Infrastructure shortfalls, evident in a 20-mile queue of trucks waiting to unload soybeans, is holding up the Brazilian land grab, prompting farmers to opt for renting prime farmland rather than buying cheap – but remote – plots.
The potential for profiting from bringing untouched Brazilian land up to agricultural standards was significant, US stockbroker Sterne Agee said, noting the price of R$2,000 per hectare for undeveloped plots, compared with R$18,000-20,000 per hectare for land in "more well established areas".
[......] However, Sterne Agee warned of a "limit" on expansion enforced by a lack of road and rail networks, which can double costs of transporting crops to port.
"Well-established farmers would rather grow their respective acreage through consolidating with their neighbours rather than expanding into greenfield properties," Sterne Agee analysts said, following an in-country visit.
This trend held even if a dearth of acquisition opportunities forced farmers to rent.
"Many large land owners are moving to renting land," rather than take the risk of buying in remote areas.
"Despite the premium rent that is being paid by some famers, in their opinion and ours, it is better at the moment to realise some return on the land rather than potentially investing, with marginal or zero returns, undeveloped land," the broker said.
"[This] may limit acreage expansion in the near- to medium-term."
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