Argentina OK's bill to curb foreigner land buying (2024)

* Critics say measure will discourage investment

* Brazil has also limited land buying by foreigners

BUENOS AIRES, Dec 22 (Reuters) - Argentina’s Senate passed a bill on Thursday limiting farmland sales to foreigners in one of the world’s top grains-exporting countries, a measure the government says will help protect a strategic resource.

Although other countries such as Brazil have taken similar steps, critics say the curbs could further deter investment in Argentina, the world’s No. 3 soy supplier.

The country already lags its neighbors in attracting foreign direct investment and business leaders complain about the government’s unorthodox and unpredictable policy making.

“Land prices will have less support because the law limits demand,” said Buenos Aires-based agricultural economist Manuel Alvarado Ledesma. “Those who want to sell land will have a smaller pool of buyers.”

Argentina’s Senate, controlled by allies of President Cristina Fernandez, passed the legislation 62 to 1. Fernandez, who was easily reelected earlier this year, had strongly backed the bill and is expected to sign it in the days ahead.

The new law may cut demand for farmland by putting large tracts off limits to foreign investment funds, which have been drawn to Brazil, Uruguay and Argentina in recent years due to soaring world food prices that are expected to remain high for decades.

According to the new rules, foreigners are allowed to buy only up to 1,000 hectares (2,471 acres) of land in the country’s most productive farming belt, known as the Pampas, or the equivalent in terms of productivity levels elsewhere.

The law also sets a 15-percent limit on land that can be owned by foreigners in the country as a whole and in each of its municipalities. The measure should cool the “hot money” that rushes in and out of trendy investment sectors, said Timothy Rawe, CEO of Argentine farm management company Hinton S.A.

“Foreign investors will have to accept that they will not be able to simply buy up vast tracts of land but will have to work with local partners and that they may have to achieve their exposure to the sector by other means, such as leasing land,” Rawe said.

“These laws do not change the macro arguments for investing in farmland, but they may change the way that it is done,” he said, stressing the point that the Argentine measure should not be seen as an isolated case but as part of a trend of such land investment restrictions in grains-producing countries.

INTERVENTIONIST APPROACH

Fernandez’s efforts to restrict land purchases by foreign investors follow similar reforms in neighboring Brazil, where foreigners are limited to between 250 and 5,000 hectares, depending on the region.

Fernandez has an interventionist approach to Argentina’s multibillion-dollar grains trade, sparking previous protests from growers who are angry over limits on wheat and corn exports and heavy taxes on soy exports.

Farm groups and some opposition parties have acknowledged the need to regulate farmland sales. But some lawmakers have said the bill was rushed through the legislature despite the fact that Argentina is not being overwhelmed by foreign landowners.

It is not clear how much of the country’s productive land is owned by foreigners. As part of the reform, foreign landowners have 180 days to declare holdings. The census should give a better picture of how much they own, but the law will not be retroactive, meaning current holdings will not be affected.

Agriculture Ministry officials in Argentina have assured overseas investors there will be a clear legal framework.

Saudi Arabia’s Almarai Co, the Gulf’s biggest dairy firm by market value, said on Wednesday that it acquired Fondomonte S.A., which owns farms in Argentina. The announced purchase is aimed at securing feed for Almarai’s dairy herd and poultry businesses.

Fondomonte has three farms totalling 12,306 hectares which focus on cultivating corn and soybeans.

Earlier in the day, Argentina’s Senate passed a controversial law to tighten controls over the supply of newsprint, part of a long-running feud between the government and the Grupo Clarin media conglomerate, which is the leading shareholder in the newsprint company.

Police this week raided the offices of Clarin-owned Cablevision cable television provider under court orders, adding fresh fuel to the dispute.

On Thursday morning, Argentina’s Senate also approved reforms to toughen sanctions for acts of terrorism and economic crimes, meaning people who manipulate the price of goods or financial assets will face prison sentences rather than fines. (Additional reporting by Hilary Burke in Buenos Aires and PJ Huffstutter in Chicago; Editing by Paul Simao)