Investor Presentaiton
Presentation
The incorporation of new areas is one strategy
Brazilian agribusiness employs to increase
its production capacity. The problem is
that this expansion has occurred through
deforestation, regardless of legality.
Between 1985 and 2020, since the systematic
monitoring of land use began in Brazil,
the country has lost 82 million hectares
(Mha) of native vegetation. Over the same
period, the area occupied by agriculture
and animal husbandry increased 81 Mha¹.
The biomes most affected in absolute
numbers by this expansion were the Amazon
and the Cerrado, with native vegetation losses
totalling 44 Mha and 27 Mha respectively, and
equivalent area increases for agricultural use².
In spite of the evidence, many agribusiness
agents refute their connection to deforestation
and the encroaching agricultural frontier
because "they do not have a chainsaw in their
hands". Is this a reasonable claim? What are
the economic effects of new areas constantly
appearing on the country's land market? What
happens to the price of this asset and the price
of agricultural products? How does Brazilian
agribusiness benefit from deforestation?
These are some of the questions this Escolhas
Institute study addresses, employing new
econometric and spatial analysis techniques
in order to isolate how deforestation has
affected land prices and agricultural product
prices differently to other variables.
* US$ 1 = R$ 5,04 (Source: Brazilian Central Bank, 03/03/2022).
MAIN
RESULTS *
THE DEFORESTATION THAT
OCCURRED BETWEEN 2011 AND
2014 DEPRECIATED THE VALUE
OF BRAZILIAN LAND IN 2017 BY
AN EQUIVALENT OF US$ 27.1
BILLION (5% OR AN AVERAGE
REDUCTION OF US$ 77.57 PER
HECTARE), COMPARED TO WHAT
WOULD HAVE BEEN OBTAINED IN
THE ABSENCE OF DEFORESTATION.
IN 2017, THE DEPRECIATION
RATE HIT US$ 16.5 BILLION,
OR 25% OF LAND VALUE IN THE
MUNICIPALITIES WHERE THE
EXPANSION OF THE AGRICULTURAL
FRONTIER OCCURRED, EQUIVALENT
TO US$ 195 PER HECTARE.
DEFORESTATION ALSO WEAKENED
AGRICULTURAL PRODUCT PRICES.
IN THE CASE OF SOYBEANS, THERE
WAS A US$ 0.6 (-4.5%) REDUCTION
IN THE AVERAGE BAG (60KG) PRICE
A US$ 1.32 BILLION CUT IN
THE COUNTRY'S GROSS SOYBEAN
PRODUCTION VALUE FOR 2017.
93.5% (5,218) OF BRAZILIAN
MUNICIPALITIES SUFFERED A
DEVALUATION IN LAND PRICES DUE
TO DEFORESTATION. HOWEVER,
HALF (50%) OF THE OBSERVED
DEPRECIATION WAS CONCENTRATED
IN 61 MUNICIPALITIES (1.15%).
1 Projeto Mapbiomas. Collection 6.0 of the Annual Series of Land Cover and Land Use Maps of Brazil. Infographics. Available in English at:
https://mapbiomas.org/en/infograficos-1?cama_set_language=en, accessed on 8 February 2022.
2 See previous reference.
HOW DOES BRAZILIAN AGRIBUSINESS BENEFIT FROM DEFORESTATION?
LO
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