Brazil urged to expand land rental market but small farmers aren't convinced

RIO PRETO, Brazil (Thomson Reuters Foundation) - Brazilian farmer Ivan Engler shakes his head at the thought of renting out his land, where he grows sweet potato and passion fruit, despite overtures from a big agricultural company keen to expand its territory.

An aerial view of a tract of Amazon jungle recently cleared by loggers and farmers near the city of Novo Progresso, Brazil September 22, 2013. Picture taken September 22, 2013. REUTERS/Nacho Doce/File Photo

For years, the farmer raised his family on this 11-hectare plot of land outside Brasilia. The proceeds have fed, clothed and provided his children with an education.

“For the wellbeing of my family, I thought about renting my land,” Engler told the Thomson Reuters Foundation.

“But I don’t want to rent my land to bigger companies or big farms ... I like seeing my small farm grow.”

In many developed countries, big commercial agricultural firms often lease land from small-scale farmers to help consolidate land holdings.

Supporters of the practice say it can help improve efficiency and profitability in farm operations while safeguarding long-term land rights for farmers like Engler.

However, in Brazil, where one percent of the population owns nearly half the land and territorial conflicts are common due to a lack of property deeds, many small-scale growers are not convinced they should pursue commercial rental deals.

Their concerns could be a stumbling block to efforts to boost production in Brazil, which is already the world’s largest exporter of sugar, coffee and beef.

If Brazil’s newly-installed government is to achieve its goal of expanding the country’s vast agricultural potential, the slow rental market needs to be addressed, land experts say.

“The best way to get this (growth) would be through a rental market,” said Maximo Torero, director of markets at the Washington D.C.-based International Food Policy Research Group (IFPRI).

“The farmers are included; they still have ownership,” Torero told the Thomson Reuters Foundation.

“They get rent money and the land is used more effectively.”


Under rental agreements, small-scale landowners retain their title deeds, but larger companies with access to capital and machinery pay for the right to use the land to grow their crops.

Owners’ fears their land could be taken over in unscrupulous business dealings have contributed to a weak farmland rental market in Brazil, which has cumbersome regulations in comparison with other major economies, researchers say.

Less than four percent of Brazil’s farmland is rented under lease or sharecropping contracts compared to 33 percent in Europe or 38 percent in the United States, according to the World Census of Agriculture.

“A lot of Brazilians view land renting as exploitative,” said Lee Alston, a professor of economics at Indiana University, who studies land markets.

Frequent land conflicts in South America’s largest country and unclear property titles in rural areas have deterred owners from renting their land, Alston said.

“They fear it could be expropriated,” he told the Thomson Reuters Foundation.

The government needs to simplify rental contracts so investments are protected, he said.


The expansion of land rentals has also run into criticism for favoring the production of monoculture crops like soy or sugar by large farms, rather than more varied food for local consumption.

“Land rentals usually mean that a rich farmer will exploit the land of a poor farmer,” said Daniel Balaban, director of the United Nations Centre of Excellence Against Hunger in Brasilia.

“It’s not in the best interest of Brazilian public policies to encourage the expansion of this market,” he told the Thomson Reuters Foundation.

Seventy percent of the food consumed by Brazilians is grown by small farmers, according to U.N. data.

If they rent out their land, larger farms are more likely to grow less healthy food for export, Balaban said.

“For small farmers the land is not only their work,” Balaban said. “It’s their home.”

Back on his farm, Engler, the fruit and vegetable grower, agrees. Today, he isn’t keen on renting his land to a larger operation, but he says his views might change as he gets older.

Engler’s two daughters have moved away from the farm to take jobs in the city. They show little interest in moving back to the countryside to work on the land, he said.

“I am not sure yet what I will do in the future,” Engler said, adding that his daughters might want to rent out the land once he retires.