May 28, 2022


Farmland Assets

International finance and the transformation of Brazil’s agricultural lands

The election of Jair Bolsonaro in 2018 commenced a long agenda of environmental destruction in Brazil. Before taking office, Bolsonaro had openly threatened Indigenous communities with racist attacks, commenting that Indigenous peoples should not have “an inch of land” and that “Indians in reserves are like animals in zoos.”1 Targeting the land rights of Indigenous peoples, peasants and quilombolas (rural Afro-Brazilian communities), he articulated a neocolonial agenda to control the land and natural resources of rural communities. 

Such encroachment on rural communities predates Bolsonaro, and it intersects closely with global crises of climate change and food production. Industrial agriculture has been a driver of climate change,2 with chemical inputs destroying local soil and water sources. In Brazil, widespread fires in the Amazon, the Pantanal wetlands, and the Cerrado, the most biodiverse savanna in the world, have been unprecedented in their number and scale in recent years.3

The expansion of industrial agriculture in Brazil has been an international affair, linking pension funds, university endowments, and major financial actors across the world. After the global financial crisis of 2008, international agribusiness and financial corporations formed alliances with rural oligarchies to operate in the Brazilian farmland market. In recent years, mergers and joint ventures have changed the profile of agribusiness in the country. Land purchases are no longer limited to large-scale Brazilian companies, or even foreign agricultural corporations. Now, financial firms and oil companies have prominent roles in the market as major sources of capital.4 The entrance of these firms has unleashed new forms of speculation within land markets, with expanded access to credit, and therefore, land purchases. These practices have led to devastating new realities for those living through the changes. 

Land grabbing in the Cerrado

The Cerrado, the vast savanna region in the western part of the country, has an area of approximately two million kilometers, representing almost a quarter of Brazil’s territory. Its trees are important sources of underground water, such as the Guarani, Bambuí and Urucuia aquifers, which contribute to the formation of two-thirds of Brazil’s hydrographic regions.5

Central to water and food production, the Cerrado has been a target of an especially predatory form of agricultural real estate speculation. Many of the industrial farms now operating in the chapadas (high plains) were established in areas that were once public lands, making up the homes of peasant, Indigenous, and quilombola communities. Upon moving into these regions, agribusiness corporations take advantage of local operators6 by illegally forging ownership, fencing off the farmland, and displacing local communities. Recent legislation introduced by Bolsonaro aims to further facilitate the privatization of public lands. This process, named land grabbing by local activists, also affects the baixões (lowlands), which also have a long history of housing rural communities.7

Drastic environmental changes have accompanied land grabbing in the region, with major implications for land use. Land previously used to cultivate food crops for local consumption now grows commodities—in many cases, sugarcane for ethanol production and soybean are grown in monocropping plantations. As a resident of a quilombola community in the northeastern Brazilian state of Piauí explained in a Network for Social Justice and Human Rights interview, “We used to live off of fishing and farming. I can still remember the smell of rice when it was being harvested. But now we can no longer grow our crops.”8  

Water pollution and deforestation are now widespread; the heavy use of pesticides and other chemical inputs sprayed by tractors and airplanes have destroyed local water and food supplies. “The water from the highlands flows down and fills our streams with agro-toxins. The water gets muddy, it stinks. In the river, we see the little fish floating on top of the water, dead. I didn’t see the little fish dead before. When we go fishing now, if we go in the morning, it takes us until noon to catch a little fish. There are no more fish in the river because of the poison,” stated one resident. Deforestation has caused the extinction of endangered species and polluted river springs, affecting biodiversity and rainfall patterns.

Soybean plantations have destroyed many water sources, leading rivers to dry up across the region. With monocropping extending into forest areas, fires have become more frequent. A resident of the local community described, “We are very concerned with the burnings because the fire destroys all the flora, the pequi flower burns, the cashew burns, it burns the trees that provide food. The fires also cause damage to streams, our streams are no longer filling.” 

Financialization of farmland

The devastation in the Cerrado is not simply the result of the outsized presence of domestic agribusiness. The industry’s financial support can be traced to an intricate web of capital flows, connecting funds in New York, London, Germany, and other financial centers in the Global North to Brazil-based firms.

Beginning in 2002, agribusiness corporations in Brazil started to take advantage of high commodity prices for products such as sugarcane in international markets. Companies began contracting debt in US dollars with the expectation of increasing future exports, and the mills negotiated export contracts in future markets to justify their territorial expansion and mechanization. This inflated the price of agricultural land. At the same time, promises of future production by companies that had previous debts fueled new indebtedness and further territorial expansion. The cycle continued—the strategy of financing existing debts with new funds based on futures markets intensified the scale of industrial agriculture, and therefore the use of natural resources.9 Brazil is already home to one of the highest concentrations of land ownership in the world—one percent of large landowners control 90 percent of agricultural land—and industrial agriculture has led to even greater concentration of rural property ownership. 

The global financial crisis of 2008 marked a watershed for agricultural expansion. The price of sugar began to fall along with agriculture commodity prices, and several Brazilian sugarcane companies went bankrupt.10 While government support for commodities aimed to achieve a positive balance of trade, the fall in commodity prices led to trade deficits. But this drop did not hurt the land market, as some would have expected. Brazilian agricultural companies began to court international markets for access to credit. Land prices continued to rise, attracting the attention of international finance. The flow of financial capital into farmland markets generated speculative bubbles and sharp escalations in land and food prices, with the burdens shifted mostly to rural communities.

Before 2008, the possibility of a growing global demand for ethanol was used to justify the territorial expansion and monocropping of the sugar-energy industry—sugarcane increasingly replaced local food crops as large corporations took over smaller farms. The global financial crisis, however, led forecasts to change. Ethanol’s economic viability on a large scale depends on market conditions of two major international commodities—sugar and oil—making ethanol function not as a “leading” but a “supporting” commodity in this context.11 But given the instability of financial and commodity markets, ethanol was no longer projected to provide energy security in Brazil nor internationally. 

Despite these consequential market shifts, agribusiness corporations still present themselves as engines of economic development in a commodity-oriented economy. In return, they demand state subsidies for expanding monocropping plantations. The large corporations of the industry commonly measure their contribution to national development by estimating the role of industrial agriculture in Brazilian GDP; they usually place that number between 30 and 40 percent. But this percentage is inflated by the inclusion of “productive chains,” which encompass agrochemical, industrial, commercialization and retail activities, outside of agricultural production itself. The GDP contributions do not consider the various forms of public subsidies, unpaid debt, and other economic, social, and environmental impacts. 

Over several decades, the agribusiness lobby has continued to receive large amounts of state-subsidized credit12 to expand plantations in areas with access to infrastructure, vast hydrographic basins, and biodiversity. Even though small farmers produce 70 percent of food for local markets, large agribusiness corporations received the vast majority of approximately US$46 billion in subsidized credit available for farmers in 2021. 

Even with receiving a steady flow of subsidized credit, the industry has historically generated public debt. Back in 1980, the Brazilian government forgave a US$13 billion debt to agriculture corporations, representing twice the amount of the trade balance for agriculture at that time. Though indebtedness has persisted, access to various types of subsidies and tax incentives has endured. In 1999, the Brazilian government forgave a US$18 billion debt, a year when the announced trade surplus for the agribusiness sector was US$10 billion. Sixteen years later in 2015, while the country was in the midst of an economic crisis, subsidized credit provided by the state program Plano Safra increased by 20 percent compared to the previous year, reaching R$180 billion reais.13 Data from the Ministry of Agriculture show that this amount was equivalent to the trade balance of agribusiness in 2014—US$80 billion dollars at an average exchange rate of 2.5— excluding agribusiness debts. In the 2014-2015 harvest period, the debt of sugar and ethanol corporations alone exceeded R$50 billion, which represented a 12 percent increase compared to the previous year.14

The role of TIAA

A key case for understanding this trend in farmland speculation—and its transformation following the global financial crisis—is Radar Agricultural Properties. The rural real estate company was founded in 2008 as a joint venture between the largest sugarcane corporation in Brazil, Cosan (with 18.9 percent of shares), and a financial company, Mansilla, which was the main shareholder at that time.15 Data from 2012 indicates that Radar controlled 151,468 hectares of farmland in Brazil, estimated at R$2.35 billion in Brazilian currency or $1 billion in US dollars.16

Radar has a surprising source of capital: TIAA, a pension fund manager for employees in academic, government, non-profit, and research fields in the United States. Assets under TIAA’s management are valued at approximately US$1 trillion. For its speculation in global farmland, TIAA collects capital from other sources in the United States, Europe, and Canada, such as funds AP2 in Sweden, Caisse de Dépôts et Placement du Québec, British Columbia Investment Management Corporation (bcIMC), Stichting Pensionenfonds AEP in the Netherlands, Ärzteversorung WestfalenLippe in Germany, Cummins UK Pension Plan Trustee Ltd., Environment Agency Pension Fund and Greater Manchester Pension Fund in England, and New Mexico State Investment Council in the United States.

To operate in Brazil, TIAA uses Brazilian subsidiaries Mansilla, Tellus and Nova Gaia Brasil Participações to comply with a Brazilian law that limits foreign ownership of land. In 2020, the National Land Institute, INCRA, investigated TIAA’s acquisitions of farmland and argued that TIAA violated Brazilian ownership laws, because TIAA and its Brazilian subsidies are part of the same economic group. INCRA recommended that all of the lands purchased via TIAA’s subsidiaries since 2010, covering more than 150,000 hectares, be annulled and void.17

Through TIAA’s investments of their pension funds, staff and faculty at US institutions are tied to environmental destruction in Brazil. The role of US higher education in the country broadens when considering the activities of university endowments. Harvard University, for example, acquired agriculture land by using subsidiaries including Terracal, Caracol Agropecuária and Insolo Agroindustrial to operate in the Brazil’s rural real estate markets. By 2016, the university had acquired more than 405,000 hectares—twice the size of Massachusetts’ total farmland area. In October 2020, the State Court of Bahia issued a sentence blocking the registration of lands for one of Harvard’s largest farmland acquisitions in Brazil, a 107,000 hectare agglomeration of lands known as Gleba Campo Largo. To avoid legal consequences, Harvard transferred its farmland division to a private equity corporation called Solum Partners, a partner of AIG insurance group. It’s likely that INCRA’s criticism applies to Harvard: the university’s new subsidiaries may not actually comply with Brazilian law.

Through this mechanism, international corporations can “outsource” their land deals, forming several companies with the same administrators and making it appear that they pertain to different owners. The “outsourcing” mechanism has other implications for transparency: with several interrelated subsidiaries, companies obscure the locations of the farms they control, as well as their social and environmental impacts. 

The pure scale of foreign investment carries major consequences for the price of rural real estate. By creating specific funds to invest in farmland markets, a large pension fund like TIAA can inflate land prices so that they no longer reflect commodity prices. In 2012, land prices rose by an average of 56 percent,18 and Radar’s portfolio increased by 93 percent compared to 2011. With TIAA’s backing, Radar currently owns 555 properties in Brazil, with approximately 270,000 hectares of land at a declared value of R$5.2 billion.19

The price of land

The entrance of pension funds and endowments as financial backers has revealed a stark disconnect between land and commodities. Commodities such as sugarcane, soybean, corn, cotton, and eucalyptus continue to rationalize land prices, but in fact it is Brazil’s massive land area—the fifth largest in the world—which has become the main financial asset. This is indicated through the trajectory and production of the sugarcane industry. Though sugarcane plantations saw a decline in productivity after 2010, their territorial expansion, and the concentration of that expansion among few landowners, persisted. In 2011-2012, the industry acquired even more territory while sugar production stayed the same.20

The commodities production that justifies the land acquisitions has upended life for many rural workers. The industrialization of the sugarcane sector has increased unemployment, and for those who remain employed, it has lowered wages. In the state of São Paolo, for instance, the rural worker population declined from 440,000 in 1986 to 94,000 in 2014.21 In the early 2000s, sugarcane cutters saw both their pay per ton and daily wage slashed as a result of mechanization. The “ethanol boom” of this period was accompanied by an alarming increase in the deaths of sugar workers, mostly attributed to poor labor conditions.

In areas where monocropping has been introduced, frequent assassinations target Indigenous residents, particularly those seeking to protect public lands from encroachment. Rural activists, who for generations have struggled to secure collective land rights,22 are now organizing with greater urgency against constant threats of violence. The very presence of these communities has become an obstacle for the financialization, and thus the devastation, of land.

  1. G1, “Índios em reservas são como animais em zoológicos, diz Bolsonaro.” G1 Brasília, November 30, 2018.

  2. UNCTAD, Wake Up Before It is Too Late: Make Agriculture Truly Sustainable Now For Food Security in a Changing Climate, 2013, p. 4.

  3. Thais Borges and Sue Branford, “Rapid deforestation of Brazilian Amazon could bring next pandemic: Experts,”Mongabay, April 15, 2020.

  4. Carlos Vinicius Xavier, Fábio T. Pitta and Maria Luisa Mendonça, A monopoly in Ethanol Production in Brazil: The Cosan-Shell merger, Rede Social de Justiça e Direitos Humanos, 2011.

  5. The aquifers contribute to the Amazon (4 percent), Araguaia-Tocantins (71 percent), Western Atlantic and Northeastern Atlantic (11 percent), São Francisco (94 percent), East Atlantic (7 percent), and Paraná and Paraguay (71 percent).

  6. Land grabbing or “grilagem” in Portuguese consists of fencing off public land and falsifying land titles. The term comes from the practice of storing counterfeit documents in boxes with crickets (“grilos”). The insects make the falsified documents look old so that they appear to be legitimate. Normally, this strategy involves local rural oligarchies and notary offices.

  7. Fábio T. Pitta, Gerardo Cerdas, and Maria Luisa Mendonça, Transnational corporations and land speculation in Brazil, Rede Social de Justiça e Direitos Humanos, 2018.

  8. Interviews with community members affected by land speculation in the states of Piauí and Bahia were conducted by researchers from Rede Social de Justiça e Direitos Humanos (Network for Social Justice and Human Rights, For the safety of those interviewed, their names are not disclosed.

  9. Maria Luisa Mendonça, Economia Política do Agronegócio (Sāo Paulo: Annablume, 2018).

  10. Maria Luisa Mendonça, Fábio T. Pitta, and Carlos Vinicius Xavier, The Sugarcane Industry and the Global Economic Crisis, Rede Social de Justiça e Direitos Humanos, 2012.

  11. Ethanol production is only commercially viable if the price of sugar is at a lower rate (since most companies can choose to produce larger amounts of sugar instead of ethanol), and the price of oil is at a higher rate on the market. It is presumed that consumers will not buy ethanol if its cost is more than 70 percent of gasoline’ prices because of the difference in productivity between both fuels. Therefore, ethanol’s commercial viability depends on these two main commodities, sugar and oil.

  12. For the harvest period of 2021/2022, the Brazilian government announced its subsidized credit plan, Plano Safra 2021/2021, in which $39.34 billion reais (equivalent to about US$8 billion) are allocated to small farmers from a total of $251.22 billion reais, while the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística – IBGE) estimates that small farmers produce approximately 70 percent of food for local markets in the country.

  13. According to the Ministry of Agriculture, the amount of governmental loans at subsidized interest rates available for agribusiness for the 2014-2015 harvest period was R$156.1 billion reais. For the same period, the amount available for small farmers who produce the majority of food for local markets was R$24.1 billion reais.

  14. Maria Luisa Mendonça, Economia Política do Agronegócio (Sāo Paulo: Annablume, 2018).

  15. Ministério da Fazenda, Radar Contrato de capital, August 27, 2008:

  16. IG Notícias, “Negócio de terras ‘inventado’ pela Cosan já vale R$ 2,3 bi e pode ajudar ações: a Radar, uma imobiliária high-tech de fazendas, que segundo analistas possui valores ‘escondidos’, passará a fazer parte do balanço da empresa,” São Paulo, November 28, 2012.

  17. Associação de Advogados de Trabalhadores Rurais, GRAIN, and Rede Social de Justiça e Direitos Humanos, TIAA and Harvard’s Brazilian farm deals judged illegal as fires rage on their properties in the biodiverse Cerrado, December 2020.

  18. Lourenço Moreira, A corporação Cosan e a conquista de um território em torno de sua usina de etanol em Jataí, Goiás (2007-2012), Instituto de Geociências, UFRJ, 2013, p.58-59.

  19. Rede Social de Justiça e Direitos Humanos, GRAIN, Inter Pares, and Solidarity Sweden – Latin America, Foreign Pension Funds and Land Grabbing in Brazil, November 2015.

  20. Maria Luisa Mendonça and Fábio Teixeira Pitta. “International Financial Capital and the Brazilian Land Market.” Latin American Perspectives 45, no. 5 (September 2018): 88–101.

  21. Ibid.

  22. Rede Social de Justiça e Direitos Humanos, Ribeirinha Community Conquers Collective Right to Land.

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