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BrasilAgro shares soar as land sale flags rising values

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Brazilian agriculture company BrasilAgro sold its Cremaq farm for more than seven times what was paid for it nine years ago, in a deal that highlights growing values in the country's underdeveloped north east.

BrasilAgro shares on the Sao Paolo stock exchange traded as much as 13% up on the news, touching two-year highs in morning trades.

BrasilAgro agreed to sell the 27,754-hectare property for R$270m, equivalent to more than $9,700 ($3,000) per hectare.

The farm, which is located in the remote north-eastern state Piauí, was bought by BrasilAgro for around 1,293 reais per hectare in 2006.

The sale price also underlines the continuing growing in Brazilian land values, including in Piaui, part of the Mapitoba agricultural frontier.

Deloitte valued the farm last year at R$251.1m.

BrasilAgro added that, given the gap between the Cremacq sales price and the value attributed by the group's existing accounting method, the deal "should increase the company book value by approximately 30%".

Mapitoba acceleration

Including capital investment, the farm has yielded an annualised return of 21.4% for BrasilAgro since purchase.

BrasilAgro, which specialises in renovating run down farm properties, has been enjoying particular rich pickings from the north east region.

The north-eastern states of Maranhão, Piauí, Tocantins and Bahia – the first two letters of which form the acronym Mapitoba - were long considered agricultural and economic backwaters, but have been enjoying an acceleration in farm values.

Data released by BrasilAgro last year showed that its property in Bahia were up 90% in less than four years, with Piauí land up 32%, while its investments in the agricultural heartlands of Minas Gerais languished.

Calls for deregulation

The Brazilian farmland market is currently restricted to foreign investors, however landowners are currently lobbying to have these measures relaxed.

The restrictions were introduced by President Lula to stymie Chinese purchasing of land in Bahia state.

BrasilAgro share prices fell back, to trade up 3.4% at R$10.70 a share in afternoon deals.


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