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Concentration and foreign ownership


of land in Brazil in the context of global
land grabbing
a b c
John Wilkinson , Bastiaan Reydon & Alberto Di Sabbato
a
CPDA/DDAS Department, Federal Rural University, Rio de Janeiro
(UFRRJ), Brazil
b
University of Campinas, Campinas, Brazil
c
Federal Fluminense University, Niteri, Brazil
Version of record first published: 20 Dec 2012.

To cite this article: John Wilkinson , Bastiaan Reydon & Alberto Di Sabbato (2012): Concentration
and foreign ownership of land in Brazil in the context of global land grabbing, Canadian Journal of
Development Studies/Revue canadienne d'tudes du dveloppement, 33:4, 417-438

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Canadian Journal of Development Studies
Revue canadienne detudes du developpement
Vol. 33, No. 4, December 2012, 417 438

Concentration and foreign ownership of land in Brazil in the context of


global land grabbing
John Wilkinsona , Bastiaan Reydonb and Alberto Di Sabbatoc
a
CPDA/DDAS Department, Federal Rural University, Rio de Janeiro (UFRRJ), Brazil; bUniversity of
Campinas, Campinas, Brazil; cFederal Fluminense University, Niteroi, Brazil

ABSTRACT This article analyses land concentration in Brazil and the changing patterns of land
acquisitions predominantly through foreign investments. First we compare census data from 1996
and 2006 and identify an acceleration of land concentration. We then show the limitations of the
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ofcial registry data for capturing the phenomenon of foreignisation, and complement this with
an analysis of data from the Central Bank, which provide for some general conclusions. Our
research into journalistic and business literature conrms and complements these ndings. We
discuss the historical context of land concentration in Brazil, highlighting its progressive
institutionalisation through juridical and regulatory control of foreign access to land. The
transformations underway are driven by changes in the market dynamics of key agricultural
and forestry commodities, for the analysis of which we develop a typology of capital.
RESUME Cet article analyse la concentration fonciere au Bresil et les changements dans les
modes dacquisition de la terre resultant principalement des investissements etrangers. Notre
comparaison des donnees des recensements de 1996 et 2006 indique dabord une
acceleration de la concentration fonciere. Puis, nous montrons les limites des donnees du
registre foncier ofciel pour cerner le phenomene de la main mise etrangere alors que les
donnees de la Banque centrale permettent de tirer des conclusions sur les grandes tendances.
Un examen des ecrits journalistiques et daffaires conrme et complete ces resultats. Nous
traitons enn du contexte historique de la concentration fonciere bresilienne pour faire
ressortir son institutionnalisation progressive a travers ladoption de mesures juridiques et
reglementaires de controle de lacces a la terre. Les transformations en cours sont stimulees
par les changements dans la dynamique des marches des principaux produits agricoles et
forestiers. Pour conclure, nous proposons une typologie des formes dinvestissement a
loeuvre.
Keywords: land grabbing; land concentration; Brazil; foreign ownership

Introduction1
In this article, we analyse the processes of land concentration in Brazil as well as the indications of
an acceleration and a change in patterns of land purchases, led by foreign investments. In order to
better situate this phenomenon, we examine census data from 1996 and 2006. Next, we provide a
historical contextualisation of land distribution in Brazil, its progressive institutionalisation and
the juridical and regulatory measures aimed at controlling foreign access to land.
We begin by discussing the phenomenon of foreignisation in the process of land acquisition
in Brazil through the examination of two ofcial data sources. First, we analyse the National


Corresponding author. Email: jwilkins@uol.com.br

ISSN 0225-5189 print/ISSN 2158-9100 online


# 2012 Canadian Association for the Study of International Development (CASID)
http://dx.doi.org/10.1080/02255189.2012.746651
http://www.tandfonline.com
418 J. Wilkinson et al.

Institute for Colonisation and Agrarian Reform Cadastral Records (INCRA), highlighting above
all the registrys limitations, as it does not allow for a conrmation of the ndings identied in
empirical investigations. Next, we analyse Central Bank data that reinforce other sources,
which identify the importance of new types of investment capital, new tendencies in the location
of these investments and their concentration in large scale production chains.
Although general processes are currently reshaping the land market, we argue that the main
transformations are largely driven by changes in the market dynamics of key agricultural and for-
estry commodities. In order to capture this phenomenon we develop a typology of capital that has
dominated land acquisitions in this recent period, drawing on journalistic sources, specialist
magazines, case studies and websites.

The main processes of land concentration in Brazil


In the twenty-rst century, Brazil still maintains a high level of concentration in land ownership,
as can be veried in Table 1, and has one of the worlds highest indices of land concentration
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in the world,2 despite recent efforts towards its democratisation and redistribution. The Gini
coefcient of property ownership continues at the high level of 0.85, without showing signs of
decreasing. The total area of the 50 per cent smallest rural landholdings continues around 2.3
per cent, while that of the largest 5 per cent add up to more than 69.3 per cent of all farmland.
These data illustrate the extremely high level of land concentration in the country, which has
not changed despite agrarian reform.
In addition, there is also a large amount of land in the country that is either idle or with a very
low level of utilisation. An important example is the fact that ranching still constitutes an average
of one head of cattle per hectare, signicantly below the productivity level recommended by tech-
nical bureaus. On the other hand, there remain many people in the country who demand land. In
fact, there are more than 50,000 families in camps and occupations according to the Landless
Rural Workers Movement (MST), indicating that the demand for land is both high and
accompanied by strong political mobilisation.
The lack of a registry and effective regulation of land ownership in the country can be best
exemplied by the process of titling in the Amazon. The registry data that do exist, based on
self-declarations by the occupants, show that in 2003, 35 per cent of the 509 million hectares
of the Legal Amazon region were subject to the rights of private occupation as properties or as
a simple possession.3 On the other hand, the recent establishment of various federal or state reser-
vation areas places 42 per cent of the Legal Amazon under some kind of public protection.
Approximately half these areas are indigenous lands and the other half are conservation units.
The remaining 24 per cent are not under any of these categories and so are technically considered
unassigned public lands (Figure 1).

Table 1. Structure of agricultural land holdings in Brazil.


1975 1985 1995/6 2006
Number of holdings (millions) 5.0 5.7 4.8 4.9
Total area (million hectares) 323.9 369.6 353.6 294
Average size (hectares) 64.9 71.7 72.8 67.1
Gini coefcient 0.855 0.859 0.857 0.856
Area of the smallest 50% (% of total area) 2.5 2.4 2.3 2.3
Area of the largest 5% (% of total area) 68.7 69.7 68.8 69.3
Source: Compiled by the authors from IBGE agricultural censuses for various years. For the data on the Gini coefcient,
see also Hoffman and Gomes Ney (2010, 20).
Concentration and foreign ownership of land in Brazil 419

Figure 1. Legal Amazon landholding structure, based on data from the national system of rural registry
INCRA and protected areas (Reydon 2011). Source: Compiled by the authors.
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The situation, however, is more complex and uncertain than these numbers indicate. Many
protected areas are physically occupied by private users, with claims that may or may not be
valid according to the complex legislation previously described. The large area described as
private in the registry is also under suspicion. Among the 178 million hectares declared as
private property, 100 million may well be based on fraudulent documents. Another 42 million
are classied as homesteads (posse), which may or may not be eligible for regularisation and
titling depending on their size, history, and location. Thus, as much as 30 per cent of the total
area in the Legal Amazon could be legally undened or contested.
We now analyse census data, focusing on the different categories of producers in relation to
land grouped by total area, while considering information relative to the total agricultural and
ranching landholdings in the country.
The Agricultural Census of 2006 registered around 5.2 million agricultural and ranching
establishments in the country, covering an area of approximately 330 million hectares (IBGE
2009). This signied an increase of 6.5 per cent in the number of establishments in relation to
the Agricultural Census of 1995 1996 (IBGE 1998). On the other hand, the total area under pro-
duction decreased by 6.7 per cent (Table 1). Consequently, the average size of the establishments
declined by 8.3 per cent, from 73.1 hectares in 1996 to 67.1 hectares in 2006. Among the various
groups considered, the only category in which there was no average reduction was the 100 to less
than 1000 ha category, whose average size increased by 0.9 per cent.
Observing the data in Table 2, it is clear that land structure changed very little during this
decade. The establishments with less than 100 hectares, which represented 88.9 per cent of the
total in 1996 at 20 per cent of the area, still represented 86 per cent of the total at 21.4 per
cent of the area in 2006. On the opposite extreme, the establishments with 1,000 hectares and
above, which were only 1 per cent in 1996 and accounted for 45.1 per cent of the total area,
continued to represent 0.9 per cent in 2006 and accounted for 44.4 per cent of the total area.
The variations observed in the number and area of agricultural establishments do indicate,
however, a change in their structure during the period under observation. Thus, the group of prop-
erties smaller than 10 hectares, in which owners held 58.1 per cent of the establishments and 70.8
per cent of the area in 1996, increased to 72.2 per cent of the establishments and 80.6 per cent of
the total area in 2006. Therefore, there was substantial growth in the proportion of owners with
very small properties (less than 10 hectares) and, to a lesser degree, the proportion of occupants of
medium to large properties (10 to 1,000 hectares).
These results point to the inuence of agrarian reform settlements established during the
period of analysis. The total area of agrarian reform settlements according to the second
420
J. Wilkinson et al.
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Table 2. Number of agricultural establishments in Brazil and their land area, 1996 and 2006, grouped by establishment size.
1996 2006
Establishments Total area Establishments Total area
Size category (hectares) Number % Hectares % Number % Hectares %
Less than 10 2,402,374 49.4 7,882,194 2.2 2,477,071 47.9 7,798,607 2.4
10 to 99.9 1,916,487 39.4 62,693,585 17.7 1,971,577 38.1 62,893,091 19.1
100 to 999.9 469,964 9.7 123,541,517 34.9 424,906 8.2 112,696,478 34.2
1,000 and more 49,358 1.0 159,493,949 45.1 46,911 0.9 146,553,218 44.4
Undeclared/production without areaa 21,682 0.4 0 0.0 255,024 4.9 0 0.0
Total 4,859,865 100 353,611,245 100 5,175,489 100.0 329,941,393 100
Source: IBGE (1998, 2009).
Note: aUndeclared on the 1995 1996 agricultural census, or listed as producer without area in the 2006 census.
Concentration and foreign ownership of land in Brazil 421

census under analysis covers 5.8 million hectares, which is signicantly less than the area incor-
porated to the Agrarian Reform Programme during the period 1997 2006, which amounted to
48.1 million hectares according to INCRA (2010).4 Even though this number might be overesti-
mated, it is reasonable to suppose that the settlements registered in the Agricultural Census of
2006 might have been under-reported. If this were the case, this might explain the fact that the
agrarian reforms carried out during 1996 and 2006 have not engendered any change to the land-
ownership structure of Brazil, as illustrated by this most recent census.

Legal and institutional aspects of foreign-owned land in Brazil5


Since its origins, Brazil has been characterised by its lack of governance over the land. From the
beginning of its colonisation up to the establishment of its Land Law (1850), the rules that pre-
vailed in the case of urban and rural land were effectively dened by the political and physical
power of its occupiers. The Land Law was the rst attempt at regularising rural and urban real
estates and was perpetuated by land access restrictions which characterised the colonial
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world.6 As described by Silva (1996), in a context of English pressure to abolish slave trafc
and generalise free labour, this law sought to impose order upon the chaos of land tenure,
combining the demarcation of vacant and unassigned public lands (terras devolutas) with the
nancing of immigration as a solution to the lack of labour.
The application of the law, however, turned out to be quite challenging, failing in its primary
goal of distinguishing private from unassigned public lands and in sustaining the prohibition of
homesteading (posse) according to the law (the invasion of unassigned public lands, according
to the terminology of the time). This maintained the possibility of regularising homesteads and the
occupation of unassigned public lands, thereby rendering the establishment of a proper registry
unfeasible.
Beginning in 1864, a new institutional requirement established a tradition that lasts to this day:
the need to register homesteads and properties in government registries. This ended up increasing
even more the juridical complexity of real estate regulations, generating an environment of uncer-
tainty and an inability to effectively regulate the land market, while giving the appearance of leg-
ality to real estates without there being any mechanism to guarantee such legality.7
In Reydon (2011), it was seen that the institutionalisation of the Public Land Registry in 1900
is perhaps the main step towards the current system of real estate record keeping. According to
that ruling, everyone was required to demarcate and register their properties, whether rural or
urban, but there was no control over this nor was there a national register. For the state, which
would also need to demarcate and register its own lands (unassigned public lands), this was
impracticable, since these lands were dened by exclusion and thus the state itself went into illeg-
ality. This requirement ultimately created the conditions of possibility for frauds in the public
records. The next legislative adjustment, the Civil Code of 1916, established the basic framework
for institutionalising access to land, for reasons which did not necessarily reect the interests of
landowners. This Code determined that registration in a public records ofce was necessary (and
sometimes sufcient) to attest a title to property.
The next great innovation in real estate legislation was the Land Statute of 1964, the rules and
concepts of which continue to be valid and served as a basis for the creation of a Rural Real Estate
Register in which private or public establishments including homesteads (posse) must be
registered. The National Institute for Colonisation and Agrarian Reform (INCRA), created in
1970, became responsible for the management of the National System of Rural Registration
(SNCR), which maintained the rural property register. Once the establishment was registered,
INCRA would issue a Property Register Certicate (CCIR), required for any land transaction.
Homesteaders registered by INCRA also received a CCIR and were also required to pay the
422 J. Wilkinson et al.

rural property tax, even though the value of this tax has always been kept at a low level. The Land
Statute sustained the legitimacy of homesteading, thus permitting the titling of informally-occu-
pied public lands, and was not able to consolidate a centralised register by a single institution.
As a consequence, effective governance over access to land was thwarted, thus opening up the
possibility for non-productive speculation in land.

Juridical and institutional measures to limit access to land by foreigners


During the last 40 years, the set of rules, laws and judicial determinations that seeks to limit access
to land by foreigners can be clearly distinguished in two phases: in the period 1969 1995, when a
sharp nationalist spirit imposed strict limits to the acquisition of land by foreigners; and after
1995, when the legislation was modied in order to facilitate the entrance of international
capital in the privatisation of state-owned companies. Legislation was therefore rendered more
permissive towards acquisition of land by foreigners, and simultaneously, less clear in regard
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to its multiple interpretations and diverse judicial determinations.


In fact, even during the period of greater restrictions upon acquisition of land by foreigners,
there was no capacity to enforce the laws, despite the rules of the rst period being very clear
and well dened. There were no clear mechanisms of control over the process due to the
absence of an effective land property records ofce that could keep track of purchases and
sales in land markets.
According to Wilkinson, Reydon, and Di Sabbato (2010), the main juridical denitions in
relation to the acquisition of rural properties by foreigners (whether individuals or legal entities)
have their origins during the military dictatorship. More specically, the Complementary Act
number 45 (1969), which permitted the military to regulate the Institutional Acts (AIs) that
granted them extra constitutional powers. In this context, its third article determined that the
acquisition of a rural property could only be undertaken by Brazilian citizens or foreigners
with permanent residency in Brazil, a norm that was justied in terms of the defense of the integ-
rity of the national territory, State security and the just distribution of property (Wilkinson,
Reydon, and Di Sabbato 2010).
Still under the shadow of the military dictatorship in 1971, Law 5.709 was drafted to regulate
the acquisition of rural real estate by foreigners. It was permeated by the need to guarantee national
sovereignty, which remains an object for discussion to the present day, given the rigid restrictions
(at least 23) to resident foreigners and legal entities authorised to operate in the country.
The Law was regulated by Decree number 74.965/74 and both are still in effect. According
to this law, the following limits are imposed as regards the area of the real estates:

(a) Foreigners cannot exceed the limit on purchases of land xed at 50 modules of undetermined
use (MEI), in contiguous or noncontiguous areas, while acquisition of areas smaller than
3 MEIs is exempted from license (Article 3);
(b) The sum of all real estate owned by foreigners (individuals or legal entities) cannot exceed
25 per cent of the municipality in which they are situated, as attested by certicate of Real
Estate Registry. In addition, individuals of the same nationality cannot be owners of more
than 40 per cent of this area within each municipality (Article 12).
(c) Foreign corporations constituted as public limited liability companies (Sociedade Anonima, S/
A) are required to hold their stocks in nominative shares when investing in rural real estate,
exploiting rural areas, or owning rural real estate not linked to their corporate activities
(Article 6);
(d) In any real estate transaction involving the alienation of land to foreigners, the deed must
necessarily be emitted by a public deed;
(e) Every three months the real estate notaries are obliged to submit to the Ministry of
Agriculture and INCRA, the records of deeds granted to foreigners;
Concentration and foreign ownership of land in Brazil 423

(f) The notary can only certify deeds with the authorization of INCRA, after certication by
the latter body;
(g) Any deed granted in discrepancy with legal restrictions will be annulled. In this case, the
notaries that registered as well as those that certied it are subject to civil and criminal
prosecution. The seller is then obliged to return to the would-be buyer the value received
for the unauthorised sale. (Wilkinson, Reydon, and Di Sabbato 2010)

Law 6.634 (1979) establishes regulations over the frontier areas of the country, prohibiting
allotments and rural real estate transactions by foreign individuals or legal entities and dening
in its third article what is considered a foreign enterprise. For the company not be considered
foreign, at least 51 per cent of its capital must belong to Brazilians and at least two-thirds of the
workers must be Brazilians.
With the redemocratisation of the country, the Constitution of 1988 came into effect. Article
171 dened the terms for companies, distinguishing between Brazilian companies, Brazilian com-
panies with national capital and non-Brazilian companies (among which are included foreign
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companies and multinational or transnational companies). Article 190 claried the requirement
of approval by the National Congress for cases of leasing or purchasing rural real estates by
foreign individuals or legal entities. The legislation that would then regulate the processes
would be the 1971 Law 5.709 (discussed above) and Law 8.629 (Article 23) from 1993,
which establishes the requirement of Congressional approval for the acquisition and leasing of
land by foreigners in the case of areas larger than those already regulated by Law 5.709.
This situation changes in 1995 with the promulgation of the constitutional amendment
number 6, which revokes article 171 of the Constitution in order to abolish any protection,
benet or preferential treatment for Brazilian companies and Brazilian companies with
national capital, thereby facilitating the entrance of foreign capital in rural real estate through
mixed capital subsidiaries, without re-establishing the legal reservations that were previously
imposed upon foreigners regarding rural property and communications. However, despite the
revocation of article 171 of the Constitution, there was absolutely no change to Law 5.709 and
its regulations, which remain in effect.
In 1997, according to Wilkinson, Reydon, and Di Sabbato (2010):

a legal Opinion by the Attorney General (Parecer AGU GQ 181, concluded in 1998) adopted an
interpretation that the rst paragraph of article 1 of Law 5.709/71 would not have conformed to
the Federal Constitution of 1988, and thus lacked validity. Based on this understanding, the legal
Opinion of the General Attorney afrmed that the same requirements established for foreign individ-
uals and legal entities would not be applicable to Brazilian companies regarding acquisition and
leasing of rural real estate in the country. It determined, therefore, that the ordinary law could not
make the distinction between the Brazilian company with foreign capital and the Brazilian
company with national capital [. . .] That is, any company with foreign stock holders can acquire
land within the national territory. Some considered as integrally valid this Opinion by the General
Attorney, but others criticized the General Attorney for committing a legal sophistry to deny the con-
cession of any protection or benet to national companies and national capital, which would amount
to a governmental option that give up any sovereignty over national territory.

In 2007, a meeting was called by the executive chief of staff on the theme of Acquisition of
land by foreigners and the goal of perfecting national legislation on this question (Wilkinson,
Reydon, and Di Sabbato 2010, 15). The meeting was motivated by a consideration of national
interests linked to the world food crisis and the possibility of the large-scale adoption of agro-
fuels as an important source of energy, apt to diversify, to great advantage, the national energy
matrix (Wilkinson, Reydon, and Di Sabbato 2010, 15). According to the chief of staff, these
two new phenomena are the main vectors of this new framing of the question of land ownership
424 J. Wilkinson et al.

in Brazil, especially the rural property market (Wilkinson, Reydon, and Di Sabbato 2010, 15). At
this meeting, therefore, there was a request to revise the legal opinion number GQ 181 of 1998 by
the attorney general, seeking to impose limits and restrictions on the acquisition of rural property
by Brazilian companies with majority capital owned by foreigners who are not residents in Brazil
or foreign companies not headquartered within national territory (Wilkinson, Reydon, and Di
Sabbato 2010, 15). More specically, it sought to remove doubts over the application of the
restrictions and limits determined by Law 5.709 from 1971. However, this revision of the
General Attorneys Opinion GQ 181 was not approved at the time, given the possible conse-
quences that it could bring to the country in the midst of a global economic crisis, and thus it
was postponed until 2010. The new legal opinion (Parecer CGU/AGU Number 01/2008
RVJ) published in the Ofcial Diary of the Union on August 23, 2010, asserts that Brazilian com-
panies controlled by foreign individuals or legal entities with majority ownership of stocks will
have their acquisitions of rural real estate supervised, and subjected to the full consequences of
any associated decision (Wilkinson, Reydon, and Di Sabbato 2010, 15). Such a position was
understood to be strategic given that the absence of control over these acquisitions could have
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the following consequences:

(1) expansion of the agricultural frontier with the advance of farming on environmental
protection areas and conservation zones;
(2) unjustied valorisation in the price of land and real estate speculation, increasing the cost
of land expropriation for the purposes of agrarian reform, and reducing the stock of land
available for this purpose;
(3) increase in illegal sales of public lands;
(4) use of nancial resources derived from money laundering, including drug trafcking and
prostitution, in the purchase of such lands;
(5) increasing illegal titling of properties (grilagem de terras);
(6) proliferation of fake agents (laranjas) for land acquisitions;
(7) increasing biopiracy in the Amazon Region;
(8) unregulated increase of ethanol and biodiesel production; and
(9) acquisition of land in frontier areas, placing national security at risk.

In this manner, the constitutionality of Law 5.709 from 1971 was reinstated and the prescrip-
tions regarding the obligation of registering land purchases by foreigners in special registers in
real estate notaries was reafrmed. Moreover, it was reestablished that land acquisitions by
Brazilian legal entities with majority capital held by foreigners, foreign individuals resident
abroad and legal entities headquartered abroad ought to be communicated every three months
to the Ministry of Agrarian Development and the states Judicial Affairs Ofce. Regarding the
size of the properties, the restrictions determined by Law 5.709 came back into effect. Regarding
frontier zones, the Legal Opinion conrms the clauses specied in Law 6.634/79, determining
that acquisition of any claim over rural properties in frontier zones that involves foreigners
(whether individuals or legal entities)8 will require, in addition to certication by INCRA,
prior authorisation by the National Defence Council, a requirement that is valid for any legal
entity with foreign capital and not only those with majority foreign capital.

Foreign investments according to the INCRA register and Central Bank data
The Rural Real Estate Register, a responsibility of the National Institute for Colonisation and
Agrarian Reform INCRA, records the information provided by land owners, public domain
title holders or homesteaders of any rural property, which is dened as a rustic holding of
Concentration and foreign ownership of land in Brazil 425

continuous area that, regardless of its location, is or may be destined to agricultural, cattle
farming, extractive, forestry and agro-industrial production (Law 8.629, 25 February 1993,
art. 4, item I). The rural real estate registry enables one to obtain a Certicate of Rural Property
(CCIR), a document indispensable for the dismembering, leasing, or mortgaging of a rural
property and in the approval of voluntary or compulsory transmission of property causa
mortis succession (Law 4.947, 6 April 1966, art. 22, paragraphs 1 and 2). The data presented
include foreign owners, regardless of whether they are individuals or legal entities. Based on
data sets as of May 2010, we traced a prole for rural properties belonging to foreigners.
According to the information available, there are 34,371 foreign-owned rural properties,
covering a total area of 4.3 million hectares. Of this total, 92.6 per cent belong to individuals,
occupying 73.9 per cent of the total area. Legal entities (companies), although retaining only
7.4 per cent of the total number of rural properties, possess 26.1 per cent of the total area.
Considering each regions specic situation, we verify that legal entities are particularly
notable in the north-east, where they possess 19.9 per cent of the real estates and 50.3 per cent
of the area. Individuals, on the other hand, are the rule in the south, where, out of the total for
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the region, they account for 95 per cent of the properties and 92.1 per cent of the area.
To assess the importance of foreign-owned within the whole set of rural properties in the
country, we chose to make a comparison based on the situation of the rural property register in
the month of May 2006, obtained from the Table of Basic Indices available on the INCRA
website. It would have been ideal to cover the information on the set of foreign owned rural prop-
erties on May 2010, coinciding with the general register. Although there is a four-year difference
between the two sets of data, this was the most recent global position we were able to obtain from
the register.
On the basis of this comparison, foreigners retain 0.70 per cent of the rural properties in the
country, covering 0.79 per cent of the total registered area. In the south-east, we nd the largest
foreign participation, both in number of real estates (1.31%) and in area occupied (1.38%). The
lower participation is situated in the north (0.47% of real estates and 0.42 of the area).
Another relevant comparison is that which allows for the observation of a temporal evolution
of foreign-owned rural properties. For this, we utilised information from INCRAs 1998 Cadastral
Statistics, which reect the situation for the rural property register until April 1998. What is strik-
ing here is the increase in the number of foreign legal entities owning real estate in the north-east
region (518 per cent) and the centre-west (450.4%), followed by the south-east (176.8%). In these
regions, although in smaller proportions, there is also an increase in area. In the north region, the
number of foreign legal entity properties decreases (221.2%) but the area increases (60.5%).
A decrease in both cases occurs only in the south (24.0% in the number of real estates and
246.2% of the area). With regard to foreign individuals, of note is the increase in the number
of properties and their area in the south-east (26.3% and 12.1%, respectively); there is an increase
in the number of properties for every region, with a decrease in the area only in the north (22.3%)
and north-east (22.6%).
In an article appearing in the popular Folha de Sao Paulo newspaper (7 July 2008) entitled
Every day, foreigners buy 6 Monacos of land in the country, Eduardo Scolese argues that:

The rhythm of the so-called foreignisation of lands was measured by Folha based on data from the
National System of Rural Registers (SNCR) in an interval of six months between November 2007 and
May 2008. In this period, foreigners acquired at least 1,523 rural properties in the country, an area of a
total of 2,269.2 km2. In this same interval, they got rid of at least 151 rural properties, which totaled
216 km2. Between purchases and sales, the net balance is 1,372 additional properties in the hands of
foreigners and 2,053.2 km2.
426 J. Wilkinson et al.

Our analysis of the register shows that the area of foreign-owned properties increased by
589,422.1 hectares (or 5,894.2 km2) between 1998 and 2010 (12 months). Therefore, according
to the article in the Folha, in six months the foreign-owned area would have increased some
38.5% of the total increase over the past 12 years, a growth rate which is nine times faster
than the equivalent for the entire period as a whole. The frailty of the registers data suggest
that any conclusion on the pace and scale of land acquisitions by foreigners demands a compari-
son of these data with other information sources, and for this reason we analysed Central Bank
data sets on foreign direct investments.
Statistics of the Central Bank (BC/DIFIS) on foreign investment ows do not discriminate
investments in land. Therefore, in order to organise the data for presentation, we rst grouped
together ve main categories according to economic activity: agriculture, ranching, lumber/cellu-
lose, food manufacturing and alcohol. We also aggregated countries of origin by greater regions:
Europe, USA/Canada, Asia, Latin America, and lastly, a group we designated tax havens. This
group includes national states and autonomous regions where the law facilitates the application
of foreign capital by offering really low or zero tax rates. Furthermore, the origin of the resources
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applied in tax havens is often unknown and the identity of their owners remains in absolute secrecy.9
The interesting variable in our analysis, therefore, refers simply to the amount of dollars that entered
the country in the form of direct foreign investments according to region of origin, federal unit (UF)
of destination within Brazil, and activity categorised by the principal agricultural and related indus-
trial activities. We processed the data by year, organising the results in temporal series from 2002 to
2008. Only summaries of these results are presented here.
In analysing the Foreign Direct Investment (FDI) growth rate for the 2002 2008 period, dis-
aggregated by agricultural sector, the most signicant growth occurred in the sugar-alcohol sector.
When we compare the average growth rate in the primary sector, minus mineral extraction, with
the mean value for other sectors of the economy and with the total FDI, the average rate in agri-
culture appears signicantly higher. In terms of the origins of FDI for the entire agribusiness
sector, including ranching, lumber and cellulose and food manufacturing subsectors, Europe is
by far the largest investor. When we discriminate by country, we can see that Europes leadership
is due to the level of Dutch investments. The centrality of the Netherlands as a port of entry and a
redistribution hub for Europe may be an explanatory factor, in addition to the recent entry of
Rabobank in agribusiness investments in Brazil.10 Investments from the United States and
Canada predominate in the agriculture subsector. In the sugar and alcohol subsector, however,
tax havens predominate, further reinforcing evidence of the importance of new sources of
capital in this sector, particularly investment funds. In terms of the region of the country in
which these investments are concentrated, the leader is, by far, the state of Sao Paulo (where
sugarcane/ethanol predominates), followed by the state of Mato Grosso do Sul (in the Cerrado
region), due to the weight of investments in lumber/cellulose. The state of Bahia in the north-
east is in third place due to investments in agriculture and lumber/cellulose. In ranching, invest-
ments are concentrated in Sao Paulo, in contrast with the direction of that sectors expansion,
which is overwhelmingly in the north region.

Investments, acquisitions and land concentration


Based on our comparison of the 1996 and 2006 agricultural census data, we concluded that during
this period the Gini coefcient did not change. Hoffmann and Gomes Ney (2010) arrive at the
same conclusion in a study that included another data source, the National Household Sample
Research (PNAD), also executed by the Brazilian Institute of Geography and Statistics, the
federal agency responsible for ofcial statistics (IBGE 1998). This period is characterised by
an expansion of agrarian reform settlements, reaching about 1 million properties and around
Concentration and foreign ownership of land in Brazil 427

50 million hectares, in addition to a continuous extension of government projects and resources


applied within the National Programme to Strengthen Family Agriculture (PRONAF), whose
credit amounted to more than US$14 billion in 2011. All this indicates that an expansion of
the agricultural frontier based upon medium to large properties, combined with the tendencies
towards concentration in regions that are already occupied, more than cancels out the efforts in
favour of promoting deconcentration of land ownership and support for the family farming sector.
In journalistic reports on recent tendencies for investments in land and, above all, in the dis-
cussions surrounding the 2008 crisis, two factors have been highlighted: the land grabbing
phenomenon and, in more general terms, the weight of foreign investments. The former refers
to initiatives directly or indirectly promoted by states that are wealthy, but poor in natural
resources, seeking to ensure food and energy supply in uncertain times. Regarding foreign
private investments, the focus has been predominantly upon its most speculative aspects driven
by investment funds. These two components are key new factors and deserve the attention
they have received. In the case of Brazil, however, they have become integrated within a much
broader dynamic, dominated by Brazils attractiveness as the new global agricultural commodity
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supply axis. To capture these recent land tendencies, therefore, we have rst identied the differ-
ent types of investors, and then situated these within the large productive sectors associated with
Brazils new position in agricultural commodity exports. Among the different types of investors
(and reasons for investing), we are able to distinguish at least the following.

(1) Agribusiness capital in its own sector of activity. Here it is a matter of investments as well
as processes of concentration via acquisitions in which national and foreign companies
are equally involved, pressured and stimulated by the new competitive environment.
Brazils consolidation as the most competitive global axis in a whole range of major agri-
cultural commodities is accelerating the concentration and the transnationalisation of
many sectors, both traditional and new. On the other hand, rising global demand and
the existence of a vast Brazilian frontier are giving farmers opportunities to expand
their activities and eventually transform themselves into the new leading players in
agribusiness.
(2) Agribusiness capital in synergistic and convergent sectors. The frontier occupation cycle
in itself leads agricultural companies to engage by turns in lumber, cattle farming, grain
production, and eventually sugarcane. New systems of production stimulate the combi-
nation of cattle farming and grains. The transformation of agrofuels into global commod-
ities, which includes soy in the case of biodiesel, stimulates traders to diversify their
investments.
(3) Capital sources, which are not traditional to agribusiness, but respond to new synergies.
Agrofuels, and ethanol from sugarcane in particular, attract companies from the petro-
chemical, automobile, logistics and construction sectors, investing equally in industrial
processing plants and in agricultural production. It is worth noting that, in addition to
agrofuels, sugarcane is now an increasingly important source of electricity.11
(4) Rural real estate companies that invest in response to the valorisation of land and new
agribusiness perspectives in Brazil. The occupation of the agricultural frontier accelerates
with the appearance of companies specialised in the purchase of bare land. These com-
panies put in the infrastructure of fencing, electricity and prepare the land for production,
allowing for its acquisition in the form of a turnkey venture. The tendency is to initiate
production even before sale to generate cash ow, leading these companies to even
engage in agricultural activities. These companies tend to be public, raising their funds
on the stock markets.
428 J. Wilkinson et al.

(5) States rich in capital but poor in natural resources seeking to ensure food and energy
supplies. Even though Africa and Asia have been the main focus of these investments,
which has commonly been called land grabbing, Brazil is also becoming an investments
target in this sense, involving several Asian and Middle Eastern countries. Japan, which
has a leading role in promoting the initiative of Responsible Agricultural Investment
(RAI), is investing in the promotion of agrofuels in Brazil in collaboration with Petrobras.
In addition, in collaboration with Brazil, Japan develops an ambitious programme for the
occupation of the African agricultural frontier, especially Mozambique, where it sees the
possibility of reproducing the key role that it played in the occupation of the Brazilian
Cerrados by commercial agriculture.
(6) Investment funds attracted by the varied perspectives for the valorisation of agricultural
commodities. These funds had their peak in Brazil immediately before the nancial crisis
of 2008 2009. Often headed by Brazilians, they are notable for attracting large investors
from cutting edge sectors in the global economy, attentive to opportunities in these new
agricultural markets and keen to be identied with the emerging clean economy. The
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crisis curbed these funds activity, placing projects on hold or even resulting in cancella-
tion, but they continue to be an important component of the new investment environment
in Brazil.
(7) Investments related to incentives for environmental services. The development of many
areas of environmental conservation, in the Amazon region above all, which include
public private partnerships, stimulates investors attracted by the new incentives for
environmental services. REDD style policies are also attracting investments and there
exists a lobby to extend their applicability.12 As carbon offsets also become a global com-
modity, there tends to be a convergence between investments specically seeking
environmental services and funds attracted in a more generic way to the valorisation of
commodity and land markets.
(8) Mining companies and oil prospection. The search for new sources of petroleum and the
strong demand for a large spectrum of minerals are signicantly increasing investments in
land in Brazil. In the Amazon region, these investments may be the main factor in con-
icts with indigenous communities. These types of investment imply new uses for the
land and often become a source of friction with regard to the agricultural activity and tra-
ditional communities/producers.

The typology presented here distinguishes the investments fundamentally in terms of motiv-
ation. To this we can add a distinction in terms of origin, only partially captured in the typology
above. In many cases, it becomes relatively easy to distinguish between private national capital,
state-owned national capital, private foreign capital and state-owned foreign capital. Increasingly,
however, these categories become mixed. This is not limited to front man strategies, where
national entrepreneurs are merely the visible part of foreign investments, although this phenom-
enon does exist. Many leading Brazilian agribusiness companies have opened their capital and
have substantial participation from foreign capital. At the same time, joint ventures, not just
between national and foreign capital, but also between private and public investments, have
become common, mostly in the agrofuels sector. It is also worth noting that acquisitions have
been the predominant gateway for foreign capital to enter Brazilian agribusiness, making a com-
panys national identity a volatile indicator when analysed diachronically. A new factor today in
Brazil has been the importance of greeneld-type investments in response to the opening up of
new agricultural frontiers and the expansion of new sectors (for example, agrofuels).
This study focuses on new investment in land and related concentration processes. Our
characterisation of the different types of actors involved clearly shows the predominance of
Concentration and foreign ownership of land in Brazil 429

agents external to the agricultural sector. What is new from an agribusiness studies standpoint,
however, is precisely this interest in direct investments in land. The transformation of agriculture
into a linked series of production activities analysed diversely as production chains, networks
and clusters was accompanied by a tendency towards the concentration of investments in
inputs and services for agriculture or in activities between the farm gate and the nal consumer.
The contract model that dened production and delivery conditions seemed to be the new
paradigm for the relationship between agribusinesses and producers. Pressures towards concen-
tration in this case would then come from differentiated capacities to respond to the conditions
established by agribusinesses and would be specic to each sector. Today in Brazil we can
clearly see how this model leads to a concentration in classic integration contract sectors such
as pork and poultry. Other sectors such as tobacco, which has doubled its production in the
past few years in Brazil, reached their goal more through a multiplication of producers than ten-
dencies to concentration. A more generalised tendency that drives concentration in agribusiness
comes from the new hegemonic position of major retailers, which requires higher levels of quality
and delivery capacity. This exerts a pressure towards concentration insectors typically dominated
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by small-scale agriculture such as horticulture. In other cases, these same tendencies can lead to a
certain level of deconcentration, as is the case for coffee in Brazil, where commodity strategies
give way to the search for differentiation through quality. In all of these cases, the interest has
been limited to an indirect control over land through control over the production system.
Today, the agrarian/land link in production chains becomes strategic as much as a result of the
increased demand for commodities that threatens to exhaust the available frontiers, making land a
scarce resource, as for the centrality of activities where direct integration between agriculture and
industry becomes advantageous from a technological and organisational standpoint (particularly
sugarcane and paper/cellulose sectors, among others). This new phenomenon is stimulating the
appearance of actors whose interest is access to or negotiation around precisely this scarce
resource. On the other hand, each one of these commodities which, as a whole, are responsible for
land valorisation in the aggregate, involve dynamics that are very differentiated with regard to
land concentration and foreignisation. Therefore, we will now identify the prole of these
investments, differentiating the major commodity sectors.

Sugarcane and ethanol


Census data show an increase in sugarcane production in properties over 1,000 hectares, which
accounted for two-thirds of production in 2006 against one-half 10 years earlier. Although Sao
Paulo remains the main producing region, with about two-thirds of the national output, there
has been a signicant increase in the centre-west regions participation and a decline in the
north-east. There was also an increase in production in the north, although from very incipient
levels.
A favourable conjuncture aided the expansion of sugarcane, but it was the launching of ex
fuel cars in 2003 (shifting the decision to use either gasoline or ethanol from the moment of pur-
chase to that of refueling) that marked the beginning of an explosive advance of sugarcane pro-
duction, which in 2010 reached 8 million hectares. The prospects for continuous growth in the
domestic market demand plus the hope of becoming the pivotal source of a global market for
ethanol made the sector a priority in the Federal Governments Growth Acceleration Programme
(PAC) and awakened the interest of a broad range of private and state, national and foreign capital
sources. The PACs investment predictions for the sector were to the order of US$8.5 billion in
the 2005 2012 period, primarily nanced by the National Bank for Economic and Social
Development (BNDES). Longer term calculations estimated that up to US$20 billion would be
invested in the sector. The 2008 2009 nancial crisis caused a signicant number of projects
430 J. Wilkinson et al.

to be suspended or cancelled. In 2010, however, there was a clear return of investments, but this
time more priority has been given to acquisitions than to greeneld-type investments.
The cultivation of sugarcane primarily for ethanol has become the center of domestic and
global debates regarding agribusiness expansion in Brazil. About 70 per cent of agricultural pro-
duction is undertaken directly by industries and all new investment projects involved proposals
for their own production of sugarcane. The ethanol sector has attracted capital from almost all
the categories in the typology presented above. They are, therefore, all directly involved in the
discussions about the agrarian impact of investments. In the beginning of the sugarcane
boom, the degree of transnationalisation remained at about 10 per cent, increasing to 20 per
cent in 2010, and is estimated to reach up to 50 per cent in the next 10 years.
Regarding the negative implications of this expansion, the following criticisms stand out.
First, it is argued that the expansion of sugarcane in Sao Paulo is dislocating food crops and
related small producers. There is evidence to this effect, but the new sugarcane areas privilege
land previously dedicated to orange monocultures and ranching. A more systemic critique
argues that ranching dislocated ultimately relocates to the frontier regions of the centre-west
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and north, becoming one of the causes of deforestation in the Amazon. Among additional
social and environmental critiques, there are the effects of monoculture, the pollution arising
from the burning of sugarcane elds to facilitate harvest, and slave labour practices that have
been sustained by leading national companies as well as major foreign investors. The desire to
transform ethanol into a global commodity, as well as pressures from social movements and
NGOs, have led to the adoption of a series of measures to ensure its acceptability, including
the elimination of burning and the adoption of mechanization for the harvest, training pro-
grammes to absorb a portion of the labour force unemployed by mechanisation, zoning that
excludes investments in the Amazon, the Pantanal and in areas of original forest cover, and the
conditioning of access to credit on good social and environmental behavior. A large part of
the investments involve the support of the BNDES, which, in principle, allows for better
regulation.
Based on the zoning policy, it is estimated that there exist about 65 million hectares suitable
for sugarcane in Brazil, the cultivation of which is expected to triple in the next 10 years, reaching
more than 20 million hectares. The major crops in Brazil today occupy around 60 million
hectares, and ranching another 180 million. Optimistic calculations estimate that about 100
million hectares can still be incorporated without much threat to the Amazon forest, and an
even greater area if the recovery potential of degraded lands is included. The availability of
this frontier for incorporation into agribusiness production, as well as the potential to recuperate
degraded land, have been subject to contestation and conicts over land suggest that the current
occupation of new lands does not conform to technical availability criteria.

Soy and other grains


Covering 20 million hectares, soy leads both the grains sector in Brazil and the agribusiness
sectors export agenda. The industrial links upstream and downstream from agricultural pro-
duction are already strongly transnationalised; however, unlike sugarcane, these companies do
not participate directly in agricultural production. The movement of the axis of production
from the south (near the ports, the crushing industries and the Argentinian soy complex)
towards the Cerrados in the centre-west, the north and the north-east is profoundly changing
the sectors dynamics.
First, agricultural operations change scales. Settlers from the southern states could sell 30
hectares and purchase properties of hundreds or even thousands of hectares in the centre-west
frontiers. Nowadays, properties over 1,000 hectares are responsible for over 45 per cent of the
Concentration and foreign ownership of land in Brazil 431

total production value. The centre-west region became the largest producer, overtaking the south;
and as a reection of the same process, the north-east now exceeds the south-eastern region in the
production of soy.
Second, the new frontiers distance from ports and crushing centres requires a progressive
movement by the agro-industrial chain to restructure itself around this new agricultural base,
opening up new routes to make integration with global markets viable. This opens up opportu-
nities for the appearance of new players, mostly local and based on agricultural accumulation.
The iconic case here is that of Blairo Maggi, considered to be the largest soy producer in
the world, who now consolidates his basis through agro-industries and trading, relying strongly
on the conquest of political power, as the governor of the largest state of the Cerrados, Mato
Grosso.
The Maggi family originated in the southern state of Parana; in fact, the great majority of soy
and grains producers are from the south, identied by the generic name of gauchos.13 Their
migration amounts to a transformation of southern settlers into a class of US Midwest-style
farmers. In 2010, Blairo Maggi planted 168,000 hectares, but his cousin Erai Maggi planted
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up to 223,000 hectares on 36 farms. Born in the state of Rio Grande do Sul, his family moved
to the state of Parana, where they owned a 65-hectare farm, which, with the purchase of a
tractor, permitted the leasing of a further l,240 hectares. When they moved to the Cerrado,
they leased 2,000 hectares, paying in kind with their own grain. Today, their company, Bom
Futuro, has a eet of 300 harvesters and sprays the crops with their own aeroplanes. They also
adopt the mixed crop livestock integration system mentioned above with a herd of 40,000
animals. Other companies have followed suit, such as Vanguarda, which plants 200,000 hectares
and connes 180,000 animals in the same state. Smaller-scale producers, who can still be con-
sidered large-scale when compared to their southern counterparts, as the average soy farm in
Mato Grosso is some 3,000 hectares, have begun to integrate grains and livestock in the same
manner. Concentration and diversication processes thus occur simultaneously with verticalisa-
tion into the processing of feed and biodiesel.
Although producers from the south have dominated the occupation of the Cerrados, foreign
interests have been present from the outset. In the 1970s, a co-operation programme called
PRODECER was signed between Brazil and Japan. It lasted 20 years and was fundamental in
the consolidation of an agribusiness model for the region, playing a key role in the frontiers
expansion towards the north and north-eastern states. During negotiations for this programme,
Japan expressed interest in bringing producers from Japan to consolidate the colonisation
nuclei. The Brazilian government rejected the request, but a solution was found in co-operatives
of Brazilian producers of Japanese descent, who had already played a decisive role in the
development of agriculture in the south-east of the country.
Nowadays we can identify three types of foreign interests in the region. First, there is a ow of
US farmers that is particularly evident in the state of Bahia, along with companies specialised in
promoting such migration. Second, we can identify the land grabbing phenomenon, with China
negotiating 100,000 hectares of land for soy production in the state of Bahia through its state-
owned Chongqing Grain Corporation. According to the property administration company
Duarte, Garcia, Caselli Guimaraes e Terras, several Chinese clients were looking for land in
2010 before the implementation of the legislation that would regulate foreign purchases
(Exame, 22 April 2010). Third, Argentine companies are introducing the pampeana model for
soy cultivation in the Cerrado. Rather than land purchases, this model leases and, most impor-
tantly, assumes complete responsibility for the management of agricultural production, turning
the landowner into a mere rentier. In this context, the most important company is the
Argentinian Los Grobo group, which already has 60,000 hectares of cultivated land mostly in
the Mapito region (north/north-east) and intends to increase that number to 150,000 hectares
432 J. Wilkinson et al.

by 2013, when the bulk of its revenue will come from Brazil. This amounted to US$700 million in
2010, with the goal of reaching US$1.3 billion in 2012/2013.
Even though the Cerrados are often seen as a virgin frontier land, the occupation by the
gauchos involves the displacement of native producers, sometimes through conicts but
more often by the impact of land valorisation and pressure of demands for its sale. An increasing
adoption of mixed production systems can be observed, although monoculture still prevails,
causing signicant damage to the soils. Furthermore, monoculture is eliminating the rich biodi-
versity of the Cerrados, which is only now becoming an object of conservation policies.

Logging, planted forests, lumber, pulp and environmental services


During the late 1990s, there was a mobilisation in Brazil against the Asian invasion in logging
activity in the Amazon, which led to the establishment of a Parliamentary Investigation
Commission. Greenpeace identied 17 foreign companies with investments in industrial
lumber mills and forest lands, often in alliance with national companies. The majority of these
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were, in fact, European and North American, with a minority participation by Asian companies,
particularly from Malaysia (Greenpeace 1997). Between 1998 and 2004, the participation of
foreign companies in lumber exports from the Amazon region increased from 14 to 36 per
cent. A series of factors social mobilisation in Brazil above all, a greater international
sensibility regarding the Amazon and technical considerations (such as the decreasing density
of high-value wood) seem to have stalled new investments after 2004 (Macqueen et al.
2003). Some studies suggest that there was a shift in these investments to the Amazonian
region of other countries (TTAP 2008; Putzel 2009). Young and Prochnik (2003) conclude that
foreign investments in this sector were smaller than the average for the Brazilian economy and
that, in general to a greater extent than national companies, they adopted best practices in
forestry and the certication systems required by international markets and, increasingly, by
Brazilian legislation.
It is necessary to highlight the importance of certication requirements which today affect
all major chains of agricultural and forestry commodities for the drawing of closer ties between
industrial processing and the production of raw material. Even if these controls can be obtained by
means of contracts, the tendency for industrial processing companies to enter directly into primary
production increases. The lumber industry is entering a process of concentration through the
increasing adoption of medium density berboard (MDF) and oriented strand board (OSB) as
substitutes for wood panels, and the role played by new companies that dominate this new
chemical technology. Consequently, raw material is increasingly obtained from planted
forests, and this sector installs itself preferentially in the southern states of the country (rather
than the Amazon).
During the last decade, there has been a fundamental transformation in the global paper and
pulp industry, with the shift of primary production towards countries in the south and, predomi-
nantly, South America. Brazil already has more than 6 million hectares of planted forests, a term
rejected by environmentalists since it refers essentially to eucalyptus monoculture. Major corpor-
ations from the north, such as Stora Enso, abandon pine forests and invest in eucalyptus, which
grows in the south on average three times as fast as in the north. Representing 75 per cent of
lumber production in Brazil, domestic companies rebounded from a period of crisis with the
support of BNDES and have achieved international benchmarks in both technological terms
and the adoption of socio-environmental best practices.
The predominant model is vertical integration, with the production of their own forests,
which are located in various regions of the country, especially in the southern states, Minas
Gerais, and Bahia. All these areas of planted forests have been the focus of conicts, not
Concentration and foreign ownership of land in Brazil 433

only due to the expulsion and intimidation of peasants, but also because of their negative impacts
on water resources in the surrounding regions. Census data demonstrate, however, a relative
decline in the participation of properties greater than 1,000 hectares, reducing from around 80
per cent to a little over 60 per cent, in favour of properties of 100 1,000 or even 10 100 hectares.
In order to understand this phenomenon, we can cite the national company Suzano, which has
more than 1,000 contracts with farmers who plant eucalyptus according to norms and conditions
set by the company, although the corporation still depends upon its own forests for the majority
of its production. Suzano now invests heavily in the Mapito region, the new Cerrado frontier in
the north/north-eastern states of Maranhao, Piau and Tocantins, with two industrial mills and
200,000 hectares of forests to be planted. The farmers in this region suffer strong pressure to
sell or lease their land, and in the three years between 2007 and 2010 the price per hectare
increased from US$25 to US$200 (Painel Florestal, 11 October 2010). More than 70 per cent
of the increase in global demand for cellulose until at least 2025 will come from Asian countries,
China above all. The Southern Cone and Brazil in particular concentrate the greatest investments
in this sector, which should double production capacity between 2010 and 2015.
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A study conducted in the shadow of the 2008 2009 nancial crisis, thus cautious in its pre-
dictions, estimated that until 2014 there would be an increase of more than 1 million hectares of
planted forests. By far the greatest amount 780,000 hectares would be on account of the
demand by steel industries that have committed to supplying their furnaces with planted forests
instead of native lumber. More than 200,000 hectares are attributed to independent producers.
These are new actors, normally foreign investment funds betting on new markets linked to
environmental services and carbon sequestration. As the nancial crisis lessens, these investments
are likely be taken up again.

Ranching
Among the 250 million hectares dedicated to ranching in Brazil according to the 2006 census,
around 170 million hectares have an occupation rate of around one head of cattle per hectare.
Since the beginning of the 2000s, and especially after 2003, the increase in the cattle herd has
been concentrated in the north region of the country. In 2008, according to Friends of the
Earth (Amigos da Terra 2009), this region now accounts for 35 per cent of the domestic herd,
with some 74 million cattle on 50 million hectares. Between 1997 and 2007, the herd in this
region increased by 77.4 per cent, while the national average increase was only 23.7 per cent,
and between 2003 and 2006, this region accounted for 96 per cent of the total increase in the
country. These 50 million hectares correspond to 74 per cent of the deforested area of the
region and ranching has now been identied as the main cause of deforestation, and not only
one part of a cycle stimulated by demand for lumber.
Although the traditional view associates extensive ranching with large latifundia, the
picture in the northern region is more complex. In the states of Rondonia and Acre, where
there was a more intense expansion of agrarian reform settlements, 50 per cent of the herd is
found in properties with less than 500 cattle. In these states there is a partnership between
small-scale and large-scale producers, dividing up the stages of reproducing and raising calves
in the former, and fattening in the latter. At the other extreme, there are new investments, such
as the now notorious farm of Daniel Dantas in the state of Para, which was occupied by the
Landless Rural Workers Movement (MST) and became a target of INCRA. In fact, this property
is composed of 25 farms owned by the Santa Barbara Corporation, with partners from the
Opportunity Bank, and amounts to nothing less than 141,200 hectares. The Friends of the
Earth report (Amigos da Terra 2009) also identies a new sort of rancher who is concerned
with socio-environmental and quality requirements of international markets.
434 J. Wilkinson et al.

There are various reasons for the importance of the northern region in Brazilian ranching, such
as its status of being free of foot-and-mouth disease, the low price of land and, unlike the south-
east, the lack of competing land uses. The pace of this increase, however, can only be explained
by the strong investments of leading corporations in the sector, which swiftly concentrated pro-
duction and already account for over 60 per cent of the beef slaughtered in the region. In addition,
these investments would hardly have been viable without strong support by the National Devel-
opment Bank (BNDES), which seeks to consolidate national companies that are competitive
globally. These investments have been primarily driven by the expectation of taking over
global markets abandoned, for various reasons, by traditional exporters such as the United
States, Australia and Argentina.
Thus, the dynamics of ranching are explained in a large part, as is the case with several
other production chains, by the strategies of major industrial players, major retailers, and civil
society. Cattle is the sector that has raised the greatest fears at the level of consumption (the
infamous mad cow disease), and since then has been subject to traceability and quality control
measures that are being established in Brazil by ts and starts. Beef destined for the national
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market also needs to show that it is not associated with the deforestation of the Amazon, and
the four major meatpackers are in negotiations with NGOs that include this requirement in
their model of traceability. Non-association with deforestation is also becoming a condition
of access to credit, and coming around full-circle, Wal-Mart has initiated its own embargo
on beef linked to deforestation. The beef production chain is dominated by national corpor-
ations and the dynamics of ranching are strongly inuenced by its increasingly oligopolistic
control.

Other sectors
In our analysis, we focused upon the processes of concentration and foreignisation taking place
in a limited number of major commodity chains, due to the importance of these products in land
occupation and their strategic character in global commerce and investments. It is important to
recognise, however, that several other agricultural sectors are undergoing restructuring in
Brazil, characterised by greater concentration and increased foreign investments. This is
notable in the dairy, wine, and fruit and vegetables sectors, among others. One of the most dis-
cussed transformations has been the increasingly hegemonic position of the major retailers in
the agrofood system. The supermarket chains pressure the food industries in the traditional pro-
duction chain to lower their costs and improve their logistics, which has led industry to supply
itself from a smaller number of agricultural providers who are capable of keeping up with the
requirements of larger scale. In other chains, supermarkets take direct control of agricultural pro-
duction, as in the case of vegetables and fruits, which were traditionally small-scale producer
sectors but have now undergone strong concentration. Beyond pressures exercised by global
markets, therefore, we can identify a general tendency towards concentration in the agricultural
sector that results from the transnationalisation of major retailers, consolidating as well the dom-
estic retail sectors of Brazil and the other Latin American countries.

Conclusions
While foreignisation has been associated with transnational corporations, investment funds, and
the states of emergent countries, analysis of investments in Brazil reveals the importance also of
companies from neighbouring countries. Thus, it is possible to identify a regionalisation process
involving the major Latin American corporations. We have already seen the strong presence of
Argentinian capital on the new soy frontier in Brazil, Chilean companies entering the wine
Concentration and foreign ownership of land in Brazil 435

sectors of both Argentina and Brazil, and Chilean companies entering the forestry sector in Brazil.
More recently, Chilean capital has also moved into Brazils retail sector. Brazil, in turn, extrap-
olates its own borders and advances strongly upon neighbouring Paraguay and Bolivia in the
case of soybeans, and into Uruguay in the case of rice.
In the sugarcane and ethanol sector, we can also identify the beginning of foreign investments
by Brazilian companies. With the adoption of ex fuel cars, which run on either ethanol or gaso-
line, the Brazilian domestic market will be very dynamic for ethanol in the medium term.
However, the goal of the sector is to create a global market and access the main markets in the
USA and Europe. For this reason, Brazil promotes the adoption of sugarcane ethanol in other
countries in Latin America and Africa by offering technology (which includes the establishment
of EMBRAPA afliates, the national agricultural research company) and also offering capital
through its development bank (BNDES). At the same time, Brazil invests directly in Central
America and the Caribbean in order to qualify for export to the US without paying tariffs,
taking advantage of the Central America and Caribbean Free Trade Agreement (CAFTA). In
the same manner, it invests in African countries to access European markets in the context of
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the EBA agreement, Everything But Arms (Wilkinson and Herrera 2010). The nancial
crisis of 2008 2009, however, has hit the ethanol sector with particular force. Investments in
the 2008 2012 period have not accompanied the growth in the domestic market, and Brazil
has been forced to import what it saw as unsustainable ethanol from the US. It is likely,
therefore, that its international presence, at least temporarily, will be less in evidence.
The transnationalisation of Brazilian agribusinesses is already in full swing, most emblema-
tically recognised in the global consolidation of the Brazilian meatpacking corporation JBS Friboi
as the world leader in its sector. Unlike the case of sugarcane/ethanol, foreign investments by
leading Brazilian corporations in other agro-industrial chains are normally restricted to the
industrial stage of the chains. In the case of beef and meats, however, these investments also
include forms of contracting with the ranching and livestock sectors of the countries in which
investments are made, implying the establishment of indirect control over land.
Since the rise in food prices during the past decade, researchers and journalists have identied
a movement towards direct investments in farmland by a diversity of actors, domestic and foreign,
public and private. Since the 1970s, the modernisation of agriculture has been understood above
all as a process involving the consolidation of investments and major corporations upstream and
downstream of agricultural production. In general, companies opted for indirect control of
agricultural activity based on integration contracts, the technological requirements of which
drove simultaneously a process of selection, exclusion and concentration in agriculture. These
same tendencies persist and strengthen today with the growing hegemony of the large retail
sector, which establishes new quality standards and logistics, consequently accelerating the
concentration of agricultural activity.
Direct investments in farmland indicate, therefore, a series of new tendencies in which direct
control over land becomes central. The media tend to associate this phenomenon either with
speculative movements by nancial capital or security strategies by new emerging countries
seeking raw agricultural materials. Our analysis of the Brazilian case conrms both tendencies
as important components of this new wave of investments in land. Working with Central Bank
data, we identied the importance of investment capital, with its origin in tax havens, and inves-
tigative journalistic information has made evident the interest of the states of emergent countries
in acquiring farmland. Our study, on the other hand, suggests that the processes of concentration
and acquisition of land responds to broader tendencies that also affect traditional agribusiness
sectors, domestic capital, and the policies of the Brazilian state.
In so far as land (and along with it also water and even climate itself) becomes a scarce
resource, and in as much as it is seen as a key problem/solution in the context of environmental
436 J. Wilkinson et al.

geopolitics, the need for land regulation increases. Tracking, certication and zoning are increas-
ingly established as requirements by the new markets of major agro-forestry commodities, which
increases the need to manage land use. A precondition for this management is an effective system
of regulating land ownership. Our analysis identies the historical roots of a lack of effective
regulation over land in Brazil, as well as the limits of the current system of rural registration
for the identication of processes of concentration and foreignisation.
The Brazilian case is fundamental for understanding global processes of concentration and
foreignisation for three reasons. First, Brazil is becoming the main global axis in the production
of major agro-forestry commodities. Second, Brazil demonstrates the diversity of interests
involved in the current wave of land acquisition. Third, the corporations that lead this process
in Brazil, whether domestic or private, state-owned, or foreign, are also investing heavily in
the rest of Latin America and Africa. The limitations currently imposed upon access to land by
foreigners in Brazil are, in many cases, innocuous due to the use of Brazilian gureheads. On
the other hand, they stimulate strategies geared to forms of indirect control over land, as in the
case of Chinese investments in the soybean sector in Brazil, which involve long-term commercia-
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lisation contracts with cooperatives nanced by Chinese banks.

Acknowledgments
The authors would like to acknowledge Rudi Rocha (Federal University of Rio de Janeiro, UFRO/RIO) for
the work on Central Bank data and Anna Lopane (MA student and associated researcher with the Markets,
Networks and Values Research Nucleus at the Graduate Centre in Development, Agriculture and Society
[CPDA], Rural Federal University, Rio de Janeiro) for gathering the data.

Biographical notes
John Wilkinson is an associate professor at the Graduate Centre in Development, Agriculture and Society
(CPDA), Rural Federal University, Rio de Janeiro. His publications in English include From Farming to Bio-
technology (co-author, Blackwell 1987).
Bastiaan Reydon is a lecturer in Projects, Sustainability, Land Markets and Agrarian Policies at the Univer-
sity of Campinas (UNICAMP) in Sao Paulo, Brazil.
Alberto Di Sabbato is an economist, associate professor and director (20102014) of the School of Econ-
omics at the Fluminense Federal University (UFF), Rio de Janeiro. He received his PhD in Society, Agricul-
ture and Development from the UFRRJ.

Notes
1. Original article text was translated from Portuguese by Inessa Figueiredo and Gustavo de L.T. Oliveira.
2. The persistence of unequal land distribution in Brazil can also be demonstrated by the Gini coefcient.
Hoffman and Gomes Ney (2010, 20) note that this coefcient presents strong stability since the Agri-
cultural Census of 1975.
3. The Legal Amazon is a juridical distinction ofcially designated to encompass all seven states of the
north region (Acre, Amapa, Amazonas, Para, Rondonia, Roraima and Tocantins), as well as the north-
ern portion of Mato Grosso state in the centre-west region and most of Maranhao state in the north-east
region (translators note).
4. The Numbers of Agrarian Reform available on the INCRA website include two sets of data: the area
incorporated into the Agrarian Reform Programme, which totaled 48.1 million hectares in the period
19972006; and the area of expropriation decrees issued, which represent the area obtained for agrar-
ian reform through expropriation on account of social interest, which includes 9.9 million hectares
during the same period (see INCRA 2010).
5. This item is based on Reydon (2007).
6. Such as racial and gendered exclusion (translators note).
Concentration and foreign ownership of land in Brazil 437

7. The most common irregularities in these registries are overlapping claims, or in other words, various
individuals claiming to be owners of the same plot of land. When this takes place, it is said that the land
contains stories or oors; for each owner with an irregular title to that land another oor is
added. The federal government is taking a decisive step towards the regulation of rural and urban
land markets in approving Law 10.267/2001, in which registries are required to pass on the infor-
mation to INCRA whenever there is any change to the property in a form that species the propertys
limits cartographically (in terms of latitude and longitude).
8. More specically, those that involve foreign individuals resident in Brazil, foreign legal entities legally
authorised to operate within the country, or Brazilian legal entities in which foreign individuals resi-
dent abroad or foreign legal entities headquartered abroad participate with any share.
9. In this group, we included Bermuda, the Virgin Islands, Luxembourg, Netherlands Antilles, Cayman
Islands, Panama, Isle of Man, the Channel Islands, Liechtenstein, Monaco, Barbados and the Bahamas.
This list is a result of a cross between the denition of tax haven used by Brazils Federal Revenue
Service (Receita Federal, Normative Instruction no. 188 of August 2002) and informal conversations
with capital market investors.
10. Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A, headquartered in Utrecht, Netherlands
(translators note).
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11. Through burning the bagasse (translators note).


12. The UN-REDD Programme is the United Nations collaborative initiative on Reducing Emissions from
Deforestation and Forest Degradation (REDD) in developing countries. The Programme was launched
in 2008. See http://www.un-redd.org/AboutUN-REDDProgramme/tabid/102613/Default.aspx
13. The common designation for the inhabitants of the southernmost Brazilian state of Rio Grande do Sul
(translators note).

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