Land Market and Land Grabbing in Brazil during the Commodity Boom of the 2000s

Abstract

This article analyses the determining factors affecting the land market in Brazil in an international context where the availability of natural resources, essential to satisfy the population worldwide, is again heading the agenda. This scenario provoked a rapid expansion of agribusiness and enhanced international participation based on the relative abundance of natural resources. The first part of this article presents the spatial dynamics surrounding the production of commodities and gives evidence of the sharp increase in land price in Brazil. The second part attempts to understand the factors that affect price dynamics and subsequent effects over capital allocation in the sector, addressing the impact of the recent boom of commodities and rising interest by foreign actors in Brazilian land. The conclusion elaborates on the possible land pricing developments and political unfolding.Keywords: Natural Resources; Land; Land Grabbing; Commodities; Agribusiness.Due to the sharp increase in the price of agricultural commodities since 2005, the issue surrounding the availability of natural resources essential to satisfy the needs of the population worldwide, such as land and water, is back on the international agenda. Thus, countries where such resources are more abundant, as is the case for Brazil, have gained a strategic position given their capacity for providing food to meet the growing demand worldwide. This article investigates how the increase in the price of food commodities has impacted land market dynamics in Brazil. 1One of the central hypotheses is that the food price rise brings about an increase in demand for land in countries that export such goods, as with Brazil, inducing an increase in price of land-related assets in these countries (in the short term). Moreover, following the economic theory of international trade, an increase in the relative price has significant allocative and distributive effects (Feenstra 2015): more resources will be used for export food, and the owner of these resources will benefit from the increase in export. A study by the World Bank, for example, has concluded that the increase in agricultural production

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