Last year alone, investments announced in corn ethanol production capacity reached R$41 billion, according to a study by consultancy FG/A conducted for Valor.

These funds will be allocated to 44 projects that, if completed, will add 12 billion liters per year to Brazil’s ethanol production capacity. The largest investment was announced at the end of 2025 by Inpasa: R$3.5 billion for a new plant in Rondonópolis, in the state of Mato Grosso, and the expansion of its Nova Mutum facility, also in Mato Grosso.

The total investment pledged for corn ethanol in 2025 surpasses the R$30 billion invested in sugarcane ethanol projects between 2009 and 2012, according to a 2009 survey by Valor.

Willian Hernandes, partner at FG/A, said the corn ethanol boom is driven by the segment’s attractive profit margins and favorable financing conditions.

With Brazil’s abundant corn supply, the cost of producing ethanol from the grain has become more competitive than sugarcane-based ethanol, allowing the product to reach new markets. “It’s an opportunity to sell a higher value-added product [than corn], and the infrastructure is already in place,” said Felippe Serigatti, a professor at FGV Agro.

To navigate high interest rates, many of the announced investments were financed through the Brazilian Development Bank (BNDES) Climate Fund, which offers loans at around 8%. That was the case with São Martinho’s plant expansion in Boa Vista, Goiás state. Inpasa, Brazil’s leading corn ethanol producer, has funded its projects entirely with cash flow.

Another key driver for the surge in projects was the increase in the permitted blend of anhydrous ethanol in gasoline, enabled by Brazil’s Future Fuel Law. The law allows the government to raise the blend to as much as 35%, pending technical studies.

Biodiesel and soy

The biodiesel production chain also saw multi-billion reais in investment announcements in 2025, though on a smaller scale. Soy processors planned at least R$5.9 billion in investments through September 2026, according to the Brazilian Association of Vegetable Oil Industries (ABIOVE).

These investments are focused on soybean crushing and oil refining and represent a 2.4% increase over the previous 12-month period.

In addition to ABIOVE’s tally, one of the highlights in 2025 was a R$1 billion investment announced by Frísia Cooperativa Agroindustrial, based in Carambeí, Paraná state. The plan includes a soybean crushing facility and warehouses in the states of Tocantins and Paraná, as well as expansions in other business lines such as dairy, pork, seeds, and forestry.

Daniel Furlan Amaral, ABIOVE’s director of economics and regulatory affairs, said the investments are largely aimed at meeting domestic demand for soybean oil used in food and biofuel production.

“Without biodiesel, Brazil’s crushing capacity would likely be much smaller. Oil production has been the main lever for increasing soybean meal output, which has helped lower animal feed costs and encouraged both semi-confinement and full confinement in livestock farming,” he said.

Meatpackers announced at least R$1.54 billion in domestic investments last year, and an additional $1.06 billion abroad, according to Valor’s tally. Most of the capital will go toward expanding production lines at existing plants to meet rising global meat demand.

Another R$7.6 billion in investments covered other agribusiness segments, from dairy and coffee to fertilizers, seeds, and potato processing plants. Argentine agribusiness firm GDM alone pledged R$1 billion over five years, while Brazilian cooperative Coamo announced a R$3 billion investment in a new port terminal in Itapoá, in Santa Catarina state, slated to begin operations in 2030.

Serigatti, from FGV, said that despite Brazil’s benchmark interest rate being at 15%, which discourages investments, “in the long term, the fundamentals support agribusiness as one of the most investment-intensive sectors.” “Among the country’s major industries, it has been the most successful in integrating into global value chains. It benefits from both a strong domestic economy and favorable conditions in international markets,” he added.

Citibank analysts also see growing global demand for food, with Brazil standing out as one of the few regions with significant potential to expand agricultural output. According to the bank, investments are being driven by the expansion of grain acreage—particularly through pastureland conversion—and the growth of biofuel production.

However, Citi forecasts a potential decline in agribusiness investments in 2026. “That’s due to the current challenging environment, marked by high leverage, elevated base rates, tight credit, and squeezed margins for producers. We believe most companies will prioritize resilience and debt reduction over the next year,” said Citi analysts Gabriel Barra and Renata Cabral.

*By Camila Souza Ramos, Nayara Figueiredo and Cibelle Bouças — São Paulo and Belo Horizonte

Source: Valor International

https://valorinternational.globo.com/