Exclusive - Brazil could ease foreign land ownership limits by June: minister

By Stephen Eisenhammer and Anthony Boadle

BRASILIA (Reuters) - Brazil could pass a law by the end of June to lift limits on foreign purchases of agricultural land, the Agriculture Minister said in an interview, adding he supported maintaining some restrictions to ensure farms were put to productive use.

The bill, which still has to go before Congress, would end an effective ban on major foreign ownership of agricultural land imposed in 2010 under leftist former-President Luiz Inacio Lula da Silva.

The move is part of a series of measures to keep Brazil's giant agriculture sector growing, something seen as crucial to government attempts to lift Latin America's No. 1 economy out of its deepest recession on record.

"There will be changes," Blairo Maggi said in an interview in his office in Brasilia on Wednesday. Asked if the bill could pass in the first half of 2017, he said "it could."

"I'm not worried about the ownership of the land ... I'm worried about the use of the land," Maggi added.

The bill would, according to the minister, seek to avoid land speculation and large foreign investment funds buying vast swathes of territory only to leave it idle if commodity prices fell.

Instead, Maggi said reforms would look to support foreign investment in agricultural products with longer production cycles such as oranges, pulp, sugar cane and coffee.

Restrictions could apply to soy, corn and other crops which are harvested the same year as they are planted, he said.

Maggi said there was particular appetite from foreign pulp and U.S. soy producers to buy Brazilian land.

But he dismissed the idea, proposed by some in the government, that 10 percent of proceeds from any foreign land purchase go towards land reform to benefit landless farmers and peasants.

"It won't work. I'm against that. It's a penalty for the person to come here, a tax," he said.

The planned changes come as Brazil looks to open markets from airlines to oil, while much of the world appears to be turning inwards. In the United States, a rival agricultural powerhouse, President Donald Trump tore up the Trans-Pacific Partnership trade deal.

"A lot of opportunities will open up now... These changes that President Trump is proposing, and the form in which he's doing it, are disrupting many markets," Maggi said.

ENVIRONMENTAL PROTECTIONS

A former soy farmer who grew his business into the largest producer in the country before becoming governor of the agricultural state of Matto Grosso, Maggi has long riled environmentalists who accuse him of overseeing vast deforestation.

In 2005, Greenpeace awarded him their Golden Chainsaw award, "for the Brazilian person who most contributed to Amazon destruction."

Maggi dismisses such allegations, arguing that no major agricultural producer preserves as much land as Brazil, where 61 percent of the country is protected by strong environmental legislation.

Without touching this area, Maggi says he wants to increase Brazil's share by value of the global agriculture market to 10 percent in five years, from 7 percent today.

In order to do that, he has traveled extensively since taking the job in May, visiting Asia and Europe. He highlighted Vietnam and Malaysia as exciting potential growth markets.

But some of his most passionate and difficult work is, perhaps ironically for a Cabinet minister, trying to row back government interference.

"One of the things that most affects the results of producers is bureaucracy, rules passed years ago that make very little sense today and cost money to adhere to," Maggi said.

His ministry has identified about 200 rules and regulations that are judged to be antiquated or inefficient. These will be updated to try and reduce the cost to producers.

"Leave the market freer so that it can run faster!" he said.

(Reporting by Stephen Eisenhammer, Anthony Boadle and Daniel Flynn Editing by W Simon)