SLC Agricola SA, the Brazilian farming company that gets 45 percent of its revenue from selling cotton to Asia, plans to expand its plantations by a quarter through 2015 as demand increases for protein exports.
The company expects to operate 350,000 hectares (865,000 acres) during the 2014-2015 crop season, up from 280,000 hectares now, Chief Executive Officer Aurelio Pavinato said today in a telephone interview. It currently plants mostly cotton, soybean and corn.
A growing shift toward protein-based diets in Asia is boosting demand for animal feed, Pavinato said. About three quarters of its crops are exported and that ratio will rise slightly through the decade.
“As Asian populations become richer, there’s more demand for poultry and swine and the crops that feed them,” said Pavinato, who was appointed to lead the company in December.
SLC Agricola plans to cultivate 700,000 hectares of fields in Brazil by the end of the decade with sugar-cane and sunflower, two crops it’s experimenting with now, making up about 10 percent of the total. The company, based in Porto Alegre, Brazil, will invest annually half its annual earnings before interest, taxes, depreciation and amortization to expand crops, he said. Last year Ebitda was about 300 million reais ($153 million).
All land purchases will be conducted by SLC Landco, a venture 51 percent owned by SLC Agricola and 49 percent owned by the Guernsey, Channel Islands-based investment fund Valiance Asset Management Ltd., he said. The development of new crops will use financing from local banks, including Brazil’s national development lender Banco Nacional de Desenvolvimento Economico e Social.
Source: By Stephan Nielsen - Bloomberg