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In just five years, farmland in Brazil has skyrocketed, rising 110%. The leasing market is also struggling. Is it time to invest in land? Check out experts' predictions about the future of agribusiness.
Buying farmland was once considered one of the safest investments in Brazil.
However, in recent years, the appreciation in the price of rural properties in the country has surprised even the most optimistic analysts.
We are not talking about a simple rise, but a historic leap that caused the values of agricultural lands rose more than 110% in just five years.
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If you’ve ever thought about investing in a piece of land, you’ll know that current prices can leave anyone wide-eyed. But what’s behind this appreciation?
Will the land market continue to see rising prices? Let’s explore the data and understand what’s behind this phenomenon.
Impressive appreciation of land prices
According to data from Scot Consultoria, between 2019 and 2024, the average price of agricultural land in Brazil increased by 113%, jumping from R$14.818,10 per hectare in July 2019 to R$31.609,87 in the same month of 2024.
In regions dedicated to pastures, the increase was even more significant, reaching 116%, with the price per hectare rising from R$8.267,14 to R$17.886,94.
This growth is not just nominal. Adjusting these numbers for inflation, the real increase was 59,9%.
According to S&P Global Commodity Insights, the scenario is one of much higher appreciation than that observed in other investments.
While the Ibovespa appreciated by just 25,89% and savings by 28,66% in the same period, agricultural land stood out with a much more robust performance, surpassing the 100% growth mark.
The impact of the pandemic and the rise in commodities
But what drove this explosion in farmland prices? Several factors have influenced this increase, including the Covid-19 pandemic, the commodities boom in 2022 and global stock shortages.
According to the channel Buy Rural, Land has come to be seen as a safer asset, mainly because it is “dollarized”, that is, it is directly linked to the price of agricultural products such as soybeans, corn and coffee, which are sold in foreign currency.
José Eduardo Daronco, from Suno Asset, highlighted this connection, stating that “agricultural land has become an even more attractive investment because it produces dollars”.
This trend was driven by the increased demand for land to expand agricultural production, in addition to growing competition with pasture areas, which put pressure on prices, especially in regions with good infrastructure, such as proximity to ports and agribusinesses.
The appreciation of specific regions
Although the average price of land has increased throughout Brazil, some regions stood out even more, mainly on agricultural frontiers.
In Rondônia, the price of agricultural land rose by an impressive 300%, and pasture land rose by 286%. States such as Maranhão and Piauí also showed increases of over 200%.
On the other hand, the South of Brazil, especially Paraná, has stood out for its soil quality and well-established infrastructure, which has resulted in very high prices. According to data from S&P Global Commodity Insights, land values in Paraná reached almost R$60 per hectare.
The future of farmland prices
And what can we expect for the coming years? Although prices have reached surprising levels, the expectation for 2024 and 2025 is price stability, without major variations.
Anderson Galvão, an analyst at Céleres Consultoria, points out that the lack of “surplus income” due to part of the farmers, the drop in harvests in some regions and a more pessimistic scenario indicate that interest in new acquisitions will be more limited.
In other words, although land values have risen sharply in recent years, the trend now is towards a “settling period” in the market, with less liquidity and a slower pace of transactions. The market has stabilized, but without major fluctuations for 2024 and 2025.
The rental market and falling liquidity
Another important point about the agricultural market in Brazil is the leasing market. In 2023, the liquidity of the land market has fallen considerably.
With the reduction in commodity prices, many producers faced difficulties in keeping their accounts balanced, directly impacting the pace of negotiations in the market.
Furthermore, farmers who entered into high-priced lease agreements between 2022 and 2023 are now facing financial challenges.
Faced with this situation, many of these farmers have two options: renegotiate the values with the owners or return the land.
This dynamic could directly impact the rental market in the coming months., with a possible drop in rental prices, especially in regions that have seen the biggest increases in recent years.
The role of Fiagro
With the land market becoming increasingly valuable, alternatives are emerging for investors who wish to take advantage of this trend without directly purchasing land. Fiagro, an investment fund in agribusiness assets, has proven to be an interesting option.
Suno Asset, for example, has invested in land in Mato Grosso, in addition to securities related to agribusiness, such as the Agribusiness Receivables Certificate (CRA), which offers profitability linked to commodities.
Opportunities or risks?
The agricultural land market in Brazil remains one of the most valued in the world, with prospects of stability and caution for 2024 and 2025.
With the scenario of high land prices, the The opportunity may be advantageous for investors who have capital and the ability to wait for the right moment to enter the market..
However, commodity volatility and high interest rates require careful analysis for anyone wishing to invest in this sector.
Do you think land prices will continue to rise, or are we in the midst of an inflated and saturated market? Let us know in the comments!
I think now with the fall of commodities
Interest rate hikes tend to fall.
The need for food is growing in the world, on the other hand, climate change, wars, natural disasters make food production more difficult, while stricter environmental laws do not allow the opening of new agricultural frontiers, certainly the price of land will continue to rise especially if there is legal security (respect for property rights).
I have to laugh reading that agricultural land in the south is 60 thousand and the EC is 150, that's right