By: Vitor Ferrari and Ivan Kubala
Proposed by Senator Irajá, Bill 2963/2019 makes it easier for foreign people to buy, maintain and lease rural lands in Brazil. The Bill dismisses the mandatory authorization which allows foreign people to buy rural lands which area is not greater than 15 rural cells – a unity of measurement that varies in each Brazilian state.
However, the Bill sets limits: there is a limit of 25% of the surface of each municipality, and in case of companies which are composed by foreign people the limit is reduced to 10% of the surface.
According to Irajá, the Bill is essential, because Brazil lost at least half a billion BRL of foreign investment in agribusinesses due to these difficulties.
Despite being extremely important, the Bill is waiting for its vote for months. Now it is stagnated in the Brazilian House of Representatives, waiting for the creation of a special committee to be voted on.
Unfortunately, there is no projection to the Bill`s voting because the House of Representatives does not inform the date of its voting or a schedule.
Meanwhile, foreign investors are using another way for making their investments in Brazilian agrobussines: the FIAGRO – an abbreviation which means Agrobussines Investment Fund. This funds only invests in agribusiness and its branches, such as fertilizers development and creation of new seed varieties.
There are 2 groups of FIAGRO: exclusive and non-exclusive.
The first one is the fastest and least bureaucratic way for large investors became a Brazilian agrobussines investor. In the exclusive FIAGRO only one investor compounds the fund, it is the unique shareholder inside the company, which allows managing the fund according to its interests, buying and selling the rural properties. But a manager must be employed, whose task is following the investors orders, managing the fund. We must explain that the investor will not be the owner of the lands, just the sole shareholder of its funds, which will own the properties.
The other group is composed of non-exclusive funds, which major part is traded in Brazilian Stock Exchange (B3) and does not require a huge minimum capital to become a shareholder. These funds, by its turn, create a democratic access to Brazilian agribusiness to foreigners, because everyone with an investment account in a Brazilian stockbroker can invest.
The creation of these funds increased Brazilian attractiveness for international investors once the investments in agribusiness became a possibility. The agrobussines is a differential for Brazil international trade, which means that the country is always investing in development of new technologies, an attractive point.