European Commission Consultation on Foreign Investment in Farmland closes this Friday!

The Directorate General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) is hosting a consultation as part of their initiative: Interpretative Communication on Foreign Investment in Farmland and European Union law. It aims to clarify European Commission interpretations of EU law on farmland acquisition.

Farmland investment has become a key topic for EU member states. Relevant concerns such as land concentration and land speculation have been acknowledged by the European Parliament and the European Economic and Social Committee. In April of this year, the European parliament approved an own-initiative report on ‘the state of play of farmland concentration in the EU: how to facilitate the access to land for farmers’.

However, in an attempt to address these issues, member states must remain in compliance with EU law, for example: the Treaty of the Functioning of the European Union (TFEU) or the Charter of Fundamental Rights of the EU. They must uphold, among others, the free movement of capital (Article 63 et seq. TFEU), the right of establishment (Article 49 TFEU), and the principle of non-discrimination based on nationality. However, in principle, the European Court of Justice has recognised the legitimacy of restrictive policies looking to prevent land speculation, address unequal ownership structures, sustain agricultural communities and preserve traditional forms of farming.

The nature of the agricultural sector sets it apart from others, and some of the relevant legislation can have harmful socio-economic and environmental consequences. For example, the free movement of capital favours investments in large-scale agribusiness, which threatens rural communities and the environment. Regulation of financial investments in agriculture is necessary to uphold the right to food and livelihood for farmers and rural communities, as well as the right to a preserved environment for all.

The initiative, therefore, must incorporate these issues into its conclusions.

Read the DG FISMA roadmap here.