By Caroline Stauffer
SAO PAULO (Reuters) - Federal police ordered some 200 Terena Indians to leave a former congressman's ranch in south-central Brazil on Thursday in the latest flashpoint of a widening conflict over land ownership in South America's farm belt.
The ranch's owner, Ricardo Bacha, skipped a meeting in Brasilia with the country's vice president over the land conflicts to return to the disputed area, claiming his wife and son were being held hostage by the Indians.
Brazil's indigenous policy, which includes returning land to natives based on anthropological studies, is considered one of the world's most progressive. But it has sparked violence since the country became an agricultural superpower and Indian policy clashed with farming interests.
Federal police planned to give the Terena Indians a day to respond to the evacuation order, said Francisco das Chagas, a police spokesman in Campo Grande, Mato Grosso do Sul, 70 kilometers (43 miles) from the ranch.
"The Indians may or may not leave; if they don't obey, the police will draw up a plan for their removal," he told Reuters.
Funai, the federal government's Indian affairs agency in Brasilia, said in a written statement that the Terena had not taken anyone hostage and had not used violence, although they had ignited fireworks outside the ranch.
Reuters reported on Tuesday that President Dilma Rousseff has ordered her government to stop turning over farmland to Indians in what the powerful farm lobby says is a hugely misguided effort to right historical injustices.
But conflicts, like the one in the Buriti cattle ranch near Brazil's border with Paraguay, are still common and are growing increasingly tense. Thirteen percent of Brazil's territory has been set aside for Indians and more is under study.
"The agricultural community's tolerance for these kinds of invasions has reached its limit," said Rosane Amadori, of local farm lobby Famasul in Campo Grande. Bacha, the ranch owner, was not answering phone calls.
The group says various Indian groups have occupied 56 farms and ranches in Mato Grosso do Sul, which produces export crops like soybeans and corn. It said 80 Indians occupied the Cambará ranch next to Buriti on Thursday.
The Buriti ranch is inside a 17.2-hectare area Funai says the federal justice ministry approved as a reserve for the Terena in 2010. Ranchers say they have lived there for decades.
A similar dispute, Marãiwatsédé in nearby Mato Grosso state, went all the way to Brazil's Supreme Court. In October, the court ruled the land had been set aside for Xavante Indians and 7,000 farmers were evicted and a town was bulldozed as a result.
Farmers praised a government announcement last week that other federal agencies will be involved in land decisions, effectively reducing the jurisdiction of Indian affairs office Funai. The farm lobby ultimately wants politicians in Congress to have the last word.
"This will just fuel more conflicts," said Funai director of Indian land protection, Aluísio Azanha. "Instead of gutting Funai, the government should strengthen its role as mediator."
(Additional reporting by Anthony Boadle in Brasilia; Editing by Cynthia Osterman)