Worldwide prosperity in recent years has led to a boom – and speculation – in real estate and farming land over the world and in special in South America, among the Mercosur member countries. Brazil, Argentina, Uruguay and Paraguay have seen land prices soar pushed by foreign buyers and now governments are reacting tightening restrictions on land ownership.
The first determined to address the issue head on seems to be the Brazilian government, which is looking into ways of ensuring domestic control over the country's competitive farms and resource-rich Amazon.
"Foreigners have fueled a real-estate boom, buying farmland along Brazil's expanding agricultural frontier and second homes along the northeastern coast," say government officials.
Many have circumvented current restrictions for foreign individuals and companies by using Brazilian firms as a front but that practice is set to end according to Rolf Hackbart, president of Incra, the Brazilian agency in charge of land reform and property titles.
The objective is to limit land acquisition by foreign capital acting through Brazilian companies and "this is not a question of xenophobia, but every country needs to be the owner of its territory," says Hackbart.
The new rules look to impose the same restrictions already existing for foreign companies purchasing land directly. They are currently allowed to buy 100 MEIs (Módulos de Exploração Indefinida – Undefined Exploration Modules), a unit of land that varies in size from one municipality to another. In Salvador, capital of Bahia state, for example, a MEI has 5 hectares (12 acres)Â while in Amapá the size is 70 hectares (173 acres).
In May, President Luiz Inácio Lula da Silva had said that "we need to be careful so that we do not allow people from other countries to buy all of Brazil's lands to produce sugarcane."
Brazilians nationalists as well as officials in the Armed Forces have been complaining about the presence of foreigners in the Amazon.
"From well-intentioned activists to speculators from the timber sector, everybody is selling land in the Amazon – all you have to do is take a look on the Internet," said Hackbart.
"Foreigners buy the best lands and increase the prices, paying hard cash," he added. "This increases the price of land reform"
On its Internet FAQ page the Incra answers which are the requirements foreigners must fulfill to acquire rural property in Brazil:
1) The property must be registered in the SNCR (Sistema Nacional de Cadastro Rural – National System of Rural Registry);
2) Foreigners must be permanent residents of Brazil and have a foreigner's identity card;
3) In case of companies, they will have to show proof they have authorization to operate in the country:;
4) Foreigners cannot buy more than 70% of areas set aside for private communities;
5) They will need Incra's authorization to acquire the property when the desired area is:
a) Equal or smaller than three Undefined Exploration Modules (MEI);
b) Bigger than 20 MEIs, with their project of development duly approved by Incra.
Acquisitions of area superior to 100 MEIs for legal entities and 50 MEIs for individuals will depend on special National Congress authorization.