BrazilAgro, one of Brazil’s largest agricultural companies, is prioritizing debt repayment over farmland acquisitions as persistently high real interest rates make reducing leverage more attractive than investing in new properties, Chief Executive Officer André Guillaumon said.
Buying a farm typically generates annual returns of 6% to 7%, compared with an inflation-adjusted return of 9% to 10% from paying down debt, Guillaumon told reporters.
“That’s a very bad situation, because a large share of Brazil’s capital is being directed toward financial speculation and interest rates rather than productive investment,” he said.
The Brazilian farmland operator has been cutting capital expenditures to keep its finances under control. Net debt now stands at about one times trailing 12-month Ebitda, compared with 2.8 times a year earlier.
While elevated interest rates are weighing on real asset valuations, Guillaumon said they should not prevent BrasilAgro from completing further farmland sales.
In September, the company sold 2,500 hectares (6,175 acres) in the northeastern state of Bahia, a region Guillaumon described as a pocket of liquidity in an otherwise challenging land market.
The transaction helped BrasilAgro post a net profit of $14.8 million (81.3 million reais) in the first quarter of its 2026/27 fiscal year, covering July through September, reversing a loss of $11.7 million (64.3 million reais) a year earlier. Adjusted Ebitda rose 47% to $17.3 million (94.6 million reais), according to results released Tuesday, Nov. 3.
Farmland Buyers Grow Scarcer
Although farmland transactions are recovering, the pool of potential buyers has shrunk significantly.
According to Guillaumon, well-capitalized growers with lower debt burdens are benefiting from higher soybean prices on the Chicago market and favorable exchange-rate movements, supporting profitability and leaving them better positioned to pursue acquisitions.
That should sustain demand for farmland consolidation even as the overall number of potential buyers declines.
“If I had 100 potential buyers for a farm before, today I probably have 30,” Guillaumon said. “But those 30 are eager to buy and are significant players. They’ll make up for some of the other 70.”
Financial pressure on farmers is also likely to push land lease rates lower, potentially creating opportunities for BrasilAgro to expand its operated acreage without buying properties.
In Mato Grosso, Brazil’s largest soybean-producing state, production costs are running at about 37 60-kilogram bags of soybeans per hectare, while land leases add another 15 bags, according to Guillaumon.
Lease rates have already fallen in less productive areas, but the correction has yet to reach prime farmland.
“We’re not focused on expanding our leased area right now. I still don’t think it’s the right time,” Guillaumon said. “If lease rates in core areas fall from 15 bags to 12 or 11, we’ll start looking at those opportunities much more closely.”
Paraguay is an exception. BrasilAgro is actively seeking additional leased farmland there as part of a strategy to diversify its exposure to weather risks.
2026/27 Planting Season
BrasilAgro’s operations in Paraguay, where it manages 32,000 hectares (about 79,000 acres), are benefiting from adequate rainfall, supporting plans to increase production.
The company has also focused on improving the cattle-carrying capacity of its farms, while weather conditions appear favorable for the coming months.
“We’ve put a huge emphasis on increasing the farm’s cattle capacity,” Guillaumon said. “The weather window is also shaping up very well. El Niño favors conditions in Paraguay.”
In Brazil, the company has accelerated soybean planting, particularly in Mato Grosso, which accounts for roughly 30% of BrasilAgro’s total agricultural acreage.
About 91% of its planned acreage in Mato Grosso has been planted, compared with an overall planting rate of 70% across its Brazilian operations.
Planting has yet to begin in Maranhão and Piauí, two northeastern states where insufficient rainfall has delayed fieldwork.
The two states are among the areas most exposed to potential rainfall deficits associated with El Niño. To mitigate drought risks, BrasilAgro has increased crop-residue cover on the soil to help retain moisture.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
