Brazil is one of the top three countries in terms of GDP, population, and land area. It has abundant natural resources like water, sunlight, and fertile land that make it highly productive for agriculture, especially forestry. Brazil is the largest exporter of cellulose in the world due to its low production costs and high yields of eucalyptus. A new potential region for eucalyptus and pulp production is Amapá state, which has large areas of underutilized cerrado savannah lands that are cheap, close to port infrastructure, and could support expansion of the industry.

1. Overview on eucalyptus supply for the production
of 500,000 ton/y of cellulose in Brazil
Viterbo, Jean Carlo – MSc.
Director – Acayos Agro
July – 2018

2. Brazil is 1 of the 3 giants (2017)
Bangladesh
Pakistan
Phillipines
Nigeria
Russia
Australia
Canada
United
States
China
Indonesia
Mexico
India
Japan
Germany
United
Kingdom
France
Italy Spain South
Korea
Brazil
*GDP > $ 1 tri
*GDP > $ 2 tri
Area > 7 M km2
Population > 100 M
*International Monetary Fund - World Economic Outlook Database, April 2018

3. Brazil is 1 of the 3 giants (2017)
Pakistan
Russia
Australia
Canada
United
States
China
Indonesia
India
Japan
Germany
United
Kingdom
France Brazil
*GDP > $ 2 tri
Area > 7 M km2
Population > 200 M
*International Monetary Fund - World Economic Outlook Database, April 2018

4. Source: http://unctad.org/en/PublicationsLibrary/wir2017_en.pdf
After China, Brazil is the most preferred destination for Foreign Direct Investment,
among emerging economies

5. Surplus
Deficit
1995 2015
15 highest surpluses and deficits in the Balance of Trade for agricultural products (US$ bn)
Source: WTO merchandise trade values annual dataset
- Total 15 : US$ 147 bn
- USA with highest surplus.
- Canada 2nd highest surplus
- Netherlands with 3rd surplus
- No significant surplus in Asia
- Subtotal 4 European: US$ 38 bn
- Subtotal 4 Asean: US$ 21 bn
- Total 15 : US$ 194 bn
- Japan had the highest deficit
- China mainland had no significant deficit
- European countries pravailed after
Japan; Germany first in Europe
- Significant deficit in Russia
- Subotal 6 European: US$ 66 bn
- Subtotal 4 Asian deficits: US$ 90 bn
- Total 15 : US$ 304 bn (+107%)
- Brazilian leadership (8 → 69 bn)
- USA eliminates its surplus
- Argentina raises to 2nd (10 → 32)
- Canada down to 4th (20 → 25)
- Big growth in Indonesia, Thailand
- Ukraine, Spain and Poland replace
Denmark and Ireland in Europe
- Subtotal 4 European: US$ 55 bn
- Subtotal 4 Asian: US$ 57 bn
- Total 15 : US$ 360 bn (+85%)
- China replaces Japan in highest deficit
- Middle East replaces Europe in 3rd
- Outstanding growth of deficit in UK
- Russia eliminates the deficit
- 2 Asian and 1 African replaces
3 European out of the 15
- Subtotal 3 European: US$ 68 bn
- Subtotal 7 Asian: US$ 210 bn
Middle East (WTO) : Bahrain, Iran, Iraq, Israel,
Jordan, Kuwait,Lebanon, Oman, Qatar, Saudi
Arabia, Syria, United Arab Emirates, Yemen
WTO Agriculturalproducts:SITC sections 0, 1,
2, 4 minus 27 and 28. Includes animal products,
dairy, forestry, all beverages and tobacco.
Brazil has shown the world’s highest surplus in agro trade, and China the highest deficit

6. Source: http://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/bra/all/show/2016/
Brazil total amount of exports worldwide in 2016: US$ 226 billion
Wood products $ 2.91 bn
Cellulose & paper goods
$ 8.55 bn

7. Source: http://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/bra/all/show/2016/
Brazil exports of paper and cellulose worldwide in 2016: US$ 8.55 billion

8. What are the reasons for such a
strong agro trade growth in Brazil ??

9. one of the major reasons is that
biomass productivity =
water x soil x sun x science3
What are the reasons for such a
strong agro trade growth in Brazil ??

10. Fresh water availability

11. According to BrasilAgro,
Brazil has almost 25% of the
world's land with more than
975 mm of rain per year.
Water and energy crops
energy crops (forestry & others)

12. World’s largest arable land area: cerrado (savannah)
cerrado energy crops (forestry & others)

13. “Mapeamento dos Recursos de Energia Solar no Brasil”
Divisão de Clima e Meio Ambiente – INPE
Labsolar – UFSC, 2007 média diária
Sun in Brazil and forestry assets
energy crops (forestry & others)

14. Science
on productivity
(EMBRAPA agro
research company)
Science and agro productivity in Brazil – example from grain crops
Area - 000 ha
or
Production- 000 tonnes
Productivity
Kg / ha

15. Science and agro productivity in Brazil – examples from forestry
Brazil as a whole International Paper Company
São Paulo state farms

16. Railways and energy crops

17. Brazil shows the word’s highest productivity in forestry production
www.iba.org

18.  Last years of crisis have reduced internal consumption, and so the Foreign Direct Investment in forest farms and
wood product industries was kept lower.
 However, FDI in pulp & paper industries has been sustained in high, due to the outstanding competitiveness of
Brazil cellulose exports.
www.bcb.gov.br
The internal economical crisis, which is coming to an end, made no damage to the FDI in pulp
industry and to its exports neither, which came to the world’s top position since 2013

19. Brazil independent wood suppliers raised from 13% in 2006 to 42% in 2016
7,84 M ha
www.iba.org
0
1
2
3
4
5
6
0
1
2
3
4
5
6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Evolution of the covered area of croped forestry in Brazil (M ha)
eucalyptus others pinus

20. Brazil national production of paper and cellulose (kton/y)

21. Brazil cellulose exports: CAGR 9.1% since 2000
Compound Average Growth Rate
2000 – 2017: 9.1%/y
Compound Average Growth Rate
2010 – 2017: 6.8%/y
2000:
3,000 ton
2010:
8,350 ton

22. The long lasting competitivity resulted in continuous growth of exports ratio
Brazil cellulose exports destinations
2016
Cellulose exports ratio

23. Brazil is top producer of short-fiber pulp and exporter of pulp as a whole
Since 2013, Brazil is the top exporter of cellulose as a whole.
Brazil production cost of cellulose is the lowest in the world.
Brazil is the world's top producer and exporter of short-fiber pulp
because the Brazilian climate favors the planting of eucalyptus,
while in the other producing countries the production of long fiber
pulp is higher, as the climate favors more pine forests.

24. Almost 100% of Brazil cellulose exports are short-fiber type (eucalyptus)

25. São Paulo and Paraná states concentrate the cellulose plants in Brazil
Total
plants
71

26. Cellulose price trends to grow

27. Brazil annual production of eucaliptus wood was 154 million m3 in 2016
Brazil wood consumption for industrial use - 2016
0.5 M ton/y cellulose
140,000/3 ha = 46,667 ha
@ 35.7 m3/ha/y
250 m3/ha (7 years)
35.7 * 46,667 = 1,666,012 m3
1,666,012 / 500,000 =
3.33 m3 wood / ton cellulose

28. The investment for self-production of fiber (land-lease) in Brazil is estimated in between
6.1% and 8.5% of the annual gross revenue of a 500,000 ton/y specialty cellulose plant
• Land amount required for to supply
500,000 ton cellulose plant:
38,000 - 52,000 ha (approx.)
• Estimation on farm investment (7y) for
1.9 million m3/y of eucalyptus:
US$ 155 M – US$ 215 M (approx.)
• The annual arithmetic average of
investment value estimation is:
US$ 22 M – US$ 31 M (approx.)
• The annual average investment weight
over the expected annual income is:
6.1% - 8.5% (approx.)
• Third-part wood supply is normally
30% - 50% higher (approx.)
than self-production (9.1% - 11.1%)
NOTE: not to confuse “stumpage price” of
wood (= standing wood, the market price as
normally found) with the price of harvested
wood (= ready to road truck loading).
“Harvesting + intra-farm transportation” may
be as expensive as the standing wood itself.

29. Land lease for eucalyptus normally require monthly payments for 15 years,
with no grace period
 The leasing of areas for eucalyptus is normally done for 15 years contract (which supports 2 harvests for cellulose – 7 years each),
renewable for a further 15 years contract.
 The lease price obeys some variables, such as: topography of the area; soil type; logistical facilities; distance from the pulp mill.
 However, the lease cost goes from R$ 500 to R$ 900 per hectare per year (US$ 125 – US$ 225/ha*y; @ R$4/US$). The normal case
is when payments are made in a monthly basis, with no grace period.
 There are some landowners who accept participation in percentage of the wood sales revenues, at the harvest season. However,
the market has become unstable and this practice has been abandoned.
Cost for Preparation and Planting
 The cost of preparing an area for planting also depends on the topography of the area, to determine the amount of grating,
leveling and lanes. Depending on the quality of the soil, it changes the amount of limestone and fertilizer. This cost can vary from
R$ 2,000 to R$ 4,000 per hectare (US$ 500 – US$ 1,000/ha).
Maintenance and Harvest
 The maintenance of the forest is carried out 2 to 3 times a year, with weeding, cleaning of antlers, and ant combat with
application of herbicides.
 Also needed to follow fire-fighting standards with systems and control brigades.
 Third-part services for harvesting are expensive (R$25 – R$35 per m3).

30. World-class corporations have acquired huge areas of land in Brazil
The purchase and recovering of degraded lands, from livestock levels towards agriculture higher grades, is able to reach more than 110% profit (find
below) for resale after 3 years of recovering investments (28% a year). “Eucalyptus grade” soils are normally even poorer (cheaper) than livestock
grades. Investments in this field may gradually grow from US$ 20 million to US$ 1 billion. This investment has a low risk level, which is represented mainly
by land location, negotiation and documentation conditions. World’s major financial and real estate corporations have done US$ billionaire deals of land
purchase in Brazil lately (Bank of America, Rabobank, Brookfield Properties). The main reasons: favorable exchange rates and, in addition to the value
creation from land recovering, the real estate prices for rural areas in Brazil have increased under very similar patterns compared to the Brazilian Stock
Exchange Index. Those phenomena attracted the investments of world-class financial institutions, combining very low risk to attractive returns.
Here you find the difference
of the strong experience and
deep penetration of
ACAYOS AGRO to create
higher and reliable value,
managing the search for best
lands and the effective due
diligence process to
guarantee the lowest risk
level to the investor.

31. The lease of 4 eucalyptus rotation cycles is as expensive as land acquisition
 Considering a celulose plant 500,000 ton/y, the investment in land acquisition (2018) may range from US$ 110 M to US$ 360 M
 Land lease total cost for 28 years operation = 4 * (45 or 60 M) = US$ 180 M – US$ 240 M
 Considering the value increase for land recovering (livestock-to-agriculture) as found in Middlewest in 10 years = 242%. Considering
such value increase shall to be even larger for eucalyptus-to-agriculture grade recovering, along 28 years = 800% - 1,000%
 Therefore, the acquisition of US$ 180 M (min 38,000) could reach market value of US$ 1.44 Bn (8-fold), and the acquisition of US$ 240 M
could reach US$ 2.40 Bn (10-fold).
 Brazilian celulose companies normally operate more than 50% of their supply from self-owned farming operations.
Land acquisition brings HUGE
ADVANTAGES for agro-industrial
operations in Brazil:
• Lease means wealth transfer.
• Acquisition means huge wealth
creation, under very low risk.
• Lands are the ONLY warrant
accepted by development banks
and federal funds for public-
subsidized investment loans.

32. AMAPÁ case: a very good start to survey on eucalyptus & pulp production
 The Amazon region is huge, therefore, IT IS NOT HOMOGENEOUS. Amapá state (14.2 M ha) presents a considerable area of
cerrado (savannah – 890,000 ha). That’s the newest Brazil agro frontier. Large-sized entrepeurships of eucalyptus and soyabean
have been established there.
(State authority) (Federal authority)

33. AMAPÁ’s lands & forests: cheap, close, productive, lower competition
 Among the traditional eucalyptus producing areas in Brazil, Amapá state offers the cheapest price for acquisition, which are all of
them very close to the port, indeed (< 200 km).
 From the 890,000 ha cerrado, only 273,000 ha are under human activities, from which 160,000 ha are used for eucalyptus.
 Amapa’s cerrado offers affordable roads, no tolls, and its port already export a growing supply of 700 kton/y eucalyptus chips.
 Davi Alocumbre, one the youngst Brazilian senators (democrate party), has announced to run to the government elections in 2018,
then bringing new perspectives for that state.
Private-owned productive areas (ha) in Amapá and respective uses
eucalyptus
soyabean
cattle
mining
% over the total area
of savannah in
Amapa (889,714 ha)

34. Wood chips from Amapa Port: ~700 kton/y

35. Conclusions – Brazil industry facts
 Brazil is one of the unique 3 world giants which combine GDP > US$ 2 tri; population > 200 M; territory > 7 M km2.
 No other country than Brazil offers a better combined availability of water, sun, arable land and agro technologies.
 Thanks to its outstanding productivity, Brazil shows the world’s highest surplus in the balance of trade of agro products
(US$ 69 bn in 2015), by far higher than other agriculturally powerful countries, as like Argentina, Canada and Australia.
 After China, Brazil is the most preferred destination for Foreign Direct Investments, among emerging economies (IMF).
 Brazil cellulose & paper products exports accounted for US$ 8.55 bn in 2016, from which US$ 5.7 bn were cellulose
“paper grades” and US$ 0.5 bn were cellulose “dissolving grades”. Since 2000, cellulose exports grow at 9.1% a year.
Since 2013, Brazil is the world’s top cellulose exporter. Brazil is the largest producer of short-fiber pulp (eucalyptus)
and the Brazilian cellulose’s cost of production is the lowest in the world.
 Brazil shows an outstanding productivity on cropped forestry, as for short-fiber (eucalyptus), as for long-fiber (pinus).
For eucalyptus, yields as large as 350 m3/ha are commonly found for 7 years harvesting crops.
 The economic crisis in the internal market in last years has reduced the annual Foreign Direct Investments in new
forests and forniture manufactures. However, the cellulose sector received the traditional level of FDI, due to the
competitiveness in quality, price and logistics, even though a relatively stable demand worldwide.

36. Conclusions – Highlights for starting a survey in Brazil agroindustry
 Brazil production of eucalyptus was 154 M m3 in 2016 and thanks to its outstanding productivity, only 140,000 ha of
land are required to supply a 1.5 Mton/y conventional cellulose plant, compared to 720,000 ha in Scandinavia.
 The investment for self-production of fiber (land-lease) in Brazil is estimated in between 6.1% and 8.5% over the
annual gross revenue of a 500,000 ton/y specialty cellulose plant.
 Land lease for eucalyptus normally require monthly payments for 15 years, with no grace period.
 World-class corporations have acquired huge areas of land in Brazil.
 The lease (wealth transfer) of 4 eucalyptus rotation cycles (28 y) may to become as much expensive as land acquisition,
which has proven to be able to bring billionaire wealth creation from real estate valuation.
 Amapá state’s cerrado (savannah) is the newest Brazilian agro frontier (273,000 ha) . Large eucalyptus farms (160,000
ha) and soyabean (23,000 ha) were established there, under full support from federal and state authorithies.
 Amapá offers the cheapest price for acquisition, lands are very close to the port (< 200 km), affordable roads have no
tolls. Farming and indsutrial competition there is lower, when compared to states of other regions (NE, SE, MW, S).
 Amapa’s port already exports a growing supply of 700 kton/y eucalyptus wood chips.

37. Consultants
Carlos Gonzalez, 56
• Experience in logistics for agricultural commodities since the age of 18,
on sales of crops from the agricultural cooperatives at Brazilian
midwest to the ports of Santos and Paranaguá
• Experience in logistics in road, rail, fluvial and long course - the latter
including all customs clearance and international freight
• Worked for Ferronorte logistics demand studies and implementation of
rail terminals and warehouse (silos)
• Founder of Acayos Logistics and Acayos Agro.
• 15 years of consulting for agricultural groups, advising in routes and
construction of 74 silos for grains price hedging
• Recent works focused on agribusiness, from the maintenance of
agricultural machinery and operation of farms (outsourcing of
preparation, planting, spraying and harvesting), and completing the value
chain with commodities’ brokerage and logistics
Jean Carlo Viterbo – MSc., 42
• Bachelor in Business Administration, FGV Brazil; Specialization in Renewable
Energy, UniKassel Germany; Master of Science in Naval Eng., USP Brazil;
Specialization in Exponential Techs., Singularity University, Nasa Ames & Google,
Silicon Valley USA
• Director at the Brazil India Chamber of Commerce
• Strategy Director at Acayos Agro Ltd
• Strategy Director at CRIVEX Imp. & Exp. Ltd
• Former Head of Strategy Americas, International Dialogue Advisors. Corporate
Diplomacy from Europe & Brazil to deal with the European and the Brazilian
Parliaments
• Evaluation of the competitiveness of Brazilian-borne ship machinery supply chain
the for Oil & Gas Industry
• Engineering and institutional assessment to promote new export routes for soya
beans throughout Amazon waterways
• Consultant in wind energy and agroenergy (pellets and biodiesel). First Brazilian to
research on the matter of Offshore Wind Energy