Brasilagro Companhia Brasileira de Propriedades Agricolas

BOVESPA:AGRO3

Earnings Call Analysis

Earnings Call Transcript 2024-Q4

[Ana Paula Zerbinati Gama, executive]

[Interpreted] Good morning to all. We're here for our call at the end of the year for 2023, 2024. As you know, our year goes from June to July, and we're here to talk about Q4 and closing of the year. I'm here with André, our CEO; and Gustavo, our CFO.

[Operator]

[Operator Instructions] Thank you. And now I pass the floor to André.

[André Guillaumon, executive]

[Interpreted] Thank you, Ana. Good morning to all of you. It's a great pleasure once again to be with you with our annual results. We will comment about the year, the problems, the great objectives. It was a very challenging year for agro-business.



Once again, I reinforce that the combined strategy of the company with real estate and operations has been a winning strategy. The company's capacity, the resilience the company has to deliver combined results, both operational and real estate results. The great highlight of the year was this. And we will talk a little about production. We will talk about climate.



Many things here with you but what I would like to really stress is that the company, in fact, consistently has been delivering its strategy through operations and real estate results. This has been done during the years with a lot of capacity and has brought good returns to our shareholders, investors.



So I would like to begin, let's begin with the first page and where we see here the highlights of 2024. It's a financial highlight, BRL 1.1 billion in net revenue. We have a net profit for the year, BRL 227 million, and adjusted EBITDA. I always like to show this line, BRL 279 million, and dividends that will be proposed for the shareholders' assembly, around BRL 155 million. All these numbers show a little of what we have said. It's a company that has the ability, the capacity to combine a real estate strategy with operational strategy, enabling us to generate this result and enabling us to really pay dividends to the shareholders that trust the company's management.



In terms of real estate, sale of real estate. We sold Chaparral Farm, a very important sale, and we [ shield thus ] the resilience of Brazilian agro-business. A lot of people asked us in the previous calls will the company be able to sell farms with the drop in the market? And I said the company is resilient. The company is using this resilience and to make an important sale of a farm that we haven't sold yet. We sold an important piece of this farm, 30% of the area, but we still have 70%. So it's a farm that is worth more than BRL 1 billion.



And the third, we talk a little about operational results, more than 2.3 million tons of production you know we have been saying in the calls we're making progress with the strategy to farms in Bahia with irrigation. And we have been continuing with this.



We implemented another 600 hectares of irrigation and next year, another 900 hectares that will be irrigated. This brings stability to these farms. The company is always after new technologies. It's not only a land development company. It's a company that is a good operator, and we cannot be distant from connectivity. All of this, we believe, will bring us excellent results.



So this is data from [indiscernible] that has 10% of the GDP with artificial intelligence. So we're implementing this in the main units. And one important point to highlight. You all know how much logistics has cost in our business and the company finalized, we were able to build a silo in [indiscernible] Farm. It has already received many products this year. This gives us flexibility in terms of freight, logistics, and harvest in this unit and in the close by units.

These highlights, this picture of the company shows the company's ability to combine operating results and sale of real estate. When we talk about real estate, I brought here the main highlights of the year. The sale of Chaparral Farm, 12,335 hectares, 8,796 useful planted area, BRL 364 million, and 350 bags of soybean per hectare. It's an asset that has been in the company since 2007.



So such a high return. This shows the company's capacity to generate value to the shareholders. And how much value this farm generated. I was remembering the other day, we paid BRL 40 million. And today, we sold 1/3 for BRL 365 million. So you all know this. You know that the company does this very well.



The second pillar, we brought here something that we have been saying for a long time that companies need to balance the relationship and the production of ethanol. The company always grew. We're a company that plants sugar came for more than 17 years, and we had most of our production of sugarcane aimed at ethanol.



In the past, there was a great need. More recently, you all know you have been following the market and other companies of sugar and ethanol that the relationship has changed. And since we have focused on ethanol, we were hurt a little and we, as management, were to correct this to place in the production of sugarcane units that may not only produce ethanol but also sugar, thus improving the mix.



This is an important progress, very important, and we won't stop. Certainly, it enables us. It helps us with a large player of the market, one of the largest players of the market. And then we're playing this game of production of sugarcane, aiming at producing sugar and not ethanol.



More recently, we finalized during the last month, the operation, the purchase of Novo Horizonte. Novo Horizonte was an agricultural company that had operations in the region of Primavera do Leste. The highlight here, it's a region that has a great value. The farm is very mature, where we have irrigated land, 17% of this unit has irrigation and we were able -- we bought this company that came, brought to us equipment, irrigation equipment, all the structure of the company. We will begin a new unit with operations, with stable production a farm that will bring us great results in terms of diversification with cotton. So it's an asset that is now in a difficult year. So we're showing this highlight.

The company's ability to capture real estate opportunities even in times where price of commodities are dropping. Well, here when we talk about price of commodities, this shows the price of commodities and how they are behaving.

We saw in the last year, soybean, this is always in the port of Paraguay from 190 to 130. Corn also dropped a little less, but it dropped. So cotton that had a certain stability, we had an important impact at the end. This shows once again the strength of combining the sale of real estate farms and operations. Now we saw that ethanol, the price of ethanol went up. It had a small benefit on this result because it became a few months ago, it will benefit the company's result in the next year. Ethanol, thus taking sugarcane to historic levels of contribution.

Here are summary of what we produced. So the production of soybean, as I said, it's time to show what we did, where we have things to change corrections. We had a smaller production than we had expected, and this is due to three units and one that really was affected was the operation in Paraguay. We had a very difficult year in terms of, we had more than 45 days of drought. This affected soybean and cotton in this unit and two new units, Mato Grosso, Fazenda, Panamby, and Regalito. These are units that are being converted from pasture land to arable land.

This is the effect. Of course, you will ask me, the council asks me, the investors ask me, the company is much well, much better prepared in these units in relation to the last. They were conversion land, converting from cattle raising to arable land. This year, now they are ready, and this will allow us to attenuate all the beginning effects.

This year, climate conditions, the forecasts are better, but we know the problems we had in the state of Mato Grosso in the past. Here, we show in the highlight that I stress is the actual versus what we had planned in Paraguay. The yellow line shows the average during the last few years. You can see that here in summer, we were below the historical levels in Paraguay.

When we look at the harvest 2023, 2024, when we look at production of sugarcane, we had 1,975,000 tons, our harvested area. Here, we'd like to highlight that this has a new project. It was affected very shortly. There will be a strong harvest in the second semester at TCH in the harvest '23, '24, we're estimating 83.7%. We have a growing relationship with the previous harvest.

In the past, we suffered a fire in San Jose that affected productivity. We have been recovering this sugarcane planted land, and we will close the harvest with a productivity of 83 cattle. We always say that for us, it's only a transition raising cattle, we use it only for some time. We will never buy farms for cattle raising. We buy farms that have cattle raising, but can become arable land.

So, pasture land is practically the same and due to everything that happened at the beginning of the rainy season. You know that the rainy season, November to March is when you have a lot of grass for cattle raising. November and December, we had less rain and this affected pasture land, but with the GMD that they still attracted 490 grams per day.

Well, reinforcing once again the company's ability to sell farms, to lease, to buy and with you, we have shown growth, so harvest after harvest, although we sold 8,700 hectares. The company is still growing and the company will continue growing in '24, '25 in terms of planted area. We're close to 178,000 hectares.

The important thing I'd like to highlight when we look at the graph on the right, the diversity in crops. This is helping the company, remember, many years ago, this pie chart had only two colors. It was sugarcane and soybean only and now we see a great diversity. There's a learning curve but it shows what we have been saying, the importance of being able to explore these units with a maximum they can produce diversity in crops and this makes them profitable.

The graph on the right leased land, we see land that we leased to third parties and the cultivated area and once again, I reinforce the company's strategy is the combination of two businesses. We believe in leasing to bring stability, to allow us to be even more aggressive in [indiscernible] and also, we believe in our own land that brings us a drop in the cost of capital.

So, the strategy of combining leasing with our own land no doubt will show as a winning strategy because it brings stability in production. And on the other hand, our own land will bring us the ability and capacity to get cheaper capital for the working capital of the company.

Well, next slide, inputs. I believe you have been following the inputs. I said that we were in the alligator's mouth, cost dropping, the cost goes up as we say using an elevator, and it comes down step by step. So, once again, we have a drop in the cost of production, reminding you when we talk of, let's talk about soybean.

We had 5,000, we dropped to 4,504 and now 3,900, 4,000. We believe in this that there will be the need to drop this cost so we can expand the area and increase production. What we show beside this is the relationship between the products, potassium close to historical prices, nitrogenated, you know there are ups and downs. It has a lot to do with winter and phosphate that went up in the last few months and we're alert.

The graph, the numbers on top shows what we have bought, chloride 83% bought, phosphate 80% bought, NPK 95% bought and defensive 70%. So, everything for summer has been bought, now there's the harvest in winter and annual crops. Nitrogenated when you look at it, its 65% bought because sugarcane needs fertilizer during the year. But we believe that these numbers will converge.

Well, here, we show our hedge position. It's not only producing. We have to buy, sell. [ Farm could ] also sell all these products, this production. So on the first graph, we show the behavior of the price in Harvest 2023, '24. Very competitive price. We closed soybean at $12.81. So this has already been harvested. Most of it was already sold. There's only a part for the second.

We're looking at the exchange rate during the whole year. If we take a picture now in the last few months, we saw a higher price in the dollar, and this is the change in the graph beside it. This is the Harvest '24, '25. The company has 17% already sold. We have some derivatives. And here, we have more of the effect of the exchange rate, especially in the last month, 45 days, we saw what happened to the exchange rate.

On the right bottom, price of 80 to 20 per pound New York and with an exchange rate of BRL 5.57, a very good sale, 19% sold at BRL 82, very different from what we have today in terms of prices and an exchange rate of BRL 5.41 to a dollar. Also, we have receivables from the sale of farms. You know that we report almost BRL 770 million in receivables. These are all linked to commodities.

So here, we show how we sold during 2024 at the price of Chicago BRL 12.27 and the exchange rate the same. Now the Harvest 2025, we have 21% sold at BRL 12.37. And here, we see above a better exchange rate.

And now corn small volume, we're very optimistic because we have other factors helping the price, especially the production of ethanol and corn from some regions and the second graph is ethanol. So we signed the Harvest '24, '25, a great recovery in the last few months. We believe we will have more recovery. We have a part sold, 25% and some and sold here and derivatives. These are derivatives that we're beginning to operate. Why? Because now we have production of sugar.

Well, these were the highlights. And now I'll pass the floor to Gustavo, our CFO, and he will show the company's numbers.

[Gustavo Lopez, executive]

[Interpreted] Thank you, André. Good morning to all who are with us here with earnings, our conference call. We're reporting 12 months from July 1 to June 30, the whole year. And here, we're showing a profit, BRL 226.9 million, and we see that we had a net margin a little higher than last year.

And as André mentioned, now with the sale that we made in the state of Bahia Chaparral farm, which brought to us BRL 248 million in gains, selling this farm. And we also see although adjusted operational EBITDA was well under the number it should have been if we worked with historical averages that we obtained in previous harvest, especially in soybean and sugarcane, which are the engines of the EBITDA generation of the company.

But when we look at adjusted EBITDA, BRL 179 million, this 25% EBITDA margin is due to this factor, the sale of the farm. When we look on the right in the center, we're showing what we built company's revenue, unit prices that we were able and unit costs, we can notice that we didn't have great variation in relation to the tonnage that we sold during this period.

In soybean, we have a little less sales, especially because we made the decision to accumulate more the inventory of soybean. And remembering that the premiums in the previous quarter were well below. And although we had positive derivatives and an exchange rate that was close to market value, we still had difficulty to validate prices that would make these margins more attractive.

So we saw here corn that we also sold in the same amount during this period. Remembering that we have the second crop, we decreased the second crop because margins were low. We will see the performance on the next page. But in sugarcane, we had a production that was a little better.

In the past, we had difficulty in São José Farm due to the fire. We had a fire in 5,000 hectares, and now we're recovering its potential. And cotton, as André mentioned, is a highlight. Beans too, we began to diversify more, and we will show this learning curve to the company.

When we look at prices, all of them, we see a drop around 20% soybean, sugarcane and cotton, a little more in cotton and corn and this was a factor to avoid producing the land we had for this. The unit cost, we see that there was a drop in the price of fertilizer, but it did not compensate the drop of the price that destroyed margins when we compare with historical margins.

At the bottom, we have a graph of the main crops. We see soybean and cotton, sugarcane too. Here we understand that there is potential to recover. Later, we will explain the expected margin for this type of crop and the sale of farms.

We sold more last year, especially [ Araucária ] Farm and Rio do Meio Farm, which was a small part and also the sale of Jatobá Farm, which generated a sales result of BRL 100 million more. But as André mentioned, the highlight here with the combined in a year that is very difficult in terms of margins, although we have a hedge policy to get better prices still. We had excellent harvest of soybean in Argentina, Brazil and in the U.S. too. So this put pressure on inventories and this put pressure on the price, which dropped.

Sugarcane too. Last year we had a full harvest for Brazil. This year, we see better prices coming, but this pressure on price really was the cause that the operational EBITDA in the company, which should have been normal, was not normal.

Now on the next page, here, this is to show these margins, historical margins in soybean, cotton and corn we see a drop of 30%. In the case of soybean, here, 166,000 tons. Although we have results -- margin was 16%. Although we had results with derivatives and ratioed values that were much higher than the price of Chicago.

But we see that this led us to have a price that was much lower than the prices we had last year. So when we look at another product that is important for us, that we sell, which is sugarcane we also see how the price per ton 2 years ago, it was BRL 200 per ton. It's being sold at BRL 133 per ton. With this, we reached BRL 8 million, a margin of 12%, very low contribution. And if we look at historical margins, if soybean had a margin of BRL 140, BRL 150 for sugarcane, we estimated BRL 80 million to BRL 100 million. And we see how the -- this price impact had a strong pressure.

Other crops corn, such a large volume that we produced and we didn't see a price recovery. We sold and this generated a negative result. Beans is a culture that we began to diversify and cotton the highlight as of the implementation of some services with irrigation, we begin to have a technical knowledge that is better. And we're trying to intensify the surface with the irrigation by diversifying the crops.

On the next slide, we will see operational EBITDA last year, BRL 190 million to BRL 100 million this year, BRL 31 million. We have also inventory to sell, and we're taking this to the next semester. But here, I'd like to highlight, as I mentioned, we understand that with margins to what we have seen in terms of historical prices, we should have an EBITDA of BRL 200 million and an operational EBITDA.

But as we showed great difficulties in terms of price, led the company to not reach the numbers it wanted. Next semester, we will -- we still have some inventory. We will be selling in the next semester, and this EBITDA will have an effect in the next fiscal year tax year.

Here, indebtedness, we have a highlight that we have a spectacular numbers when we look at asset and liabilities very well balanced and a company that is not leveraged, no leverage. We see here in terms of short and long-term, BRL 680 million, and the difference in relation to last year, the debentures that we issued during December last year to implement 4,500 hectares of irrigation in Bahia.

When we look at the debt and the company's cash, BRL 209 million, BRL 520 million net debt, reminding you that we have BRL 770 million in receivables from farms that are not considered here, which shows that the company has a net -- a negative debt.

So a highlight is the composition of this debt. We have 100% of the CDI index, very low interest rates. And we were able to lengthen the terms, especially to transform land and to buy irrigation. This is a non-recurrent. But in the short term, we have debt at low interest rates, which allow us to help the company's cost and also have working capital, BRL 500 million, BRL 600 million. And with this, we can be a little more efficient in the capital structure.

In the next slide, to show, as André mentioned, the company likes to pay dividends every year. We saw that the year was very challenging, but we understood that this dividend does not compromise the financial situation of the company. As we saw on the previous page, we have BRL 770 million in receivables from the sale of farms. And apart from this minimum dividend 25% the company decided voted yesterday to distribute a proposal to distribute additional dividends and this dividend proposed is around BRL 155 million.

Next slide, as we always say, this is the value of the company's shares. When we look at the price that is trading close to the net assets of the company when we consider the value of the properties, the farms, the valuation of the firms, we have a net asset value of BRL 34, BRL 35. And we understand that there is a great potential for the price of the shares to go up apart from the payment of dividends.

Now we'd like to begin the Q&A session. Thank you very much for being with us.

[Ana Paula Zerbinati Gama, executive]

[Interpreted] Thank you, Gustavo. Thank you, André. Before we go on to the questions, I'd like to invite all the participants on September 19. We will have BrasilAgro Day, a very interesting event for the first time we will be in one of our farms. So if you have the opportunity to participate, it will be very interesting this day. We're so pleased if you have registered yourself, we have limited seats.

Now Pedro from XP your question.

[Pedro Fonseca, analyst]

[Interpreted] Hello, André, Gustavo, Ana, nice to talk to you. I'd like to ask some questions. The first on the guidance of productivity that you're projecting growth for soybean and corn from 47 to 54 bags of soybean. My question, how can we quantify this gain in productivity with normalization in the climate and the normal due to land development?

Last year was very different with climate problems. This year, it seems to be a normal year, but you have the gains from land development and also the sale of Chaparral that had a higher productivity. So please, what can we expect from a more normal climate? And my second question is about the drop in costs, 10% in soybean, corn too, and the main categories. How much of the drop comes from seeds, also fertilizers, herbicides? Thank you.

[André Guillaumon, executive]

[Interpreted] Excellent question, Pedro. We could spend all afternoon but let's try to summarize this. I will begin from the end. First, the drop in prices, what we're seeing --what we're seeing a drop around 15% to 16%. The price of agrochemicals and this drop, we're not talking about real terms. It's a reduction in dollars. So we have 15%, 16% price of agrochemicals. In soybean, it represents BRL 650 per hectare.

So we have also a drop this year in the price of fertilizers in the case of potassium, in the case of phosphate, no. So we didn't have a great drop in the price of phosphate. And the price of seeds, we began to see a small drop in seeds. Many new biotechnologies and we saw here a drop around 8% to 10% in the price of seeds in general.

So chloride, it drops to $400, phosphate $700, agrochemicals 15% to 16% and seeds 10%. I'm always talking about the first harvest. The corn seeds, we haven't bought yet for the second crop, and we will wait more.

The first question is complex. I will have to give you some names and units to help you. What is climate and what is maturity? That was your question. Paraguay, I would say to you that is maturity. It's basically climate. We believe that not that we're going to have a full year. We always use a methodology in units to foresee production based on the land average of the last 5 years.

This year was very bad, and this year, average productivity, that's the picture of the climate. Since we're seeing we have expectations of a weak La Niña and almost going to a neutral year in general. That's the picture.

So theoretically, a neutral year with land, especially in a neutral year, the climate should become more normal. In Brazil, you know very well. We have a great concentration in the Northeast. In years of La Niña, it's worse. So we're estimating that with this week La Niña and a neutral year, we should have a productivity within historical levels.

Well, Paraguay, now let's talk about maturity. What happened in the last 2 years in the company? We included the Panamby Farm, Regalito Farm, São Domingos Farm operations that came from pasture and were converted to grains. These conversion areas, when you do the conversion, you have a lot of work to do. And then many times, it takes long. So where we will have direct planting, we estimate that we will go back to a second year. We're 45, 48 bags in this like a normal second year.

So in the case of maturity, we have been developing what we had to develop, but the percentage is still low. Now because we had a lot of progress in Bahia. We have some in Arrojadinho and some areas in Chaparral. So we should have a piece of this that is maturity -- based on maturity.

I'm going to give you an idea, I would say to you that the performance stabilizing because Paraguay has a great effect. This increment from, I would say to you that 40%, 45% will be Paraguay in a normal situation. The other is 35%, 40%. These operations in Mato Grosso will become more mature. And I would say, around 10% to 15% is the maturity -- organic maturity of the company's area, Chaparral, Arrojadinho, Serra Grande and the operations in Paraguay.

So a numerical analysis would be this 40%, 45% climate, 40%, 45% maturity of the areas in Mato Grosso and 10% to 15% maturity of the portfolio as a whole.

[Ana Paula Zerbinati Gama, executive]

[Interpreted] While we have some questions of some investors in writing Antonio [ Lopez ] one of the analysts they mentioned in their report that we had no impact due to the fires. You're correct, Antonio. So what actions do we have to decrease fires?

[André Guillaumon, executive]

[Interpreted] Antonio, it's very sad what we had in the last few months in the state of Sao Paulo. Those who went there saw this. It's not only sugarcane that was burned. A lot of parks, reserves, and forest were burned down too. So if you go to [indiscernible] car, you will see the effect of these fires.

This year, apart from having an operation in Sao Paulo, although we didn't have big fires in Sao Paulo. In the case of Maranhão too, some very small areas too end. This morning, I was in the call talking to the people who produce sugarcane. We were seeing a September -- next September with high temperatures and most, not Sao Paulo, but in general, the fires sometimes happen due to external fire and the internal fire.

So let's talk about internal fires. Internal fires, for example, a machine, with a leak you have for hydraulic oil working at a temperature of 190 degrees. So if a holes has a problem, it starts a fire. So what have we done? We have worked hard with all the machines in terms of kits for fires, like an air bag, an airbag with extinguishers. It activates an airbag and sets off a extinguisher on the whole machine.

We're being very careful when machines have to stop. We remove excess straw. Another thing we have done in the case of internal fire, the number of fire trucks together with the harvesters. For example, in San Jose, we have 12 water trucks, an operation of 15, 16 hectares. There's one water truck for each 1,000 hectares.

So there's an important cost there to extinguish fires, but we're alert to this based on what we already saw as long as it's not a criminal fire. There's another origin of fire, which is from outside the fire that begins in another area and comes to your area. So we have a team [indiscernible] by satellite, by radar. So what have we done?

We have a team of remote sensing. They monitor. They go to the manager and say, "Look, there's a beginning of a fire 6 kilometers from your unit, send someone to inspect, to see the winds." So we have an active search to find these fires before they arrive in our units. So we look at this, and we monitor this. So it depends on how fast you act.

Many times, so we're doing this constantly. Another that we do, especially in the state of Maranhão, our unit is in a region where you have we have a policy to increase awareness. And so we're helping the communities to increase awareness for fires. Some companies will be hurt bad, reached 60,000 hectares of sugarcane. There is a very great concern with September, but we're trying our best to avoid these fires. Thank you, Antonio.

[Ana Paula Zerbinati Gama, executive]

[Interpreted] Pedro has another question.

[Pedro Fonseca, analyst]

[Interpreted] Thank you, André. I always like to talk about this to you -- with you. Today, the company's hedge for soybean and corn, is there space to increase this? Do you see any trigger in the medium and long term to increase the hedge? So in order to capture a better price, what do you see in the near and medium term?

[Ana Paula Zerbinati Gama, executive]

[Interpreted] [Interpreted] Also, there is a question from Carlos Antonio. He's comparing our hedge position with the same date last year, which is below. Are you betting in the recovery -- on the recovery? André will explain.

[André Guillaumon, executive]

[Interpreted] Well, that's the million-dollar question, the crystal ball. But when we look at this, what do we see? Yes. The main basis is offer and demand. We have a lot of -- we have very -- we have less demand. I'm talking about soybean. So U.S. production, 125 million tons in the U.S., Brazil with good perspectives.

But what are we doing? We saw here a drop in Chicago prices. We believed in a drop-in basis, and we saw an important recovery in Brazil of the basis. You all know that soybean has 3 components: dollar, exchange rates, premium and Chicago.

We saw an important recovery in premium in the last few months, both for spot Chicago $10, but we're selling physical soybean with a premium above 100 points. This means we were right. We couldn't do this in the past. We believe that Chicago would drop and Chicago and Brazilian premium to be an important player. The one affects the other. Chicago drops since we're an important player. Chicago goes up and premium should drop since we bet low-end debt on a soybean of $10. Otherwise, we would have sold more when it was worth $12. No one thought it would go so low.

So in the next harvest, answering Carlos' question, we have 17%, 18%. We'd like to highlight that most of this is done with derivatives and these contracts accumulate until May. So the sold -- the part that is sold will be greater in these contracts around $11.75. So they will continue accumulating. These are derivatives that accumulate on a daily basis.

And we're seeing an important recovery in premium. We had a negative premium for the next harvest, and we can see positive premiums already.

What makes sense today, the feeling we have and what we're seeing is that it may make sense to really sell everything, especially with this exchange rate, higher exchange rate in Brazil. So we're looking at this.

If you ask me the picture that we have today, soybean a little lower than last year, but not that lower. We worked last year with BRL 123. And today, the soybean is around BRL 115, BRL 117 in today's picture. We're alert. We believe many things will happen still as we see.

There's the whole harvest in South America, also climate problems. And the fundamental thing, we're also looking at geopolitical issues around the world, elections in the U.S., many factors on the table. The company will do its best. We're going to try to capture volatility. So we're going to try to have a better average price.

So in our Brazilian harvest, we're in September, we have the beginning of the harvest to close and answer better Pedro's first question on corn. Corn, we have a much lower harvest. Last year was 130 million tons. Today, it's 115 million tons. And we see an important demand and recovery of ethanol prices. Another factor that is not less important, the devaluation of the Brazilian currency helps connectivity, helps also the exports of Brazilian meat. I'm trying to give you an idea to see how we're working and monitoring things. Thank you.

[Pedro Fonseca, analyst]

[Interpreted] Very clear André, thank you.

[Ana Paula Zerbinati Gama, executive]

[Interpreted] We have a last question from an investor, Pedro Lopez concerning our real estate strategy. He congratulates the sale of Chaparral Farm, and the challenging year in operations. He wants to know perspectives for purchase of farms. So how is the funnel of -- is there space to buy more farms?

[André Guillaumon, executive]

[Interpreted] Pedro, thank you. This well, very good question. Yes, you're right. I always say to you that we're the company that is -- when everyone is buying, we're selling. When everyone is selling, we buy, what you said is correct.

The resilience of the price of land, a bad year. 2 bad years aren't going to affect the price. For example, if the bag of soybean went from BRL 170 to BRL 120, you have a drop in the price of bags, but many people still selling land in -- with currency, selling in reals and not in bags of soybean.

I'd like to show this. We had more -- sometimes we are selling more, sometimes we're buying more. So now we're looking at a lot of opportunities, but we still believe that the price has to drop a little more. I would like to say we will continue delivering margins and returns that are similar, and there's another reason, like I explained.

In the past, we bought land very cheaply. We had important gains, but you needed environmental license. We had -- there was a learning curve and large areas. So this is changing right now. So now most of the time, we're buying pasture land that you can convert much more rapidly. You don't need licensing like the other cases. An area like this reaches maturity much faster than in Savannah. So it reaches maturity.

So I would say we're alert to offers. There are some opportunities. When there are opportunities, I'm sure that all investors will help us to buy more land. But I still think that we need to wait a little for a drop in price.

Another point. So like I said, transformation of pasture into arable land. And the non -- we had cases where in the past that we waited for studies, environmental studies of 5 years. So today, we don't need these complex environmental studies. So things are faster today.

And another point, size of the portfolio is smaller. So these are farms that you can convert in a faster way. Farmers -- farms that we bought last year, we have already converted to arable land, like Chaparral. Thank you for your -- congratulation Chaparral. We've been developing for 15 years.

This -- so I would say that the company will continue looking for opportunities and looking for profitability through stressed assets or because we will convert more pasture land or the absence of environmental licenses. We will work to deliver profitability to you.

[Ana Paula Zerbinati Gama, executive]

[Interpreted] Thank you, André. Thank you.

If you have -- if you need any other clarification, please get in touch with Investor Relations. We have another challenging year ahead of us less because of climate, but with more challenging in terms of the market. But we're prepared for this year.

Thank you, and we will meet again.