The various issues involving the large-scale acquisition of land by foreigners in Brazil are of great importance due to their close correlation with the development capacity and the possibility of implementing public and business policies for Brazilian agribusiness, currently responsible for approximately 23.8% of the Brazilian GDP.[1]
From a legal and political point of view, such acquisitions are historically quite controversial and are currently on the agenda in Parliament and under analysis by Brazilian superior courts, especially by Supreme Federal Court.
Originally, Brazilian Federal Law No. 5,709, of October 7, 1971 ("Law No. 5,709/1971") established limits for large scale acquisition of Brazilian rural land by foreigners[2].
Among the controversial issues on the topic of protection of land property is whether Law No. 5,709/1971 would have been admitted to the Brazilian legal system or not, given that said law predates the Federal Constitution in force, which was approved by a National Constituent Assembly in 1988, three years after the end of the last Brazilian authoritarian government (1964-1985).
On August 19, 2010, Opinion LA-01 of the Federal Attorney General's Office was approved and published, establishing an interpretation (which has a binding effect for the public administration) confirming the reception of Law No. 5,709/1971 by the Federal Constitution of 1988, emphasizing the principle of national sovereignty applied to economic order, indicated in the Federal Constitution among the fundamental principles of the Federative Republic of Brazil.
The advent of Opinion LA-01 also confirmed the understanding that the limitations established in Law No. 5,709/1971 extend to Brazilian companies managed or held by foreigners. That is, the limitations imposed by law are directed not only towards foreigners (individuals) and foreign legal entities, but also towards Brazilian legal entities equivalent to foreign ones, i.e., companies whose share capital is mostly held, in any capacity, by foreign individuals or legal entities residing or having their headquarters abroad (art. 1, §1, of Law No. 5,709/1971).
It should be noted that there currently are two actions dealing with the constitutional validity of §1 of art. 1 of Law No. 5,709/1971: (i) Action Against a Violation of a Constitutional Fundamental Right (Arguição de Descumprimento de Preceito Fundamental - ADPF) No. 342; and (ii) Original Civil Action (Ação Cível Originária - ACO) No. 2,463 of DF.
On April 26, 2023, in a monocratic decision granted by Brazilian Federal Supreme Court Minister André Mendonça, within the scope of the ADPF No. 342, all ongoing legal proceedings in the national territory, which deal with the validity and constitutionality of §1 of art. 1 of Law No. 5,709/1971, were halted until final judgment of such constitutional actions by the Federal Supreme Court.
Additionally, certain economic aspects of such large-scale acquisition of rural lands, or land grabbing, must be emphasized, eg. the agro-inflation phenomenon and rising prices of agricultural products stand out, which proves to be a gateway to food insecurity for the Brazilian vulnerable population.
In effect, high food prices and the expectation of strong population growth in the coming years, as well as the issue of large-scale rural land acquisition by big multinational companies and investors in various regions of the world, have drawn the attention of national governments, especially in Africa and Latin America.
Finally, the topic of the so-called "land grabbing" is also linked to the issue of sovereignty and national security of countries with an agriculture-based economy. In the view of the eminent minister of the Brazilian Superior Court of Justice, Min. Marco Buzzi, the imposition of legal limits on land acquisition gives effect to national sovereignty, guaranteeing the independence of the Brazilian State in defining the agrarian policies to be implemented, aiming for national development[3].
It is clear that several countries around the world, including the United States of America and some African and European countries, have been adopting more restrictive policies regarding the acquisition of large territorial areas by foreigners. In Brazil, the issue that currently depends on authorizations from Parliament and INCRA (National Institute of Colonization and Land Reform) is today on the agenda for a potential legislative modification by the Federal Senate and the House of Representatives.
[1] Source: Centro de Estudos Avançados em Economia Aplicada - CEPEA - USP; Confederação Nacional da Agricultura.
[2] "Art. 12 - The sum of rural areas belonging to foreign persons, individuals or legal entities, cannot exceed a quarter of the surface of the Municipalities where they are located, proven by a certificate from the Real Estate Registry, based on the auxiliary book referred to in art. 10. § 1 - People of the same nationality may not own, in each Municipality, more than 40% (forty percent) of the limit established in this article."
[3] REsp 1874460/CE, rapporteur. Min. Marco Buzzi, judged on December 15, 2020 (DJe December 17, 2020).