Cargill Flouts Law to Secretly Build Land Bank in Colombia
Cargill, the world's largest food company, has been secretly amassing land from small farmers in eastern Colombia, despite a law prohibiting the practice. When the two countries signed a free trade agreement last year, Cargill emerged as the owner of 52,574 hectares where it grows corn and soybeans.
The small farms in the isolated high plains of Vichada department in eastern Colombia were given to poor peasants in the 1990s under a scheme to convert "wasteland" in an area that had become a stronghold for the lucrative cocaine trade. Colombian law prohibits any one person or entity from owning more than one "agricultural family unit" of this land in an effort to diversify land ownership in a country where most land is owned by a small wealthy minority.
But between 1989 and 1999, Cargill used a variety of companies such as its hedge fund subsidiary - Black River Asset Management - to buy up adjoining parcels one by one, according to Paula Alvarez, a researcher who uncovered the scheme on assignment from Tierras y Poder (Land and Power) and Oxfam. All the farmers sold willingly, she says.
"These SAS (joint stock companies) were created in Notary number 16 in Bogota, between May 2010 and August 2012, all with the same company domicile in Bogota, all sharing the same economic activity - the cultivation of cereals (except rice), pulses and oilseeds," says Alvarez. "They all have a single board member, a single legal representative and three alternate representatives all of whom are the same."
"It was an illegal maneuver," Colombian Senator Jorge Robledo told Time magazine. "It's obvious that Cargill used these front companies to hide the fact that the properties would be combined to form (a) huge farm."
The law firm that helped them buy the land is Brigard & Urrutia, whose major shareholder is Carlos Urrutia, who subsequently became Colombia's ambassador to Washington. He is a good friend of Colombian President Juan Manuel Santos, according to Time.
Beginning in 2010, Cargill liquidated 36 companies and merged them into a single entity. They are not the only company to do this - MÃ³nica Semillas in Puerto Gaitan acquired 13,000 hectares; Carlos Aguel Kafruni Familia & CIA took 15,000 hectares in Puerto Gaitan; Sarmiento Angulo bought 13,000 hectares in Puerto Lopez and Puerto Gaitan in the state of Meta; and Riopaila acquired 42,000 hectares in La Primavera.
"The function of a firm like ours, with 80 years of tradition and recognized for its best practices, consists of developing legal solutions for our clients. We do it in strictest compliance with the law, both in letter and in spirit," Brigard & Urrutia said in a statement issued to VerdadAbierta.com "(M)ost of the most recognized law firms in the country use similar vehicles in the acquisition of lands."
The firm added: "The land debate in Vichada is more political than legal. It has to do with the kind of rural development model the country should choose: peasant agriculture or agribusiness. Both are valid, and can also coexist, as has been expressed by President Santos on multiple occasions."
Santos has been lobbying to get rid of the law banning large land holdings but has failed to convince the Colombian parliament. His government has also refused to force the companies to give up the lands.
"It would not be a good idea for the government to suddenly arrive with backhoes and start knocking everything down and giving the land back to the peasants," Francisco EstupiÃ±an, the Colombian agricultural minister told a Bogota radio station recently. "It's a very complex problem because we don't want to scare away investors."
These investors started arrived in droves when Colombia and the U.S. negotiated and signed a free trade agreement in May 2012 and they are now looking to acquire land.
At the time that the agreement was being negotiated Oxfam warned that huge numbers of small farmers in Colombia would be forced off their land when they had to compete with subsidized U.S. agribusiness products.
One year later, this fear appears to slowly be coming true - U.S. exports to Colombia are up over 13 percent and Colombian famers are having a hard time keeping pace. "(F)or the U.S., the result has been sweet indeed. We have reclaimed wheat, soybean and soybean-meal markets that could have been lost to Canada had the pact not passed," wrote Investor's Business Daily. "All the agreement has done is put cash and goods into American pockets."
- 110 Trade Justice