Agribusiness in Brazil
Agribusiness fulfills the major consumption trends worldwide: food, energy and hardwood.
Brazil is the country that detains the most competitive combined position when analyzed through the scope of key economic variables: markets, resources, technology, logistics and capital. Using modern technologies, Brazilian professional farmers develop highly productive Low Carbon Agriculture, integrating agriculture, cattle and forest.
Agribusiness in Brazil is a world in itself: 388 million hectares of agricultural soil, 16 times the size of the United Kingdom, placing it as the strongest performer worldwide in food production potential: a true food basket for the world.
If we just take into account the region known as MAPITOBA, there are 414.381 square kilometers (16% bigger than entire Germany) gathering the best agricultural soils from the new agribusiness frontiers in Northeast Brazilian states Maranhão, Píaui, Tocantins and Bahia.
Brazil leads the world market in seven of the main agribusiness commodities: soy, chicken, beef, cellulose, orange concentrate, sugar and coffee. It holds the biggest beef cattle herd in the world. The development level of agribusiness in Brazil represents the highest standards worldwide, holding the best productivity in Latin America and Caribbean with an average annual growth of 3.6%.
The efficiency of Brazilian agriculture shows easily: The agribusiness GDP accounts for one fifth of the Brazilian economy. In 2016, the estimated share of agribusiness in the Brazilian GDP was 21.46%.. Brazil also has the biggest water reserve in the world, representing 12% of the total fresh water available on earth.
This scenario has been attracting foreign investors into Brazil’s agribusiness. It is estimated, that in the last decade, Direct Foreign Investment stood for 27% of the total infrastructure/equipment in the farming sector.
Brazils new agriculture frontier
According to the Brazilian Institute of Geography and Statistics – IBGE,
in the territory there are 324 326 farms covering an area of 73,173,485 hectares.
Attending major consumption trends worldwide: food, energy, hardwood.
Since 2000, the most competitive agriculture locations in Brazil have been moving further into the Northeast. This new area, called MATOPIBA as it touches 4 states Maranhão, Piauí, Tocantis and Bahia), already covers over 414.381 square kilometers with prime agricultural land (1.7 times larger than the entire United Kingdom) with 2,1million inhabitants (only 3,3% of UK population). The agribusiness production systems that show best performance are the ones dedicated to the production and processing of hardwood (African mahogany senegalensis, Guanandi, Piquiá), functional fruits açaí, graviola), high yield biomass feedstock elephant grass), protein (nelore cattle, sheep) and Starch (manioc, corn). Those are the production systems that we project, design, implement and manage. Besides Mapitoba states, another region stand out as the services capital of Northeast Brazil: Ceará state. Fortaleza, the capital, is already the 5th largest city in Brazil, with over 3 million habitants. Our office is located here, as well as our first farm (Caiçara farm, in Pentecoste municipality).
Most of the soy production in Brazil still comes from the so called “Soy Triangle” aligned between the state of Mato Grosso (MT), Mato Grosso do Sul (MS) and Goiás (GO). However, logistic constrains, the high price of land and the search for better areas have caused professional farmers to move up north towards the new agriculture frontier of Brazil: MAPITOBA states. Most of our projects are being developed in this area, focusing on achieving high capital growth as a consequence of the profitable agribusiness activities on itself and also because of the increasing value of land as a secure asset.
We are located at the newest and most promising Brazilian agricultural frontier: MATOPIBA (an acronym for the northeast states of Maranhão, Tocantins, Piauí and Bahia). Our farms are in Bahia, the most developed state in this region.
The route to markets are ensured by main paved roads (BR 235 and PI 144) into high standard exporting ports: Itaqui Port in Maranhão, Pecém Port in Ceará, Suape Port in Pernambuco and Salvador Port in Bahia.
We are also in close range to several prime international airports (São Raimundo Nonato, Petrolina, Teresina; Fortaleza, Salvador, São Luís…) and railways (Transnordestina and Ferrovia Norte Sul)
Competitive advantages on key economic variables
Projections indicate that this region, the country’s new agricultural frontier, is expected to produce 22.6
million tons of grain in the 2023/2024 cycle and a grain planted area between 8.4 and 10.9 million hectares at the end of the projection period. In the 2016/2017 harvest, MATOPIBA produced 18.6 million tons
Our project points directly to the increasing demand, both in Brazil and abroad, for prime HARDWOOD BOARDS (Mahogany, Guanandi, Cedar and Teak) and CASSAVA FLOUR (the newest in-fashion food: gluten free for weight control diets and with high glycemic level for athletes).
The opportunity to be a part of our projects is offered to INVESTORS with different investing profiles, from private equity to closed funds, aiming to buy into safe Land, Wood & Food investments with IRR higher than 10%, high liquidity (by selling into other investors at any time) and secure longevity (when the investor decides to wait for the final harvest within 20 years, as if in a pension/retirement strategy).
In Mapitoba areas, we found a high quality environment to perform high yield agriculture: plenty of rich deep soils with the adequate structure to develop our crops, along with good raining characteristics (between 1.000 mm and 1.200 mm per year) conjugated with one of the largest underground water reserve in the world (adequately extracted for crop irrigation). Labor resources are available and benefit from adequate professional training in agriculture, forestry and cattle raising techniques.
The technology used in agricultural projects comes from independent bespoke institutions: EMBRAPA (the Brazilian Agricultural Research Company); Mudas Nobres (state of the art specialists in African Mahogany); Federal University of Piauí (highly recognized for its research performed over soil manipulation and conservancy); Netafim (the Israeli company specialized in irrigation turn-key solutions) and Massey Ferguson (worldwide relevant supplier of farm tractors and equipments).
Agribusiness projects (in MATOPIBA) benefits from the best location: either to receive supplies or to send products to different markets. In Bahia, we have a good road structure leading to the major capital cities in the region (52 million inhabitants) and connecting with the major secondary cities. The road infrastructure demonstrates enough quality and keeps expanding along with GDP growth.
Export markets are within easy reach, through road, train (Transnordestina and North-South railways), ports (Itaqui Port in São Luís, Maranhão state; Pecém Port and Mucuripe Port both in Ceará state; Suape Port in Pernambuco state) and airplane (International airports at Ceará, Maranhão and Pernambuco).
Project funding has been coming from 3 main sources:
1st) the initial capital came from or own equity: we searched for the best land in Brazil and bought it with our own equity and thus becoming an asset in our valuable portfolio;
2nd) in a second momentum, still going on, capital is being obtained through Brazilian bank funding (low carbon agriculture funding granted by the 3 main developing banks in Brazil: Banco do Brasil, Banco do Nordeste do Brasil and Caixa Económica Federal);
3rd) as we speak, and now that the forest implementation has started, we are bringing aboard a few devoted investing partners (private equity, closed funds…) that can join us throughout the entire project.
Agri & Renewable's
CO-Invest with Brazilian, British & European Partners
Agribusiness in Brazil
Attending major consumption trends worldwide: food, energy & hardwood.
We will have, within 2 years, 2.000 hectares of hardwood forests and sawmills: 1.000 hectares of or own and other similar 1.000 hectares sold turn-key to third parties. This way, we will operate similarly to a closed fund, with high liquidity and sustainable fair profits.
Alongside, and to assure cash-flow from the second year on, we are developing 3.000 hectares of cassava plantations, on a short rotation yearly cycle that will produce, through our own agroindustry facilities, approximately 15-20.000 tons of cassava flour per year, to be sold (like the hardwood boards) in local and export markets.