Brasilagro Companhia Brasileira de Propriedades Agricolas

BOVESPA:AGRO3

Earnings Call Transcript 2021-Q4

[Ana Paula Ribeiro, executive]

Good afternoon. We're here today to talk about our earnings for Q4 2021 and full year 2021. A full year with beautiful numbers that you will see. I'm here with André Guillaumon, our CEO; and Gustavo Lopez, CFO and Investor Relations Officer. We will have a presentation telling you everything that happened this year, and then we will open for questions.

Okay. André, you can begin. You have the floor.

[André Guillaumon, executive]

Good afternoon. It's a great pleasure once again to be with you during this call with very good news that we will give to you. We will tell you about the year, a very challenging year for everyone, personally for companies with a pandemic, with many problems. We have to celebrate after a year with so many difficulties, the pandemic, logistics, bottlenecks, everything we went through, celebrate these excellent results that we bring to you. Once again, thank you very much. Thank you for being with us. Thank you for trusting in us and our team that is working to deliver good results year after year.

Okay. Page 1 with the highlights. The highlights are important. I always say that we have a new company now. You -- those -- we had a result in the past and our operational EBITDA around BRL 100 million. Now we're on a different level due to many decisions made by the company, diversifying crops, portfolio and also agricultural prices that are better. So the highlights are we closed the year with a net revenue of BRL 721.9 million, almost BRL 722 million; net profit, BRL 317.6 million; and adjusted EBITDA of BRL 365.7 million. So a spectacular year, a year when we see a very robust result for new shareholders and older shareholders.

The highlights on the same page, total production of 282 million tons of grains, 5,000 tons of cotton, 2.2 million tons of sugarcane, 1,900 tons of beef produced. These are numbers that show the resilience in the results and here an important point, a diversified company, a company that is active in production, in real estate with different pillars that bring sustainable results in the medium and long term.

And the news I'd like to share with you for shareholders that are with us for a long time, a year when we have an important results, and these results come from operations, and we will be aggressive in the payment of dividends. So we sent a proposal in October, BRL 260 million in dividends. This is the highest dividend paid in the history of the company. And shortly, I was here talking and there -- I thought of something I'd like to share with you.

This is the highest dividend paid in the company's history. The second highest dividend was when we sold Cremaq and we paid dividends of BRL 80 million -- worth BRL 80 million. When we look at that dividend and this dividend, this shows the resilience of our business model. That aggressive dividend in the past was paid based on the good results of the sale of real estate. And this dividend has very good results, a combination of real estate and operations, but much more based on operations. So this shows the capacity and what we believe in, the combination of the 2 results, real estate and operations. This is more than 5 years after. And we're bringing dividends with different origins, part of it real estate and now operations. So we're very satisfied to deliver this. It was a spectacular year for the company. We will see some other facts that were important.

Next slide, please. A year that was so complex. So many things happened. We will try to summarize in 4 points. So we increased our capital at the beginning of the year in February. We had primary and secondary offering, almost BRL 500 million. We knew that this pillar was lacking at the company. We had to increase liquidity. And you saw this happen. So when we began in the company, we worked on 3 pillars: recurrence payment of dividends, recurrence of results and liquidity. The first 2 pillars we had already delivered to the market. We had to deliver liquidity, and we were sure that this would come with an increase in the number of shareholders.

So we went from a liquidity of less than BRL 1 million per day in the stock market and today, BRL 15 million to BRL 20 million in the stock market per day. So we multiply the liquidity by 15%. For you, investor, shareholder of the company, it's important for the company to be well managed, delivering results. And we understand the investor side the need for liquidity. So this is something we did. We made an international expansion. And more than expansion, the investment was small. The message that we sent to the market is that any international expansions that may happen will be done through BrasilAgro.

This was the great message. We expanded our activities into Bolivia. We purchased 3 units of production. Our team is there working in operations. The Brazilian team is there today. The Bolivian team is always there, but the Brazilian team is there today. And for a more consistent delivery of results, making some changes, reinforcing the team, bringing consistent results in the operation in Bolivia, I'm sure we will have good results in Bolivia.

After increasing the capital in this acquisition, we had an important fact in the company. We had 2 facts. We had a debt that was very well equated. And we are a company that is not very leveraged, but it was based on the short term. So we did a CRA with a longer term to accelerate the transformation with this new and good cycle of commodities, accelerate -- we have 40,000 hectares that need to be transformed. So the CRA is here for us to accelerate the transformation of land, to accelerate, intensify production with irrigation projects. And it's important, and we were able to do this very well. Although it's -- although we have a week with many offers, the company was able to do this.

As I said, these dividends come from a great year in operations and also a great year in real estate. We sold another piece of Jatobá Farm, another -- for BRL 67 million, which helped the initial result of BRL 365 million in adjusted EBITDA. These are the important facts of the year. We closed the year being very sure with new certainty. Now we have a new company, more liquidity, more cash, a company with a more equalized -- also equalized leverage and with good results in operations in real estate.

While talking about the sale of Jatobá Farm, we've been talking about this for a long time. We have sold parts of this farm. It's a very large farm. Originally, it had 31,600 hectares. We sold parts. They're still an important part remaining. The sale is not the oldest. Oh, maybe you might think we're selling the best parts. No, no. We're selling a part that was recently developed. The older parts that are more mature, are still there. 1,640 total area, 1,200 in agricultural land. And it's important to hear a fact. We are capturing this good cycle of commodities. So this sale -- in the past, these areas were sold at BRL 25,000 a hectare. And now we're talking about selling for more than BRL 40,000 per hectare.

So a good time for commodities, a good rate of return. We have a rate of return of 20.4%. Acquisitions on the right. I mentioned this in February, in Bolivia, 7,900 in planted area and arable land in 9,800 of total area. This is on the same latitude as Mato Grosso. It allows us to have 2 crops, the main crop and a winter crop, 2 crops. Value, $30 million. In other words, buying an area where you have a crop and a winter crop for $3,000 a hectare. Okay. We know that Bolivia has a different country risk, but we know that in Brazil, $3,000 per hectare, you can't even buy in savannas because it has 2 harvests. It has a winter crop and a main crop.

Well, this is a slide that we brought. We don't show you this slide during every single call. But look at the last graph, 2021, where we see gray, yellow and green. Here, we see what we have done. What is dark green, our products ready for sale. So like land in Bolivia, the maturity of our portfolio, this shows that the company should generate real estate results in a recurrent way. We have many areas ready. In yellow, these are the areas that we are developing, transforming. These areas are not -- don't have high production yet. So we have an important real estate gains to be made. And in gray, the CRA. This is our land bank. These are the lands in transformation. We show this graph and this shows the company today, the company in the near future, and the company after this period, in the long term.

So we have land to be transformed that will generate. Soon, we will talk to you about an excellent valuation of the portfolio, the yellow part. This is the appraisal we are being -- green is the land already transformed. You already have an increment in yields and is already at market price. Yellow is where we like to show that we generate value for shareholders. And the gray is land that we have to transform into yellow and green. And on the right, we have here the breakdown of development by farm.

It's important for you to see these, the farms that are ready, the farms where we have a lot to do. We call your attention to the last operations in Bolivia. These are ready. They have 2 crops per year, winter crop and main crop. Well, as I said, we had 2 pieces of good news. The first was the dividend. This is the second excellent news that we share with you, spectacular news. We're very conservative in our evaluations. Deloitte also is very conservative. And we -- as a team, we like to say that we never sell assets for a price below that of Deloitte.

We always sell above the price of Deloitte. So when we bring an evaluation, so we can be sure to say to you that this portfolio is worth this or a little more than this due to higher and higher sales. But what I'd like to share with you, the evaluation of our -- the appraisal of our portfolio on June 30, the market wanted this information. You all wanted this information to understand how much of this boom in commodities really affected our assets. And those who made calculations, the maturity of each assets, the type of crops, some have only soybeans, some have soybean and cotton or corn.

And not all commodities had the same increase in price. So this is a mix when we talk about the company. We have an evaluation of BRL 3.4 billion. This is naked land. This is land to be transformed. So the internal evaluation, we have BRL 3.3 billion, very close to Deloitte's appraisal. Once again, I'd like to stress. We never sold farms below the evaluation of Deloitte. So we trust in their work, in our work when we sell land, and we have delivered this profitability to the shareholders. So I said that this -- we had the first good news, the dividends, and this one now the evaluation that brings to us higher prices of commodities, transformation.

This depends on speed of transformation. We accelerated the transformation of land during the last few years. Here, although we're selling farms, we're always looking for a way to increase our annual billing by leasing land or transforming our areas. And here, it's important to say that although we had the pandemic, although we sold farms at everything we saw, we grew our planted area year after year by 5%.

And on the next page, you will be -- you will see by culture, by type of crop. It's important to have consistent growth, and we have had consistent growth. So we closed the harvest with more than 161,000 hectares that are cultivated. And thus, we're a large agricultural operator in Brazil. This slide shows a little of the agricultural production of the company, not different. We've been telling you in the last few calls, we had a challenging year. Apart from the pandemic, we had drought. And here, we see the production year after year. In soybean, we see the difference in productivity from the estimate. This is due to the Paraguay operation, the largest.

We have a drop in 10,000 tons, and we have also drops in all the operations in the state of Piauí, another 6,000, 7,000 tons. So this is soybean, also corn, main crop. We had a summer that had a lot of rain in the state of Maranhão and Piauí. This affected the quality of the corn. This went to our silo, but there was a drop -- productivity drop. And now we depend on the good work of the quality team and also the new corn that is coming to try to recover this productivity that dropped.

When I talk about quality, now the winter crop, our picture is very close to that of Brazil. We have the winter corn in the Midwest in 2 macro regions. One is Mineiros, Alto Taquari. And on the border with Mato Grosso, we had many problems in the winter crop. And then also the corn some effect. And in Mato Grosso in Xingu, we also had a reduction, maybe not the largest. We had a region that produced well. We had 106 bags. We ended up having 93. We had a drop in production because of many problems. We also had problems with drought and frost, but this was compensated by the price. We had an important drop in corn, but the price was higher.

So the revenue per hectare, the profitability per hectare was compensated due to the increase in price -- higher prices. When we look at the lower graph, so we have a smaller reduction because we have larger areas, soybean a little more; corn a little less, and winter corn here 2 points. When we look at winter corn year after year we had a change in portfolio. We had a leased operation in Xingu that we did not plant this year. They planted 4,000 hectares of winter crop. So there, you have 25,000 tons. So we cannot compare the green with the yellow because there was a reduction in the planted area.

Well, here, cattle raising. What this shows is the combination of activities of the company, number of cattle heads, 15,000 in relation to 14,000. Pasture land, the same. And our team -- the whole team of the company did a good job. We had GMD as average gain. We had budgeted 600 grams, and we were able to obtain more than 730 grams. So this was good. We sold part of Jatobá, which included cattle raising, but we had robust results. Now we will talk about sugarcane. Our sugarcane, different from winter corn, we have a difference in relation to sugarcane in Brazil. Most of our production is in the Northeast of Brazil, especially in Maranhão. It's a sugarcane in regions without any risk of frost. And we have a drought problem. So we're using irrigated sugarcane plantations.

So I believe that what happened in sugarcane was very positive in terms of price in the last few months. And for us, since we have most of the production in the regions without any frost and in the Midwest too we have less frost, so in the case of Maranhão, 65%, 70% of our production of sugarcane. We have sugarcane in Bolivia, Midwest, Mineiros, Alto Taquari and in the state of Maranhão. So we're very diversified in sugarcane. Year after year, we have a similar area of production that is similar and a TCH this year around 84 tons. So this year, if you look at the numbers of the sectors, many people talking about a drop of 15% to 20%. We had a reduction in TCH of 5 tons, less than 6% in average TCH of the company. This reinforces first the resilience of having various cultures, crops and also the portfolio in different regions.

Well, here to close a little, then I will pass the floor to Gustavo, to show a little of the hedge. In 2020, I'd like to remind you when we did this budget, we're talking about May 2019, we were in trade wars. We had soybean at $8.30, $8.50. So at that time, we were being aggressive with a budget at $9.30. And I always stress our concern is to have margin per hectare and not only the price. So when we saw it made sense, we began to sell. So we ended 2021 harvest with an average price of $10.50 -- $10.50 per bushel. We began selling this at $8.30, $8.50 per bushel, and with an average exchange rate of BRL 5.31. With these 2 strategies, we were -- when we look at the spot price, it was higher. But once again, I say it's important to guarantee the margin.

Let's give you a picture. If 2021 was good, '21-'22 in the case of soybean has everything to be better and better. First, we have a totally different price. Today, we have 50% of the next harvest already guaranteed at more than $13. So every dollar with an exchange rate of BRL 5.48, so totally different harvest. So when we began in the past, we had BRL 70, BRL 80. Today, more than BRL 140 per bag with an exchange rate of BRL 5 40. And so we're talking about a soybean higher than BRL 140 per bag. The corn this year, we are being more aggressive. We have 33% of the next harvest already sold.

It was the opposite last year. We sold a lot in areas that we had leased. And this year, we see in the middle of August with 33% of corn already sold. Most of this corn will dill be produced in the second harvest. Cotton, also a strong position. We have this combination of prices in New York with this 2.882 with an exchange rate more than $140. And this also gives us a lot of profitability. Well, these are the numbers of the year, expectations for the next. This began in July. And we have a commercial position that is very robust.

Now I'd like to pass the floor to Gustavo, and he will talk about the economic highlights. Thank you.

[Gustavo Lopez, executive]

Thank you, André. Well, continuing here on Page 12, we would like to highlight things that we have been telling analysts and investors. The company is now on a new level of operational results. And this is due to the higher prices of commodities. We have 170,000 tons of soybeans, 140,000, 150,000 tons of corn and also 2 million tons of sugarcane. And the impact of the price really has made the company to have a totally different result than we had a year ago.

This we can see here in adjusted EBITDA for 2020 BRL 177 million with BRL 62 million from the sale of real estate. For 2021, we have BRL 365 million with BRL 53 million from real estate. As we see the sale of real estate is -- the operational results have a new impact. And here, I'd like to highlight adjusted EBITDA. We -- here we exclude the land in transformation, and we include derivatives. As André mentioned, during the presentation, we had sold soybean at BRL 112 per bag. And what -- and now it's BRL 140, BRL 150 per bag. This is why we have a result of BRL 78 million that we're excluding.

Now we will show on the next page, on Page 13, the breakdown of operational activities, generation of EBITDA. Here, we see BRL 112 million operational results. Last year, in the same period, BRL 116 million. And sugarcane continues to be a strong activity for the company. Today, we have an EBITDA of BRL 130 million from sugarcane, BRL 110 million from soybean, BRL 40 million, BRL 50 million from corn and the rest in other activities that we have to diversify our risk in each region. Last year, we saw that the value of sugarcane continued to be important and the margins that we had in soybean and corn were lower than the ones we have right now.

So today, sugarcane has a margin of BRL 5,500 per hectare. And in soybean, BRL 2,300 to BRL 2,500 per hectare. Here, what we're showing -- we are consistently improving the company's production and stabilizing the EBITDA of the company. For next year, we -- as André said, we continue to believe we will have very good prices. There is an impact to the price of fertilizer has risen, price of seeds has risen. The cost has gone up, but margins continue to be attractive and margins continue very similar to the ones we had in 2020/2021.

Now on Page 14, we have the results of the year, BRL 317 million. In here, 166% increase and with a profit per share of BRL 3.10, considering the number of shares that is higher than last year. During this year, we were able to do a follow-on. We issued another 20 million shares and also subscription, another 20 million shares. And this raised the total number of shares 112 million shares. Going on -- going back to the results, we see an increase in net revenue of the company, 71%. And as I mentioned, total tonnage, soybean, corn and sugarcane, no change, but the price went up. Almost all of them went up 70%, 80% of prices with an expressive increase in the net revenue of the company.

The sale of farms, as we mentioned previously, we have -- this is -- it's important to highlight in income tax and social contribution, we recognized deferred taxes of BRL 70 million, which corresponded to a tax loss in Agrifirma. This was calculated when we purchased Agrifirma and from -- as of this year with also the inclusion of Jaborandi Company inside Agrifirma. We were able to use this tax loss, and we will be using the tax loss as a credit during the next 2 years. Then we see also the main lines of the year-end report. Here, I'd like to mention the cash position of the company, BRL 1 billion. A consequence of this follow-on.

And also, we have here the CRA and also the sale of the inventory that we had during this year. Here, we have also several credits, sale of soybean, corn and sugarcane and sale of farms, BRL 530 million, of which BRL 400 million correspond to a credit for the sale of farms. Property for investment, BRL 1 million, reminding you that the market value, as André mentioned, BRL 3.4 billion and also the CRA, the loans and financing, BRL 664 million, and as we see at the bottom increase in here. Here, we see total equity 1.6 to 2.1 and the results, the profit and increase in capital already mentioned.

On the next page, on the next slide, we see the company's debt indebtedness. We have debt in short-term debt, BRL 322 million. This is the capital we need for the company's operation long term, BRL 341 million. Total debt -- gross debt, BRL 663 million. With the cash that we mentioned on the previous page, we see that net adjusted debt is here negative. Here, we'd like to say adjusted net debt negative. We mentioned that one of the objectives of the company was to lengthen the duration of our debt, the terms of our debt. And through the CRA, we were able to -- we -- to transfer BRL 246 million, 4 to 5 years later. And the average cost of the debt we had an increase this year, 8.6%, reminding you that all the debts are all in Brazilian currency.

Next page, we see the dividends here, BRL 260 million. And André mentioned, the company's objective was always -- although we don't have a clear policy of -- for distribution, we always say that we had a very good operational result. And every time we have sale of real estate, we believe that we should celebrate this together, employee, shareholders, all the people who trust in the company. So we understand that we have here -- we have always given a dividend yield of 5%. And last year, we said we could make acquisitions, increase the leased areas. That's why we had distributed only the mandatory amount. And this year, since we have a very good result scheduled for next year and also real estate is at a good time for sales, and we have a cash flow that is good, so we believe that it would be a good opportunity for us to pay dividends of this size.

On the next slide, we saw the value -- market value that Deloitte gave us. We always show this calculation. We have our calculation, which is a little lower than Deloitte's. So here, we have the net value of upside potential. And here, we have a BRL 4.2 billion. And a net asset value of BRL 41.45 with the market value. Here, we see that there is an upside potential that is very good. And I believe that we always evaluate the prices. And with the new international prices, the value is much higher than the BRL 28 per share. So we invite you to invest more in the company. We will make an effort to continue.

On the next, we have here -- we see the evolution of the stock market and the price of the share of AGRO3. As we mentioned before, the performance is very good, but we believe there is space for more -- for the prices of the shares to go up. To conclude, let's talk about SEG (sic) [ ESG ] environment, social and governance. Here, we have some highlights of practices that the company has for years. We're working on many things -- many new things in the next few months in relation to this topic. It's important to stress -- highlight our institute as a year old, so BrasilAgro. Here, this is to illustrate what we have done in terms of ESG. And if you wish more details, please look at our sustainability report on our website. There's a lot of information on the practices of the companies in relation to these topics.

[Ana Paula Ribeiro, executive]

I'd like to thank André and Gustavo for the presentation, and we would like to begin the Q&A session.

[Ana Paula Ribeiro, executive]

Well, the first question comes from Damian. Congratulations for the excellent management. If we have plans to increase the speed of sale of productive areas.

[André Guillaumon, executive]

Thank you. Good question. Yes. I believe that it's important to highlight this, the importance of being an anti-cyclic. When everyone wants to buy farms, we sell. And when everyone wants to sell, we buy. So this is the mechanism to generate value for the shareholders. Yes, certainly, soon, you will receive good news to capture the good moments, to capture the liquidity that producers have. Produce farmers have money. They're expanding their business. They're buying land. And we are having important gains.

Well, very directly, you can expect in the next few months excellent news about the sale of farms. So it's a process that takes some time, but there are many things ready. Okay. Thank you for the question. And yes, we will have, I believe, next year, once again, I said the operational side very strong due to good prices, most of them guaranteed, and we expect to have a better year in real estate next year. This year, we still have a little of the pandemic uncertainty. If God wills, this is in the past, and we have good liquidity. Thank you for the question.

[Ana Paula Ribeiro, executive]

Well, after Damian's question, we have a question from Bruno. Congratulations for the results. What is the company situation in relation to the cost of inputs for next year? Will there be an effect from logistics problems and higher input prices?

[André Guillaumon, executive]

Bruno, excellent question. I'd like to share with you, yes, the answer is yes. Higher costs, all companies are having higher costs. I would say that the higher cost when we look at sugarcane, corn, soybean, cattle raising a little less. Cotton, we're talking about 40% higher prices. But I repeat. If you look at the calculation, we had an average price of soybean at BRL 109. So when we look at the new prices at BRL 140 -- BRL 145 a bag of soybean, even with the higher prices, we expect very positive margins for next year. This is in the case of corn, soybean and even more in sugarcane. Sugarcane I believe in the last months the price went up in ATR, total recoverable sugar, and this will give us an important profitability. So yes, price of inputs went up, and we're always monitoring margin. I would like to say that the contribution margin crop-by-crop hectare-per-hectare next harvest with the budget, they are better than the profits in 2020/'21.

[Ana Paula Ribeiro, executive]

Thank you, André. Two questions from [ Eder Castro ] concerning prices and volumes for next year, 2021/2022 and in relation to what we expect to recover from the loss of production in Paraguay. How much insurance will pay us for the loss and the strong cash position and a healthy year-end report and healthy leverage? What are the alternatives we have for the company to grow.

[André Guillaumon, executive]

[ Eder ], thank you. We could stay all afternoon answering these 3 questions. But okay, I will talk about our expectations. When we look at each sector, we're going into a harvest soybean, with a market that is well adjusted in terms of inventory and demand. Any problems that we may have will have an effect. We should have this year a La Niña year. La Niña is -- makes us concerned in the south of Brazil and in Argentina. So the relationship between inventory and demand is so tight that any problem will have a quick effect on prices.

When you look at corn, the sector, I believe we'll recover the inventories only in the second semester of next year. In Brazil, we decided to have -- 75% of the production of corn is in the winter corn. The first represents 25%. We will increase the area that is planted and we may get to 28 million, 30 million tons. But the great volume comes in the second harvest in the winter crop. So you have also new facts. I always talk about structural changes. We didn't have an importer of corn like China 3 years ago.

They used to import soybean, not corn. So a great change in the production model in China. Sugarcane, a result of everything we saw, the frost in the south. The loss of productivity in sugarcane. So I believe that we will spend next year with the oil in good prices. This will give a good -- this will guarantee a good price for ethanol, which is mixed to gasoline and also good prices in New York. So now in terms of the company, we have been -- in the case of sugarcane, we don't have guaranteed prices.

Two, we have -- we are working to mitigate this year. We're going -- we were careful last year. And we have to continue making our efforts. If we have to reduce the planted area, we will do it. So we -- in terms of insurance, we have insurance in the south. But on the border, it's very difficult to have insurance. In Paraguay, we have revenue from insurance, Gustavo can correct me, $1,640,000, which we should receive in the next few months between September, October, insurance money. We already made all the documents.

And the third question, healthy cash. It's important for a company like ours, healthy cash. We're always after good opportunities. I always reinforce. We have an enormous pressure to allocate cash, but we have a responsibility also to make good allocations, good purchases. As I said, you can expect in the next few months sale of land. And certainly, we will make acquisitions too. Acquisitions will be slower than sales. We're anti-cyclical, but we will have sale and purchase opportunities. The company will be very active on the -- in real estate and in operations working in a disciplined way. We see another year of positive margins. Discipline will be necessary. This will be very important.

[Ana Paula Ribeiro, executive]

Well, I believe with this answer, André already answered Victor's question, [ Victor Polly ], who asked about the pipeline for acquisitions and sales. So in this line, André, people are asking in terms of diversification, whether we're looking at South America and if we have plans to diversify geographically. This is a question from Marcelo and some other -- and more people asking about expansion. Most of this was answered. So where are we looking at for expansion?

[André Guillaumon, executive]

Okay. Marcelo, I heard his name. Yes, the company is very active in looking for opportunities. We have good data. Later on, we can send to you the concentration and distribution of the investments. In the last 12 months, we mapped and analyzed 1,000,140 hectares in Brazil. In the last 3, 4 years, 8,350,000 hectares. So there is a robust pipeline. We're analyzing many proposals, and we are focusing our regions with double -- with 2 crops, like north of Mato Grosso, the south of Para, Maranhão and Piauí. We have -- we can also work with this and very focused on acquisitions of pasture land to be converted to arable land.

The agricultural Brazil -- we plant 66 million hectares in the country total. And cattle raising 190 million. Of these 40 million to 50 million cattle raising land have good potential for arable land. So Brazil can double its total production. And many of you want to know about competitiveness, new funds joining. We're talking about agro. And agro is the most pulverized, atomized industry in the world. This is the same all over the world. So we have competitors. We have new people coming into the market, but it's very pulverized, very atomized. In other chains to grow, to expand, you have to distribute contribution margin, but not in agro.

So yes, we're very active in acquisitions and also in the sale of farms. So I don't -- and I doesn't like me when I give guidance. She will be kicking me under the table, but it's a year where we should be more aggressive in real estate, this next year. We will have robust operations with the numbers we should, but it's a year where we intend to be much more aggressive in real estate, purchase and sale. So you can count on us. Our team is working actively in purchases and sales. After this call, I have a meeting to talk about this with the team. So you can count on this kind of growth of the company in the next few months.

[Ana Paula Ribeiro, executive]

In line with expansion and growth, Henrique's question from BTG and [ Bruno Bandeira ] concerning the development of the current portfolio, what are the company's plans to develop new areas in 2021/2022? Will we focus on our own land? You talked a lot about acquisitions already.

[André Guillaumon, executive]

Thank you, Henrique. Thank you, Bruno. Let me go back. When we talked about the CRA, this was done with this objective. We understand we have a good cycle of prices. Prices are still very good. And with -- so yes, we will accelerate transformation. The BRL 240 million we obtained in the CRA, we want to use to transform the land bank, 40,000 hectares. We have accelerated this. We accelerated a lot in the state of Piauí, in the state of Bahia. We will continue accelerating the land transformation in Bahia, in Paraguay. So in terms of expansion, we, as a team and the company, would like to finalize the transformation of the land bank in the next 3, 4 years.

This year -- with these areas going into production, we're working for this, where our budget has this aim to accelerate transformation of land in the next 3, 4 years. To do it well, you need to have a certain number of hectares per operation. You need to respect some characteristics. And -- but the message is, yes, we're working hard. Yes, we're accelerating the transformation of land into arable land. So we have a good breakeven, even with low productivity in the first year. So it's worthwhile transforming the land. Thank you, Bruno. Thank you, Henrique.

[Ana Paula Ribeiro, executive]

Two more questions from Henrique. The costs with the current increases in the price of inputs. What do you expect in terms of pressure from costs in the next harvest? Have you anticipated purchases of inputs and inventory? I believe that you still have soybean in inventory. Can we expect to sell this in the next year that began on July 1?

[André Guillaumon, executive]

Thank you, Henrique. Okay. I will ask -- yes, we have inventory. Gustavo will talk about the inventory. In terms of costs, 2021/2022, we have an increase in the price of inputs of 40%. Why 40%? Answering your second question, these costs are -- we have already bought all the fertilizer for the next harvest, so phosphate, potassium. We have already bought the seeds we need in the market for corn, for soybean. We already bought most of the inputs, agrochemicals.

So I would tell you that when we have an increase in price of 40%, this is what we will have at the end of the year. We shouldn't have surprises. Since then, prices have gone up even more. We bought potassium. We bought chloride in November last year with interesting prices. We have to buy just a little more the price of last year versus this year, almost 70% higher in terms of chloride. And you've seen the restrictions in international trade. Summarizing 40% higher prices, the next harvest has the cost of -- I wouldn't say 100%, but more than 90% of the cost is -- has already been bought. Gustavo talk about the inventory we have in soybeans.

[Gustavo Lopez, executive]

Yes. We still have 70,000 tons of soybean that will be sold in the second semester -- or first semester of the next year. We will have 70,000, 80,000 tons of corn to sell. The winter corn hasn't been recorded. And we have sugarcane, a relevant impact in the next 2 quarters due to the price we're estimating. And giving you numbers, the impact that André mentioned last year, we had a direct cost in soybean and corn, around BRL 2,600 per hectare. And now we're talking about BRL 3,400 per hectare in terms of cost per hectare. First, fertilizer went up. The greatest impact came from fertilizer, but the margins will be very similar to this year's margins. Last year, we had sold soybean with close to BRL 90, BRL 100. And now we're working for next year with prices at BRL 140, BRL 150 per bag.

[Ana Paula Ribeiro, executive]

Well, one more question for Gustavo from Eduardo. Bonus subscription. Is there a balance to -- will this cause dilution in current investors? What is the amount and the percentage of dilution if these options are accepted?

[Gustavo Lopez, executive]

Henrique (sic) [ Eduardo ], the company had -- doesn't have the bonus for subscription. What we have is 600,000 shares -- 625,000 shares that we left as a guarantee for the transaction of Agrifirma. And one day, we will issue these shares. Now bonus to dilute the shareholders we don't have.

[Ana Paula Ribeiro, executive]

Next question from Flavio. He wants us to talk of the cost of capital per year, the interest rates. He believes that this is very high in relation to the SELIC interest rates. Can you talk about the composition of the interest rates, cost of capital?

[André Guillaumon, executive]

Well, Flavio's question. Flavio, here, it's worthwhile clarifying the methodology. What do we have here when we do this and with total transparency? We look at this curve of cost. We look at our debt. We see the duration of each debt, the duration, the maturity and we have a curve. The great impact is that we issued a CRA. And most of the company's debt comes from the CRA.

And when we look at the whole amount, we have a projection for the future. So if you look at this today, we're talking about a CDI that can get to 7% at the end of the year. But since we have long-term debt, we're looking at the curve of the CDI in the future. So in the future, it should be 10% So this makes this cost come to 8%. So this is due to the duration. It's not the cost of debt today, but it takes into consideration the duration of the debt.

[Gustavo Lopez, executive]

To supplement, we have approximately 1/3 of this debt with pre-fixed rates of 6%. These are the ones we have with long-term development of areas. There's another part, BRL 240 million, that André mentioned that have inflation -- that cost us inflation plus 5.35%. And the other part, part in CRA, CDI plus 106% and 110%. So in reality, as André mentioned, there is a methodology.

And these are debts that we can do swaps and the second fortress, both in Brazil and Paraguay. Bolivia, not yet. We don't have financing. They are all in local currency. So through commodities, we want -- we have these amounts financed in local currency. As we mentioned in the presentation, we have BRL 400 million, which are not included here, that we will receive for the sale of farms. They are -- so we understand that in terms of debt, we're very well equalized. We can even increase this leverage to increase the operations of the company. Thank you.

[Ana Paula Ribeiro, executive]

Here, Helmut. Why don't you buy back shares instead of paying dividends? To concerning the drought, what are your expectations in terms of the impact of the climate on the next harvest? Question from Gustavo and [ Eder ] wants to know what can we expect for the -- in terms of developed land, nondeveloped land during the next year, especially considering the challenges of La Niña in the next harvest?

[André Guillaumon, executive]

This call is very interesting. Many intelligent questions. I love this. Okay, [ Eder ], Gustavo, buying back shares. We even discussed this during the decision-making for dividends. I believe that one of the important drivers, an important pushback in the price of the share is to work on liquidity. So right now, we did a follow-on. The mark -- some people criticized the amount of the increase in capital, but this was going to help liquidity and it did. So today, we still have 3% of the shares of the company in the treasury. We could increase this buying back shares, another 3%, not more than that. But right now, I believe it's premature to talk about this. We have to consolidate the good liquidity. And we have shown -- today I was looking. We have -- we had almost BRL 50 million in liquidity during the day.

So it's a new company. The company is beginning to understand better our business. The second question, the drought. We work with many consultants focused on climate in the units. So we have historical data, atmospheric pressure. With -- we have long term and short term also forecast for the climate. In a nutshell, I told you it's a year of La Niña. This makes it difficult for -- this makes things difficult in the south of Brazil. We are expecting rain in the Midwest and Northeast where we have our agricultural production within historical averages. A part in this historical average, we believe that rain can begin earlier. Last year, we had problems in all regions. Mato Grosso, there was no rain. Some farmers had to plant 2 or 3 times in the same area. This year should be a little more normal.

So this even reached the winter crop. So we have droughts, but we were more aggressive for the main crop, which was soybean in October. We have a rule of not -- we have a policy of -- we're not planting more than 5,000 outside the window. But many producers, many farmers did this. So these years of good prices, we learn a lesson. Policy, rules are also to be followed during years of difficulty. You saw the numbers for corn. But in terms of profitability per hectare due to the price, everything was good. So our expectation for Midwest, Northeast this year is for a very good year in terms of climate. A very good year in terms of climate. Thank you.

[Ana Paula Ribeiro, executive]

Well, we'd like to close our conference call. We're very happy with the results that were reached. I'd like to thank André and Gustavo for the call. We had excellent questions. And now I will pass the play to -- pass the floor to André for his final comments.

[André Guillaumon, executive]

Thank you, Ana. Thank you, Gustavo. And we'd like to thank all the participants who were with us during this hour. Once again, I'd like to reinforce our commitment, the team's commitment more than growing, people are growing, and this will guarantee the sustainability of the business. Count on our commitment during the next year. I mentioned this in the council's meeting. We're always having -- raising the bar. So with these results, imagine our responsibility for next year, both in the business units, the managers, the company's managers, all the leaders. But I believe that everything we have done, training people, will really give us sustainable results.

So count on our commitment. In the next few quarters, we will have more good news for you. And we will have a good -- we believe we will have a good year in terms of climate. So we should have good results in the last quarter of next year. Thank you very much for your attention. And also many people congratulated us for the dividends, the results. And I reinforce, this is the result of the work of all the team that is committed 24 hours a day to deliver results and help the company to grow and -- in line with your expectations as analysts and investors. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]