Cost to turn degraded pasture into soybean farmland tops R$480bn
Estimate from Itaú BBA highlights scale of sustainable farming shift
By Camila Souza Ramos — São Paulo
06/10/2025 03:20 PM Updated 3 months ago
Converting all degraded pastures in Brazil suitable for agriculture into soybean fields would require an investment of R$482.6 billion, according to a study by Itaú BBA. The figure is equivalent to Brazil’s entire annual agricultural financing program, “Plano Safra”. While there is no plan to commit the entire amount at once, the estimate underscores the challenge of expanding agricultural production without deforestation.
“This is a huge opportunity for agribusiness to meet growing demand for grains sustainably, using existing land and avoiding massive carbon emissions,” said Cesar de Castro Alves, head of agribusiness consulting at Itaú BBA.
The study was based on data from Embrapa, the Brazilian agricultural research agency, which identified 28 million hectares of pastureland in Brazil with moderate to severe degradation that could be converted into farmland.
The figures also reflect Itaú BBA’s experience with Reverte, a pasture conversion financing program operated alongside Syngenta and The Nature Conservancy (TNC). The average cost to convert moderately degraded pasture is R$16,904 per hectare, while severely degraded areas cost R$17,784 per hectare due to the need for lime, fertilizers, and more intensive soil management.
If all producers already had the necessary equipment — including graders, subsoilers, and plows — total costs would drop to R$188.7 billion.
Land gains
Although the investment pays off over time, the return is not immediate. In the first few harvests, soil fertility remains low and productivity tends to be below potential. According to the bank’s estimates, soybean and corn yields only reach full potential after five harvests. The internal rate of return for conversion projects averages 8% over ten years.
The calculation assumes that farmers will begin planting grain crops immediately after soil preparation, though that’s not always the case. “Many prefer to start a year earlier by planting brachiaria to build ground cover, and only plant soybeans the following year,” said Mr. Alves. According to Francisco Queiroz, another analyst at the bank, landowners tend to follow this approach, while tenants typically convert pastures in May and plant soybeans in September to ensure cash flow, even if yields are lower at first.
Despite the delayed returns, producers benefit from immediate asset appreciation. If all 28 million hectares were converted, farmland values would rise by an estimated R$904 billion. On average, cropland in Brazil is worth 2.4 times more than pastureland.
Turning those pastures into cropland would also avoid deforestation, preserving native vegetation and preventing the emission of 3.5 billion tonnes of carbon, according to the bank.
Impact on grain supply
The conversion would significantly increase Brazil’s grain output. Soybean production could rise by 104.7 million tonnes — the equivalent of two Mato Grosso harvests — and corn production could grow by 52.8 million tonnes through second-crop planting.
Although the study assumed all degraded pastures would be converted to grain farming, Itaú BBA acknowledged that conversion could also support other types of crops or land use.
Julia Mangueira, TNC’s director of conservation for the Cerrado region, emphasized the need for diversified use of degraded land, including intensive livestock farming, integrated crop-livestock systems, native vegetation restoration, and alternative crops. “Diversification improves water infiltration in soils and increases resilience to climate change,” she noted, adding that financial tools must be adapted to support different business models.
Currently, Brazilian farmers convert an average of 1.5 million hectares of pastureland each year, according to the National Supply Company (CONAB. At this rate, it would take 18 years to convert all degraded pastures.
To accelerate the process, the federal government is implementing a new program called “Caminho Verde Brasil”, which is still in the financing structuring phase.
Mr. Alves said the main obstacle is the financial cost, especially with the Selic policy rate at high levels. In the ongoing Ecoinvest auction to support Caminho Verde Brasil, the government expects to achieve single-digit financing rates.
Monitoring is another challenge, to prevent reconversion into degraded pasture. Additionally, Mr. Alves stressed the need for technical assistance, as many of these pastures are owned by ranchers with less experience in crop farming.
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