Land Grabbing in South America: Fueling Displacement and Inequality

Mackenzie Blog Pic

Photo of a woman in rural Paraguay, as part of a series of photographs that reflect the challenges and dignity of the rural poor being displaced at the hands of an agricultural export model. By Flickr user Ministerio de Cultura de la Nación Argentina under an Attribution-ShareAlike 2.0 Generic license.

By MacKenzie Hammond

As the global population continues to rise, land and other natural resources will only grow in importance. Foreign companies have taken advantage of cheap lands and corrupt governance in Latin America, Southeast Asia, and Africa to expand their operations. Worse yet, more than 60 percent of those crops are exported, often leading to rural displacement and food insecurity in developing countries. ‘Land grabbing,’ was first defined in the Tirana Declaration in 2011 as an acquisition of land that violates human rights, dictates unfair contracts, disregards impact on social, economic, or environmental conditions and ultimately causes rural farmers to lose their way of life. Land is packaged and sold to multinational corporations which uproot families and take land away from indigenous populations and the rural inhabitants without offering alternative options for employment.

Foreign investors, such as multinational corporations, promote their commitment to add value to the national economy of countries they invest. Although selling land to foreign investors can increase agricultural exports and contribute to overall economic growth, it does not always translate into economic inclusion for local land owners. Wealth does not trickle down from multi-national corporations to benefit local impoverished populations because increased mechanization reduces labor costs and agricultural employment opportunities. Throughout history, land ownership has been a key determinant of power and wealth. Today, land ownership continues to favor wealthy stakeholders and frequently disadvantages low-income communities. This article analyzes the impact of land acquisition in rural communities of South America and, specifically, the current initiatives in place to improve the livelihoods of impacted populations in Paraguay.

El Gran Chaco is a region in South America that extends across Paraguay, Argentina, Bolivia, and Brazil. The basin has been a focus of foreign investments in the last few decades because of low land and production costs, loose environmental regulations, and high returns. Land is easily acquired in these countries by foreigner’s due to weak land governance and an unequal distribution of resources. Some unenforced policy environments have enabled opportunities for exploitation. One intention of channeling foreign direct investment (FDI) into developing countries is to promote integration into an increasingly globalized market. Developing countries should export common commodities like soybeans, palm oil, and beef to new markets. For example, soybean exports from Argentina, Brazil, and Paraguay combined in 2016 were worth $24.3 billion and accounted for nearly 47 percent of the world’s total soybean exports.

The international demand for products, such as soybeans, and the required land-intensive processes have created extensive problems for the local populations excluded from participation in the global economy. These include increased urbanization and poverty, loss of economic opportunity, and negative environmental and health impacts. Many efforts are tackling the symptoms of the problem, but more attention should address the root cause of the problem – land ownership.

In recent years, local unrest has prompted governmental action in Brazil and Argentina to limit land grabbing. Argentina enacted a land acquisition act in 2011 which limited foreign land ownership to 1,000 hectares. Additionally, Argentina and Brazil have a tax on soybean exports, which puts a burden on producers, but supports the local economy. Argentina recently increased this tax to 50 percent, which has the potential to drive out producers. Through these actions, governments are taking a stance against foreign abuse on the resources and people of these countries.

While countries such as Brazil and Argentina are taking intentional actions to alleviate the issue, others are not taking the effective steps to protect the local populations or land. Paraguay, for example, lacks thorough restrictions on foreign investments for commodities like soybeans and struggles to properly enforce current laws that protect rural populations.

Case Study: Paraguay and the Soybean Monocrop

Paraguay has one of the most unequal land distributions in the world. Nearly 80 percent of agricultural land is held by only 1.6 percent of landowners. Former President Alfredo Stroessner sold or gave away 25 percent of Paraguay’s fertile land during his 35-year dictatorship. Over the years, wealthy land owners have sold their land to large private investors. Companies like Louis Dreyfus or Monsanto are among the many investors who purchase land in Paraguay because of its low valuations, tax incentives, and comparatively good agroecological potential. Since the 1990s, most of these investments have contributed to the expansion of soybean plantations. 75 percent of all arable land in Paraguay is dedicated to soybean plantations. Of these plantations, over 96 percent of soybeans cultivated in Paraguay are exported, primarily to Russia, the European Union (EU), and Turkey, where it is then used primarily for animal feed.

The versatility of soybeans makes it an attractive crop to produce, yet sharing the benefits of this industry has remained a challenge for Paraguay. Rural inhabitants who are uprooted from their land do not benefit from soy exports because soybean plantations increasingly use mechanized processes instead of physical labor. Rural populations not only lose their land but are left without a job to support their families. The expansion of soybeans has forced nearly 9,000 Paraguayan families each year to migrate to the cities in search of work and a better livelihood.

These displaced individuals need a plan for integration into the local economy, whether they have migrated to urban settings or attempted to stay in their rural environments. For example, the World Bank developed a strategy for Paraguay that aimed to improve financial inclusion, increase access to basic services for impoverished communities, and foster market integration for smallholder farmers. The country partnership strategy will be ending in 2018, and the World Bank has not released a progress report on the impact of this strategy yet.

In addition to multilateral organizations – human rights groups, local NGOs, and campaigns are helping attract attention to this immediate concern and provoke a response from the government. Organizations such as the Global Forest Coalition and Friends of the Earth are providing land-use planning methods, legal advice and training for farmers, and human rights interventions to protect the land and freedom of rural inhabitants. Others, like the International Fund for Agricultural Development (IFAD), aim to increase rural capacity in municipalities and organizations. Local government and civil society organizations (CSOs) can strengthen and empower small farmers through facilitated dialogue between affected citizens and government, community protection programs, and cooperation agreements.

Other development organizations in Paraguay link rural farmers to markets through partnerships with the private sector. This way, smallholder farmers are reintegrated into the supply chain of agricultural exports. Despite these efforts for economic integration in Paraguay, these challenges are deeply rooted in structural and political capacity issues that will require institutional actions to improve regulatory frameworks and laws that protect land owners and help those that have already been displaced.


The land management crisis extends beyond Paraguay and El Chaco, beyond soybeans and indigenous populations; more international attention should be given to the situation in Paraguay and in countries around the world where land and wealth divide populations, cause conflict, and destroy livelihoods. Land grabbing will continue to increase urban density and stretch resources, housing, and jobs; youth populations will have higher aspirations than what those jobs can provide; food demand will increase as populations do and agricultural production will struggle to fulfill it. These consequences will intensify if the root of this problem is not addressed proactively. Preventing future land grabs will require an integrated stakeholder response to secure effective and sustainable resource distribution, environmental and human rights protections, and government accountability and transparency.

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