz, says the text was flawed and threatens small and medium-size producers and leaseholders.

“It also represents insecurity to the country’s sovereignty. Brazil is a nation that will continue to play a major role in the production and export of food. This must be exclusive to Brazilians,” Braz says.

Ourique believes that before easing the purchase by foreigners, the government should establish ways to ease the purchase by Brazilians. “This can increase the price of these areas and leave us in the hands of a few,” he says.

What changes with the bill on land sales to foreigners?

The bill passed by the Senate revokes the 1971 law, which provides for a number of restrictions, such as limiting the size of areas that can be purchased and requiring prior authorization from the National Institute of Colonization and Agrarian Reform (INCRA) to implement agricultural projects.

The bill establishes that the total amount of land sold to foreigners may not represent more than 25% of the municipality’s territory. Furthermore, rural areas will need to be used for production, which is their social purpose.