May 05, 2010
Land Prices in Brazil Increase 3.9% Compared To Last Year
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Even though commodity prices have languished in recent months, the price of rural land in Brazil has remained stable or even increased compared to last year. According to the consulting firm AgraFNP, during the first two months of 2010, the average price of rural land in Brazil was R$ 4,500 per hectare (US$ 1,028 per acre), which was up 3.9% compared to the first two months of 2009. The price of land in Brazil varies by region, land type, level of productivity, intended use, and transportation costs. Land used for sugarcane production is some of the most expensive land in Brazil, whereas unimproved pastures are some of the cheapest.
The most expensive land in Brazil is found in the southern region which includes the states of Parana, Santa Catarina, and Rio Grande do Sul. During the first two months of 2010, the average price of rural land in the southern region was RS$ 9,486 per hectare (US$ 2,168 per acre), which was up 7.5% compared to a year earlier.
In southern Brazil, as in the rest of the country, it is customary to price land in terms of what is produced in the region. In Parana for example, the price of land is often quoted in terms of sacks of soybeans. Fertile, highly productive land in Parana might be quoted as being worth 500 sacks of soybeans per hectare. If soybean prices, then the land is worth more. If soybean prices decline, then the land is worth less and owners might be reluctant to sell.
Southeastern Brazil, where the state of Sao Paulo is located, had the second most expensive land at R$ 7,868 per hectare (US$ 1,798 per acre), which was up 3.1% from the previous year. Sugar and ethanol producers did not have very good years in 2008 and 2009, but the industry is expected to recover in 2010, which could help to increase land prices in the state.
In the center-west region, which includes the state of Mato Grosso, the average price was R$ 3,487 per hectare (US$ 797 per acre) and that was an increase of 3.8% compared to last year.
In northeastern Brazil the average price was R$ 2,028 per hectare (US$ 463 per acre), which was up 4%. In northern Brazil the average price was R$ 1,423 per hectare (US$ 325 per acre), which was up 5.7%
The price of land in dollars was determined by using an exchange rate of 1.75 Brazilian reals to the dollar.