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Growing Pains

May 1, 2012

Agribusiness is pushing farmland prices higher and scaring politicians in its search for returns. Some operators are broadening their geographies.

Farmland in Latin America has become a hot investment in recent years, pushing land prices in Brazil and Argentina to unforeseen heights. Agribusiness companies in the region are now facing the daunting obstacle of increased state regulation over the ownership of prized farmland. Argentina's President Cristina Kirchner last year issued new regulations that limit the amount of farmland foreigners can control. Brazil is following suit, and this year politicians are set to determine what will happen to the market for Brazilian farmland, a decision that will directly impact publicly-traded agribusiness companies. Large farming operations such as Adecoagro, BrasilAgro, and SLC Agrícola are all relative newcomers to the capital markets, having listed their shares within the last six years. All of them have made a business out of buying large tracts of land, developing it into farmland and selling it later at much higher prices. The visible hand of politics, however,...

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