Brazil Land Prices Rise In Ethanol-Rich Southeast. Land prices are rising in the sugarcane- and ethanol-rich regions of Brazil's Southeast, according to a study by consulting firm Institute FNP, business daily Valor Economic reported Friday.
Land prices have risen by 2.5% in Sao Paulo, Minas Gerais, Rio de Janeiro and Espirito Santo over the last 12 months compared to 1.2% price increases on average nationwide, according to FNP.
Sao Paulo and Minas Gerais are some of Brazil's largest sugarcane producers and home to large numbers of ethanol mills. The renewable fuel has caught on by storm in Brazil over the last few years because of a sizable flex-fuel auto fleet, large sugarcane plantations, and a growing world demand for renewable energy.
Over the last three years, Southeast land has risen by 18% to 5,739 Brazilian reals ($2,656) per hectare, the newspaper reported.
The northeast has also seen prices increase because of biodiesel demand, FNP director Jose Vicente Ferraz told Valor. Land prices have risen by 2% over the last 12 months and 10.2% over the last three years to BRL1,362 per hectare.
By comparison, land values in the soy- and grain-rich southern states have declined by 7% over the last three years, and have been stable over the last year. In the center-west soy and cotton-producing states, land prices have fallen by 20.5% over the last three years and remained stable over the last 12 months, FNP told Valor.
Southern states remain the most expensive, selling for BRL5,963 per hectare on average compared to BRL2,286 per hectare in the center-west.
Last year was one of the worst years for soy and grain farmers, as local commodity prices barely covered the cost of production and fell far below production costs in states like Mato Grosso in the center-west. Low prices, coupled with heavy debt burdens and an unfavorable foreign exchange rate between the local currency and the U.S. dollar, have led farmers to dump large quantities of land in the market.
Source: Kenneth Rapoza, Dow Jones Newswires; 5511-3145-1488; kenneth.rapoza@dowjones.com |
