Was it a good-faith investment by a U.S. multinational in Colombia? Or a flagrant land grab?
That’s what Colombians are debating following revelations that the Minneapolis-based food giant Cargill Inc. acquired nearly 130,000 acres of former government land that had been donated to peasant farmers. The farmers sold out voluntarily. But the deals may have violated Colombian laws designed to preserve small holdings by limiting the number of acres of these specially designated lands that any single buyer can purchase. The deals have also raised eyebrows in a country where small farmers’ lack of access to land helped spark a guerrilla war that’s lasted for nearly a half century.
Investigations by the development organization Oxfam and by Colombian lawmakers show that Cargill’s Colombian subsidiary Black River Asset Management set up 36 shell corporations to make dozens of small land purchases that, individually, did not violate the legal limit. The end result of these transactions, according to the investigations, is that Cargill now owns 129,857 acres in eastern Vichada department where it grows corn and soybeans.
“It was an illegal maneuver,” Colombian Senator Jorge Robledo told TIME. “It’s obvious that Cargill used these front companies to hide the fact that the properties would be combined to form huge farms.”
Adding to the controversy, Cargill’s legal guidance on the deals was provided by the Bogota law firm Brigard & Urrutia, whose former main shareholder and managing partner is Carlos Urrutia, Colombia’s ambassador to Washington. Following his diplomatic appointment last year, Urrutia left the law firm and sold his shares but he was at Brigard & Urrutia when many of the Cargill purchases were arranged between 2010 and 2012. Wilson Arias, an opposition congressman who has held hearings on questionable land acquisitions, has called on Urrutia to resign.
Urrutia, who is a close friend of Colombian President Juan Manuel Santos, declined to comment. In a statement e-mailed to TIME, Cargill said that the company and its Colombian subsidiaries “conduct our business under a set of ethical principles that include obeying the law in every country in which we operate.” Cargill’s statement neither confirmed nor denied the company’s ownership of the land in question.
Cargill is one of several business goliaths, including Colombia’s largest sugar manufacturer Riopaila Castilla and the Bogota banking and construction holding company Grupo Aval, that have come under scrutiny for gaining control of huge tracts of former government lands in Meta and Vichada departments. Known as the high plains, these areas have few roads or towns and were for many years dominated by drug traffickers and Marxist guerrillas. Like the pioneers who carved out homesteads in the American West, Colombian peasants were encouraged to settle on unoccupied government lands. In many areas of Colombia, small farmers are more productive than large landholders, but on the isolated high plains the campesinos often lacked the money to improve the highly acidic soils while getting their crops to market was an arduous slog. Not surprisingly, they were eager to cash in.
“Each one of these farmers received more than 1 billion pesos,” Francisco Uribe, a lawyer for Brigard & Urrutia who helped arrange the Cargill and Riopaila Castilla purchases, told the Bogota newsweekly Semana. That’s about $525,000 — although Congressman Arias insists that many farmers received far less.
Now that a military offensive has weakened Marxist guerrillas and improved security, Colombian officials are touting the region for agribusiness. To facilitate exports under a free trade agreement with the United States, they have pledged to dredge rivers and build roads and bridges. The goal is to blanket the region with oil palm, corn, soy beans, rubber trees and other crops similar to the Brazilian cerrados, or tropical high plains that were once ignored but now serve as the country’s bread basket.
“We are going to turn the high plains into an agricultural powerhouse,” President Santos vowed in a 2011 speech.
To kick start the project, Santos tried to ease the strict rules on the sale of homestead land on the grounds that they blocked economic development. But the reform was struck down last year as unconstitutional resulting in a loss of more than $1 billion in promised agribusiness investments, according to Semana.
Santos’s enthusiasm for corporate farming has also collided with his government’s campaign to pacify the countryside and reduce inequality. Peasant demands for farmland in the 1960s helped give rise to the Colombian Revolutionary Armed Forces, the country’s largest guerrilla group known as the FARC. The fighting has forced nearly 4 million Colombians off their land and many of their properties were snapped up by speculators and drug traffickers further skewing land tenure patterns. A recent UN study indicated that just 1 percent of the population owns 52 percent of the country’s land, a factor that has helped make Colombia one of the most unequal nations on earth.
The FARC and the government are now holding peace talks in Cuba and in the event of a final accord the two sides have agreed to set up a pool for farmland. Millions of illegally held or underused acres would be placed in the pool for eventual redistribution to landless peasants and people displaced by the fighting. But given the government’s tepid response to the scandal over the land purchases by Cargill and other companies, Arias and other critics question its true commitment to land reform and helping the common man.
Although several government institutions and officials have branded the land deals as illegal they seem willing to let them stand. “It’s a very complex problem because we don’t want to scare away investors,” Agriculture Minister Francisco Estupiñan told a Bogota radio station last month. “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.”