1. THe PLACe OF LATIN AMeRICA IN THe gLOBAL LAND RUSH
a. Foreign Investor’s Interest in Latin America’s Land
With 24% of the world’s arable land, Latin America’s resources are of particular significance in the context of the global land rush.10 Even if a good part of this land has been put to agricul- tural use, a World Bank study showed that the land “reservoir” in Latin America is huge and ranks second after Africa. Although one may rightly debate the concept of “potential avail- ability of uncultivated land” (as it often covers areas which are actually precious ecosystems and not land which is “readily available”),11 according to the World Bank, the continent has a supply of more than 123 million hectares (ha) suitable for rainfed cultivation compared to 201 million ha for Africa and 66 million ha for Eastern Europe and Central, East, and South Asia taken together.12
Argentina and Brazil represent together 56.2% of the total agriculture area13 of Latin America and the Caribbean (up to and including Mexico). These two countries are both included in the group of countries designated by the World Bank as land abundant and having
10. Inter-American Development Bank, Agriculture in Latin America by the Numbers, <http://www.iadb.org/
en/topics/agriculture/latin-american-agriculture-statistics,2342.html>.
11. Deininger and others (n 3) 77. The World Bank estimates nearly 445 million ha of land are ‘currently uncultivated, nonforested land that would be ecologically suitable for rainfed cultivation in areas with less than 25 persons/square kilometer (km2).’ See also Borras and others (n 2) 13, where the authors criticize the idea that there are underutilized and marginal lands by pointing out: ‘Territories by indigenous peoples and by pastoralists are often the top candidates for this definition which is often based on mainstream economic ideas about factors of production and economic efficiency in resource allocation and use that are blind to social, cultural, and political dimensions of land.’ In addition, it must be remarked that, very often, investment in land does not fit into this definition of ‘marginal lands’ and investors look for land where there has been some land cultivation in the past, with good infrastructure and irrigation.
12. Deininger and others (n 3). See table 2 ‘Potential Availability of Uncultivated Land in Different Regions.’
13. Economic Commission for Latin America and Caribbean (ECLAC), Food and Agriculture Organization of the United Nations (FAO) and Inter-American Institute for Cooperation on Agriculture (IICA), The Outlook for Agriculture and Rural Development in the Americas: A perspective on Latin America and the Caribbean (IICA 2012), Statistical Appendix, Table A10. For a thorough definition of what is covered under the term
‘agriculture area,’ refer to the FAO glossary at <http://faostat3.fao.org//faostat-gateway/go/to/mes/methodol- ogy_list/*/E>.
a low increasing yield.14 This means that they are among the group of countries in the world which have half of the global availability of land suitable for potential cultivation,15 but that lands already being used are close to their yield limits due to the relatively advanced stage of agriculture in those countries.
In spite of having a high level of land availability and advanced technology, it appears that the current rush on farmland is directed more toward Africa than Latin America. The general characteristics of agriculture in the region, such as the presence of good infrastructure, which allows convenient access to the market, and the relatively advanced level of knowledge in agri- cultural technology16 explain why the price of land in Latin America is comparatively higher than in Africa, and why investors’ interests in large-scale land investment has shifted mainly, though not entirely, to Sub-Saharan Africa.17 Paradoxically, if some local and international investors have expressed their interest in Latin America rural land, it is because countries like Brazil, for instance, appear to be the new place for competitive agricultural commodi- ties production.18 The country has indeed become the new leader in many of the most traded agricultural and forestry-issued commodities in the world. Agriculture in Argentina too is advanced, and modern technology and practices used by large firms have boosted the produc- tion of competitive agricultural commodities over the last three decades, notably in crops like soybean, corn, and wheat.19 Therefore, in order to be sure to cover all aspects of large-scale land investment in Latin America, one has to leave aside the explanation centered on food production20 and explore the variety of reasons that attract foreign agricultural investment in the region today.
The drivers of land deals in Latin America are numerous but four main elements remain central.21 First, the land rush is increasingly due to the changing rationale of agriculture toward a food-feed-fuel complex, accelerated as well by changing patterns of consumption in middle-income countries (MICs) (demanding more meat, fruit, and wine). In other words, this explains the expansion of cattle-raising and of flex crops (soybean, sugarcane, and oil palm) which can be used either for producing food, feed, or, increasingly, biofuels. Second, MICs as well as Brazil, Russia, India, China, and South Africa (collectively referred to as the BRICS
14. Deininger and others (n 3).
15. ibid 79. Argentina would be, along with Brazil, one of the countries with the most available lands: ‘Using the 25 persons/km2 cut-off, the seven countries with the largest amount of suitable but uncultivated land (Sudan, Brazil, Australia, Russia, Argentina, Mozambique, and Democratic Republic of the Congo, in that order) account for 224 million ha, or more than half of global availability.’
16. ibid.
17. ibid xiv, 92–93. ‘The reason investor interest has recently shifted to Sub-Saharan Africa is because factors in Latin America, such as infrastructure access and a large pool of readily available skilled manpower, have already been capitalized in the prices.’ In addition, 70% of the projects reported by the World Bank were in Africa while only 21% were in Latin America.
18. John Wilkinson, Reydon Bastian and Alberto Di Sabbato, ‘El Caso de Brasil’ in Acaparamiento de Tierras: Estudios de 17 Países de América Latina y el Caribe (FAO-LAC conference, Santiago de Chile, November 2011) 83, <http://www.rlc.fao.org/fileadmin/content/events/semtierras/acaparamiento.pdf>.
19. Miguel Murmis and Maria Rosa Murmis, ‘El Caso de Argentina’ in Acaparamiento de Tierras: Estudios de 17 Países de América Latina y el Caribe (FAO-LAC conference, Santiago de Chile, November 2011) 1, <http://
www.rlc.fao.org/fileadmin/content/events/semtierras/acaparamiento.pdf>.
20. Inter American Development Bank (n 10). Latin America only accounts for 11% of the world’s food pro- duction according to the Inter-American Development Bank webpage on agriculture in Latin America.
21. Borras and others (n 2) 22–23.
countries) are responsible for a surge in the demand for minerals and forestry products within and outside the region, provoking the expansion of extractive industries which require the cap- ture or control of land. Third, an emerging cause of large-scale land investment in the region has been the buying of large tracts of land for conservation purposes (Chile, Argentina, etc.) or use in response to policies linked to the environmental crisis and climate change (REDD+,22 for instance). Fourth, against the backdrop of the recent financial crisis, investment in land is now deemed safer than before, especially with respect to land that relies on flex crops. This last driver also explains why a number of companies from outside the agricultural sector are now investing in land.
b. The Presence of Foreign and Local Investors: A Diversity of Profiles
The questions of the types and origins of the investors are critical when examining the issue of large-scale land investments in Latin America. Such a study makes it harder to understand why Brazil and Argentina have passed laws regulating only land acquisition by foreign inves- tors. Indeed, investors in land deals are diverse and come to these investments from either abroad or the host country. This reinforces the observation that the current phenomenon of large-scale land investment is more of a polycentric trend. There are currently four main inves- tor profiles:23 international investors; (Trans)Latina corporations (TLCs); domestic investors;
and “undetermined” investors. First, international investors are mostly, although not exclu- sively, conventional multinational enterprises (MNEs) from Europe and North America, origi- nating in the United States, Canada, Spain, Italy, Portugal, and other countries such as Japan (recent negotiations quoted in the newspapers mentioned China, Saudi Arabia, South Korea, and the Gulf States). They are mainly engaged in “flex crops” investments and in non-food pro- duction settings (tree plantation, for instance). Their importance in agricultural investment should not be underestimated. In addition, while considering the presence of MNEs in land investment, one must also have a look at corporations directly involved in agriculture through land acquisition but also indirectly engaged through value chain capture. Very often they do not own or lease the land but nonetheless control the market at every stage, leading some experts to qualify this practice as a “commodity grab.” The category of international investors also encompasses governmental investors, such as sovereign wealth funds (SWFs), which are not that significant in the region for the time being, though their importance is growing. Many concerns are being expressed about the acquisition and leasing of land by these types of actors (along with MNEs from China, Saudi Arabia, etc.), but it is important to remember that they invest mainly in one type of commodity—food (which is just one dimension of land grabbing in Latin America)—and the strategy they follow is not necessarily to directly buy land but rather just its products.24
The second category of investors is also composed of international investors but on a regional scale. Indeed, the emergence of powerful economies in Latin American explains the fact that (Trans)Latina companies from Brazil, Argentina, Chile, Uruguay, or Mexico are as
22. REDD+ is the United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries.
23. We use here the classification developed in Borras and others (n 2) 23.
24. Gómez E (n 1). Moreover, at the scale of Latin America, according to the FAO studies, no direct link has been established between harm to food security and their activities. This might be the case because most investments have occurred outside the staple food sector, which remains in the hand of smallholders.
important today as conventional MNEs, perhaps even more so. In this context, Brazil’s situ- ation is quite interesting. The country receives a lot of foreign investment in its land while at the same time investing massively in land across neighboring countries. For instance, many Brazilian investors own or lease land in Paraguay or Bolivia for soybean production or for cattle-raising purposes. In this regard, the Latin American is similar to the one in Southeast Asia where intra-regional MNEs from Malaysia, Indonesia, Vietnam, and Thailand are invest- ing in neighboring countries.
The issue of land “foreignization” in Latin America, referring to the increasing share of land owned by foreigners, may be tempered by the importance of the third category of inves- tors, namely domestic investors. To date, local elites are, and remain, the largest investors in land. Furthermore, due to the laws regulating foreign ownership, they even keep significant control over land because, in order to invest in land, international investors have to set up joint ventures to circumvent these limitations. The research on the importance of these investors is scarce and needs to be deepened. However, this fact must be read in light of a broader con- text, namely that if domestic investors formally control the land, subsequent investments are directly or indirectly linked to international investors, or more generally to the global agrarian trajectory change.25
Finally, a fourth category covers all “undetermined” investors. This category is more blurred and encompasses all the previous ones, while differing from them in the type of actors involved. Indeed, the global change in agricultural investment today has seen the emergence of new actors in agriculture. Big oil companies, auto-makers, or finance companies invest mas- sively in land, the former two seeking biofuel production facilities, and the latter seeking safer investments after the biggest global financial crisis of the last decade.
The variety of actors involved in large-scale land investment in Latin America can give us an idea of the contexts that have led some countries to implement strong regulations limiting foreign acquisitions of land. This is not the only reaction provoked by these investments. This renewed pressure on land has brought out the issue of structural problems regarding land ten- ure across the world. International institutions have expressed their concerns regarding some of the consequences of large-scale investments in farmland. Indeed, most of these investments aim at leasing or buying the land (as opposed to using contract farming schemes, though there are strong relations between these three forms of land use, as we will point out in the case of Argentina), thus raising issues about property rights violations, land mismanagement by governments, and institutional and regulatory framework failures, which lead to limited ben- efits for host countries and local populations. What is worse, these countries and their people sometimes come to suffer social and environmental damage. In many cases, and especially those where land property rights were not well defined, they have raised many problems with the local population and indigenous peoples. These are deals that ignored the land rights of local communities, forcing farmers off their land and leading to environmental damage. This explains why some international organizations have drafted “guidelines,” which have been lacking until now, in an attempt to get the best out of these investments, while avoiding their adverse effects. Nonetheless, there is no indication that countries that have recently changed their laws regulating foreign acquisitions have taken these guidelines into account. Perhaps this is because the countries studied in this chapter do not fit the usual profile of “weak” or
“fragile” countries for which these guidelines are designed.
25. Borras and others (n 2) 29.
c. Is There “Land Grabbing” in Latin America?
The discussion around laws passed by Brazil and Argentina and large-scale land investment in Latin America finds a particular echo with another discussion, namely the definition of what non-governmental organizations (NGOs) have called “land grabbing.” At the end of the year 2011, the FAO published case studies on 17 countries in Latin America and the Caribbean (hereafter FAO studies). They concluded that only two countries in the region were undergoing processes of “land grabbing”: Brazil and Argentina.26
However, the definition used by the FAO leading it to that conclusion was very narrow. In fact, by choosing a restrictive definition of “land grabbing,” the FAO studies may have failed to draw the right conclusions about the current situation in Latin America. The definition of
“land grabbing” was based on three elements: (1) large-scale acquisitions (and not leasing) of land, (2) undertaken by at least one foreign government, (3) aimed at producing food and thus undermining food security in the host country.27 In fact, the very act of trying to define “land grabbing” shows that there is some reluctance to use the term in official studies. In an effort to avoid this politically loaded expression, most academics and international institutions have begun using the expressions “large-scale investments in farmland” or “large-scale land invest- ments,” which offer the advantage of looking at the problem through a broader lens. However, some authors have expressed some concern around the limitations induced by the use of such terms. As underlined by Borras, “defining land grab this way is bound to miss significant aspects of the character and dynamics of contemporary land grabbing and possible trajectories of agrarian change.”28 More important, some experts continue to use the term “land grab- bing” because it encompasses the analysis of power and power relations. A particularly strik- ing aspect of the FAO studies mentioned above is the coexistence of a restrictive definition of land grabbing, mentioning only land acquisition, with a considerable amount of analysis on the concentration and capture of agricultural value chains by a few actors through leasing and contractual arrangements.29
Thus, through the lens of the FAO studies only two countries are undergoing processes of “land grabbing” in Latin America. Yet if we broaden the restrictive definition of “land grabbing” to include, inter alia, significant large-scale land acquisitions, leasing, contractual arrangements, and value chain capture, for food or non-food production, and by a variety of investors including natural persons or corporations, governments, or private or public invest- ment groups, whether domestic or foreign, the situation is radically different. As a result of
26. Food and Agricultural Organization (FAO) Regional Office for Latin America and the Caribbean (LAC),
‘Acaparamiento de Tierras: Estudios de 17 Países de América Latina y el Caribe’ (FAO-LAC conference, Santiago de Chile, November 2011), <http://www.rlc.fao.org/fileadmin/content/events/semtierras/acapara- miento.pdf>.
27. Gómez E (n 1) 6.
28. Borras and others (n 2) 10.
29. ibid 4. On a side note, these observations should strengthen the idea that ‘land grabbing’ does not exclu- sively concern land acquisition. Restrictive definitions do not take into account the complexity of the situa- tion. ‘Land grabbing’ occurs across land property rights regimes (private, state, and community), on a variety of land types, through a diversity of mechanisms (purchase, lease, contract farming, and value chain capture).
It is thus clear that one of the problems of the global land-grabbing narrative today is the variety of definitions of ‘land grabbing,’ and this problem has consequences on the assessment of the scale of the phenomenon.
While attaching great importance to this aspect, this chapter will nevertheless use the expression ‘large-scale land acquisitions’ very often. This use is to be recommended while discussing the new regulations passed by Brazil and Argentina, which mainly concern acquisitions.
redefining “land grabbing,” large-scale land investment in the region is far more widespread than previously assumed. Ten countries seem to be experiencing relatively high levels of “land grabbing”: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guatemala, Paraguay, Peru, and Uruguay. Others, namely Panama, Mexico, and Nicaragua, seem to be concerned at a medium level.30 This broader definition also seems to suggest that Brazil and Argentina, where land grabbing is acknowledged to be underway, are concerned by this problem on a much greater scale.
2. INTeRNATIONAL POLICY FRAMeWORK TO gUIDe FOReIgN LAND INVeSTMeNTS
a. The Policy Context for Land Investments: National Policies for Foreign Access to Land
Since its appearance, the debate over how to mitigate the adverse environmental and social impacts of large-scale investments in farmland has quickly moved toward the international sphere. But considering national policies for foreign direct investment (FDI) in agriculture, and particularly examining the “entry conditions” for such investments, can be useful for an understanding of the broader international policy responses.
The choice to limit foreigners’ abilities to use one country’s natural resources is very com- mon in national law and has been the object of much debate in the case of some resources such as oil, and so forth. Most countries tightly regulate access to their strategic resources, and these measures are often justified by socio-political, economic, and cultural reasons, as well as security reasons. However, land is a resource that has not spurred extensive discussions except, of course, in cases of military and diplomatic disputes about the borders of two or more countries. Perhaps because land matters are so embedded in the definition of a nation, most countries in the world only allow foreign use of their land by means of leases or con- tracts, in essence restricting land ownership. In India, for instance, FDI in agriculture is gen- erally prohibited except in the tea sector where 100% foreign ownership can be allowed under some conditions.31 Quite strangely in this regard, most countries in Latin America and the Caribbean are open to foreign ownership of land, like Argentina, which only had one restric- tion (for strategic border areas) before 2011.32 Hence the reaction that Brazil and Argentina, representing half Latin America’s land, had to large-scale land investments in 2010 and 2011 in limiting foreign ownership of land can be seen as an unprecedented policy shock in the region.
Restricting or allowing the entry to foreign investment does not end there. In case a for- eigner is granted the right to access, use, or even own land, there are still many legal and practical barriers to FDI in agriculture. The clarity of land property rights (officially recog- nized or customary), the varying scope of land-use rights, and uncertainty about water rights
30. ibid 17.
31. United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2009: Transnational Corporations, Agricultural Production and Development (United Nations Publication 2009) Box V.I. (UNCTAD World Investment Report 2009).
32. ibid.