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Serving: United States

How a New Land Ownership Law Affects Us


The last six months in Brazil have been a time of change on many levels. This fall Brazil will elect a new president to replace the ever-popular President Lula. Many feel that she will continue to run the country much like President Lula. While many view this as a good thing, there are a few issues on the front burner of change that are making people sit up and pay attention.

For example, the Brazilian attorney general has reviewed the language in the constitution, and has passed a referendum on foreign ownership of ag land in Brazil. This doesn’t apply to small parcels under about 750 acres, but it does make larger purchases of land very complicated.

Another interesting moratorium recently passed is the restriction of opening virgin cerrado land to bring into new production. This is a five-year ban, and many feel it could become permanent law. It would make the days of opening new land a thing of the past.

Both issues are serious, and are a huge change to what many have felt was the gold rush era over land. However, there’s a word (jeitino) in Portuguese that means: a way to get around an obstacle/problem when there doesn’t appear to be another way.

It’s hard tosay if the new laws will stick or whether loopholes will be found, but in the meantime land prices – fueled by commodity pricing and the issues above – have prices on the rise. Production land is trading in the $1,700-2,400/acre range. Still a good deal when compared to Iowa or Illinois, but a far cry from eight years ago when $300-500/acre would buy a lot of land here.

So just what is Brazil going to raise this year, and how much of it? The price of cotton is trading near 15-year highs, and the profitability level from growing cotton trumps other crops such as soybeans and corn. Talk is that cotton acres will increase by 15% across the country.

Then what’s going to get shorted – corn or beans? A lot of cotton will come in the form of double-crop from Mato Grosso, so that will replace corn acres. In other parts of the country it will pull acres from beans.

Much like the U.S., there is going to be a fight for acres again this year. I think it’s doubtful we’ll see any of the commodities fall off in price before the U.S. has its 2011 crop in the ground.

At Global Ag Investmentswe’re in a legal battle over a large land contract that’s turned into a Brazilian standoff. They have the land and we have the contract and legal right to farm it.

It’s been a living hell the past few months dealing with the Brazilian judicial system. But when there are millions of dollars on the line, it’s amazing how fast judges can be “persuaded” one way or the other.

Issues that many in the U.S. could not imagine happen here daily. That’s part of farming here, so the story will continue.

In the meantime, we’ll grow beans this year as we work through the issues above. I’d like to think that I’ve seen about enough of the roller coaster, high-octane ride that Brazil throws at us everyday down here. The key is just to grit your teeth and hold on.

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