Argentina to seek looser foreign ownership rules for rural land

[MilHojas]

Argentina to seek looser foreign ownership rules for rural land

BUENOS AIRES, March 25 (Reuters) - Argentina's government will send a bill to Congress that seeks to change the limits on foreign ownership of rural land, Cabinet Chief Manuel Adorni said at a news

finance.yahoo.com

Argentina's government will send a bill to Congress that ‌seeks to change the limits on foreign ‌ownership of rural land, Cabinet Chief Manuel Adorni said at a news conference on Wednesday, the latest step by the Milei administration to boost foreign investment in the country.

 

[Ries]

since 80% to 90% of the arable land in Argentina is owned by under 1000 individuals or business entities, this change will do nothing for the ordinary citizen, but, like most other argentine laws, will benefit the inherited wealth of the few who are already very wealthy.
This will not result in hundreds of thousands of foreigners buying 10,000 hectaire estancias.
It will allow some rich people to get richer, and other rich people to export raw materials at low prices, and keep the money abroad.

 

[LuckyLuke]

since 80% to 90% of the arable land in Argentina is owned by under 1000 individuals or business entities, this change will do nothing for the ordinary citizen, but, like most other argentine laws, will benefit the inherited wealth of the few who are already very wealthy.
This will not result in hundreds of thousands of foreigners buying 10,000 hectaire estancias.
It will allow some rich people to get richer, and other rich people to export raw materials at low prices, and keep the money abroad.

Relax old chap, it's statistically proven that generational wealth dilutes and dissipates with time. The old rich don't stay rich forever. Then you get new rich like Bill Gates buying 275,000 acres.

In any case, I don't think farm land is all it's cracked up to be anyway. My wife's family owns 600 hectares, and it just sits there doing nothing. Land is only as valuable as someone's interest in productively working it.

 

[Ries]

Relax old chap, it's statistically proven that generational wealth dilutes and dissipates with time. The old rich don't stay rich forever. Then you get new rich like Bill Gates buying 275,000 acres.

In any case, I don't think farm land is all it's cracked up to be anyway. My wife's family owns 600 hectares, and it just sits there doing nothing. Land is only as valuable as someone's interest in productively working it.

I went to high school with Bill Gates. There was serious family money there. His mom was close friends and on a board of directors with the head of IBM, hence the ability to buy what became windows for a pittance. He had a trust fund that paid to create Microsoft.

 

[Ries]

Relax old chap, it's statistically proven that generational wealth dilutes and dissipates with time. The old rich don't stay rich forever. Then you get new rich like Bill Gates buying 275,000 acres.

In any case, I don't think farm land is all it's cracked up to be anyway. My wife's family owns 600 hectares, and it just sits there doing nothing. Land is only as valuable as someone's interest in productively working it.

you are kind of proving my point.
a family, here, can hang on to land forever.
no property taxes, no school bonds, no inheritance tax.

In the USA, I live in an agricultural area, and I own a small farm.
the average price per hectaire there, assuming it was not zoned to build homes, (which could double or triple it). is around $28,000 USD.
The yearly property tax expense there for 690 hectaires would be around $20,000 USD.
Thats what happens when you have a tax system that is NOT designed to protect inherited wealth at all costs.
NYC gets around 50% of its $120 Billion tax income from real estate taxes.
Buenos Aires gets around 1% of its tax income in ABL, which is all immediately spent on garbage collection, street cleaning, and drains.

so the idea that a family can afford to keep raw land, vacant and uncultivated, for decades, is a direct result of the taxation system, which was designed to protect oligarchs and large property owners.

 

[Ries]

Since by the governments own admission, a lot of the impetus for this change is to sell land to foreign companies who seek to extract, and export, natural resources, anyone who really cares about this subject could read this really interesting study, by an economist, about the results economically of countries that are resource rich.
It aint a pretty picture.

Economists call this phenomenon the "natural resources curse".

the common effects are not particularly good for the economies, and the range of reasons usually blamed are these 6:
1. Long-run trend of world prices for commodities.
2. Volatility in commodity prices.
3. Permanent crowding out of manufacturing, where spillover effects are thought to beconcentrated.
4. Autocratic or oligarchic institutions.
5. Anarchic institutions: unenforceable property rights, unsustainably rapid depletion, orcivil war.
6. Cyclical expansion of the non-traded sector via the Dutch Disease.

Its only 30 pages long, which obviously, is longer than a twitter post, but really not hard to read.
and again and again, we see parallels to Argentina, past and present...

https://www.hks.harvard.edu/sites/default/files/centers/cid/files/publications/faculty-working-papers/233.pdf

 

[FrankPintor]

This hasn't really gone well in Chile, where land purchases by foreigners have cut off parts of the country. Chile was lucky in at least one case, where the (now deceased) founder of The North Face was well-meaning enough to donate his land to form part of a national park. Not everyone means well:

¿Qué se sabe sobre el video viral de la tranquera colocada por una propietaria en la Ruta 12 de Chubut?

“¿Te imaginás ir manejando por una ruta nacional y que de repente te aparezca una tranquera que no te deje seguir el camino? Está pasando en la Ruta 12, entre Esquel y Gualjaina, provincia...

chequeado.com

Though the article doesn't mention it, I've read that the ultimate owners of the land in question are foreigners.

 

[Ries]

Doug Tompkins, and his widow bought, then donated between 1 and 2 milloin acres to the chilean park system ,as well as over 150,000 hectares in Corrientes in Argentina. And the Danish botanist, Troels Pedersen, donated 17,000 hectares to become Mburucuyá national park.
But neither of those donations are what this new law is about.

 

[SlowWalker]

Since by the governments own admission, a lot of the impetus for this change is to sell land to foreign companies who seek to extract, and export, natural resources, anyone who really cares about this subject could read this really interesting study, by an economist, about the results economically of countries that are resource rich.
It aint a pretty picture.

Economists call this phenomenon the "natural resources curse".

the common effects are not particularly good for the economies, and the range of reasons usually blamed are these 6:
1. Long-run trend of world prices for commodities.
2. Volatility in commodity prices.
3. Permanent crowding out of manufacturing, where spillover effects are thought to beconcentrated.
4. Autocratic or oligarchic institutions.
5. Anarchic institutions: unenforceable property rights, unsustainably rapid depletion, orcivil war.
6. Cyclical expansion of the non-traded sector via the Dutch Disease.

Its only 30 pages long, which obviously, is longer than a twitter post, but really not hard to read.
and again and again, we see parallels to Argentina, past and present...

https://www.hks.harvard.edu/sites/default/files/centers/cid/files/publications/faculty-working-papers/233.pdf

I am not sure what you are trying to get at about landowners extracting resources as if they can just take what they want from the land because it is located within the boundaries.

Typically, mineral rights do not belong to land owners. I cannot speak for certain for Argentina but in most countries you have surface use rights and that is mostly it. You do not typically own oil, or mineral rights. Most mining companies probably also don't own the land, but they get mining leases/rights for it by studying the land, finding resource and continued investment in further drilling and developing it. When applicable, mining companies will typically offer up to or over fair market value for the land to fairly compensate the existing landowner. If the landowner fights it then it can go to arbitration where the state can end up setting a lower value.

In Argentina, as far as I am aware, mineral rights are provincial jurisdiction and they can set/receive their own royalties.
Globally, are many methods of setting royalties, however, typical methods are as fixed percentages of smelter value or can be as a function of mineral/commodity/metal price. This is ultimately up to the authorities.

Can you please provide evidence where landowners just extract and export resources from the land?

I will read the paper you have linked before I comment on it.

 

[Ries]

the natural resource curse does not discriminate about who "owns" the land.
It is about national policies, and their failures.
In this case, the new Milei law is to encourage resource extraction- the foreign companies buy the rights, and sometimes the land itself, sometimes not, and then extract and export.
this happens everywhere, australia to nigeria, chile to canada.
The important thing is- who writes the laws, and who do they benefit?

The law in Argentina is that the provincia, ie. politicians, decide. And that the owner has a fixed upper limit of royalties at 3%.
So if a foreign company buys the land, they leave less money here- topping at the 3% max.
Thats what this law intends to encourage.
And provincial ability to allow, or disallow, mining and agriculture and drilling means there is more opportunity for corruption.