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Prices of farmland in Brazil soar 17% in 13 months

Prices of farmland in Brazil soar 17% in 13 months

Posted by Laura Zúñiga on September 23, 2014

Brazilian farmland prices soared 17% in a little over a year – but with wide variations between regions, according to data from SLC Agricola, which signal the most reliable performance in traditional corn- and soybean-growing states.

SLC Agricola's 304,000-hectare farmland portfolio - an area equivalent to the size of the UK county of Cambridgeshire - was worth R$3.19bn as of the end of July, up 19.0% from the R$2.68bn from the end of June last year, according to consultants Deloitte Touch Tohmatsu.

The increase in the valuation - which counts only land, disregarding buildings and machinery, and includes 25,000 hectares within the SLC LandCo joint venture - was in part down to purchases of two farms in Brazil's north eastern region.

However, even excluding these acquisitions, and some small disposals, values on a per hectare basis rose 17.4% to an average of R$10,488 per hectare.

Wide variation

Deloitte's valuations show a wide variety between the rates of appreciation at different farms, ranging from 59% growth for a row crop farm in Piaui in north eastern Brazil to just 3.1% at a row crop farm in Mato Grosso, the top soybean growing state in the centre east of the country.

However, in fact, these two examples appear to contrast with the broad trend of the data. Excluding these two farms, Mato Grosso properties have seen above-averages increases in per-hectare land prices, with the value of land at a farm in neighbouring Mato Grosso do Sul soaring 37%.

Meanwhile, values of land in the north eastern frontier district of Mapitoba – an acronym formed from the first two letters of the names of Maranhão, Piauí, Tocantins and Bahia states – have largely shown below-average growth.

Land appreciation

SLC Agricola has now raised its portfolio swell 4.6 times by value in seven years, through acquisition and appreciation.

This equates to a compound annual growth rate of 24%, the company said.

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