In Argentina, approximately 100 million hectares of farmable land—of the country’s total land area of 270 million hectares—have been affected by water and wind erosion, amounting to economic losses of approximately $700 million USD annually. The estimated rate of increase of land erosion is approximately 2 million hectares per year. This erosion crisis is a direct result of the country’s land-leasing policies, which have led to an over-reliance on short-term farm leases, encouraging cycles of land neglect and abuse by farmers.
Agriculture is one of Argentina’s largest industries, accounting for over 15 per cent of its GDP. Over 39 million hectares are actively cultivated for ranching and farming, with the industry’s size projected to continue growing in the coming decades. The industry’s main exports include soybeans, maize, wheat, beef, and wine. However, with decreases in regulation and a rise in short-term tenants, agricultural output has shifted to just two main monocultures, soy and maize, posing tremendous risks to the land’s long-term health and the sustainability of these agricultural practices.
To reap high yields, farmers on short-term leases re-farm the same crops and use harsh chemicals, resulting in soil degradation over time. In the case of Argentina, while natural erosion plays a role in land degradation, 61 per cent of erosion is directly caused by human land use, with 31 per cent attributed to agricultural land use. Nutrient depletion, wind- and water-induced erosion, and the breakdown of soil structure reduce the land’s long-term productivity. Moreover, soil degradation reduces carbon capture, increasing atmospheric greenhouse gases, and therefore linking this issue to the broader global problem of climate change.
This habit of environmental negligence traces back to land tenure legislation from 1948, which permitted short, two-year leases with minimal environmental protections. The law encouraged farmers to farm in a manner that maximized profit, thereby inflicting damage on the land. Moreover, this practice has enabled more farmers outside Argentina to rent land, deepening the disconnect between a farm’s tenants and the long-term health of the land. While the 1948 legislation has led to more land being converted for agricultural purposes, it has come at the cost of longevity and sustainability.
Despite the devastating environmental impacts of this farming method, laws governing land tenure have only become more lenient. Decree 70/2023, a legal framework adopted by the World Bank, supported the mass deregulation of the Argentine economy, thereby reducing state intervention. The decree also repealed laws restricting foreign investment, such as the 2011 Rural Land Law. The Rural Land Law had limited foreign land ownership to 15 per cent of the nation, and, of that 15 per cent, only 30 per cent could be of the same nationality. The law also limited the regions in which foreign tenants could own. However, through the repeal of this law in 2023, Argentina experienced a sudden increase in foreign ownership, leading to the financialization of agricultural land. Such changes only gave the individuals controlling it less incentive to practice environmental stewardship.
The rise in short-term land leases is not merely a product of poor government foresight; restructuring land leases into shorter cycles is a purposive, strategic choice. Firstly, short-term land leases are beneficial for the government. A large share of farm revenue goes to the government through taxes, with the agriculture industry accounting for 10.6 per cent of tax revenues in 2021. By creating laws that empower farmers to spend more on capital, yield more agricultural output, and specialize in the most economically efficient crops, the government ensures it will receive higher returns. The legality of short-term land leases also encourages the conversion of more land to agricultural use, further increasing the tax revenue Argentina’s government can extract from this industry.
Yet, even beyond tax revenue, an economically efficient industry like agriculture also brings in earnings by virtue of its position in international markets. In 2016, 64 per cent of Argentina’s exports were agro-foods, making farming crucial in bringing in foreign currency, attracting foreign direct investments, increasing GDP, and improving trade deficits. Although it must be considered that the tradeoff for this economic gain is the environment.
Short-term land leases also benefit landlords. In Argentina, land ownership is concentrated among large-scale landholders and agribusiness elites. A staggering one per cent of companies (2,500) control 40 per cent of the country’s productive land. Short-term land leases offer a mechanism through which major companies can maintain control of the land while maximizing profits by leasing to small-holder farms. Because land leases are short, landlords can negotiate terms, rental pricing, and change tenants regularly without legal consequences. As a result, many small-scale farms are pushed off their land leases. Many family farms lose their original farms, with the land being turned over to large-scale landlords who are neglectful of long-term environmental protection.
By allowing for more foreign ownership of land and authorizing landlords to lease to foreign tenants, these laws open Argentina to an influx of foreign currency. This is useful because other currencies, such as the US dollar, are more stable than the Argentinian peso. So, for large landholders, the flexibility to lease to foreign tenants functions as not only a source of income but a hedge against Argentine economic instability.
Short-term land leases also make agricultural land plots more accessible to farmers; they are cheaper to engage in, freeing up money to spend on capital and other production factors. This land ownership structure also encourages farmers to produce more of the same financially lucrative crops. Since they only hold the land for a short period of time, farmers bear less of the concern as to the future environmental costs of degradation from these improper farming practices.
Short-term tenants can re-farm the same economically efficient crops, generating significant profits without giving the soil a rest, as a long-term landowner typically would. The end result of this dynamic is two competing incentives: economic development from short-term profits and long-term environmental costs. Yet the individuals and corporations weighing the benefits and drawbacks of short-term leases are only exposed to the short-term positives of this system—the environmental harm caused by their farming tactics is externalized onto future farmers and the many generations to come that will suffer from accelerated global climate change.
More regulation around land laws and a bigger push for sustainable farming practices in the region are necessary. Unless Argentina reforms its current land tenure laws, economic growth will continue to come at the cost of environmental sustainability.
Edited by Adele Torrington
Featured image caption: “Strawberry fields in Argentina” by World Bank Photo Collection is licensed under CC BY-NC-ND 2.0.
