Brasilagro Companhia Brasileira de Propriedades Agricolas
BOVESPA:AGRO3
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Brasilagro Companhia Brasileira de Propriedades Agricolas
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Good afternoon. Welcome, everyone, to BrasilAgro's Q1 2022 Results Conference Call. Today, I'm here with Mr. André Guillaumon, CEO; and Mr. Gustavo Lopez, Administrative Officer and Investor Relations Officer. The company's year begins on July 1, so that is why we are reporting Q1, the 3 months that ended on September 30, 2021.
Well, this transmission is being recorded. It is transmitting at our website and also on YouTube. And here, we're talking about estimates and declarations concerning the business perspectives of the company's projections, operational goals based on our...
Now I would like to pass the floor to Mr. André to begin our presentation.
Ana, thank you. Thank you, Gustavo, to all of you who are here in our conference calls. It's a great pleasure to be sharing with you good news. Even before I arrived, I asked the team, "Gee, where are we going to have our bar? We're raising the bar. The results during this quarter would -- are the same as the ones that we would celebrate as the year's results." So the company is on a new level.
We have a better prepared company in terms of real estate and operations. It is a company that is totally different today. So we will begin with the highlights of our quarter. And then, as usual, we will be open to have our Q&A. Well, those who are sharing, let's begin with the first slide.
Okay. The highlights that we bring here for Q1, as Ana reminded us very well, this is Q1, which began on July 1. We had a net revenue of BRL 378 million in this period. We had a net profit of BRL 107.9 million and an adjusted EBITDA of EUR 190.6 million. The estimate for the harvest that we are ending; the numbers, 2.6 million tons of grains, cotton and sugarcane; 168,000 hectares in production.
And now we have the excellent news that we gave in the last meetings of the company concerning the General Assembly on October 27, the approval for a record dividend payment, BRL 260 million in dividends for the previous year, BRL 2.62 per share. So always bringing to the investor.
Last year, was a great investment if we consider the appraisal of our shares and also the size of the dividend that we are paying that will represent approximately 9% this year, 9%.
Next slide. Well, in the highlights in the last call or the call before last, we said we are sellers. We are working on purchases, too. In the last call, we already had these 2 transactions in progress, the negotiations in progress. And during Q1, we finalized the sale of these 2 farms. I'd like to remind you, last year, when we talk about BRL 260 million in dividends, they are linked to an excellent operational results last year, and a small part of this came from the sale of farms, real estate.
Here, we already have relevant results from the sale of real estate. The first sale is Rio do Meio. Those who have been with us for a short time, this came from the acquisition that we made from Agrifirma. We acquired 2 farms, Rio do Meio and Arrojadinho, and we're selling a third. This farm has approximately 8,000 hectares, and we're selling 2,800. We acquired this recently, January 2020. The value of the transaction, the NAV, this 1/3 of the farm represents the value of the whole acquisition of the farm. So this shows the potential and -- of value generation that the company has in terms of real estate results.
The second sale, the most important sale of the company, higher volume, BRL 589 million. And also, we told the market about a farm that we acquired in the past in 2006, worth BRL 10,000 per hectare, and now we're selling at BRL 150,000, BRL 160,000 per hectare.
And I would like to mention 2 fundamental points for you. The sale will be recorded, both the first sale, Rio do Meio, and the second will be recorded in our accounting during the new -- the next quarter, and the sale of Alto Taquari has a different recording, different posting. We sold 2,700 hectares, and this sale of 2,700 hectares, we will record in 2 moments. When we deliver, we will deliver 1,500 hectares initially, and we will record this part, this result on the 1,500 hectares.
What will we do with the other 1,200 hectares? We will continue exploring. It has sugarcane. We will continue until the harvest of 2023, and then we will deliver the second part. And then we will record the sale. So this is how we do our accounting.
Next slide, please. Well, what I'd like to say here, 2 points. First, the company's capacity to increase its operational area, even being a very efficient company in terms of the sale of real estate. So if we look year after year, we have a growth of 10% of the cultivated area, planted area. And this comes from our owned land, leased land, development of land that shows to you, investors, those who follow us, the capacity to increase more and more operational results in an efficient way and in a safe way.
The graph also, beside you, shows the breakdown of the types of crops. I'd like to call your attention, basically in the harvest '21, '22, we are increasing the cultivated area of winter crop for corn, corn winter crop. Later on, we will talk about prices. So we see an optimistic scenario for winter corn, and also more and more, maintaining products that have more added value, maintaining the areas with beans.
Well, here, we have a summary, we will grow in production. Here, we see 2021 and what we're estimating for 2022 harvest. Soybean, an important increase from 173,000 tons to 196,000 tons; winter corn, the most important leap, some areas we're intensifying the planting of corn because of the prices that you are following. So corn, winter crop.
Here, we see also in other areas in Bahia, for example, and here, we see an overlap of winter corn and corn. And here, we can continue seeing the numbers. We have the crop, we had some drought in Mato Grosso and in the Northeast. So the winter crop has an increase, but it does not refer to the area. It refers to a recovery or maintenance of our normal results.
When we look year after year, when we look at total growth in production, we went from 287,000 to 398,000 tons.
Last column. Well, this is a thermometer. This is a new slide, Ana Paula prepared this. It's very good to show. First, on the graph below, here the graph below represents the ideal window for planting. This is a picture of the company. We'd like to remind you that these numbers are from Friday. So we can see here the amount planted.
Also another point, we have operations in Mato Grosso, part of the plant with soybean is in the Northeast. It is a window that is different from Mato Grosso. And there, we are also seeing the results from Xingu. So we will continue. And we can see here the results: soybean, corn, cotton and beans in the harvest 2021, 2022.
We can also see here 2021 and '22 harvest year in cattle raising. We can see here cattle heads, pasture and ADG. So beans, we have some of the results are already in.
Next, please. Well, here, sugarcane. I would like to say that we have -- we see a great evolution in the number. You can see here the production in thousands of tons and the number of hectares for sugarcane, then the harvest area and the number of tons. Here, we see the difference between the estimates and the actual numbers for sugarcane.
Sugarcane was not affected by the drought, we have irrigation through our agreement with Agroceres. And in the case of the Midwest, it is not irrigated, but the risk is much smaller. So when we look at BrasilAgro and Brazil in sugarcane, we have almost 580,000, 590,000 which is -- and we see the harvest at the end of -- now with 520,000 tons. The company had a drop.
Here, we see the generation of results, bringing a lot of results from real estate sales. So what did we do here? So during a time of spectacular prices, we have to maximize our inventory. We had an inventory of cattle at a low price. Last year, we had a good strategy to decrease the volume, to be more aggressive in sales, generating results. And apart from all of this, we generated spectacular results in the business units when we closed on June 30. And this is the picture now.
The 2020, the -- we had a GMD, the highest in history. Maybe part of this comes from a lower load when you -- so with less pressure in the pasture land, and GMD had a gain, we gained 500 million grams of GMD, very similar to the market. We're estimating now closing with 0.70. This is what places the company as an excellent producer of sugarcane, excellent producer of beef and other -- also other crops.
Here, what I'd like to stress is the company's capacity, resilience of the company to move this to inventory, capture the good prices and the last bubble, the last slide shows that cattle raising in the company is being done with a lot of operational results and good techniques.
Next slide, please. Well, here, we're talking about the current harvest. And here, I'd like to repeat this, we're always with a good contribution margin, what we expect per hectare. So we have a moral obligation to make progress every time we have a good contribution margin. And depending on the price of sale, we're always looking at contribution margin, the difference of -- between sales and costs on this date.
We can see the amount of corn sold at a price of BRL 66.96. Most of the corn production is winter crop. So here, we have a mix of prices between corn in the Northeast, then in the Midwest. So, we have 50% of the next harvest. When we look at this in comparison with last year, with the same mix, BRL 50 and now BRL 67.
At the bottom, we see soybean. We're also making progress in soybeans, Here, we can see the main figures, revenues from operations. When we look at the future and the exchange rate closing at BRL 5.57 per dollar, a little higher than the previous harvest when we had BRL 5.51 per dollar. This will help us with an even more robust result this year because we have prices that are higher than last year for the grains.
The last line is cotton, where we have progress, an important progress, 68% in sales in relation to the previous harvest -- actually in relation to this harvest with a price of BRL 163. When we look at the price of the previous, it was at BRL 108. And you will see, we also intensified the area with cotton this year. We had an important increase due to what we can see in terms of margin for cotton.
Next slide. Well, here, I'd like to pass the floor to Gustavo to talk about the numbers, and then we will be back.
Thank you, André. Good afternoon. Well, here we're showing the main numbers of the quarter, as Ana mentioned. And our -- this is the year until June 30 next year. And here, what we can see, an increase of 83% in net revenue of the company. We see a net profit, BRL 107 million, 43% above last year. And it's important to stress, and the increase in price for corn, soybean and especially in sugarcane is what leveraged all these results.
It's important to mention that during this quarter, we harvested almost 1 million tons of sugarcane, and we should expect results that will continue to come in from sugarcane. And our expectation is that the price increases will continue leveraging or improving the operational results.
When we look at adjusted EBITDA, and this shows the performance. And here, we include derivatives, as André mentioned, in the previous page. So we see BRL 190 million. Last year, we had a sale. And this year, we're expecting for next quarter to record the sale of Rio do Meio farm and part of the second farm, as André mentioned.
On the next page, here the highlight is the BRL 190 million. We see adjusted EBITDA here last year. Here, we see the price of sugarcane, which almost doubled. Last year, we had BRL 68 per kilogram. Now it's BRL 130, BRL 135. Reminding you that there is an expectation in the market to close at BRL 196, BRL 195 million, and we have a premium of 20% in the contract with San Jose.
The weight of sugarcane this year from sugarcane will be much higher than before. Reminding here in the case of soybean and cotton, we're selling the inventory of the harvest that we collected recently. And with prices in soybean 45% higher; and in the case of corn, 32%. So we reinforce, we're expecting an EBITDA that will be very similar to that of June 30 last year, but the impact in the price of sugarcane will provoke a significant increase.
On the next page, we can see here the company's numbers. We continue with a year-end report that is stable, strong. We see here assets, 4.1%. And also in the company's cash, on September 30, it had an increase in relation to June 30 because we're selling the inventory of soybean and corn. It's important to say that accounts receivable, short term, long term, BRL 400 million due to the sale of farms. Here, we're including receivables of the new farms that we sold, and we will record in the next quarter.
We see also property for investment, the company's farms, BRL 1 billion. And we see cash, total indebtedness, and we will see more details on the next page.
Well, here, we see in terms of short term, BRL 325 million short-term debt; long term, BRL 300 million; total, BRL 626 million, 5% lower than on June 30. Here, one objective we had in the past that we mentioned to you to have a longer debt, BRL 240 million, we have for 5 years and BRL 300 million, which is what we need to plant and the company's operation. So this, we are working to renew these debts.
When we consider the gross debt, adjusted gross debt or net gross debt, in net gross debt we see it's negative. But we expect to make some investments, especially in purchasing farms, transformation of areas that we have in the land bank, and we will be very careful with the company's cash. But during these times of volatility, we know, but we're trying instruments to maintain the company's numbers, the company's debt at reasonable levels. Here, we have the cost, 8.5%, if we consider the future curves and interest rates.
On the next page, here, this is -- we'd like to say that the General Assembly approved the payment of BRL 260 million in dividends. We will pay on the 10th after tomorrow, November 10, after tomorrow. And here, I'd like to stress that although we don't have a clear dividend policy, the objective of the company is to have a dividend yield of 5%, 5.3%. So this is what we will have as a goal.
On the next page, we will see net asset value, BRL 3.2 million (sic) [ BRL 3.2 billion ]. Here, this is the cost. These are the numbers. These numbers reflect the cost, the value of the property of the company with an internal valuation lower than that of Deloitte's evaluation. Deloitte had said BRL 3.4 billion. We always consider our evaluation. We see that the net value of the company, BRL 4.3 billion, BRL 4.4 billion, and with the number of shares, BRL 42.75 per share.
So once again, we like to talk about the great potential for upside, and we invite you to continue to invest in our company.
On the next page, the last slide, we see an evolution of the stock market, and our share, AGRO3, on November 4. Here, we show the performance of the company. So this is -- the market is booming for agro business and the company, too, with positive results. So we believe that our company is excellent opportunity for investments.
We thank you for participating, and now we will go on to the Q&A session.
[Operator Instructions] We're receiving the questions here, and I will read them. The first question, Carlos [Herrera]. What is the difference between NAV and price of shares?
68%.
Do you see opportunities to buy back shares?
Carlos, looking -- of course, we have an important gap, but we have worked to increase the shareholder, base to increase the free float of the company. I'd like to remind you before the pre follow-on, we traded 1 million to 2 million. And since the follow-on, 25 million to 30 million are being traded every day. We monitor this. And when we believe this will make sense, yes, we will approve that through the council of the company. The company's council. Today, we consider our -- the valuation of the properties, it's as if it were worth BRL 1.5 billion. And we know we have a portfolio of BRL 3.4 billion. So we are now having the farms that are the cheapest in the Brazilian market. And we're looking to see if there are opportunities to launch a new program, maybe not with such high volumes, but we might buy back shares to show to the market the value of the shares.
Also Carlos -- the resources that we're raising with the sale of farms, how will we use these resources? Will it be used to pay dividends, the sale of farms?
Carlos, a good question. It's important to stress, the, company in the sale of farms we have a lower cost of capital than the producer. So we can finance the transaction. So in purchases, we're more aggressive with cash purchases because we have a cost of capital that makes sense.
So I would say to you that, first, it's important to stress, these sales were made with a duration of 2.5 in 1 transaction, 2.9 in the other, approximately 2.5, 2.6, so the revenue from these transactions, I'd like to stress the sale of Taquari was made in 2x. It will be recorded in 2 instances. We should record BRL 330 million in -- during this year and the remainder, the BRL 590 million, only in 2024. And the sale of Rio do Meio should also be recorded during this year, but it is also sold in installments.
So I joke, we buy with down payments, cash, and we sell in installments. This will give us a result. Gustavo showed us how we're showing the results of Q1 with higher prices, better results and different from last year, right, Carlos? Last year, we had very few sales of real estate in the company's results. So the company will be aggressive once again due to the results we will have.
And I always say, with good opportunities, we will buy farms, without good opportunities or limited opportunities we will be aggressive in distributing -- so dividends to our shareholders, but we should have an even more robust result than last year.
We also had a question from Damian in line with the previous question concerning the buyback of shares. So I believe we have already answered.
Now Victor Saragiotto, Credit Suisse. He says congratulations for the results. And many concerns in relation to the price of fertilizer that went up during the last months, so do you have delays in the delivery of fertilizer for this harvest?
I was in Xingu this week. I came back on Saturday. It's a pity that it's not live. We were there. We went to visit large areas of the region. We were very happy with what we saw. So we had operations left. We want to look at new areas for acquisitions, and you did not go with me. We are always inviting you to come -- to go with us to Xingu.
But going back to your question, we are following the price of fertilizer. I believe it's very important to see the results, how things are happening. The fertilizer industry, phosphate or nitrogen, most of it is born from natural gas. You produce natural gas.
I also said this, so you have to produce also from nitrogen, urea, and with nitrogen, urea or ammonia and natural gas, this is the raw material for phosphate-based fertilizer. So being frank, we don't believe in a price drop for fertilizers in the next 6 months. Why 6 months? Because we are now at a time of greater consumption of natural gas in the world due to the winter in the Northern Hemisphere.
So in December, January, we have the highest consumption of natural gas for heating homes. So we have a competitor. This always happens every year. So -- and now we have very high prices for natural gas. You can see the prices -- the price of natural gas. But in Europe, too, the price of natural gas went up 208% in the last 6 months. So it's fundamental to see this industry in this way.
The fertilizer industry on a global level has raw materials. I know that many potassium plants will begin producing, phosphate plants will begin producing. And in terms of nitrogen, we have this great concern with gas, which has a direct effect. So the way we see it, Victor, there will be an impact, an important impact for Brazil in terms of the second crop, the winter crop. Same for BrasilAgro, we're projecting this in our numbers, an important impact for the second crop.
For the previous one, we have all the fertilizer bought. So we have a crop with the previous prices, but they will go up. It's important to see, when we look at the price of last year, the price of sales for this harvest, we're expecting very positive margins for us.
The great question in the market is what will happen in the future from now on? We're looking at fertilizer, but also agrochemicals with increases in U.S. currency. We're talking about increases in dollars, 10% to 15% depending on the chemical. So it's -- we have to be careful. There are many consequences for the increase in -- of prices in chemicals, fertilizer is based on the increase in the price of natural gas. So this is for the harvest '22, '23, we're monitoring.
We're already monitoring this, Victor. And as I always say, when we believe that there is something to do, we are making decisions. Fertilizers, nothing yet, but agrochemicals, yes, we have already -- we already have a strategy.
In terms of logistics, no problems until now. Gustavo reminded us, we put pressure for delivery. Until now, no problems, no lack of fertilizer. All our fertilizers for this that was planted from October to December is already in our properties.
Winter crop, we bought most of it. There is a part in nitrogen to buy. But phosphate, I was looking this week. And I said, "Why so much fertilizers here?" And they said, "No, this is the fertilizer for the winter crop. We're receiving fertilizer for the winter crop".
Well, in line with Victor's question, Henrique from BTG Pactual, asks concerning the cost of production. The company's estimates for '21, '22 show important increases in the cost for the main crops. Please comment on how you expect this will impact the profitability this year.
And now we know the price of commodities is favorable. Do you believe there will be a risk for this harvest or next?
I believe André has already answered these questions.
And the next question, Leonard [indiscernible], [indiscernible] Investments. First, he says, congratulations for the results. Thank you. I believe you have the harvest for soybean and the winter crop for corn. I believe you have bought the fertilizer. How about the future fertilizer for '22, '23? Have you bought the fertilizer? What is your vision concerning the fertilizer market?
André has already answered all these questions from Leonardo.
And the next question, I believe that in this question, I'd like to say, this is it. We have 2 concerns. We have the sugarcane harvest that begins in April, May with nitrogen fertilizers. Our perspective, as we said, the base industry, the base raw material is natural gas. We don't believe in a drop in natural gas, especially now with the cold season in the Northern Hemisphere.
The way we see it after winter in the Northern Hemisphere with more natural gas available at the end of the first semester next year, beginning of the second semester 2022, we can expect a drop in the price of fertilizers, especially in nitrogen and phosphate.
The next question, Flavio Becca. Congratulations for the results. Could you tell us more about rainfall in the various farms?
Flavio, thank you for the question. It's a great pleasure to talk to you. I would say the following: this year, the behavior is much better than last year. You can see, you follow us, not only the company but all the market information, Mato Grosso, as I said, is finishing the planting. Last year, we had a lot of problems in the state of Mato Grosso during the planting season, a lot of complexity.
You heard me talking about replanting in Mato Grosso. In the press, in the company or even in other companies, no one is talking about this, this year, because it's not happening. The climate is well with a good window, a good distribution. And the good news is that the region in MaPiTo also has good rainfall.
Rainfall began a little earlier. We have a lot of soybean planted in Mineiros, Piaui, Bahia, too. Things that we know that historically, these are regions, we have rainfall in MaPiTo in November and this year already in October. So in terms of Brazil, when we talk about the situation, this is it.
Now in the long term, things are positive. We have a year that is La Nina, and this allows us a good distribution of rainfall in MaPiTo within average in the Midwest, and we're always concerned with the south of Brazil. When we talk about the South of Brazil, so talking about BrasilAgro, our concern this year is Paraguay. Paraguay, we had good rain, but we know that we begin to plant in the end of November. We have good rainfall, but we're always looking at the climate in Paraguay, the rainfall in Paraguay. We reduced the exposure in Paraguay to new areas, areas where we have coverage, where we have been working for a long time we will continue planting, respecting and planting in a defensive way.
But we're concerned with Paraguay, and we're also concerned with the south of Brazil and also Argentinians should also be concerned with their climate. In Bolivia, the climate is normal. We're beginning -- we began 15 days ago, the second harvest is for soybean, the winter crop for soybean is more representative than the previous. So we're beginning, and the rainfall in Bolivia is within the average. In April, May, we had a little bit of stress, but now rainfall is normal in Bolivia. There, we have a lot of sugarcane.
So Flavio, in a nutshell the company is doing very well, all of Brazil, Midwest and upwards. And we have a concern with Paraguay in the South of Brazil. The forecast for the year is good in these regions with the exception of the South and Paraguay.
Well, the next question comes from Walter. Bearing in mind the taxes on dividends, do you intend to anticipate dividends? For 2021, 2022, the government intends to charge income tax.
We have no forecast, but we're looking at the reforms from the government. We're prepared. The company is prepared for this taxation of dividends as the government wants to do. This received a lot of attention when we saw the tax reform being prepared. The company is prepared if this actually happens, if this reduces the profitability of the -- for the investors. We're looking at the tax reform.
One of the next question comes from Adrian Pattinson. Concerning fertilizers and chemicals, how much was spent in 2021? And what is the cost for 2022?
Well, here we can talk about percentages without looking at each product. Gustavo, help me with the numbers. Now last year, we had a cost of production in soybean, BRL 2,600 to BRL 2,800, depending on the region. This year, BRL 3,200 to BRL 3,400. These are -- there are different farms, regions where you have differences, but this is it.
In the case of corn, help me with corn, 4,000 -- BRL 3,800. Last year, BRL 2,800. Corn has a higher cost. It uses more fertilizer, and it also uses more fertilizers with nitrogen. These were the ones that had the highest price increases. So cotton suffers twice.
Now in relation to agrochemicals, in the harvest 2021, 2022, we had no expressive differences in U.S. dollars. We had problems with the exchange rate. When I mentioned previously an increase, 10% to 15%, in dollars, this is for the harvest 2022, 2023. This is a forecast for the next harvest, not this harvest that we're planting now. We're talking about 2022, 2023.
We're estimating a possible increase in the price of agrochemicals due to many points -- natural gas, environmental restrictions, ocean freight -- that had high increases. And we know that the chemical molecules in Brazil, the finished products are imported in containers, so ocean freight, and this issue of containers, lack of containers that you see, lack of containers that came from China to America for $1,400. Now $18,000, $20,000. So we begin to have importing increases. I'm sure that industry will raise their prices for us.
As André mentioned, in the harvest 2020 and 2021, we had approximately an increase roughly 15% to 20% in soybean and 30% in corn. For the next, also 23%, 25% for soybean increase. Why? Because we were able to buy in advance. We also made payments when the U.S. currency was around BRL 5 to $1.
Now we have the winter crop. We took more time to buy this in. We're expecting an increase of 70% in relation to last year. Why are we making this decision? Last year, in Xingu, we had an expectation of sales, BRL 35, BRL 36 per bag. Today, we're selling in an anticipated way, around BRL 60, BRL 65 per bag. So in terms of margin, they are similar or even better than the increase of the price of fertilizer.
Also in relation to production costs, a question from Rafael Sommer, Logos, concerning the price of inputs for sugarcane, a greater rise.
I will answer this for Rafael. So last year -- this year, we began to include the cost of leasing in sugarcane. If you purge this effect, which was not considered last year, the increase is weather very similar to the other crops, 30%, around 30%.
Later on, I can give you the details, but approximately BRL 1,000 more in the production price of sugarcane due to the leasing, rental of the farms.
The next question, Fabiano [indiscernible]. The company -- does the company have a hedging policy for contribution margin? The hedge is done at cost? Or do you hedge 100%?
Fabiano [indiscernible], I had a colleague in Catanduva, had the same name. I had a colleague in [indiscernible] answering you. We do hedging. We're always monitoring the total revenue of the products and the contribution margin, we monitor the cost and revenue. So when the number that we showed, almost 57% in soybean, that is not the cost. It's 50% of the volume of soybean produced. In the case of corn, 56%, the expected volume. Cotton, it's the total volume of cotton expected in relation to our budget, the best expectation of productivity.
So hedging for us is total volume projected. What is important too, we have also receivables from farms, which is important for the company. And the receivables from farms are also in bags of soybean. So all the receivables that mature in that year, they become part of the P&L of soybean to be sold. The producer can pay us based on soybean. So we consider the receivables from farms of the year in our analysis of derivatives.
And this analysis is also done every quarter by Gustavo based on future perspectives of receivables. So answering your question, we look at the number that you saw as a result of the estimate of production and the policy foresees that we will be able to sell up to 50% of the harvest when we plan. Then we monitor the evolution of the crop, and we can get to 80% at the time of harvest, sale of 80%. So we're very strict in following this policy.
Fabiano said that he is from Catanduva.
Thank you. I had a great friend who graduated with me, Rodrigo [indiscernible].
Some questions concerning the market of land, the price of land. What does the company think in terms of acquisition of new areas, new sales? There is a question from Murilo, then we have Edgar Castro. Questions on the price of land.
And we're seeing the growth of almost 100% in the price of land. Do you believe that these higher prices will continue for land?
Well, Muri Lueder, first, let's talk about how we think about this. We only say that we have to be an anti-cyclical company. When everyone wants to sell, we buy; when everyone wants to buy -- when everyone wants to sell, we buy.
So we buy the assets that are ready, the farm that is producing sugarcane or producing soybean. They are very similar to what you asked. This area, due to the price of increase in commodities, also the price of land went up.
When you look at the other areas, pasture, our areas to be transformed, we also see price increases, but not as strong as the soybean areas. -- soybean areas are multiples of the bag of soybean. If it's -- if a bag of soybean is worth BRL 70, it's a multiple. If it's worth BRL 150, it's x times BRL 150. That's the first point.
So we believe that the price of land will be on a new level because we're not going to talk about soybean worth BRL 70, BRL 80. Soybean, when it -- and you are much more smarter than we are, we believe that in the long term, we should have soybean around $11. We're talking about a balance as a result of tax adjustments, but the price should converge to a balance. This should come to a balance.
In terms of acquisition, we're very active. We have spent -- we have traveled a lot. We have many things in the radar with difference in relation to 3 years, but we're also selling at higher numbers than 3 years ago. We should have an efficient allocation. We are doing everything to guarantee this profitability. We have to be very good at buying and transforming the land.
And with these new levels and the size of the land, we should be able to transform land more quickly and be able to guarantee good returns for investors.
It's an excellent question. Prices have changed for purchase and sale. As I said, we're always buying farms that are not ready, that are not generating this interesting flow with commodities. We always buy land that needs development, needs, CapEx, management, human capital to transform these areas. So there will always be opportunities.
This is a very large market. We must have disciplined resilience to do what we have done during the last 15 years with a lot of resilience, a lot of discipline. So this is the message we have to all of you.
Thank you, André. A question from [indiscernible], purchase of land. I believe Andre has answered. Now we have 2 questions from John Wayne and the Edgar Castro concerning sugarcane. Do you believe that the prices of sugarcane should continue at high levels due to ethanol for decarbonization? How do you see this scenario?
And Edgar's question in relation to sugarcane. He wants a guidance in relation to sugarcane for the next harvest, whether they will continue at the current levels?
Well, 2 excellent questions. I'd like to spend all afternoon. First, John. first, we have clean energy ethanol, not only ethanol as a source to substitute fossil fuels, but ethanol also for hybrid cars. We believe that if we migrate to an auto industry that wants to decarbonize, decarbonization within a metric that will generate fuel for electric cars. So we believe a lot that ethanol becomes fundamental.
What I'd like to say too, John, Brazil was a country that approved, right now in decarbonization, a new program, which is RenovaBio. It's a government program. RenovaBio is a state program that is here to be another source of revenue for producers of ethanol and to compensate the industry that produces fossil fuels. So I'm sure that ethanol will be more and more relevant.
I get sad when I see the world working for a more balanced situation and company saying, "Oh, now it's better to buy gasoline instead of ethanol." We have to be -- we have to decide what we want. Do we want less emissions, then ethanol will be important in this industry in the next few years.
Edgar's question is very good. Why is it good? Because sugarcane is a crop with annual cycles. It is plurally annual. So the effects that we have in a harvest, they continue until the next harvest. So why do I see they continue? We had 2 large important effects in sugarcane and Brazilian production. We had the first, the intensity of the drought. So we had rainfall that stopped earlier, and we had important results. And the second, we had a second when we had severe cold in the South. The drought is known. It hurts, but if the next year, we have rainfall within the average, you can recover.
The great problem is that when we have cold weather, when it happened in July, August, we had most of the sugarcane already harvested and planted, which is for the next harvest. So you can imagine the plant had used its reserves to -- and suddenly comes the cold, and it has to begin again. So our experience when this happens for any reason, due to fire or cold or -- we have an important drop because the plant uses its energy.
So I would say to you, next year, 2 scenarios: one optimistic, one pessimistic. And this is not from us, it's not from André or Gustavo. This is -- the pessimistic one is 530 million tons; and the optimistic, 550 million tons, due to these problems with frost and everything.
So if you ask me, I believe in a year of favorable prices for sugarcane. For Brazilian production, we have to look -- it's important to look outside Brazil. The production of sugar in India, especially in India, we're having a recovery, a modest recovery in the production of sugar in India.
And you can see this with the prices of pound per sugar in New York. I don't remember having seen sugarcane at $0.21, like we had a few months ago. So the scenario for next year, since it's a purely annual crop, the impact we have this year will continue next year. We will have low inventories of raw material, and that puts pressure on the price during the next year.
Well, the next question comes from Anthony Gordon, Genagro. As announced in the summit of COP26 last year, Brazil signed a treaty, an agreement for deforestation, ending deforestation by 2030. How will this affect our company?
Anthony, it's a great pleasure to talk to you. I believe it's important to understand what they proposed. Brazil, I believe what Brazil signed is our obligation, zero deforestation, illegal deforestation by 2030. This is what they signed.
In other words, to zero illegal deforestation in Brazil, we're talking about illegal deforestation,
Okay? Let's look at us, independent, whether it's legal or illegal, we have a few areas in our pipeline to be transformed, and all of them are Savanna land being transformed in the Chaparral that are being transformed, and we have the best expectations to finish this development by 2025.
So illegal deforestation, yes, is what Brazil signed. And every time we see these commitments and they become a reality for companies like ours, companies that have governance, companies that respect the environment, that have management, I believe it's even more decisive for us to take action. We -- so the great one problem in Brazil is that there is illegal, not in agro business, I would say, illegal deforestation in the Amazon that is illegal, government areas, Indian reservations.
Thank you, André. A question for Victor [indiscernible], concerning, can you talk about the technology projects in the field? How can 5G help?
We will stay here until tomorrow. So I'll ask Andre to be -- we have another question.
Victor, excellent question. As Ana said, I love this topic. I will give you some numbers from Embrapa. Brazil, with investments of 4,500 antennas. Today, Brazil has a coverage of 5G, 70% to 20%. With 4,500 new antennas, we will take 5G coverage to 50% of the agricultural. With 15,000 antennas, which is not a very high investment, we take coverage of 5G around 80% of the areas in production in Brazil.
I'll give you a number, I will share with you a number from Embrapa. Dispersed coverage around 50% of the Brazilian agricultural area, that would be another BRL 50 billion, BRL 60 billion from agriculture.
If we can take this to 80%, the estimates, and of course, we're talking about technology. We can get to numbers upwards of BRL 110 billion generated to add to our GDP.
So Gustavo, we are -- and I are leading projects. The company has some units where we have coverage, not all the farm, but not only 5G, also other technologies: Biological connectivity linked to 5G, innovation of many things, many tools, drones for monitoring, many things that are being done in agrobusiness. And this will represent the new green revolution that agro business can bring.
The next question, Antonio [indiscernible], concerning the measurement of ESG policies in Brazil, environment, social and governance.
Antonio, we here in the company, we feel at ease to talk about the ESG. I will look at the 3 letters. When we talk about governance, we're the first company in agro business to be listed in Novo Mercado, the elite companies in the stock market. The only one also listed in New York also, [indiscernible], with more governance, even the SOX legislation.
So when we look inside, we were born this way. It's in our DNA. When you talk about social, for being in boundaries, we did a lot of this. We made many investments in social programs. when you take SAP to these regions, you have to train people, invest resources and the company has invested a lot in social programs.
We created the BrasilAgro Institute, Ana Paula is the Director of the Institute. We invest 1.5% to 2% of our results in projects with focus on education in the regions where we are present. When we talk about the environment, the company had the capacity and the efficiency to manage the assets. It had to transform more than 135,000 hectares. You can see this is linked to conservation preservation. We have thousands of hectares of protected areas. And this, the environmental, these are the actions in the environment to preserve biodiversity. So I would say that agribusiness has everything to lead other sectors in terms of ESG.
While we'd like to close, once again, thank you for participating, André Gustavo, and we will see you again in the next quarter.
Thank you. Thank you, Ana. Thank you, Gustavo. Thank you, participants, who are with us with many questions. We have the greatest number of questions, very good questions, intelligent questions, focused on our business model. Thank you for your attention.
Once again, count on our team, team of people who are showing the result of the team, which has been doing good work, committed with the results of the company, committed with the investors, to the investors. We will continue, continue this way, delivering resilient results.
Thank you. We wish you a good afternoon.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]