BrasilAgro - Companhia Brasileira de Propriedades Agricolas (LND) 2025 Q2 法說會逐字稿

Good morning, everyone. We are here for another earnings call of BrasilAgro to disclose our second quarter of our Harvest Year '25-'26, which represents the first half of the year. If you're new around here, it's important to highlight that the BrasilAgro year goes from June -- July to June, and that's why we're reporting the second quarter now. Have a great call, everyone.

And I will pass on the floor to Andre.

Thank you so much, Ana. Good morning, everyone, and good to be with you all once again. I want to bring in some important news here. We're going to talk about the harvest, the climate, commodities and also major dollar variations in this quarter, which is super important to demonstrate here.

And you all know that due to accounting reasons and considering the value of our stocks and assets, these variations were very important within the quarter. But overall, we would like to once again thank you for your participation and share a bit of what the company has been doing very well in the first 6-months of the year.

So we would end the first 6-months with a net revenue of BRL644 million and then an adjusted EBITDA of about BRL78 million. So these are the main numbers, and we'll see that most of the net income was affected by this main variation I mentioned. And then Gustavo would just mention that this is like occasional within our balance sheet.

So on the next slide -- on the next page, we can see major stability for some products. And I want to highlight some products also that have been really standing out from January all the way here. So we saw a reduction in soy. And once again, it's very important to highlight the company is really focusing on closing the contribution margin, not only the price itself, but the exchange ratio and our contribution margin. So we saw the soy reality in the first year from January '24 -- January '25, dropping about 9%.

And so we've also seen -- we can also see some important reasons for this, right? So plantation this year was really good overall in all the Central Brazil region. But the beginning was a little later. And this year, we can see that this off-season harvest would move along a bit. Now that has really been leveraging the prices a bit.

Now what's also influencing prices a lot is the loss of value and that makes our meat basket become cheaper. And that no doubt increases the demand for the need of corn internally to be able to handle this possible increase in exports.

In cotton, we've seen a year with major reductions. And this is really connected to economic factors. And so we've also seen an inversion in the cycle. This cycle has been inverted in the second semester and we've never seen such a high peak in 60-days. So this cycle has reversed a lot. And this is important to mention that we have a cattle stock that also affects the company's results and there was an important increment in the stock value.

Then for ethanol, we had the first semester last year pretty weak. Second semester was an important recovery trend. And basically here, I think this is levered by two important effects. One is the modification in the shift in the ethanol percentage in gasoline. This volume went from 27 to 30, which generates additional demand of 1.5 billion, 1.6 billion liters of ethanol. And so that really made the market react positively. And in parallel, the main competitor for sugarcane has been corn ethanol. As I mentioned, this peak in the corn costs also creates this effect.

And so in sugarcane, we had some higher prices. We reached historical levels last year and we saw a major reduction, but still really attractive prices in sugarcane. And more recently, in the last few days, we've seen a significant reduction in our production -- in the production in India, which will impact us with the market having a bit more volatility in the next few months because it's almost like BRL1.4 million of sugarcane tons. So that would have been produced in India. So they're dropping to about 20 million tons of sugarcane produced there. But Brazil is still strong with its numbers at about 42 million tons.

Now in the next page, it's important to highlight, and I believe the company has been very disciplined in this. There's a learning curve, of course, but I was looking at the pizza graph before on the left side for a few years, we can see it was a graph that was really focused on two crops, sugarcane and soy.

And then we've seen a diversification in the planted area in the company where there's less learning curve process, but also all of the agriculture projects, which bring in more diversity to the product basket. And once again, I always say diversifying is fundamental.

We're in this production, which is an open-air industry and you can reduce the climate change risks. And so that also affects the real estate risks, right? We see demand or markets that from a real estate perspective are really connected to diversified crops, right?

So on the right side map, you can see a bit of how we see the rain volume this year. And so when we started the year, we had all of the discussion in the intensity of the La Nina. So it was La Nina that was not too strong, pretty moderate or neutral, but we've seen this move with this La Nina phenomenon throughout the year. And that brought in important stability. So as I mentioned, it took a little longer to start with the rain period. But ever since they began, it was a really good year from a productive perspective.

So it's important to mention also, and I love using this example, which is last year in the company, we had replanting that was about 8,000 hectares and this year, less than 600. So it just demonstrates that we were able to plant with the ideal humidity periods and not too many disturbances and everyone knows that for good harvest, we need to have stability.

So everything we do after the plantation is just to keep the productive potential. So that's where we consider the choice of the seeds and the soil management as well as the quality of the plantation. And so then all of the other processes are factors that help avoid the potential dropping.

So that's a summary in the beginning of this. And then rains were kind of accompanying this. So December was really rainy and like Maranhao, Piaui and Bahia, which is always an important caution point, especially Bahia with more climate volatility with January going above average, and that's where January even gets in the way a bit.

So then soon after we'll highlight this a bit. Then we can already start the plantation of the cotton. And so the rain in January kind of gets in the way, but no one can complain about the lack of rain. We have to try to be more efficient, right?

So that's just an overall panorama. From then on, we've had pretty good rain and we're still having rain conditions and soil conditions that are pretty good. And we start off with February with soil humidity that's really interesting and pretty stable. That allows us to also start having some conclusions about how soy in the first cycle has already pretty moved along accordingly. Then soon after here, we have more of an educational approach of where we're at this moment. So our plantation is a little more extensive.

We also consider Paraguay as well, and that's a little different. So Paraguay starts this in the beginning of December goes to mid-January. And then as we mentioned, you have the plantations of cotton with the off-season harvest as well. And we were able to plant all of the cotton and off-season harvest before the January, which really gives this cotton a very good level of productivity.

And so from the productive perspective, the summary is pretty good with crops performing very well, very low rates of replantations, which means we have good levels of productivity and good crop installation rates. And Paraguay also, we've finished and we had rains following this until January.

So the critical period for us is the month of March, just as in Bahia, Maranhao, Piaui is February and March. For Paraguay, it's more about March. But we have good expectations. And the expectations for February in Brazil, there was a possibility of some impacts in the Mapitoba region. But we'll have February a little drier, which is actually pretty good because the crops also need some sun and light, but that won't in any way impact at this moment the state of these crops and harvest.

So here, you can see the amount what was estimated versus what was actual and that's due to the births that start happening in December, normally around January and February. So this number is going to be recovering considering the amounts of animals and the amount of cattle and we're estimating about 510 grams of GMD and we already have 310.

So here, you can see that there's a bit of influence with this -- from the delay of this beginning of the rain period. And that also delayed a bit of the scenario with the pastures, and we think we'll be able to really achieve our 510 kilos of beef that's budgeted.

So just about sugarcane, which is so important, the company ended the harvest with approximately 2.6 million of sugarcane, an increment of 4.3%. And what's important to highlight here is a growth of 3% in sugarcane in the productivity. And there was also due to everything you guys have seen, we had a pretty dry winter and that makes sugarcane accumulate a bit more sugar, which also helps us with important gains, right?

So when you increase the TCH and ATR rates, that means that that's just pure EBITDA because the sugarcane was already going to be transported and you're transporting sugarcane that's a lot richer in [saccharoces]. So it's not only about the 3% of ATR gains, but you also reduce some costs in the CCT phase.

So this is a photograph of sugarcane and how it looks. Then we'll show you a bit of volatility and how we've been positioning ourselves. So Ana provided us with this briefing. It starts off in the July 1. And we worked on this budget in the end of the month of May, beginning of June. And the expectation we had was that when you look at the (inaudible) estimates, we're considering $1 at BRL5.30. And now we considered this, of course, for our budget and so it was a little higher as well.

So that's the photograph of soy at the company now. Soy has already been lower now. We're talking about soy at about [BRL10.70, BRL10.80]. And the company has practically 50% and we have currency at about BRL5.33. So what's -- and so a currency at about BRL5.30. Then we also had an important recovery, which is maybe a little different than what we expected, and we're going to show you this later on.

Well, this is a photograph of the soy we're going to be harvesting. So you remember in the last earnings call, we were saying we were going to ensure part of the harvest in the campaign -- in the past campaign to sell in the second semester because we believed in the recovery of these and this was assertive, generated important impact. And now we can also see a trend with the recovery of this due to this turbulent scenario, right?

So we have that at 51.80. And ethanol here on these two columns, you can see the column with the closing in the last harvest and this harvest. Today, the levels of pricing are about [2.750, 2.220]. And we're also increasing this position of what's sold. And this is the hedge position at February 7 and we've already advanced a little more with our ethanol sales prices are a little higher, [2.750 to 2.720].

And in cotton, we just bring in the two harvest still because that's where we really consider [CPG] December and the harvest in '23-'24, we ended at BRL5.27. And so now we have 41% of our cotton closed and we were able to really block this pretty well. It was positive, but as you all know, we have a mismatch policy.

We also had to block the dollar there and that was at BRL5.27. But this combination of cents, pounds and dollars are still providing the cotton at BRL106 per ton. That's a bit higher than what was budgeted. Then we have the receivables, which is also in our P&L and the farms where we can see soy closed at BRL10.53, and we've also started off with this volatility in the dollar rates, and we started selling soy at BRL26 also for receivables and -- sorry, we sold dollar for the receivable at BRL26 and the blocked rate at BRL5.26.

And so that's an overview of how our commodities are and we'll be able to have major insights as well in the next slide. So on the next page, we also bring in a bit of the vision in regards to costs. So you'll see a reduction in our cost that's maybe not that significant, but a reduction that we also consider impacted the results of the company very well.

You saw the MAP stability in prices. And we also had an opportunity to have prices that are even a little better in certain inputs. We were also able to confirm some chloride -- sorry, for the harvest of '25 and '26 with chloride and we've seen petroleum kind of moving sideways, but what we can see in the urea is that it's pretty stable.

And so the exchange ratios are a little better, but they've been -- they were better in the past, actually, but they're pretty stable. And we're talking about chloride at about 13%, 13.5%. So the position upon the cost was already pretty much blocked all of the fertilizers in this current harvest and also for the defenses.

So now I'll pass the floor to Gustavo after providing this overview, and we'll look at the numbers in this quarter and semester.

Thank you, Andre. Good morning, everyone, and thank you for keeping up with our earnings call for the first half of the year. We're going to start talking about the December 31, 2024 where the company has been disclosing this total net income, BRL77.8 million, where in the same period last year -- in the previous year, the net income was BRL24 million.

So these main variations are represented here on the graph above on the right upper side. And you can see that all of the expressions of soy, corn, and sugarcane as well as the volume in soy and sugarcane. And so you can see how this reflected in the net revenue and BRL478 million in 2025.

And we've also seen revenue, the accounting of the sale, we had the real estate sale of a total amount in the factory -- in the farm and equity. And we also had some hectares, like 200 hectares I think, that would add up in Bahia. And we had also registered a revenue from the sales of BRL129 million when we discounted the taxes and other acquisition costs, et cetera.

We had an EBITDA of BRL107 million. In the previous year, in the same period, we also had a small sale performed, which was about approximately BRL5 million and that was in this segment. As you can see in the upper graph, you have the BRL103 million that are varying due to the real estate and property sales we had in this period.

In 2025, the EBITDA margin -- adjusted EBITDA margin was the 31%. And you can see about 31% and for an EBITDA of BRL200 million, which is very different than what we saw in the previous year. And in this graph, as you can see here at the center, we see the main variations in soy, corn, sugarcane. And we also have the sale of real estate. And so the margins got a lot better because of pricing issues and also volumes. And in some crops, we've also had a savings in our costs.

So we're going to also show you some crops like beans and cotton where we intend to incorporate this in the basket. There's still small volumes, but we're not being compensated as we had estimated because the productivity is still not that positive. So when we see the profit in the period, which are the BRL77 million, as Andre mentioned, and that's why we're bringing in this last chart here with the financial results. You can see a very relevant impact when comparing periods.

So in the previous years, in the first 6-months of '24, we saw that the revenue from financial investments that were leading to BRL19 million in interest. And now we see there's BRL11 million because we reduced about the amount of cash that we're carrying. And we consider that the interest is also starting to be recovered now in the last 2-months, but we have a variation because of this.

Then you also have the passive interest, which are the BRL26 million and BRL38 million this year, which are the interest that we pay due to our debt. So the BRL26 million represented an impact of lower interest with a debt stock that's also a little smaller, and in exchange, what's happening in these 6-months in 2025.

However, some updates in fair value. Here, you can see we always talk about how we have a major stock in amounts receivable. And every quarter, we have to mark this as it's indexed and we have to consider the dollars and the premiums and freight, et cetera.

So all of this leads to what would be the current value of these receivables. And also last year, we had a variation that was higher than what we saw this semester because of this reduction. And so last year, we were valuing about this at [$12.80]. And now we're talking about on the December 31, this level was about [$10.20] per share.

And the main important point here that Andre mentioned is the derivative. So this year, we are demonstrating this. And of course, this will only take place at the moment where we sell the actual product and establish the final price for the company. The company has been working towards this, considering the position for the purchase of these inputs, considering the margins per hectare.

And with that, what Andre mentioned, we're maybe a little above this value that we had considered with this margin. And when you consider soy, about BRL2,000 per hectare. And what happened in the December 31, we had to consider about $75 million that we had sold. And we also had the receivables for the sale of the farm and soy. We generated an average price of about BRL540, BRL545 and that led to an impact of about BRL65 million.

So this photography, if we consider this price from yesterday, we consider the result of BRL30 million positive. And this value, if we were to consider that with the market value yesterday, we're talking about BRL32 million. Just to show you the volatility. So we're going to mark this, once we sell this, we'll be considering the market value and the revenue value.

And so once you perform these until you have the amount or value, which is about BRL112 per sack. So the market is at about BRL124, BRL125. So if you consider this difference with the 300,000 tons with the values and tons to be sold for production about -- we'll be able to reach this value that we're presenting here.

In the next, just to show you what Andre was mentioning, so we always say that soy and sugarcane. And so you can see -- so when you add that, it's about over 75% of the revenue and the gross results in the company. And so what's positive about all of this that we were discussing in the last two calls is that when we had seen this last year, we had always considered that we had the crocodile effect of the costs and revenue where we had some margins that were -- contribution margins that were way below the historical average. And so we can see that during this last quarter, they were able to reach these levels.

So you have this BRL48.8 million. As I mentioned, margins at about 29%. That's the historical average. And with the price per ton -- when we started the period in July, these values were at about BRL400 below. And that was the impact of these premiums that generated this improvement in pricing.

And so also the main factor responsible for the cost reduction with the reais per ton, which was because of the better costs we had already discussed. And so we could say, we understood that it was really important with this bigger amount.

And so when we consider the sugarcane and we can see that the margins are even higher than the 30% historically and the increment in the margin led to a very positive impact considering the increase of this price in the TR and the reference term. And we also see this increase, and that's the photo we worked on.

And then the high levels of sugarcane -- sugar also that levered this price even more. So we can see that these are excellent prices, very different than what was being practiced in the last 2-years. And the increase in the costs as well this year was also at about 3%. So very controlled, but that's something that increased a lot, would increase the contribution margin a lot.

So then you can see a reduction in the amounts that are commercialized at about 70,000 tons, 42,000 were 2025 and 113,000 tons last year. And this was a bit of a consequence from a decision the company had made of not -- well, because the previous margins due to agronomic issues, really, we had considered diversifying the portfolio.

We had made the decision to continue. But prices being recovered, I think the 14% approximately between BRL650, BRL745 per hectare, let's say, are getting back to levels of prices that are really profitable, but our costs had suffered an increase because we had lost this in the Mato Grosso region where we had a very -- we had some impacts with pork and swine and that led to lower productivity with a higher cost per ton.

For beans, volumes are pretty low still. And for sugarcane, we would also like to increase and expand this portfolio and have a higher contribution of this crop, but we're still having some variations. So we understand that the deployment of irrigation in the Bahia region and also with some diversification that we are trying to implement in certain regions in Mato Grosso should lead us to this positive result.

And on the next page, we also have the level of debt in the company and the cash position December 31, where we have the biggest volume where you have all the incurred costs and we're still lacking all of the revenue and production and considering the commercialization of products as well, then the debt of BRL798 million with a cost that's an excellent cost for this funding, 93.4% CDI and a net debt -- on the right side you can see the schedule for the amortization of this debt.

And the working capital as well and BRL516 million, reaching 2- to 5-years. And it's also important an amount that we had considered also due to the sale of this farm. And so as I mentioned, we had about BRL8.4 million tax we had received. And this variation was kind of like what I mentioned about the impact we bring with the financial results as well.

Next page, please. Well, here, what we would like is that we would like to invite you all to review our sustainability reports and that we just disclosed and also a bit of how we communicate about this commitment towards value creation in a sustainable way.

And here, we're going to show you also how -- what types of investments and actions and social environmental impacts that we've been working on during this harvest of the June 1, 2023. And it's important to mention that we had also created all of this considering the principles in IR and SASB that guarantee the transparency and that demonstrate that we follow international standards for communication.

And here, you'll see about four groups. And so also the social environmental and governance issues as well to strengthen the company at the moment where we should consider this stock exchange here in the US We'd be very careful with this as well and adherence to all the policies and we also have some premiums and some awards we've been conquering as well. And so we'd ask you to please review this report with everything the company has been performing in a very maybe silent, but consistent way, let's say.

Anyways, here, we can go into Q&A now. Thank you so much.

Pedro Fonseca, XP.

I had two here. And I wanted to get more information from you guys to understand your understanding, because of course, we had viewed a better sale for margins and not considering the loss in the ideal window for the off-season harvest of cotton considering the ideal window, but I just wanted to confirm this understanding. And so I remember the last time we spoke, we were talking about a margin of about BRL110 to BRL1,200 per hectare for the off-season harvest. And I wanted to confirm if that still makes sense when it comes to price.

So then I also wanted to know what you guys are understanding as sugarcane productivity as well. So the rain in South-East -- the Southern region of the Mid-West area as well. And I want to understand what you guys are imagining when it comes to results and productivity. These are the points I had to share.

Great. Pedro, very good questions as always and provocative questions, of course. And so I'm going to start off with the first one, which is you were very assertive. It's not like there was a reduction in the off-season harvest. We were able to plant it all in the ideal window. But of course, there was an improvement in the prices of corn that started happening from October, November and December. And then, of course, trying to increment this a bit more because there was, of course, a recovery of the margins.

But I just want to give you a classic example. The harvest, maybe we grew even more because when we were preparing our budget in May and June, we were talking about this margin of about BRL400, BRL500, BRL600. And so we consider our first projection in the results now and we decided to improve this as corn started getting better in the second half.

And so we had significant recovery in the margins of the corn. And that helped us increase our corn harvest and also contributed to search for ways to have a bit more of this off-season harvest. And of course, you'll see the company grew in this area in Mato Grosso in the next few years because we'll have major operations in Mato Grosso starting.

In the first year, we're always very careful, especially with the off-season harvest of corn where we work with soy and then wheat, soy and wheat, soy and wheat and then after we add corn to the system. So we'd expect that this also happened, of course, this year. Some farms that had the second year of soy and then wheats. Then this year, the farms had soy and corn. So this combination and the pricing combination also improved performance. So that's where we can see this recovery.

So then we see the company here where you have the earnings call and you can see we're not here to promise, we're here to really just fulfill whatever we've promised. And the company has been growing in sugarcane, as you've seen. You saw us talking about this in the past, we increased sugarcane and we need to have more. We have to increase productivity of sugarcane as well. We're working on many investments.

And this year, we're also working on plantation. We're also planting more sugarcane. And so we're also investing a lot more in irrigation. We had been working on more water storage tanks and we've been really implementing major efforts to increase productivity and you'll have very positive surprises in with Sao Jose in the next exercise.

Now when we look at the Brazil vision, you can see the company is going to increase productivity year-over-year and also the volume of sugarcane in the next harvest. So then when we look at year-over-year, we can see this amount -- and it's worth mentioning that the beginning of the rains were a little delayed. And we know it's fundamental because you have the cut. And then in September, October, November, if you already have rain, you have great results, it's wonderful.

But you can see we don't go back to this kind of perspective with the BRL614 million in the next harvest due to this delay in the rains in September and October. So this delay in the rains is a reflex of the price coffee -- how the prices of coffee here go up so much. The lack of rain in September, October is impacting the prices of coffee in Brazil now. So you can see how this impacts the price of coffee as we're all seeing.

Anyways, I think in the Southern part of the Midwest, there is a bit of a difficulty with this delay in the beginning of the rain period and that impacts the overall results. But in sugarcane, Pedro, even when you extend -- up until where would you extend the volume? And so if the rain is coming in earlier, we'll have this impact. And if it comes in later, we have more TCH and less rain.

So initially, Pedro, we have three meteorologists that work with us, three main companies in meteorology. And we've actually seen a bit of a positive perspective with an extension of the rain system in the summer period.

So we'd expect that there would be March still quite rainy March and April would also be very rainy and that we would be able to have the beginning of May as well with rain. That really makes a huge difference in TCH and that can help recover so that we cannot close the BRL614 million in this harvest and try to have a bit more in the next harvest. So that's the overall vision for Brazil.

The beginning of the rain period really impacted us initially. And now we're understanding how long this period will extend for. So if it's made, then we'd imagine it would recover a bit. But also in exchange in the Midwest region, as we're considering in Sao Paulo, it's really important. It's just like following the temperature.

If you have a rain where you have a low temperature, then you stop vegetating the sugarcane and you start accumulating actual [saccharoses]. But initially, we're not seeing this in the beginning of May and the end of April. We're seeing this extension in the rain period, but we're still not seeing the possibility for anticipated cold weather.

Bruno Tomazetto, Itau BBA.

Excellent panorama as always. And I just wanted to try to bring in this discussion of everything we discussed so far with opportunities for us for M&As in '25. We see it's a year with higher interest rates, cost of capital is higher and we should have more decision-making in a careful way. But in exchange, higher interest rate maybe have some impact for that kind of public that's a little less capitalized, let's say.

So let's consider all of the factors we're seeing along with the case of higher interest rates and understand what we would expect from the market this year? And then if you could also compare the scenario considering the counterparties in the market now with other points in the past or even at this moment.

Bruno, as always, it's a pleasure and great questions you have here. No doubt at all, the high interest rates -- and then, of course, the overall market suffers, but it's not the overall agribusiness photography. So that's not the total photograph. But I think no doubt at all, the abundance in the last few years really made the leverage in the sector go up a lot.

Overall, the leverage levels were really high and we don't think we'll have a market of low interest rates in such a short period of time. So no doubt at all that a company and group that had this leverage level cost of capital that were like CDI plus something, we're considering CDI that could reach maybe even 14%, 14.5%. But we're talking about 17%, 18% interest rates and this activity would not tolerate this cost of capital. So that's quite clear.

And just to answer in a very clear manner, we saw some very occasional points drop. We also see liquidity. And when I'm talking about diversification here, it's really interesting because we diversify considering the productive risk and also logistics. And so we're seeing some regions in Brazil that are more stuck and other regions in Brazil that are pretty heated, which is the case of Bahia due to irrigation projects and new agribusiness factories in the state.

And so in Bahia, I see a lot of current liquidity. And what I'm saying here is, well, you can buy in other regions, but you can also sell in Bahia and it's great. And so we need to buy in other regions as well. And so for us, this duality in the liquidity could not be better than it is already.

And so it's quite reasonable to understand why Gustavo just talked about the soy of BRL110, BRL112. And we see Bahia pretty heated. So what I always say is that here we provide some guidance. And no doubt at all, the company is seeing major opportunities, and that's the year where we need to search for some opportunities, some occasional acquisitions.

It's not something general, but we can still have some leaps in all of this. But we definitely see a scenario that's more of a buyer and also more of a -- also sale opportunities due to irrigation projects, agribusiness and other projects in the state where we see some recurrent liquidity in Bahia.

And then we think that here in this market for us it's going to generate this kind of opportunity. And that also eliminates a bit of the appetite, let's say, and with agricultural funds, buying properties, et cetera. And so shareholders in Faria Lima are going to be moving towards high interest rates and the prices still weren't accommodated for this. But as we are looking at these projects in perpetuity, an operational perpetuity, this is maybe a little different in our case.

Thiago.

If -- in this discussion, so we wanted to discuss the long-term projects and all of the history with transforming plant and all the real estate value as well. In the last few years, this discussion migrated to a discussion where we consider the purchase and transformation of raw land or soil to discussion that I believe is going to be really focused new generation, which is converting pastures into farming regions, right? And that's something that has been intensified in Brazil over time.

So you guys have already started some recent movements and trends towards this, right? And I just wanted to hear you all and understand if you guys consider that this thesis is sustained based on the experience that's pretty small for your size, but based on the experiences you've already had with converting pasture into harvest areas and farming areas.

And I'm saying all of this considering the -- and no one has seen the arroba prices go up as much. So of course, this would impact the equation a bit, right? So I want to understand if this generational conversion in the overall real estate gains are really supported and not sustained?

Well, Thiago, pleasure to speak with you. And your question was almost the thesis we believe in, right? And that's where we're going to generate opportunities. And so occasionally if you could consider the price of the Euribor, of course, no doubt it could be more valued.

But when we look at -- if we consider the price of this land that has the cattle and when we perform the IRR in the perpetuity of this operation, it's about 2.5% to 3%. So when you look at the conversion of this land and you consider this agricultural project, it's about an IRR of 7%, 8% or 9%. So there's a difference that's very important.

If you consider this at BRL330, BRL340 per bundle, we're talking about profitability about BRL1,100, BRL1,200 per hectare, that's what gives you this kind of result with BRL330. And so when you consider the system, we're not going to consider the -- well, we're going to look at our history and what the market believes in. So if you consider BRL1,200, BRL2,000 and you consider a off-season harvest, then you shouldn't consider this of BRL1,500, you consider of BRL1,000. And so we're considering BRL3,000. And it's still really a better advantage at the end of the day.

And the biggest discussion here is really that people always provoke me and they say, well, is Brazil going to continue to grow with its production of soy. Well, income around the world grows, yes. The challenge we have -- and considering the international demand as well. And so if income continues to be incremented -- and so this fundamental point in this thesis, of course, we've already discussed this many times, is that this land matures a lot quicker.

So if we have some -- well, you can have really good levels of productivity. So we have this new operation in the [Guapira] Valley, and it's really impressive to see the results we're having there. It's not about productivity in the farm, but last year, we produced about 54.

So it's pretty significant if you consider the first year for pasture. This year, the farm is moving towards the second year. And I'm not saying this because of the farm, but we have many areas that have above 65 tax rate. So when you consider this and you see that there's a bit of limitation, it's not an area where we're going to have 80% or 70%, but you're going to have 35% or 40% of this.

So if you consider the profitability of the soil and 30% or 40%, it's going to be a lot higher than harvest itself. And so more and more, Brazil is not stopping this production, just intensifying this model and that's going to make a major, major sense.

And then the next question here, I'm going to be reading is from [Reinaldo Bellissimo] And he says the drop in the dollar, could that be an opportunity for the acquisition of fertilizers? Well, if you consider the rain period, is there any farm that's been calling your attention due to a drought or an excess in rains?

Well, thank you so much for that question. Anyways, the dollar and this accommodation of the dollar at BRL6.20 to maybe BRL5.70 or BRL5.80 still makes us have a fertilizer cost. When you think about reais, it's higher than the previous harvest. So we have our eyes open. And I think that in this decision, when we decide about acquiring fertilizers, we need to consider the exchange ratio between the inputs and products. So we have our eyes open.

And so we considered about this and for MAP, we made a decision about this. We're looking at the ratio, the exchange ratio. And unfortunately, with this increase, we went from a level of like BRL5.30, BRL5.20 with the dollar that was BRL5.70, BRL5.80. And now we're talking about a product that's a lot more expensive.

And so the Northern Hemisphere and the US and part of Asia starting to cut now in April and May. And so we've already started to plant this. And the Northern Hemisphere is going to have to make more precise decisions now as well to start planting from April and May when we start this plantation in the hemisphere. So we are going to be really monitoring this, the 40 or 50 days where the market historically always finds the bottom of the well, let's say.

And so when it comes to rain, as I mentioned in the beginning, this has been doing pretty well. And some things concern us, not the lack of rain, but the excessive amount of rain. So the soy in the beginning of this harvest in Mato Grosso, we had some reductions in productivity due to the fact that we started to have the situation with the grains.

And in these cases, it's where you see that it's really started breeding and that's where you lose volume. So the soy has 2% or 3% of this problem in the grains, but it's not only a discount of 2% or 3%. But when you start this process, this grain starts breeding and consuming its own mass. So it's more than just the discount of the grains that have visible damage. But that was just the beginning of our harvest. We were able to have a bit more humidity in certain units, but we see we're in a better situation.

So what's important here is the concentration of the harvest in Mato Grosso that starts off now in the first 15 days of February. And the expectations are that there will be a little less volume of grains now. And we're looking into a bunch of different measures to be able to harvest as much soy within this window. And that's where you can see a major surface to be harvested.

And so in the other states, as we can see, rains coming along pretty well. And we had a possibility for this off-season summer and we start February with our box full, let's say. So now if you have 10- or 15-days of drought, from now on, you're still going to have a lot of humidity in the soil. So I don't think this is a warning point. I think we have good distribution for this region in the Mapitoba area.

And so in Paraguay, the critical period is normally not February. It's like the last part of February until the first part of March. And so when we look at the numbers in Brazil, just to show you Brazil, I just saw this number yesterday. There was about, in the last harvest, 14% of this area harvested. So we had a delay of 6%. And yesterday, on the February 6, we had 14% soy harvested in this area of 8% on the February 14. So this no doubt is a reflex of this intensity in the rain in the month of January.

So now the next question is from (inaudible), Investor. And the hedge policy in the company was not allowing us to confirm more sales when the dollar reached BRL6.30 or was it a strategic vision when the dollar -- that the dollar would go up more?

So they say that the economist cemetery is the type of currency, right? And so well, when the dollar started going up, and I think it's really important, I always talk about this, we need to look back and reflect and understand what was done, et cetera. And so you can see the hedge policy that really has this crucial objective. And so there's actually an objective of reducing risks. And the company's policies are that up until plantation, you have 50% sale potential. And after plantation, you can start taking on this position.

So what we reached here was in the beginning of the plantation process, we had already advanced at about 41%, 42%. And then we started selling a bit more. We were able to sell a bit more. But in exchange, we operated a bit more in the higher rate. And now we have 50% of the soy sold. So when we had 41%, we had almost 60% and we had mismeasures a bit higher authorized by the company's Board and that made sense because there's a lot of volatility.

So we weren't going to sell dollar, take advantage of this moment without selling Chicago. And at that moment, Chicago dropped. And so what happened is when the dollar reached [BRL6.49] at that day, basically, -- and so Chicago is about close to BRL10. So when you combine that, it wasn't that interesting and you didn't have the basis we have today. So we considered a base of minus 35% or minus 40%.

So I'd say that even if the dollar goes back, Chicago went from BRL10.20 to BRL10.80 and the basis went from minus 35% to plus 30%. So I think it was very precise and assertive. At that moment, we already had sales that are pretty well positioned. And so we started this and what we did at this moment was that soy has three components Chicago, dollar and premium.

So we started blocking our physical position. And when the premium started to react, we started to block this physical position. And then we also started blocking the logistics because the peak in the dollar impacted this. When the dollar started going up a lot, what happened with the Brazilian logistics is that they got cheaper. Then we made the decision to sell physical to be able to block in the logistics.

So when we consider the rush for the dollar, we already had maybe 40%-some sold. And that's -- we had about 15% or 18%. And what happened is we would be able to have physical really close to the derivative where we kind of block in the (inaudible) and cheaper logistics. So that's kind of what we took advantage in this rush for the dollar. And we consider this combination, BRL5.80, BRL5.70 with this positive premium and Chicago also from BRL10.20 to BRL10.80. So we're really equivalent to that dollar of BRL6.20 back there.

Well, we have one last question here from Saulo. He's also an Investor. And considering the low value of the stock in the company, do you guys plan to buy a buyback -- to start a buyback program?

Gustavo?

It's always a very tempting provocation. We consider this at all moments and we don't want to, in any way, lose this liquidity. We have no buyback program that's authorized yet at this moment. But if we start seeing this frequent delivery in the results as we expect this year again and at this price, well, a big part of this is you have the effects of the Brazilian Stock Exchange.

So although your company is doing well and you have consistent results, if the equity market is low, it's going to be difficult for you to overcome this. So that's why we have kept our eyes open. And we don't have anything planned for the next few days, but it's something that we revisit at all moments. And so I think it's fundamental.

And this question is added on in the following manner. If we are able to buy assets at this moment of stress and with the levels of discounts that are similar with what we have on paper, we would not -- we shouldn't be really buying this. But if we don't understand that she has -- we have these levels of assets with the level that allow this, and who knows, maybe we can discuss this with the Board and the company.

Well, I think we've gone over time. And I just want to end by thanking everyone for their presence, Andre, Gustavo. And I think we're really excited for what's coming ahead. And if anyone has any outstanding questions, me and all of my team in the IR department are available.

Thank you all so much, and see you all in the next quarter.