As the Brazilian agribusiness sector continues to become more competitive internationally, foreign investors are taking a closer look at investing in land in Brazil’s rural areas. Due to its diverse climate and regular rainfall, Brazil is expected to continue to be one of the leading agricultural countries in the world.
The Tremendous Growth of Brazil’s Agribusiness Sector
Brazil’s total agricultural exports grew 400% between 2001 and 2011. According to the Ministry of Agriculture, Brazil’s agribusiness now accounts for 40% of the country’s exports. That figure amounted to US$95.81 billion in exports in 2012, with the vast majority of exports headed to the European Union and China.
Brazil also has the world’s largest commercial herd of beef and it is the number one exporter of soybeans, orange juice, sugar, coffee, and chicken. It’s no wonder that the agribusiness sector provides 37% of jobs in Brazil.
Agribusiness Opportunities for Foreigners
With only 28% of Brazil’s rural lands dedicated to farming, there is more than enough land available for foreign investors looking to bring modern farming and production practices into the country. Inspite of restrictive regulations, foreign individuals and corporations are welcome to participate in the profitable Brazilian agribusiness sector.
Brazilian Agribusiness Restrictions on Foreigners
Foreign investors must be aware of the legal restrictions Brazil places on foreigners seeking to purchase rural land in Brazil. There are limits on the amount of land that can be purchased, and all land purchases must be approved by the Ministry of Agriculture as well as the appropriate federal regional development agency.
To make matters more complicated, each state in Brazil has its own set of regulations, particularly when it comes to how corporations operating in Brazil are treated if a majority of the corporation’s stock is owned by foreigners. For instance, in São Paulo, it’s beneficial for a foreign corporation to invest in a Brazilian corporation before seeking to purchase and develop land. This newly formed Brazilian corporation will have a level of access to rural properties that is not afforded to truly foreign corporations.
Loosening Restrictions Means Greater Opportunities
Foreign investors interested in purchasing land in Brazil are watching these regulations closely. They are hoping that other states follow São Paulo’s lead in making restrictions on foreign land investments more flexible. Easing restrictions is not only good for foreign investors, but it could also mean a significant increase in economic growth and job creation.
Because of recent interpretations of laws regarding foreign ownership of land, and the differences in regulations from state to state, it is crucial that foreigners seek knowledgeable legal counsel. With a smart and calculated approach, foreign investors can position themselves to benefit from the continuing growth of Brazil’s agribusiness sector.
