Brasilagro Companhia Brasileira de Propriedades Agricolas
BOVESPA:AGRO3
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Brasilagro Companhia Brasileira de Propriedades Agricolas
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Good morning. We would like to begin our conference call for the earnings of the full year 2022/2023, which ended on June 30. Thank you to all the participants. On our side we have André Guillaumon, our Chairman, CEO; Gustavo Lopez our CFO and Investor Relations Director: and I am Ana Paula Zerbinati, I'm head of Investor Relations and Capital Markets. Today, we began the call at a different time.
And also, we have holidays tomorrow. And you have access to English version, we have simultaneous translation in progress in English, please send your questions through the zoom or, at the end.
So I would like to pass the floor to André, and we'd like to begin our conference call. Thank you.
Thank you, Ana. Thank you to all who are with us and it's even looking like a TV show here but excellent. It's very good to be here every quarter. Once again, we're with you. And to close the year, we will talk about the challenges we had during this year and the things that we did right, the things where we had problems, so it's good to see. So we want always to have transparency, and we won't have your trust.
And also here bringing, as I always say, more and more trying to give you good information about agriculture. Now we have more companies doing a good job as we do, and contributing to reduce the asymmetry in a sector that is so strong, so booming in Brazil, representing 27%, 28% of the GDP of Brazil. And we have less than 10 companies in the stock market -- listed in the stock market. So we want to take advantage of these opportunities with you.
So going straight to the point, what we have in terms of highlights; first, financial highlights, the company surpassed a net revenue of 1.4 billion rise, net profit 268.5 million. Although we will tell you that yesterday, I was talking to some people, this is the year of the X, Y. Because where we have the cost of formation, high cost and low sale price. I even gave an example, cost of production of soybean is like a triangle. Two, three harvests ago, it costs 3.8, now it's 5.2 went back to 4. So a triangle, very high cost for soybean. So it's a year where we had results that were affected by this. We will see this in detail with Gustavo, what happened to our cost of products sold and the revenue of these products. But we haven't adjusted a bit to 534 million and expressive results.
Now in terms of operations, more than 2.3 million tons of production and here we have grain sugarcane, and the highlight that we have for you we always say the company has the ability to combine operational strategies with real estate strategies. And it was a year in terms of real estate very strong. We had already said that we should sell more than buying due to the liquidity of the market. So we sold more than 9000 useful hectares. So we want and this is the challenge. We sell arable land and we want to continue growing.
Totaling these 9000 hectares sold R$610 million in sales. These are expressive numbers and I believe that you who are following us, I know that you do market analysis. Always in the beginning, I used to hear, “Oh, it's difficult to model how much you sell.” It's difficult for the NAV and more and more. This isn't happening in a recurring way. And I want to see that everyone knows that the company sells farms every year. Okay, next slide.
Well, as we were talking about sales, in here, we brought all sales during the year. So a lot of activity this year. So we begin with a sale in Paraguay. A small sale but I always say these -- this is only the beginning. So we sold in Paraguay, $1.5 million, 868 total hectares, almost 500 useful hectares, then we made the second sale, first in Paraguay, above 20%, help me with the numbers 27.9.
Rio do Meio, we made a big sale in here we have a combination acquisition and sale. We were able to have a 52.4% return, expressive profit, short sales, short duration sales, then we had also sales in Fazenda Jatobá 121 million, 16%. And you may say, “Oh, André, you're showing an asset of 15 and 16. But look at the generation of value for the shareholders. Fazenda Jatobá has been with us for more than 17 years, then it continues delivering also profit around 16%.
Araucária, we've seen partial sales. And this year, we divested totally this asset, this farm and the company's ability to do 2 sales. We had different environments in the farms. So we tried to accommodate to get to our price that we wanted, according to the company's counsel. So we did this in 2 sales, a small sale, which was kind of Savannah [indiscernible] another sale that sold the remainder. The second was very expressive R$410 million with an average price of 790 bags. So we had areas with more than 1200 bags for harvest and areas with 900. So this reinforces our ability to make good capital allocations. So in total, we sold more than 12,000 hectares, 9000 useful for R$610 million in the last five years.
You always hear me in the last five years, we have had an average price of R$269 million in sales. So around 14.5% of TIR. So this shows the company's track record and the company's ability to say that, yes, we have this joint model, in fact, of planting and also sale of plots of land.
Well, here we have information for you. First, on the right, the graph at the top 3.444. This was an external evaluation, you know that this is the value of our land. We use Deloitte as an outside company to evaluate. So we're comparing the evaluation made by Deloitte of our land in 2021, and the valuation of the Deloitte now. So 3.444 million and the current evaluation by Deloitte once again, 3.560 million at year end. But what happened in the meantime, in 2020, the portfolio is the same from 2021, 2023. So we had sale of farms. So how did we make a good evaluation. We excluded from 3.444 million, the sales that happened from 2021 until now, at this value, not at the sale value, so the valuation the several -- when we divested 897. These are the sales.
When you consider the value R$1.341 billion. So, we sell, we're in installments, there's the duration of the operation. But fundamentally, once again, I say, we have been selling in a recurring way above the evaluation prices. When I say evaluation, we are very safe about what we're saying. Now, when we look at this new portfolio, 3560 excluding 897 and adding the purchase of [indiscernible] firm, we have a variation of 26%. So, this is we see that our land appreciated. So looking at 2021 and 2023, we see the land appreciated, it's worth more.
At the bottom, I always say that being transparent with you, no one here is paid for appraising, or we are evaluated by the results. So we have a lot of accuracy in the evaluations and the graph at the bottom shows the green in yellow, Deloitte in our evaluation, the land evaluated by Deloitte and evaluated by us we are always conservative.
And this makes sense, you as an investor, you have to see -- a conservative evaluation is much better. So here we have been conservative, when we look at our evaluation versus the one by Deloitte 10% -- our evaluation is 10% lower.
And the graph, actually the bubble on the left here in a conservative way. We do this NAV with our internal evaluation of the shares. So it's good business for us, and excellent to use evaluations from outside.
So you would have to add another R$500 million between both of them, which is almost another R$5 per share. So we're talking in a conservative way, a share being worth 37. And if you consider the shares evaluated by outside, you would have R$42 per share. Well, we add value by transforming land into arable land. And we have been telling you what the company is doing in terms of new projects, especially involving technology. We'd like to celebrate that we have some farms that are 100% connected with 4G technology, in partnership with the telcos. We installed in some farms, and especially in this one, so shall say 100% connected, so we are sure this will bring a great gain in efficiency for the whole sector. Embrapa, the research company says that connectivity can really increase our agricultural GDP by 10%.
Now in terms of infrastructure, number two, we have made progress. I have mentioned to you an important project of irrigation in the state of Bahia where we believe we can increase the multiples in some areas where we have climate risks. So we're intensifying especially in [indiscernible], this project involving irrigation. We put into operation, the seed production unit in Chaparral farm this unit, and I believe that it will continue with this focus for the demand we have for seeds. We know that seeds is one of the inputs that had the highest increases in price. So we're looking, we have also buy farms. So we said maybe here we can have something that can help us in the results. The production of our own seeds, there is a challenge you're producing seeds in Bahia and being consumed in another state. But since we have close to it, irrigation fields, we can have this flexibility of producing materials for the state of Mato Grosso. We have seeds planted in Bahia. But there's this possibility the synergy between irrigated projects and seeds. This allows us to have materials to be planted in another state, Mato Grosso transformation of area was a core, we have a picture, we're including another 3800 hectares in Bahia, and also 7900 hectares being developed to arable land, this in the state of Mato Grosso.
Well, here, we have the challenge that I mentioned, the challenge of growing in area and at the same time selling farms. So here, we have our projection of the harvest 2023/2024. Although the company did during this year, more than 9000 hectares of land that were sold. Even with this, we see growth in the operation. And the graph on the side shows. It shows how the company is diversified, looking at different crops to add more values.
So five years ago, if you looked at this, it was almost one crop. You had two colors, you had only sugarcane and soybean. And today, we begin to see a graph that is totally different. We still have a lot of sugarcane and soybean, but we begin to see highlights of other crops. And the graph on the side, what is the objective? The company wants to -- we want to be always in commodities. But we also want to take advantage of opportunities of different crops that may give us more margin or may supplement the use of that soil. I'll give you an example. So you can understand.
You plant soybean in Mato Grosso. Soybean in Mato Grosso, you plant in September, you begin to harvest in January, the first harvest in Mato Grosso, then we plant cotton, if you plant cotton until January 20, this is ideal for cotton in the winter crop, then we begin to invert and plant corn. Corn, we also have a restricted window, the ideal would be to plant until February 20. But what happens if you can't plant. So then we have some special crops. So in the areas where you planted soybean, in the winter crop cotton and corn, you still have some time around 20%, 25% of the surface, where we're using these areas with beans and there are other crops.
I would like to show to you this vision of using the land as best we can. And the graph on the side is where we have the distribution of our lands and rented land. And the rented land gives us a stability in results in our own land allows us to be more efficient in the cost of capital. So the company is not only a company that leases land, but the combination of our own land and leased land helps us similar to the one.
And the leased land and our own land is a win-win solution. And the gains also come in efficient, more efficiency in our own land with a lower cost. Well here we have the numbers of the year soybean estimated -- between estimated and actual 218,000 tons, actual 204,000 tons with a variance of 6% less. We had farms with a production higher than estimated, but we were penalized in one business unit which is big which is the Chaparral farm this year, in Bahia we had adverse conditions in some regions, not all of them, but we had a drought in Chaparral farm, corn, very close between estimate and actual winter crop corn had an impact you all followed that the harvest planting had difficulties the planting phase and also the winter crop. When you have 20% in a winter crop, where you have this window. Beans, also we've had fluctuations, because it comes after corn. Cotton a challenge as a company we have to improve cotton in our estimates, and in the production there's a learning curve also the company is learning to plant cotton and also the winter crop for cotton.
So 9% below in total, 9% below estimate and cotton was affected as soybean was affected in Chaparral areas, a very large company, a very large farm, and we have cotton that was affected a lot in Chaparral farm. Well, here we have a little about sugarcane and other activities sugarcane, we have been telling you about this a drop in productivity, especially in the region of Maranhão, the north of Brazil. Last year, we had fire in a business unit. Fire doesn't destroy sugarcane. But you have to change many things. You have to use it in a different way. So we had a drop in sugarcane TCH of 84, instead of 84 went down to 74 of the sugar index.
Okay. Well, here the harvest is over, harvest 22/23 we closed with average currency of 547, Chicago price of 14.50. And what we have ahead of us, we have the harvest 23/24. Here I'd like to make a comment, we have part of this already sold at 12.91. We're always selling when at the same time as we buy inputs like fertilizer, and we have some operations through an accumulating operation, we have our feet on the ground, we're very cautious what we accumulated until now. So when you look at this, when you look at this number in the company, you have 25% of soybean sold. But when we use the accumulation, we're over 50 of soybean sold.
Corn, an enormous challenge this year. The company's the producers will regulate the winter crop. The margins are very tight now. This is going to be a great challenge this year sugarcane, we are making progress with the harvest. There was a delay one semester in relation to the other we had a delay in general. The other line that is important for us receivables from farms. We monitor this and we have some details of how we're selling and the exchange rate in Chicago price.
Well, here we have experts here. Here we show the new normal. So we've seen this important drop in the price of commodities, then we had also a drop in costs. And those who work with Agro and have never seen this. Those were in this business for 30, 40 years knows that this is always happening highs and lows in terms of prices. And the great challenge of the company is to be more efficient than the average, because efficient companies will have more success.
Well, as I said, we have a scenario of commodities with lower prices. But we saw also the cost also going down. And here I can say that I never saw this, at this price drop at this speed. We had a peak because of the Ukraine, price of fertilizer began with sanctions to Belorussia. And then we began to have price increases in fertilizers. And then we have the Ukraine war, the company bought the whole sector paid more. So we had a map of 900. And now we're talking now 500. So there was a price in the drop. Chloride also 1200, we didn't buy at the peak, but we paid 700 for chloride. Today it's already 600 and nitrogen with its ups and downs and the graph on the right. How the company is positioned in nitrogen here?
It's not NPK. So this nitrogen is on for the winter crop and cotton, phosphate, we have bought almost everything chloride almost purchases done. And below that you see the exchange.
Well, Gustavo, you have the floor to go into numbers. And then we will be back for the Q&A session. Thank you.
Thank you, André. Thank you very much to all those who are participating in our conference call. Let's see the main numbers.
I believe it's -- we'd like to remind you what André showed in the last two slides. This drop of prices -- drop in prices, we'd like to highlight that in our case with sugarcane we supply to the Mills who work with ethanol. Ethanol, the price was influenced by government policies with ethanol that is sold in gas stations. So we will show the impact that we had with the higher price of seeds, fuel, and fertilizer.
So let's begin with a consolidated result of the quarter and 12 months. Reminding you that we go from June 1 to July 30. The Q4, we're not going to go into too much detail especially, but especially the results as a result of the sale of farms that André showed. And the last two that we sold and we recorded in this quarter are having an impact on the results of this quarter. But looking at the main numbers in the 12 months, we can see here a net revenue, combined net revenue, real estate and operations sale of farm and operations R$1.3 billion, 9% less than in the previous year.
This net operational net revenue of 903 we see 23%, this lower revenue is influenced by more soybeans. This is a strategy that we had adopted in 2022 to accelerate the sale of soybean. So, on June 30, we're expecting to have higher prices, prices and exchange rate are influencing the price of soybean and also in decreasing the revenue from sugarcane due to the drop. Last year we sold at R$1.4. This year, on average, we sold that R$1.16. And the market cease in the last two, three months. They were selling even below R$1, the sugarcane, so a drop in the price of sugarcane and the impact of the quantity as André mentioned, we have 18% sugarcane harvested, 18% less this year in sugarcane harvest and this represented 120,000 tons, 8% or 9% of this value of this amount is due to delays in the harvest.
Due to rain, we had more excessive rainfall, it began in May normally, we begin on April, we had to begin in May to harvest sugarcane because of rainfall. When we look at adjusted EBITDA net revenue from real estate here. Here we have the sale of Rio do Meio farm, Alto Taquari farm, Araucária and Jaborandi all those sales that André mentioned. So, adjusted EBITDA total R$533 million in 2023, margin 39%, loss of 77.
Here we will show you some numbers that affect temporarily the results, financial expenses. So when we see -- look at the managerial EBITDA, we make adjustments and just correct the vision of the company's operational results. Total net profit here, you can see 48% less than the gross margin of last year. But when we look at the two years, while we had a combination [indiscernible] 2022, we had good results in real estate, but spectacular operational results too. So the combination of very high prices for sale and a low cost. And this year, we had an excellent performance in terms of sale of farms. But operations were influenced by higher costs, higher and lower prices. And this explains the difference between one year and the other.
Now going on to the next page. Here I'd like to show the main numbers of some crops. We always say that we have two main products, sugarcane and soybean, these are the engine of the generation of EBITDA results. But 22/23 harvest had this drop in price of commodities and premiums in the case of soybean and climate problems that affected soybean and cotton plus the high cost that we mentioned -- price increases in fertilizer and seeds. So this combination of factors when we compare one year with the other, the impact on margin is very great, very high. In soybean we see a price that drops R$200 per ton drop in price cost per ton increased by R$400 and a smaller quantity sold.
So, last year, we accelerated sales, this year, we're holding on a little. And you can see how the margins have dropped practically by half in soybean, when we compare one year with the other of the R$400 billion EBITDA generated last year. So we see that most of this was soybean. And today, the impact was especially in soybeans.
Another important point we can mention is sugarcane. The price, we saw that it is dropping R$14 per ton, 22% less, as I mentioned, the price of sugarcane that we had last year 14 and this year 16. And the cost per ton went up due to two factors. First, the price increase in fuel. Fuel is very important. In terms of cost, price increases in fertilizer, and here while you produce more tons, you can dilute this cost since production dropped, this also had an impact, increasing the price by almost R$40 per ton. So we see this drop, we're explaining why this happened. These two effects.
Other crops, corn is very similar. We had an important drop, we had also an impairment. We have prices dropped, as I said in the last three, four months. But everything that was done was similar to last year, although we had higher costs, as you can see, in R$ per ton and cotton the great challenge last year. We had planted with a good combination of prices, good and reasonable productivity. And this year, in the state of Bahia, we had an impact due to a drought in February. And this gave us a negative result. We have the winter crop that we will harvest in Q1 next year. But we're not expecting to recover the negative results.
Next, let me see. Okay. There it is. Well, as I said, we see net profit with the sale of farms R$77 million and adding interest, financial results, income tax depreciation which is embedded in results. So, excluding all these biological effects, and also the land that has been transformed that is under transformation. And we include here some derivatives in the financial results and adjusted EBITDA of R$187 million, last year 437 and together with real estate, we have 533 last year we had 689,000 the last line adjusted EBITDA total.
So here we see the contribution of each activity, sugarcane, as we showed had R$47 million very, very similar to this, we have to include depreciation, but we see that normally it was 44, 45 between soybeans and sugarcane. This year sugarcane, with this combination, less productivity and lower price and higher costs, also had a smaller contribution in generating EBITDA for the company.
On to the next page, here, the company continues with a very healthy financial condition. We have debts R$554,000, the company is in a very healthy financial condition. We have a debt of R$453,000, net debt 60 million when you have -- you see here, the leverage very low and net asset value of the company, value of the properties we're talking about 2% when we believe that we could have up to 30%, the debt is a low price debt, 92.60% of the CDR we're very comfortable with the interest and also the maturity of the loans. We're working now with new financing for an important project that we want to continue and conclude with irrigation R$965 million and we have receivables from farms, present value R$700 million and 1.2000 bags of soybean from Alto Taquari according as we transfer the property, we announced the sale last year and we will deliver and receive in installments. So in terms of debt and cash, we're in a very comfortable position.
On to next page. That we see this is an excellent piece of news, we always say to our investors especially in the long-term, we have investors who did not receive dividends during some years, we were reinvesting the dividends to build the company with more than R$700 million now in receivables from sale of farms. And after deciding what we will invest, we have 140 million to invest this year. So we understood that we should continue paying good dividends. So we are now using R$320 million, we're awaiting approval from our Council in October, our assembly in October. So we're giving a very, very, very good return. If we look at the last five, six years, almost 9% return every year average. So we try to do this on a recurring basis and our business model shows that we had a difficulty year in operations, but we had the sale of farms and this allowed us to continue being constant in paying dividends.
On the next page, here we see capital stock market. Here we see market cap 2.5 billion and LND 4.9 billion, share price 24, in the U.S. $4.95. And as we see an excellent investment, it's an excellent time for more investments André mentioned that we include the sale of farms here in this. We understand that it makes sense to sell in this amount R$24 per share. It has a great potential to rise. Thank you.
And now we'd like to begin the Q&A session.
Thank you, Gustavo, André. Now I'd like to pass the floor to Pedro Fonseca from XP.
Good morning, André, Gustavo, Ana, thank you for the opportunity. I'd like to ask two questions. First an update in the case of hedging. If André can explain more the point that he mentioned, so in terms of accumulation you already sold 50% of the soybean, can you give us more details about the sale and whether the rest because in hedging, you had 25% sold at 12.70 and when the other 25% was the price similar 25.70? And what can we expect in terms of the hedging for the next quarters? And another point that I'd like to ask when you said -- when you told us about margin per crop? You had many non recurring facts, both positive and negative. What can we expect? Do you believe things will go back to normal? What is the company's target for the main crops in terms of gross margin?
Pedro as always very good questions. Well, first, the first question hedging. So an enormous challenge in the year, a lot of instability, we see a market that dropped. But we saw, for example, we had a drought in the U.S. then prices went up. So what do we feel about this? The market is very tight, any piece of news, positive or negative will cause great movements in this markets. So what did we do in the past? We sold because we had to buy inputs. So we made the sales at 12.7. The market was 11.8. So we use some sales strategies, then we saw that the market was stagnated. So we began to accumulate 12%, this is an operation that can double if you are selling above the ideal range. We're considering here. If it doubles, we would get to these numbers.
So when we accumulate every day, we look at the contracts. And we're selling at 12.75. So at 12.75 we're selling part of this and we still have a large part. At the same time as we accumulate and also some sales. We're trying to capture our vision in terms of the challenge, more than capturing Chicago at a good rate. Although it's difficult, we have two great challenges in the sector this year.
The exchange rate, dollars, that this affects a lot, the company has an average dollar of R$5.40, R$5.50 to $1. But the future is showing a drop in the exchange rate. We see a lower exchange rate. And the great challenge for agriculture is basis. Last year alone, the sale happened during the harvest, and the discounts were high. So we have to look also at structural changes. So one thing is looking at last year, so soybean went down to 130. People didn't want to sell and so there was this discount, and structurally we were in South America producing 200 million tons and North America producing at 120. So we believe there will be a change in basis.
We had positive basis. And I see a timid recovery in comparison with last year. So we will have a negative basis in South America as a whole. So that's the situation margin. We believe that, that when stability comes back, it'll go back to 2500 as an average, you have more mature areas with margins around three and newer areas below 2500.
We're working with this expectation of R$2500 per hectare, which is a little above historical averages, if we use 4.9 as the exchange rate, $520 in margin, which is still a good margin. So this is in the case of soybean. In the case of sugarcane, there's a little more uncertainty because we work with mills that produce ethanol, we don't sell for sugar. We're seeing sugar higher prices 26, yesterday 26.47 in New York. So these prices of sugar will decrease the production of ethanol. And on the other hand, we see that the conflict putting a lot of pressure on oil prices, I would wait for the second semester to see the prices of ethanol as a fuel. And this will may help us to go back to 4000 per hectare.
Perfect, André. What we're estimating R$2500 per hectare of soybean. As you mentioned, our challenge simulating different scenarios between 1700 and 2,500 per hectare. And sugarcane, we're thinking we're working with an estimate of R$4000 per hectare. And the great challenge is corn, especially winter crop corn. With the uncertainty in the window for planting. We're seeing that today for exports, we have R$35, R$38 per bag and if we estimate 110 bags, 100 bags, we're talking about R$3500, R$3600 per hectare. And today the cost of planting especially nitrogen is above this value. So if everything goes right, you would lose a little bit of money.
We will replant. We will try to understand the impact of the winter crop. With corn, we have some uncertainties but soybean and sugarcane, we're working with these margins.
Thank you. Very clear. Thank you. When we look at the purchase of nitrogen-based fertilizer, it's a little lower, André mentioned this. And recently, we saw a great spike in nitrogen, do you see any risk with this input?
Well, I talked about fertilizer, nitrogen-based has its ups and downs. Ups and downs, linked to the price of oil, and nitrogenated products they are linked, the price is linked to the winter, in the northern hemisphere. When you have a cold winter, you consume a lot of natural gas, and you produce very little ammonia. So to produce nitrogenated product. So we have to understand all these changes that we're following. The [press of] [ph] nitrogenated, apart from being linked to oil, it's also linked to the consumption of natural gas in the northern hemisphere. If you have a less severe winter, there is more gas left over for ammonia.
And talking about climate, from now to January, it's difficult. We know that the forecasts have an accuracy of 15 days. So Gustavo said correctly. It's fundamental for companies like ours, we capture real estate and operations results, we have to be able, of course, we are going to plant, but we have to adjust the planting. So nitrogen is especially -- the effect especially of the winter crop, because of this uncertainty. And while we don't have a clear idea of the price of corn, you can buy nitrogenated it can become expensive, or cheap. We saw changes in corn seeds. But we haven't seen the other costs yet.
So we're always working with a winter crop that represents little in the company's results. But we're alert to try to capture and see when it makes sense today, it doesn't make sense to buy nitrogen fertilizer for winter crop. If we don't buy nitrogen production will drop in the winter corn. And so you can also buy and not have a higher price. So we're trying to understand what will happen.
Now Henrique, BTG Pactual.
I have two questions. The first I'd like to explore the guidance for 23/24 yields. You see a recovery of productivity similar to the guidance of the previous year. And since it's an El Nino year, how are you calculating this risk in productivity in your guidance? For example, how do you see this? What are your plans for next year?
And the second question concerning the price of land, André mentioned that you have been a seller of land in the last few years, and the results of the two previous years make this clear. I'd like to hear how you see this market, the price of land.
We see that we had an appraisal liquidity begins to drop in the sale of land, and the company is deleveraged allowing the company and with the drop in fertilizer prices, too. So how do you believe you will position yourselves in the next cycle and maybe buy land? Thank you.
Thank you. Two questions. We could talk about this two hours. Well, first question. Based on, I would say the following; the company producing its budgets, we use some criteria. I won't say that we're conservative, but we try to be on the safe side. First, the best sensitivity, we analyze the portfolio of the lands being planted, maturity of these areas, maturity time, and we prepare a curve with this.
I'm saying Chaparral that I mentioned suffered a lot in this harvest Chaparral farm, the numbers are impacting the projection, the estimates of production for the next harvest. So answering your question, the way we analyze production model, the land and the averages in the last few years include a downside in the guidance for productivity.
Your second question, the price of land, we saw stabilization, prices stabilized when we look at because the price of land depends on the number of bags of soybean that you produce per hectare. For example, piece of land that was worth 1000 bags of soybean. So the price today has dropped, the price of soybeans. So when we sell and when we buy, we're using a curve that is projected for the price of soybean.
So imagine a farmer that sold 1000 bags, but it's always in installments. And the way we capture these highs and lows is using a curve of prices in the future. Soybean was 180. But we did that use this price. We put 180 at the sale, yes. When I can sell at this price and the others, it converges to a curve, which is in our case is $12 a bushel. So I see a stabilization in the price of land. And for companies like ours, it's almost a synonym of opportunity because we have capital to buy farm. So we have to make good deals and we have done. So this is an opportunity to buy land. But I say we still have an agricultural sector that has high liquidity and this high liquidity as I said, you need four, five years to see a drop.
So all tax issues, all of this helps Brazil to have an important liquidity. We should continue taking advantage of this liquidity and thinking of opportunities to buy. The year before last, we were able to buy, sell, lease. This year, we were not able to buy but we sold. So as I say, we try to be an anti-cyclical company taking advantage of opportunities. Everything is very dynamic, so we have to be able to look at the details and capture opportunities. This is what we do.
Now we have some questions in writing. I'll try to consolidate some. Some André already answered with Pedro and Henrique's questions. We could talk more about the cost of fertilizer with impact on margins. And the other question, the impact of productivity, El Nino, you just mentioned that, and how this can impact in the results of next year, concerning price of fertilizer next year?
Well, as we mentioned, we had an expressive drop. So let's calculate, we were talking about MAP. We're talking about MAP that the company bought. The company bought at 950. So today, the company is buying at 550. So $400 in drop of the price of MAP, we're talking about a product that on average, sometimes you spend more sometimes less, but on average, in the case of MAP 200 kilograms per hectare fertilizer, so 400 times point two, $80 drop.
When we look at chloride, very similar 800 and a drop to 500, $300 and roughly 200, 230 kilograms, if I put 200 times, 360 plus 10%, 65. So the drop in the case of fertilizer, in the case of soybean, a drop of $80 per hectare in phosphate. So you have a reduction in total cost of $145 per hectare. $145 at 545, let's say almost R$800 in margin recovery, that's the picture of next year. So, we have R$800 less to pay for fertilizer per hectare.
So obviously, some crops which are more intensive, the savings can be higher. Cotton apart from phosphates, potassium and nitrogen, or sugarcane, where you work with more fertilizer, the drops become even more important. So we had reductions in general, R$600 to R$800 per hectare and some others even R$900 drop in fertilizer cost.
Here in this line in relation to the cost there's a question from Guilherme and Thiago concerning cultures that we intend to introduce with higher margins in the next harvest. And Guilherme wants to know in relation to mitigating costs nitrogen whether, for example, would it make sense for us to start also having raising chickens?
First question. This is a question that we also asked the managers of the units. We are always looking to see how we can improve margins per hectare. It's very important to know that we need different crops. For this we have to create also sales channels, for example, if you bring 100,000 tons of soybean, it's okay. Now when you begin to look at other crops, beans, the company has been planting almost 5000 hectares of beans. If you put 10,000 hectares, you're going to have problems with the price, and you need distribution channels. So answering your question, this includes a learning curve, not only the best way to produce, but there's a learning curve in opening channels for the sale, you have to open a channel, you need to be constant, this is a great problem in Brazil, you begin to export a different crop, when the price is good everyone plants produce. When the price is bad, no one produces that crop. And the people abroad who said who thought they had a supplier, they lose a supplier. And the special crops is for this. So we're exporting beans. We are selling beans also to the domestic market. We have a partnership in sesame. So the crops -- the special crops have a challenge which is the sale.
Now, the second question. The raising, for example, not only chickens, it's having the capacity to enrich, for example, the product, you were talking about manure from chickens, fertilizer from chickens. So yes, it's a very good idea. But you have a logistics issue or organic mineral fertilizers, like I said, we spent 400 kilograms of fertilizer, when you use chemical, when you use organic fertilizer, you will use four or five times this. So the trend is to increase this type of fertilizer, but you have to be close.
The great challenge is that normally the production from chicken are sold close to the production centers. So normally, it's close to the large centers, which is so organic mineral fertilizers or depend on logistics. And maybe in your question. You could say André, do you intend to work with this type of fertilizer? Yes, some people are specialized in this. If we have the opportunity looking at logistics to use this, we will do it, but it's not our core business. It's a totally different market. We don't have expertise in this market. And it would be very expensive to learn how to work with poultry.
Gustavo, the impact caused by the fair value of biological input prices and their effect on the sale of land because we had a strong impact on all the prices.
Well, I will try to comment three facts. The effect is R$150 million, the inventory of sugarcane that is growing. So what is the rule? You invest on June 30, we had to estimate in the future how many tons we would produce, the price we had to estimate that we would have in the future and bring this to present value. So, what would be the objective. If I were to sell the company, how much would they pay me to deliver this inventory that is growing sugarcane that is [down] [ph]. So on June 30, we had part of the cost of fertilizer and we had the price of fuel that was high, but we didn't know the price of sugarcane, it would be around R$2900 per cubic meter. September, the taxes go down. New policy for the price of fuel in the country. So, what happened on June 30, the value we had was 2300 per cubic meter, 30% below the price. When you'll look forward this difference between these estimates generated R$65 million.
If you wish to have more details, you can talk to Ana. So, we have R$65 million expense and affecting our result. I mean, every June 30, you have to take everything in inventory. And you have to put this at the market value at that time, if this value is lower than the value you have recorded, you have to make an impairment. If next month it goes up once again you will record at market value this effect especially in corn was R$47 million and you can see this in the accounting. So, there is no cash effect these are estimates.
So what happens to receivables from the sale of farms? We have all the receivables coming from the sale of farms and they are all index to the production of bags. So we have to look at the soybean, the production you see at market value, if I had to sell it to a bank, how much would they pay? And everyone uses the exchange rates, the soybean to estimate the premium freight and based on this, we will give you the market price. So what happened between last year, since the market was up, it gave us a positive result. This year, it generated a negative result R$57 million. So there are many facts that affect. There are even others but the greatest impact are these 150 million that are estimates and we have to follow this.
Thank you, Gustavo. So there's a question from Julia from My Cap. Concerning total hectares sold. So how much is productive land and the percentage of the portfolio?
Well, as I say, we have some questions that we have to calculate on the spot. I will calculate this rapidly, approximately this sale represents 5% of the area in portfolio, and it represents 20% to 25% in the value of the portfolio. So, I'd like to highlight that the sales, most of them were made in the Midwest, where we have land that has appraised. We can't say, oh, you sold five? No, we also sold farms that have higher or lower sales, The farms sold in general are worth more than the portfolio. So rounding off 5% of the volume and area and 5% of the portfolio. Remember that we said excluding the evaluation 897,000 and in sales, we sold 1.341 billion. So there is a difference with the duration and the price of the land.
Thank you, André. Question from Douglas. And for Gustavo, why do you do the impairment in [Agro5] [ph], and the amount of the impairment represents 100% of the company's share in the company?
The reason for the impairment, it's a technology company that is pre-operational. And we would not be able to maintain this amount invested, I believe it was $1 million, 100% of impairment like we had in the previous case, when we have business plans and indicators, these expenses in technology, we use indicators, axis, but we were not able to defend this. And we thought we had to be conservative. But this doesn't stop because if it becomes an operational company, we will return with these investments.
[Indiscernible]. Where are you proposing dividends higher than the profits to keep on paying the amount last year, wouldn't that be more conservative or repurchase of shares considering the NAV?
Okay, dividends. Dividends first, the number 320 last year we had 520 because we had extraordinary results. So the number is 200 million less than last year. So how apart from the profit, the company has accumulated results. So when we -- you can see this -- when we add the profit of this year plus accumulated results, we have 621 million in accumulated profits that could be distributed. So what did we do here? Gustavo mentioned this.
We analyzed our flow to avoid hurting the company's capacity to invest. So some people don't see this receivables from the sale of farm. We have more than R$700 million as receivables from the sale of land. And in the next year, we should have around 200 million being paid from receivables. So cash has another 200 million to receive, there are new sales, we will continue to making new sales when we sell cash, it's not always 100% cash. We begin with 15%, 20% as cash. So we decided to pay more to shareholders, because one thing is giving the money back to shareholders with dividends when interest rates are high, the difficult is to pay 500 million, and the interest rates too.
So today with interest rates in the market, the shareholders who want to reinvest in the company to continue buying shares of the company, we believe it's good business.
When you ask me the second question, why we repurchase of shares, one thing we have done all the time with you is to change the liquidity of the company. In the last few years, we changed the liquidity of the company in enormous way. We had three, four years ago, we had between 15,000, 20,000 shareholders and now more than 125,000 shareholders, 127,000 shareholders. So this gives us a lot of liquidity. This gives us a great capacity to take out loans. So the way we can give back to the shareholder, we have a comfortable cash position, we have a lot of receivables, we are a company that should sell more. But if we have an opportunity, I will be the first to buy we're not going to lose an opportunity to buy.
Oh but the money that you have in cash is not enough for a large firm, the difference of 50 million more or less won't make a difference I can tell you. So a large operation we will go to the market. And I'm sure that you will allow us if we need more money for a big acquisition. So that's the idea to distribute right now, what we have in a company that is a seller more that is selling more than buying and this is true. So we hope that we will continue with this situation may be a better situation in the market to make new purchases. But this will not stop us from large purchases. And if we have this opportunity, we're going to use it.
Okay. A question from Eduardo. We're running out of time. He asks about the sale of including the installments of land sold in the next semester. So, Gustavo, you should clarify that we still have a sale to be recorded in accounting. But maybe you can talk about these receivables how they are accounted for.
Okay. Some sales that we will still recognize 1.2 million bags, hectares the second part Taquari farm, the second sale. So how does this done? When we deliver, they will give us, they will pay an installment 25% at that time we price these 1.1 million bags of soybean. We look at the price at the time and all the installments do. We bring to present value with the price of market price for soybean, Chicago in dollars, premiums and freight. So, all of this we calculate and we look at the cost and we recognize the results in the sale after that, we will have the other installments and every quarter we receive installments and once again we will calculate these prices and the variance will be in the financial result.
So today, it's difficult to estimate this value, the results we will have. And the second point, it all depends on the delivery. We understand that part of it will be transferred until June 30, the last quarter of the next year and another part, most of it during 2024 and some in the next two years.
Very clear. Adding to your answer with the exception of the land sale, all the others have already been calculated. We already recognized the gains and today they are at market value in our accounting. Now I challenge last question for André. Otherwise we could stay all afternoon talking about this. [Indiscernible] and Thiago Lima, I'd like to understand more about possible future sales, which firms could be sold. And how do you see the markets looking at current prices of commodities? And Thiago, how do we see the price of commodities in the future? The million-dollar question.
Okay. I don't have a crystal ball. But okay, let's answer. First, Matheo, sale, I always say all our farms are for sale. So, everything is for sale. Our decision is based when we begin to understand that the profitability of this asset is dropping not because of inefficiency, but due to land prices, you have a farm that became very expensive. And even if you have even if you produce 65 bags of soybean and also 100 bags of corn. So when the prices drop, we divest, we sell.
So we monitor profitability. If the ROA is high, if we know that it can go up, we wait. So this is the way we look. And how we divest, the price of commodities is linked. We see a market that is under stress. We see that harvest in South America. There are uncertainties El Nino, we've seen this year, rainfall being different. So this is very positive for sugarcane. It's positive to begin to prepare the fertilizers and also for two dilutes of the fertilizer, but you also have sometimes other problems.
For example, when rain comes before you have some pests. So, the initial numbers that we are working with 155 million tons, 160 million tons of soybean, the company will grow more than this. Because we have 10,000 hectares that we're going to begin to plant -- land that was transformed, and the productivity is higher in the beginning. So I believe we will have a stabilization in the global inventories, the cost of capital is high, this should stabilize some prices. So, it's a market that is under pressure on both sides and also with geopolitical issues. So year of lot of tension. And we'll monitor this both in operations and also in the sale of firms.
So if it makes sense, we do it.
Thank you for participating, we had a record number of participants. Shares are going up. Let's see if we have another 10% in the appraisal of the shares. Thank you, André, Gustavo. If there were more questions, myself and Camila Daisy are available to clarify any points. Thank you. And I'm going to pass the floor to André for his final comments, and then we close.
Well, once again, thank you. We know you trust in the company's management; you trust in the challenges we have ahead of us. I'd like to thank you. The results are not the result of André or Gustavo or Ana, its teamwork begins with strategy, approval from the council, everyone's work, dedication, and more and more. I believe we're preparing a company to continue successful. We look at sustainability. We take care of this how we should do it. Once again, last year, we received great place to work one of the five best companies in agro to work. For me this is sustainability. Sustainability of people is the company's capacity to retain talent. And this is a constant challenge in companies right now. So this reinforces our commitment as managers that we're trying to do our best and continue with sustainability. Thank you very much. Let's hope El Nino will come in a more attenuated way to avoid hurting the northeast of the country and to bring us an excellent harvest. So count on our good work, our support, if you have any clarifications, if you need clarifications, talk to our Investor Relations Department. We wish you a good weekend, a long weekend because of the holiday. So let's all rest. And let's come back on September 11, because we have a year with many challenges ahead of us. Thank you.