Agrifirma, the Brazilian farmland investment company, announced a new joint venture with Fundo Brasil Agonegocio, one of Brazil’s biggest private equity investors.
The new fund, Agrifirma Brasil Agropecuaria, will receive an $82m investment in Agrifirma’s existing projects. Notedly, huge areas of undeveloped land in Brazil’s Bahia region.
Keep an eye on the gouvernement
No explicit connection with the note on Agrifirma above, but it is worth keeping an eye on how the Brazilian gouvernement is treating foreigners buying land in the country. Giovana Araujo, from Itau Unibanco recently pointed out that the legal imbroglio over the acquisition of rural land by foreigners (and by foreign-controlled Brazilian companies) remains unresolved. In August 2010, president Lula approved a new legal opinion issued by the General Counsel of the Federal Government (AGU) concerning the acquisition of rural land in Brazil by foreigners. As a result, restrictions spelled out by a 1971 federal law on the acquisition of rural land by foreigners and by foreign-controlled Brazilian companies went back into effect.
Giovana believes that there is room for the new AGU interpretation to be legally contested, we believe that the solution of this imbroglio will come in the form of a new law. But this will take time. Between proposal, debate and approval, it might take a year or more for new legislation to be enacted.
Quick note on Brazilian agribusiness
Half of Brazil is covered by forests, with the largest rain forest in the world located in the Amazon Basin.
Agribusiness accounts for 37% of jobs in Brazil, 46% of Brazilian exports, and 29% of Brazil’s GDP.
Recent investments in technology and fertilizers increased the sector competitiveness. Brazil is also known for introducing new plant varieties, and acquiring top-of-the-line agricultural equipment.
The result is high productivity. Brazilian foodstuffs industry is one of the few sectors to sustain consistent growth for decades.