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Type in buy farmland in Argentina on Google and you will face tens of thousands of hits. Most of the results are of dubious value and years old. However, I received a story today from a credible source that is pertinent.
Argentina Should Limit Foreigners' Farmland Purchases - Minister
Pressure is building in Argentina to limit the amount of land that foreigners can buy as record prices for grain and derivative products fuel concerns that deep-pocketed overseas investors might end up controlling a significant percentage of the country's farmland.
Last year, congressmen from a across Argentina's political spectrum sponsored about 12 different bills that would have put limits on foreign land ownership. While those bills are stalled in the agriculture commission of Argentina's lower house, the administration of President Cristina Fernandez looks set to weigh in on the issue.
"[Fernandez] believes that the legislature needs to debate the protection of the country's primary non-renewable strategic resource--the land," Agriculture Minister Julian Dominguez said in a speech on Sunday.
The land "has to stay in Argentine hands," Dominguez said.
Agriculture exports were largely responsible for Argentina's whopping $12.06 billion trade surplus last year, while taxes on farm exports accounted for a significant percentage of the federal government's tax revenue. Argentina is the world leader in soymeal and soyoil exports, ranks No. 2 in corn exports, and third in soybeans.
As global commodity prices soar, investors have increasingly looked to the fertile farmlands of Argentina and Brazil for investment opportunities.
That has helped fuel surging land prices in recent years. At the end of 2010, prime farmland in Argentina's Buenos Aires Province was selling for $15,000 a hectare (2.47 acres), according to local daily La Nacion. That is about double the price in 2007 and over five times prices in 2002 when the country was in the midst of an economic crisis (emphasis my own).
Argentina's northern neighbor, Brazil, has already taken steps to protect its national sovereignty over farmland. Last year, Brazil's former President Luiz Inacio Lula da Silva slapped limits on foreign ownership.
Land purchases involving a foreign investor or a local company that is majority owned by foreigners are now reviewed on a case by case basis. Certain limits will apply depending on the geographic area of the purchase.
A similar law is needed in Argentina, where about 7%, or 20 million hectares, of the country's productive farmland is in the hands of foreigners already, said Omar Principe, who heads the land commission at the Argentine Agrarian Federation. The association, know as the FAA, is one of the country's leading farm groups and represents small-scale farmers.
Source: CME News for Tomorrow
