Argentina's Land Law Seeks to Limit Foreign Ownership

As part of its current “legislative marathon,” Argentina’s Chamber of Deputies on December 16 passed a law that seeks to limit land ownership by foreigners. Proposed by President Cristina Fernández de Kirchner in April 2011, the “Land Law” was revived at her December 10 inauguration, when she asked Congress to take up the issue. With the president’s party in control of both houses of Congress, the measure passed by a landslide—153 in favor, 26 against, and one abstention—and is expected to pass the Senate later this week. The law follows suggestions from the UN Food and Agriculture Organization (FAO), and proponents argue land is a “strategic, non-renewable resource” that should be reserved for Argentines. Opponents call the measure xenophobic, and question its feasibility. However, given that a similar law passed in Brazil and another is under consideration in Uruguay, Argentina is not alone.

The legislation is based on a 2010 report from the FAO that suggests countries “find ways to ensure that foreign ownership of land does not have negative effects regarding food security, agricultural employment, and the development of family farming.” As such, the law will limit land purchases by foreigners to 15 percent of all land in the country—down from the originally proposed 20 percent at the suggestion of the FAO—and of that share, no nationality shall hold more than 30 percent. It will also limit landholdings by foreigners to 2,471 acres in the so-called “core region,” or the most fertile areas in the Pampas, some of the world’s most productive land. The law will not affect land already held by foreigners, which different estimates put between 3.4 and 9.9 percent of the country. In order to produce exact statistics on foreign land ownership, the law also provides for the creation of a Central Land Registry.

The law comes as Argentina profits from record food prices that have propelled the country’s recovery since the 2001 crisis. In 2010, Argentina was the world’s second-largest exporter of corn, and third-largest of soybeans. Agricultural export earnings for 2011 are expected to top $35 billion, providing half the country’s export profits. These factors, coupled with a global scare from the 2008 food crisis and reports that suggest Argentina could be one of only 15 countries with productive land by 2020  have attracted foreign interest in Argentine agricultural land.  China and Middle Eastern countries such as Saudi Arabia and Qatar showed the most interest, since food security is a major issue for them. Earlier this year, land deals by the government of Saudi Arabia to acquire 600,000 acres in the northern Chaco province and by a Chinese corporation to lease 750,000 acres (an area the size of Rhode Island) in the southern Rio Negro province attracted negative attention, and helped contribute to public endorsement of the law. “We must think of the food security of the Argentine people, our present, and our children’s future,” said Deputy Luis Cigogna. Julián Domínguez, president of the Chamber of Deputies, stated that land is a “strategic, non-renewable resource” that should be preserved for Argentines. In her inauguration speech, President Fernandez insisted the law was not meant to be “xenophobic.” 

But critics disagree, and say the measure may be unconstitutional, as Article 20 guarantees foreigners the same civil rights as Argentine citizens. Opposition Congressman Julián Obiglio commented on the law, saying: “It supposes that we Argentines will take better care of our land than foreigners.” The proposed creation of the Central Land Registry raises perennial Argentine concerns over federalism, as some contend that land ownership policy should be left to the provinces. The lack of reliable information on foreign-owned land leads the Financial Times’ Beyond Brics blog to question the feasibility of implementing the law. This concern is echoed by an editorial in Clarín, a paper heavily critical of the Fernández de Kirchner government, which questions if this measure is just “a typical salute to the flag that will result in nothing.” Additionally, some opposition members fear the measure could hurt investment in the country, though foreign companies such as China’s Heilogjiang Beidahuang State Farm Business Trade Group have already circumvented the measure by signing long-term leases.

Argentina is not alone in seeking to limit land acquisitions by foreigners. The Argentine law was based in part on a 2010 Brazilian law that made it more difficult for foreigners to purchase land by restricting the amount of land foreigners could own depending on the region of purchase, and closing loopholes allowing foreign companies to set up and use Brazilian subsidiaries to purchase land. Brazil’s Congress is currently debating a law that would further strengthen those regulations.  In neighboring Uruguay, 83 percent of all land purchases last year were made by foreigners, and an estimated 20 to 30 percent of land is in foreign hands. President José Mujica has responded by asking legislators to draft legislation that will limit foreign land acquisitions. Ironically, this measure could hurt Argentine landowners, estimated to own almost all of the 1,235,000 acres designated for soy cultivation in that country. 

Learn More:

• Read a program summary from AS/COA’s December 1 event, “Food Security in Latin America: Trends and Prospects.”
• Argentina’s Congressional news service outlines the salient articles of the “Land Law.”
• The Argentine Senate provides a complete online version of the country’s Constitution. 
• Read a draft of the proposed changes to Brazil’s 2010 land law. 
• Access a UN report on the effects of foreign ownership of agricultural land on development.