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Brazil: A (farm) land of opportunity

Jaimie Kanwar

Low-cost farmland in Brazil could be the next big investment opportunity, argues Savills...

According to Savills International Land Markets bulletin, farmland markets around the world are becoming more accessible, offering new opportunities for investors and farmers.

This demand is often competing with a strong domestic interest in land from non-farmers looking to own land for residential and lifestyle reasons. All of which points to a continued and growing upward pressure on farmland values.

Savills Director Ken Jones explained: “In South America, land in parts of Brazil is some of the cheapest productive land available. A key factor driving prices here is the cost of the inputs required to improve the land for modern farming practices.

“Traditionally the land is traded in terms of an equivalent value to soya beans with payment spread over at least four years, cash purchases are uncommon. Values vary significantly and are usually dependent upon the length of time the land has been cropped.

Exciting investment opportunities

He continued: "Brazil offers extremely exciting investment opportunities for both farmland and agribusiness. The climate, agricultural infrastructure and available water resources mean that all the major crops can be grown and in some areas double cropped.

”The bio-ethanol industry also is thriving, providing biomass for electricity generation. Estimates of land available to farm but not at present in production are in the region of 90 million hectares and foreign investment is welcomed."

The United Nations has forecast that world population is to increase by more than 40% by 2050, which will put increasing pressure on food and energy sources.

Mr Jones concluded: The growing demand for agricultural commodities across the globe will affect farmland values and open up, as yet, untapped locations for investors”.