Good afternoon, ladies and gentlemen, and welcome to Jalles Machado's first quarter 2022/2023 crop year earnings conference call. This conference is being recorded and is being translated simultaneously into English. The replay in Portuguese and English will be available at the company's website at ri.jallesmachado.com. All participants will be in a listen only mode. After the presentation, we will have a Q&A session when further instructions will be given. The earnings release and the presentation on the first quarter 2023 can be accessed on the company's IR website. Before proceeding, I would like to mention that any statements that may be made during the conference related to the company's business prospects, forecasts, operating and financial targets related to its growth potential are based on the company's management's expectations about the future of Jalles Machado.
Such expectations are highly dependent on domestic and foreign market conditions, as well as national and international economic scenarios, and therefore are subject to change. Today with us is Mr. Rodrigo Penna, CFO and IRO. I would like to turn the floor to Mr. Penna now. You may proceed, sir.
Good afternoon, everybody. Thank you very much to the entire Global IR team. It is a great pleasure to be here with you once again to present another earnings results conference, and thank you for your interest in Jalles Machado. I believe that all of you who have been with us for a while know that we had a manager with us, Frederico Manetti, and he left the company three months ago. He was with us for eight years. He provided great services.
He did a great job here in our company, and now we have Lucas Marchiori with us. He was just hired. He started this week. We didn't have the chance to introduce them, to introduce him to you. I would like to ask him to open his camera and say a few words and introduce himself to you. Over the course of the next weeks, we are going to interact with you, and you will have the chance to get to meet him.
Hello, everybody. How are you? As Rodrigo said, I'm joining the Jalles Machado team, and I hope I will be able to collaborate with the entire team in the coming presentations, and I'm here in case you might need me. Thank you. All right.
We're going to start our earnings presentation with this agenda, starting with operational and commercial data, financial data, CapEx, and then we are going to have a Q&A session. I'll try to be very brief in the presentation to allow more time to the Q&A session because we want to interact with you as much as possible. This quarter was very good in terms of crushing. We had a very strong quarter, although the projection for the year is pretty much in line with last year. April was very dry. It is the first month of the crop cycle, and we were able to crush more over the course of the first quarter. Our TRS was virtually in line with last year. It was offset by a higher total recoverable sugar. We harvested older sugarcane fields.
Our EBIT was very strong at BRL 753.8 million, with a margin of 49.8%. The net cash income, which is the result excluding the non-cash effects of biological assets and FX variations and hedge MTM and income tax. Excluding all of that, our result was very strong. We also had an increase in inventory because of the faster progress of the crop cycle. Yesterday, we announced a buyback program of up to 4 million company's shares. This is a good moment for us to do that because of the low company share price. It has been so for the past 30-60 days. Now let's talk about our operating results. As we said, the harvested area was 15% higher than last year, and crushing was 7% higher.
That happened because the yields were 7.5% lower. The most important point about this quarter is that in 1Q23, we harvested sugarcane with an average age of 2.3 years of age against the sugarcane of 2.9 years of age in the first quarter of last year. That gap is diluted over the course of the year. At the end of the year, the age will be the same. This quarter, the average age was a little bit higher because we pulled forward the renovation of some areas. That explains a little bit of why we had a gap in terms of yield in comparison with last year. Now at the bottom, the last chart on the right-hand side at the bottom, you can see the total TRS per hectare.
It went from 11.8, 11.9 actually to 11.6. That virtually offsets the drop in yield of 7.6% and the issue with the average age of the field will be offset with the rest of the field being harvested over the coming months. Production mix, you can see that we used 62% of our mix in ethanol and 38% for sugar. You can see that we lean towards ethanol even more this quarter than we did in the first quarter of 2022. That happened because ethanol prices were higher than sugar prices this quarter. We took advantage of that situation to produce as much ethanol as possible, especially up until 10th or 15th of June because of the good ethanol prices. We sold everything that we were producing to take advantage of that good moment.
After that date, in the second half of June, with all of the news about the changes in ICMS tax, we started to increase our ethanol inventories. Later on in the presentation, we are going to talk about what we are doing in this environment now that the ethanol prices are going down because of the changes with the ICMS tax and also because of the drop in gasoline prices. Total TRS is stood 13% higher than the same period last year. Out of the 13%, we had an increase of ethanol in 17.3%. Sanitizers went down significantly due to lower consumption now that we are stepping out of the pandemic, and also because of the more competitive market with lower margins.
Therefore, the company chose not to sell sanitizers with a margin lower than the minimum level that we believe that we should keep. Now, let's talk about TRS sold. Although we produced almost 13% more in terms of TRS, we sold 2.5% less, especially because of hydrous ethanol. We sold less hydrous ethanol, and that was totally offset by the higher anhydrous volume. Now, I would like to take this moment to talk a little bit about the company's strategy. After hydrous ethanol became less advantageous than sugar, we changed our strategy. We produced as much sugar as possible and as much anhydrous ethanol as possible. That brings a significant edge in terms of the investment that we made last year with a machine that turns hydrous ethanol into anhydrous ethanol.
Anhydrous is still at a better situation, even better than sugar, and we have been producing as much anhydrous ethanol as possible. It is our strategy now to produce anhydrous ethanol in the Jalles Machado unit and the Otávio Lage unit with the sieves that we have in both units, so that we can produce as much anhydrous ethanol as possible. Now, about prices. We have a 20% increase in sugar and 11% in ethanol. CBIOs, we had a good moment in terms of CBIOs prices this quarter with an average of BRL 123. We were able to sell all the CBIOs that were able to subscribe. Now I'm going to skip very briefly over this slide and move on to slide nine to talk about the financial highlights. The gross revenue went up by 10% year-on-year.
We had a lower share. As I said earlier, last year, we had only 9% share of organic sugar in our revenues, and this year, it went up to 11%. We sold more organic sugar, and we can see a significant migration from hydrous ethanol going from 50% to 31%, and anhydrous ethanol went from 4% to 20% of our revenue. COGS grew at the same rate as the revenue. Revenue went up by 10% and COGS by 11%. SG&A increased a little bit more than that, and the main impact here is related to sales. We sold more organic sugar, as I said earlier, and that entails more expenses with freight and port fees. We also sold SIF organic sugar to expedite shipping and help our clients. That's the one-off effect that we have here because of organic sugar.
We also had some fees and contributions related to the Goiás tax benefits, such as Protege and Bolsa Garantia. You know, the things that we have to do to comply with the tax law in the State of Goiás. Since we had higher ethanol revenues, that causes higher impacts in the SG&A line. Now, let's move on to slide 10. Our EBIT stood at BRL 231 with a 52.2% margin and CapEx was 65% higher. The highlight here in terms of CapEx is a higher investment in expansion in the Otávio Lage unit with BRL 30 million, both in planting and industrial assets. Also we had an impact in terms of renewing the ratoons, and that impact was a little bit higher than last year. That's not really CapEx, that is inventory.
On a pro forma basis, we consider this as CapEx, and it increased by 120% because the fertilizers increased in prices. Our cash increased by 11% with BRL 1.2 billion, and we have higher cash because of the acquisition of Santa Vitória. We got ready for that, and we disbursed that amount early this year because we were concerned about having elections this year, so we had cash to acquire Santa Vitória. It is always a policy of the company to keep a high cash level. If we are to acquire a company, we know that we are going to disburse a lot of money, but still we want to keep our cash at a good level. Our net debt is at BRL 121 million with a 0.1 net debt over EBITDA ratio.
Here's the debt profile. 80% is long-term, 20% is short-term. Now, on slide 12, we can see the changes in the net debt from March 2022 to June 2022. It dropped by about BRL 25 million. Although we invested in assets and also increased our working capital, and we had higher expenses over the crop cycle. Here we have our cash flow. Our operating cash flow was higher than last year with BRL 216 million against BRL 209 million. Here we have the recurring CapEx with BRL 71 million in comparison with BRL 91 million last year. With a stronger CapEx this year for expansion, our cash flow after investments was at BRL 23.6 million in comparison with BRL 76.4 million.
Now, here I would like to show you some more details and make a few comments about the investments that we are making right now. We're making investments in our industry so that we can get ready for that increase of 1,000,000 tons. As we said, we acquired a molecular sieve and that is bringing great results to us. We are able to turn hydrous ethanol into anhydrous ethanol by using that piece of equipment. This area here is our warehouse. We are expanding the storage capacity of sugar of 140,000 tons, and that is part of the overall increase of storage capacity of 700,000 tons. Now, irrigation. In this quarter, we finished our investments to increase the irrigation area of 1,050 hectares.
We also increased the area that is covered by pivots, which is a supplementary irrigation piece of equipment with blades of three-four millimeters that can irrigate almost 600 millimeters per year, increasing our yield and the investment. The total investment was BRL 24 million. Here we can see some pictures of the irrigation system that was installed at Otávio Lage. This quarter, we also finished the expansion of our total storage capacity, going to actually almost 100 million liters of ethanol. I tried to be very brief so that we could have more time for questions. Now I'm here to take any questions you might have. Thank you.
We're now going to start the question and answer session. If you would like to ask a question, please use the Q&A button at the bottom of your screen.
If you would like to activate your microphone, please type in the Q&A field that you would like to ask a question, and we are going to activate your microphone once your name is called. You can also type in your question directly in the Q&A button. If you are connected over the phone, you can also ask questions. In that case, please type star nine on your phone. After your name is called, you are going to hear a command to press star six, and that will allow you to activate your microphone. Please press star six only once. The first question comes from Pedro Fonseca with XP. We are going to activate your microphone now, Pedro.
Good afternoon, Rodrigo. Good afternoon to the entire Jalles Machado team. Congratulations on the results. Lucas, welcome. I would like to wish you success and good luck.
I believe that you are going to be the one that will be in most contact with us. If we can help you in any way, please let us know. I have two questions. The first one is about organic sugar, the increase in volumes. Please, if you could give us more color about it. Was it related to the normalization of the supply chain? Because we know that many disruptions happened. Or is it more related to a repressed volume? Can we expect challenging logistics for this business line in the coming quarters? The second question is more philosophical, if you will. What are you expecting in terms of EBIT margins? We know that the fertilizers prices will probably go down and the commodity level will be more resilient considering the supply and demand outlook, which is tighter right now. These are my questions. Thank you.
Good afternoon, Pedro. Thank you very much for participating in our conference call. Well, starting with your questions about logistics for organic sugar. Well, the situation is not normal yet. The maritime freight prices are very high, much higher than the prices that we had in our historical average levels. That, of course, is paid by the buyers, by our clients, but of course that affects the entire operation on the side of our clients. We adapted ourselves to these new modus operandi with tighter deadlines and, more difficulties in terms of booking the containers and ships. Also our commercial team with a very significant client based in the United States are devising a strategy to change the way we book the containers and ships in the second quarter of the crop cycle.
Although the situation is not normal, over the coming quarters, we are probably going to work the same way that we did this quarter. We learned how to live with the situation, but freight prices are very high still. The supply of ships and containers are not back to normal. Now, about the EBIT margin, of course, we're not going to give you guidance, but if you look at it, you can see that sugar has been keeping the same level despite the changes in ethanol prices, which dropped a little bit. Still the average price right now is better than last year despite the lower prices. The costs went up. The average price with the drop with ethanol, the drop of ethanol prices, we are going to see a lower level for the rest of the crop cycle.
The margin level is good right now, and the commodity prices are good as well. As you said, from now on, we are going to see a reduction, a downward trend, which can already be seen in the price of nitrogen-based fertilizers. The price is below $400 right now, and it peaked at over $1,000. Only potassium chloride dropped, but not so much. Had just a slight drop. Things are improving in terms of the price of inputs. Industrial inputs are going back to normal prices. For example, sulfuric acid. The price of sulfuric acid decreased significantly, so prices are good right now.
If you look back at our EBIT margins in the past, it was around, I believe, before prices became better, the margins were around 30% or a little bit less than that, and that's the historical level. Unfortunately, I cannot give you any guidance. Thank you very much, Pedro, for your questions. I have good news to tell you. We can see a decrease in the costs of agricultural and industrial inputs.
Thank you very much. I just have one follow-up question. Thinking about M&A transactions, I don't know if you can give us more color on that, but is your ethanol price going up or down? Also, I believe that you are going to see an increase in VHP prices.
Can you give us any color on that considering the M&A transaction that you completed recently?
Okay. Let's talk about the history of ethanol in the state of Minas Gerais. The ethanol prices in Minas Gerais have been similar to Goiás prices. The price levels are very similar in the two states. Now with the changes in the ICMS tax, and there's also a change that is going to happen with tax credits, and it's not still defined how this is going to happen. The states will probably finish making their decisions about how they are going to do it, how they're going to transfer the funds to farmers to make up for the higher PIS/COFINS on gasoline than ethanol.
We might see some changes in prices and gaps in prices between the two states, but they are usually very similar. The company that we acquired produces energy and ethanol only, so it is not going to add any capacity in terms of sugar. It is 100% ethanol, and it also generates energy.
Okay. Thank you, Rodrigo.
The next question comes from. Well, before that, if you would like to ask a question, you can type in your question in the Q&A field, and you can find that icon at the bottom of your screen. You can type in the question directly, or you can ask us to activate your microphone. The next question comes from Matheus Santana from Occere Investimentos. Matheus, please go ahead.
Hello, everybody. Can you hear me?
Yes. Yes, we can.
I would like to know a little bit more about sanitizers. Since 2020, we saw a sharp increase in production and sales because of the pandemic. Now that the pandemic is going to an end, we can see a decrease in sales. What do you think about this market? What can we expect from it over the coming quarters?
It's a great question, Matheus. We talked very briefly about this, I know, about sanitizers, and we have two things here. First of all, the pandemic coming to an end. The capacity. We adjust our capacity for the production of sanitizers and consumption now is going down. That brought price levels to, you know, to a level that it is not interesting to us. We can see a reduction in margins right now and also a reduction in consumption.
We believe that we are going to follow the same trend over the coming months, maybe a little bit better because the market is going to adjust itself. When we sell sanitizers, we always compare the results that we have from selling sanitizers and hydrous ethanol. When we produce less sanitizer, when we decide not to do it, we make that decision because our margins are better with hydrous ethanol, with fuels. That's what our mindset is like here. It's like the sugar and ethanol mix. The same thing happens with sanitizers. We sell in the B2B market, of course, and since it is less volatile, we treat it in a different way. We make one-off adjustments when needed, but it's more or less the same situation with sugar and ethanol.
Okay, thank you.
The next question comes from Mr. Thiago Duarte with BTG Pactual.
Hello. Good afternoon, Rodrigo. Good afternoon, everybody. I would like to ask three questions. The first one is a follow-up on the discussion that we had in our last quarter, in our last conference call about the ethanol strategy. I know it is clear that you are focusing now on producing anhydrous ethanol. You have a good inventory level of hydrous ethanol. You mentioned that you wanted to keep that inventory in the off-season because you expect prices are going to be better depending on what happens with gasoline taxes. Now, I would like to hear a new update about that topic. That's my first question. The second question is about the margin for the year.
It is very clear that you are not going to give us guidance, but maybe the best way to discuss this is that when we look at the unit price, the ton of sugar, which we grew by 20% year-on-year, if I'm not mistaken, and considering that your ASP per ton is going well, as your guidance suggested. Can we expect this cost to grow at a lower pace over the quarters? I believe that would help us, everybody understand exactly what we can expect in terms of margins over the coming quarters. The third question is more strategic, I believe. You are going to finish the acquisition of Santa Vitória. You are also dealing with the expansion, but the company has a very comfortable balance sheet position.
My question for you, Rodrigo, is what have you imagined as new growth avenues for the business? Be it in sugarcane, biogas, biomethane. What do you think are going to be potential growth leverages for you in the medium and long term, just, besides the projects that we already know and that you have already announced?
These are great questions, Duarte. Thank you very much for your participation. It's nice to see you once again here with us at our conference call. Okay, starting with ethanol. It is a priority strategy for us. We are pushing anhydrous production as much as possible. We can produce 100% of ethanol at Jalles Machado. 100% of that can be anhydrous ethanol. In the past, we used anhydrous ethanol to produce sanitizers, but now we are using hydrous ethanol for that purpose.
The entire volume that we are going to produce of anhydrous ethanol, and again, 100% of the ethanol that we produce at Jalles Machado unit will be anhydrous ethanol. As I said, we are using hydrous ethanol for the production of sanitizers. In addition to that, we want to bring 20 million liters of hydrous ethanol from Otávio Lage to produce anhydrous ethanol. The hydrous ethanol prices are low even after the ICMS tax changes. Now, about inventory, I believe that we are still going to have to wait and see what's going to happen with this missing component, you know, which is the tax credit that is going to be granted to farmers in each state.
We still have to wait and see what the amount is going to be to understand if it's worth it or not, considering the future projections for gasoline and considering the gasoline ethanol parity and thinking about the consumption of ethanol in the Brazilian market so that we can make a decision. For now, we are keeping hydrous ethanol here with us. We're not selling hydrous ethanol. We are just selling anhydrous ethanol, and we are going to wait and see what happens. It is also important to mention that, and I believe that people who are more active in the sector, they know that after the ICMS changes, we had an important factor, which is PMPF, which is the price that the states use as a basis for ICMS tax. It was frozen since November when ethanol prices were higher than they are right now.
That caused us to pay higher ICMS taxes than the actual price that we were able to sell ethanol for in the market. Now that price is the actual price, and that price is updated every 15 days. That situation has been addressed and solved. That improved competitiveness. To address competitiveness as a whole, if all conditions were normal and nothing changed apart from the tax rates that changed, we lost net 3 BRL, which causes a 5%-6% loss. That was the loss caused by all this mess related to the ICMS tax changes. If we consider that all other conditions are normal and remain the same, at the same levels, the gasoline prices and all other factors, except for the changes in the ICMS tax. Now, your question about costs for the coming quarters.
We believe that we are going to see improvements. We have contracts for the provision of inputs. We are already enjoying some of those reductions, especially on the industrial input side. Now, on the agricultural input side, I believe that we are going to start seeing the reductions in the next crop cycle. Apart from diesel, which is a very significant input for us, and the diesel price is already going down, and there's room for further reductions. As I said, this is a very important input in our costs. About growth avenues, I believe you asked a question about that as well. Our focus right now is fully centered on meeting the conditions that were defined in our transaction with the ERB and Geribá group for the acquisition of Santa Vitória and ERB MG.
One of the main conditions has already been met, which was the court management of Santa Vitória, and the judge approved the compliance with the condition, and it is now going to take 15 days for that to take effect. The shareholders meeting is scheduled for the second half of August. After the closing, our focus will be on producing sugarcane and filling Santa Vitória unit up at its full capacity and Otávio Lage as well. Since we have to fulfill that 1 million ton increase with industrial investments as well. We are going to work hard on that. We are also going to focus on the production of organic and healthy products that suffered a little bit because of the maritime freight crisis. Those are the two focuses. Biogas is on our radar. We are producing biogas together with Albioma.
We ran a pilot to use biogas in our boiler with lower investments and lower net present value just so that we tested the waters and understood exactly how it works. We want to start selling biogas and biomethane and maybe produce energy. That is in our radar, but not for now. For now, we are going to plant sugarcane and fill up all units at its maximum capacity, the new capacity, especially the Santa Vitória unit, so that we can take and reap the most benefit as possible from those assets.
Okay, thank you very much.
The next question comes from Mr. Gabriel Barra with Citi.
Hello, Rodrigo. How are you? Good afternoon.
Good afternoon.
I have two questions. The first one is about Santa Vitória.
As you said, the focus now will be reaching the full capacity, and you're going to focus now initially on the sugarcane field. When are we going to see the investments coming? I believe that you have touched on that in other calls, but how long it is going to take to reach the maximum capacity? Because it seems that the unit is very new and there is no additional CapEx that you need to invest to maintain the operation. The second question is about RenovaBio. I believe there was a delay of the program. The program was actually postponed until September for the use of the carbon credits. What is your expectation about that? What is your expectation about selling carbon credits?
Are you going to postpone sales of those credits for next year since the demand might be higher after two years of concentrated demand? Or are you going to sell the credits over the course of this crop cycle? I think that those are the two first questions. There's a third question about the mix. The mix was leaning more towards ethanol, but the ethanol situation deteriorated a little bit, so I would like to know what do you expect in terms of the mix for the coming quarters. Thank you.
Thank you, Gabriel Barra, for your question. Starting with the last question about the mix. We focus more on ethanol because this first quarter was exceptional in terms of prices. Jalles started the crop cycle early. We didn't have any rainfall in April, which hurt our TCH, the tons of sugarcane per hectare.
The same thing continued in April and May. The prices, ethanol prices were high. Until the first quarter of June, ethanol was paying better prices than sugar. We produced as much ethanol as possible, and we tried to sell the ethanol inventory that we had. Then sugar gave us better prices than hydrous ethanol. At Otávio Lage, which produces only hydrous ethanol, we started to focus our production on sugar as much as possible. We are producing more sugar than our maximum capacity at Otávio Lage, to be honest, and we are trying to produce as much sugar as possible at Otávio Lage. Now, at the Jalles Machado unit, we are producing organic sugar at the maximum capacity, but anhydrous ethanol, when it comes to prices, is better than sugar. Anhydrous ethanol is giving better prices than sugar.
That's why we are producing so much anhydrous ethanol, and sugar comes second, and hydrous ethanol comes third. Organic sugar, of course. Now, how long it is going to take to reach the maximum capacity? I believe that was one of your questions. We are at two million tons, and our maximum capacity is 2.7. It is a very good new unit. We don't need to invest any industrial CapEx there. We just need to invest maintenance CapEx in the off-season, which is normal. Our investments are more focused on sugarcane, on planting. We are going to increase yield to increase the volume of sugarcane, and also we are going to expand the area. The units will be at 100% of the capacity in about four years. We are going to see a gradual increase over the years.
Everything that you do in one year, you're going to reap the benefits in the next year. That's how the sugarcane market works. We are going to reach 90% or even more than that in three years and 100% in four years. Now, you asked about RenovaBio. As I said, the residual carryover inventory from the previous year and also the issuance of CBIOs in the first quarter, the company made efforts and focused on selling everything, selling all of that with the price levels that we had. Since there was a postponement until September, and because of that, our strategy was not of selling 100% of our CBIOs as we did during the first quarter.
Okay. Thank you very much.
We have a question submitted in writing from Daniel Cobucci with Banco do Brasil. "Good afternoon, Rodrigo.
Thank you very much for the opportunity of asking questions, and congratulations on the results. I would like to know more about the strategy when it comes to inventories for organic sugar and hydrous ethanol in the second quarter. If you could give us more color about the price dynamic of organic sugar in the foreign markets, that would be great. Thank you very much.
Thank you, Daniel, for your question. Daniel, from Banco do Brasil, it is a great pleasure to have you with us. As we said earlier, we are still waiting a little bit to see what's going to happen after the recent changes for hydrous ethanol. We are still going to see some changes in relation to the tax credits, and those credits will be transferred from the federal government to the states, and the states are going to transfer those credits to the farmers.
We still have that big question mark. We don't know how it is going to be done and what the amounts are going to be, and we need to see that so that we can make a decision. We are not selling so much hydrous ethanol at the moment. In July, we were able to sell a great deal of anhydrous ethanol at a price level that was very similar before the changes in the ICMS tax. You also asked about organic sugar. Organic sugar prices are very similar to last year prices, about 5% above the prices that we saw last year, and the prices are denominated in dollars.
Now, thinking about the exports of organic sugar, as we said earlier, although things are not fully normal here at the company and the clients, we have all learned how to deal with that scenario, and now the flow is a little bit better. We are able to ship more organic sugar, and we expect things to remain the same way. What really came in the way of increasing prices, as it happened with conventional sugar, was really maritime freight. The price right now is $10,000 per container. That had a great impact on the final price of the product, and those prices are still very high. We have to resort to our creativity, working together with our clients to sell through breakbulk so that we can ship more products.
We have sold about 50% of the organic sugar to be produced in this crop cycle. We have already negotiated the sales of 50% of the sugar.
We have a question also submitted in writing coming from André Buosi. I believe that you have already touched on part of the question. The question is: "What's your strategy for selling CBIOs with lower prices? Even with the CBIO price drop, is ethanol more advantageous? And for the next crop cycle, is the strategy of producing more ethanol in comparison with price hedging, sugar price hedging, are you going to keep that strategy?"
Thank you very much, André. About the CBIO strategy, I think that we have already answered that question. With the drop of CBIO prices, I believe you asked that question as well, is ethanol still more advantageous?
Well, hydrous ethanol is certainly not more advantageous than sugar. Sugar is better right now than hydrous ethanol, but anhydrous is still more beneficial to us than sugar at the current prices. Now, about the sugar price hedge policy, we have been taking advantage of the good prices for sugar. I'm not going to delve in the details of our sugar price hedge, but we have been taking advantage of the good moments that we can see in the market. Actually, 20 or 30 days ago, there was an increase in sugar prices and the FX rate was higher, so we took that chance to hedge the prices according to our policy since we are hedging for two crop cycles. That's for conventional sugar, which accounts for only 35% of our mix. The rest is organic sugar and ethanol.
The last question, since we don't have any more time, the last question was submitted by José Gula with Citi about climate aspects in the states of Goiás. With the increase in CapEx for planting and for ratoons, what's the expectation for the crop cycle as a whole? And considering Santa Vitória, what is the total estimated volume?
Thank you for your question, José. Unfortunately, we cannot provide you any estimate or guidance. I believe that we talked about the impact of price increases for planting and ratoons in our costs. I believe that there is a chart in our earnings release that shows a 20% increase in the cost of tons of sugar or sugar equivalent, increasing our production cost, including raw materials and industrial processes, so there was a considerable impact on the costs. We are not disclosing any information.
We don't have any information about that because we have not closed the transaction yet.
We are now going to finish the Q&A. We are now going to turn it over to Rodrigo for his closing remarks. Thank you.
Good afternoon. Thank you very much, Doris, for mediating our call. I have not talked about the Santa Vitória unit, but we are very excited about the new unit. We had many interactions with the company. After the decision of the Antitrust Authority in Brazil, we were very well received by them and by the employees. We have exchanged a lot of information with them. We have seen many great opportunities. We have a very good unit there, a very good plant, a great water supply, and of course that is a very important factor in our business. We are very excited.
In the next 60 days, we are going to be able to talk more about Santa Vitória. I would like to thank the entire team. Thank you very much for helping us in the presentation. Thank you very much and see you in our next call.
With that, we would like to finish the 3Q 2023 call and our IR team is at your disposal. If you have any questions, please get in contact with us. Thank you.