Brazilian Land Prices

According to a recently released study, prices for agricultural land in Brazil is heading upwards as demand from food and biofuel send prices to a record high

 

The average price for a hectare has risen more than 16% over the past year to 4,135 reals ($2,500), said the Brazilian subsidiary of British group Agra Informa. Since 2005, the price of such land has increased 35%.

 

This seems to be part of more good news for the Brazilian economy that is going from strength to strength. November 2007 saw the Brazilian government announce huge new oil reserves discovered off its coast. Experts predict that it could turn the country into one of the biggest oil producers in the world.  Petrobras, Brazil's national oil company says it believes the offshore Tupi field has between 5bn and 8bn barrels of recoverable light oil.

 

The worldwide spike in food prices, spurred by a drop in food stocks, and the growing interest in crops that can produce biofuel are behind the fierce demand for land, AgraFNP said.

 

The last time Brazil saw a comparable spike in land prices was in early 2004, when climbing soya prices sparked a property grab.

 

An analyst, Jacqueline Bierhals, told O Globo newspaper that Brazil is a hot farm property market because it has vast fertile tracts available.

 

Large Brazilian and foreign companies are leading the charge to acquire the soil. Foreign firms already own 5.5 million hectares, AfraFNP noted.

 

The south-eastern state of Sao Paulo produces nearly 60% of country's ethanol output, the biofuel derived from sugarcane.