Farmland in South of Brazil Now Costs More than in Southeast

Farmland in Rio Grande do Sul, South of Brazil Prices of farmland have risen sharply of late in Brazil, driven up by rising international commodities prices, especially grains, agricultural analysts of the São Paulo based agribusiness consultancy AgraFNP said in a report released last week.

The report found out that the average price for a hectare of farmland in Brazil rose 16.4% in the two-month period of March-April from the same period in 2007 to 4,135 reais (US$ 2,506). Compared with January-February this year, prices have risen 3.42%.

Prime farmland in the southern producing states of Rio Grande do Sul, Santa Catarina and Paraná for the first time since early 2007 surpassed the cost of land in the sugarcane rich southeast states, pointed out AgraFNP.

"The southern region prices have roughly pulled even with the southeast in the past two months," said AgraFNP analyst Jacqueline Bierhals. "Most of the shift in position is due to the search for farmland for grains in Paraná, which appreciated a lot."

The average price of a hectare of productive land in the south rose to 7,737 reais (US$ 4,689) in March-April from 7,288 reais in the previous two month period.

"Prices rose in Brazil generally, but the South had a very strong rise. They are lands that were already expensive and had found space to rise further," she said.

The average price of land in the southeast rose to 7,450 reais over the period from 7,317 reais in the first two months of the year.

In São Paulo, Brazil's main sugarcane producing state, located in the southeast region, the average price of a hectare rose to 11,824 reais from 11,604 reais in January-February.

Bierhals said this recent rise in the southeast had probably more to do with the expansion of pasture land, grain planting and reforestation in the state than demand for land to grow sugar cane as sugar and ethanol prices have not been that attractive lately.

In the center-west region, where much of Brazil's future grain and sugarcane expansion will occur, average land prices rose 3.5% in March-April from the previous two months but were up 40% on the same period in 2007, at 3,246 reais a hectare.

Bierhals said the strong rise in the center-west was due to the strong demand for new land from big productive projects seeking large areas of farmland, many of which are being funded by international groups.

Mercopress

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