Over the last few years, governments, legislators and political elites in a number of countries have been trying to calm anger and debate over land grabbing by setting legal limits on foreign direct investment (FDI) in land. These limits take various forms.
In some countries, governments are imposing ceilings on the amount of farmland foreigners may acquire. Argentina and Brazil have recently moved in this direction. Before leaving office in 2011, President Lula instructed his party and the country's Attorney General to find a way to limit access to farmland by foreigners in Brazil. Cristina Kirchner initiated a similar process in Argentina, resulting in the signing of a new law within a year. In both cases, the intent was to set limits on the amount of agricultural land foreign investors can own as a way to contain growing resentment about "foreignisation" and loss of sovereignty.
In other countries, political leaders are introducing bans on foreigners getting farmland. The president of Hungary recently pushed a decree through parliament which states that foreigners will not be allowed to buy land when a moratorium on land sales to foreigners is lifted in 2014. Hungary, like many other East European countries joining the European Union, was given a transition period before it would have to open up its currently closed land market to European investors. As that period comes to an end, Hungary's conservative ruling party clearly wants to find a way to keep the wealth that can be extracted from the country's rich agricultural land to itself. In Latin America, Uruguay's government has been debating whether to ban "public" foreign investors, i.e. land deals involving foreign governments, sovereign wealth funds or state-owned enterprises.
Elsewhere, other kinds of restrictions are being set up. In Algeria, where the state owns much of the land, a new law was recently adopted to introduce more private ownership of agricultural land. Foreigners, however, will not be allowed to acquire farmland except as minority shareholders, in partnership with domestic firms. This same kind of limitation was included in the Democratic Republic of Congo's 2012 land code. To limit speculation, some governments or legislatures are imposing land use requirements (e.g. if you do not bring land into production within a certain time limit, you will lose your rights to it).
Obviously, the situations differ from country to country. Some leaders and political groups are reacting specifically – and sometimes in knee jerk fashion – to rising numbers of large scale land deals where foreigners are seen as a particular problem for one reason or another. Others are trying to address a broader range of problems related to land – not just land grabs but land concentration, land use issues, systems of property registration and valuation – through more holistic land laws, including pastoral and rural codes.
Restrictions on foreign investment in land appear to fly in the face of neoliberal doctrine, as promoted by Western governments and international financial institutions over the last few decades. After all, most bilateral investment treaties and the investment chapters of so-called free trade agreements hinge on the notion of "national treatment" – the idea that foreign investors should be treated the same as nationals, with no discrimination allowed. These moves, while not widespread, seem to disregard that principle.
Why such restrictions may be ineffective
But will these restrictions make a difference, especially for small-scale food producers struggling to feed their families and communities? It is unlikely, for a number of reasons.
For example, in 2010 the Chinese food company Chongqing Grain Group tried to negotiate the purchase of 100,000 hectares of farmland in Bahia to produce soybeans for the Chinese market. They apparently ran into trouble, as the talk of limiting foreigners' access to land was growing in Brazil, and changed their approach. They agreed with local authorities to put their cash into a local agro industrial complex instead, and set up storage and crushing units with a view to purchasing the soybeans from 200,000 ha of dedicated farmland. This way, CGG did not physically alienate anyone from the land, but achieved roughly the same result: Brazilian farmers here are locked into producing soybeans for export by this one company for a significant period of time.
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