Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to the São Martinho SA conference call to discuss the results for the fourth quarter of the 2023-2024 crop season. With us today are Mr. Felipe Vicchiato, CFO and Investor Relations Officer, Alessandro Soares, New Business Officer, External Communications and IR, and Investor Relations team of São Martinho. The audio and slides of this conference call are being broadcast simultaneously over the internet at www.saomartinho.com.br/ir. Participants will be able to choose which language they want to view the presentation in. At the top of the screen, two tabs will appear with the options. Please note that all participants will only be on listen-only mode during the company's presentation. We will then begin the Q&A session for investors and analysts, when further instructions will be provided.
Please be advised that certain information contained in this conference call may contain forward-looking statements. Such information is subject to known and unknown risks and uncertainties that may cause such expectations not to be realized or to differ materially from what was anticipated. Now, I would like to turn the floor to Mr. Felipe Vicchiato, who will initiate this conference call. Thank you.
Good afternoon, everyone. Thank you for joining us this afternoon. I will move on with the presentation, initiating with the agenda of the points that we believe are important to talk about the quarter and the year. I will talk about guidance and the CapEx for production. Yesterday, we released the information at the end of the day, the closing of the market. We have the expectation for the quarter, the cash cost for the crop season.
With a little bit of expectation for this year, we will refer to the corn operation this year, the operation of the plant, the evolution of the hedge prices, both corn hedge and sugar hedge. And finally, I will conclude saying that the ethanol base was the major detractor last year. We understand that now, because of the demand issue, it's much healthier. Now, moving on, here, on page four, we have the production guidance of the company. We expect to produce 2.9% less in sugarcane when compared to last year, reaching 22.4 million tons of sugarcane. However, with the TRS of the final product being better than last year, so that the produced TRS is almost flat once we compare it year-on-year.
There were some changes in this first year to increase the sugar mix, so there was an increase of 6% in sugarcane production this year. Sugar coming from the sugarcane crop, and then the ethanol production remains flat once you combine a drop in ethanol production coming from lower crushing of sugarcane and a 20% increase of corn-based ethanol. This year, our corn plant is operating at full capacity, crushing approximately 495,000 tons, so the result turned out to be 26% higher when compared to last year. Now, when we look at processed cane at 2.9% lower, we also see a decrease, which is lower for our own cane and a higher decrease for third-party cane.
Our own cane is about 1.5% vis-à-vis last year, and third-party cane is dropping between 5% and 6%, and the combination of both gives us that 2.9%. This is a very important point, because we will manage to have a better cost dilution next crop season, because we have more of our own cane and the cost is lower, so the dilution is higher. So the drop is mostly concentrated in third-party cane because there are also other aspects involved, like variation in agricultural management practices and region. We, I mean, summer was quite dry this season. That summer remained through April and May, 45 days with no rain in the region. Therefore, we believe that this is why the guidance is slightly lower when it comes to sugarcane production. Now, moving on.
Now, we will talk about our CapEx guidance for this year. Our guidance is BRL 2.5 billion, pretty much in keeping with what we had last year, which was BRL 2.485 billion. Last year, our CapEx guidance was BRL 2.7 billion of Brazilian reals. We were able to save some part of it, and the other part was rolled over to the following season. About BRL 100 million, you know, were carried on towards 2024, 2025, meaning that 2025 would be a number, BRL 130-some million less, if we were to fulfill the guidance that we had released at the end of last year. It's worth mentioning that that guidance in terms of magnitude, BRL 1.9 billion refers to maintenance CapEx, you know, maintenance and cane planting.
BRL 5 million is for fleet and agricultural machinery, and the remainder refers to investments already hired by the company as the biomethane project. That should be ramping up in the middle of last year, a higher sugar mix. We are now concluding some investments so that our mix will increase the amount of sugar for the next season, and we also have an efficiency project related to the two-row harvester that would also give us about BRL 150 million in CapEx. That meaning that this will not only increase efficiency, but also reduce the cost of harvest. When the investments are lower in the coming years, and we no longer have, you know, growth CapEx, the number for CapEx in the company would be around BRL 1.9 billion. Moving on, here we have the financial numbers.
In that semester, we, we sold a lot. We grew about 65%, whereby we grew 20% in terms of our sugarcane volume, and we grew 113% our ethanol volume. However, in the case of ethanol, given the price conditions that occurred between January and March, the average price is 30% lower, which considerably hurt our margins, both EBITDA and EBIT margins. We also see that net income was BRL 607 million, accounting income, mostly attributed to the, the prepayment of the court-ordered debt payments, and everything ended up by being paid at the end of March. So we just do a reconciliation to look at a cleaner figure in terms of net income, including the court order, the debt securities, and ICMS issues that, you know, recredited.
So net income could amount to BRL 150-some million if we have a non-recurring effect in our results. But obviously, this cash had a positive effect on the G&A of the company, so our net debt over EBITDA is pretty much in line with what we had last year, 1.8x, despite all of the investments that we did to conclude the corn plant and the beginning or the ramp-up of the biomethane plant. Here, I have my cash costs, closing cash costs. For sugar, we ended with a cash cost of BRL 1,960 on sugar. Net sales price was BRL 145. So sugar margin increased 7.7 percentage points, getting to 9.8%, because it were both planned over this year.
On the other hand, the big margin detractor, ethanol. The prices of ethanol. Ethanol prices were reduced significantly from BRL 400 to BRL 200 with the season. We had the start of the annual price of oil went really up and had good performance of ethanol. So this comparison is contaminated by the prices of BRL 120 in May, May of 2022. The fact is, despite the cost of ethanol being reduced by 10%, the margin was practically zero. So we would have zero margin where we have to cover that fixed cost, our CapEx and maintenance. We speak about the ethanol market, but the fact is, very low price for the year compressed our margin for the whole group, and basically for ethanol, we kind of flat.
So here we have the summary of the corn operations, which was the first year of commissioning our plant. We were not able to crush at full capacity. We crushed 390,000 tons out of about 500,000 tons capacity. With this, we had an overleverage, where we bought corn price back, despite buying almost 70 bags . With the ethanol prices, as I mentioned in the previous slide, we have a first year of corn with an EBITDA, a negative EBITDA of about BRL 2 million in general. For this year, expectation of crushing 95,000, that's practically 100% of the plant's capacity. Our corn inventory already purchased should have a price of BRL 55.6 per bag. So over the last year-
25% lower in terms of corn cost. And corn cost, that's close to roughly 80% of the total in ethanol production cost. And we expect to have much better result in corn EBITDA. And our developments of the ethanol price and have almost BRL 200 million per year, year-on-year. Even we have a hedge, almost of free sugar, hedge of sugar. Last year, we had our cane, BRL 2,400 per ton. We had 65% realized that average at BRL 2,560. This hedge is a little bit more involved. We have 88% secured at this level, or hedged at this level, and the market has an expectation that we're going to have a surplus of sugar in this crop season, basically driven by climate, but Pakistan, their production.
This is the main reason why prices have been declining since mid-December. With that, depending on the Brazilian crop season, we might have a surprise in terms of, to 41-42 million tons of sugar, and we might have this deficit zero at the end of the crop season. As I mentioned, given that we have the summer and beginning of the crop season, practically no rain, it is possible for the season, that will be very heterogeneous. When we're going to have crop seasons divided into first, third, second and third thirds. The first third, that sort of came, was able to grow from May to last year, to May, June this year of the field. Second third, well, it could start dropping within the flow of water and growth.
And in the third, the crop season starting in September, we should see a significant reduction in yield compared to last year. I'd like to remind you that last year, we had a volume of strong, a strong crop season. Some mills operated until percent of the area were harvested. It will be harvested after September. And this is exactly that area where we have a low rainfall. So the reserve, so yield is expected to be lower. So the crop season will be very different when we break it down into thirds in terms of ethanol. Lastly, we'll have the Q&A. We have here a summary of the performance of the ethanol market, ethanol consumption behavior. Last year, ethanol accounted for only 20% of the total Otto cycle. Otto cycle almost in Brazil, where ethanol accounted for almost 20%.
That's when we had a pretty below 60%, so the consumption took longer to resume. Our assumption was resumed, probably starting March of this year, and it will take about one year, almost 2 billion. And we should be managing that we will get 70% ready in September. That's our expectation. I think it was really worth having the campaign that we started running the second half of January, to make people aware of the benefits of ethanol, economically and in terms of the sustainability. So I think it's in everyone's mind now that it makes economic sense to consume ethanol. We'll see how the demand will respond. Last year, we concentrated a lot of our sales in the last months of the crop season, which ended up hitting our results.
Back then, I thought the demand would be resumed, given the parity, and that did not happen. But now, with demand being at a very good level, when we look at it every 15 days, we are not expecting the same problem we had in the past crop season. These are my general comments. I'd like to open the floor for questions.
Thank you. We will now initiate the Q&A session. As a reminder for questions in writing, please submit your questions using the Q&A icon in the bottom of your screens. For audio questions, just click in Raise Hand, also in the lower part of your screen. Your names will be announced, and then you can ask your questions live. At that point, a notification to unmute your phone will appear on the screen. Our first question comes from Isabella Simonato. Please, you can unmute your microphone.
Good afternoon, Felipe. Good, good afternoon, everyone. Can you hear me?
Yes. Yeah, we can hear you well.
Felipe, I would just like to go back a bit when you talk about crushing and the weather. As in fact, it's been much drier and hotter than normal. And, and I think this also impacted crushing, because the growing season was extended until December.
But I think your TRS estimate, it's even more positive. And at the beginning of the season, according to the data, I think TRS is a bit lower. So could you give me some more color and tell me what is behind that assumption, and what would be the risk? And in terms of climate in the past few days, I don't think that the weather predictions are that different. And the second question refers to the sugar market. In fact, we've seen or maybe different opinions in terms of what is happening in the worldwide crop season 2025, 2024-20 25. There is an anticipation of a super season, or the market is a bit tighter.
I would just like to hear your opinion about the price behavior, and what do you see in terms of pricing for the rest of the season, and even the beginning of the next crop season?
Isabella, thank you for your questions. Well, in fact, the drop in sugarcane crushing of around 3% stems from that drier climate. If we had any normalization of rainfall in the summer, you know, things would be higher because of all the investments we did and the amount of sugarcane we have. The final TRS is a combination of the following things: When it's drier, there is a higher concentration of TRS, but this number also contemplates a better, you know, industrial efficiency. When you talk about gross TRS, it's a combination of better cane TRS and the combination of the cane TRS with industrial TRS.
Last year, at São Martinho, in particular, there was an issue related to industrial efficiency because it was lower than expected. Now we see the recovery, and that's why our final TRS is slightly higher than the rest of the industry. Now, in regards to sugar, well, it's very difficult to have a good reading about the sugar market with 5 million in surplus. I mean, we have a lot of dissenting opinions. Our hedge today, currently, 80% is already fixed at that level that we gave you before, in- mostly concentrated in the first screens. I mean, the last screen, we don't have a lot of hedging. We believe that in Brazil, we saw lower sugar production, sugar yield, and prices may react. We see a market assumption that Brazil will produce more sugar.
But what we're seeing is that despite the fact that a lot of people are investing in crystallization, we have two problems. The first problem was that the basic industry was not able to deliver all of the necessary equipment. And the second issue is that once you have a very dry crop season, and the season is moving very fast, the daily average is moving fast, the conversion of bags of sugar per ton is lower than what was anticipated because, you know, the mill is full, everybody is using, you know, their full capacity. Therefore, the sugar conversion per ton, which is an indicator that we look quite frequently, that indicator is lower than anticipated. If the season was moving at a slower pace, certainly that sugar conversion or that bag of sugar per ton would be much better.
So in our view, Brazil would be a leading indicator for this crop season if we could have a lower volume of sugar than anticipated. But obviously, we have to keep an open eye. We have to keep an eye on the other countries, like India, for instance. And we have to look at the conversion, sugar, ethanol, according to the program they have, additional exports from Thailand and so on.
That's very clear. If you allow me another follow-up, your opinion in terms of what should we expect in terms of India, whether that is something that should occur in the short run, or you're not considering that so much when we look at sugar prices going forward?
For this year, we think that the crop season in India will not have as much ethanol as previously estimated, and the volume is pretty much in line with what we showed you in one of your slides. It should be something close to 31-32 million tons. I mean, there were elections in India, and that's why they delayed the season. There was a worsening in the season in terms of ethanol conversion, but the ethanol program is in progress. It's just a matter of time, one or two years, probably, until we see some other effects.
Very clear. Thank you very much.
Our next question from Gustavo Troyano. Please, you may proceed.
Good afternoon. Can you hear me?
Yes, we can.
I would like to hear from you two particular points. One is the cost estimate for the next crop year.
You already talked about the TRS guidance year-on-year with lower crushing volumes, and you also mentioned, you know, this composition between crushing and your own cane. But could you elaborate a bit more in terms of what we could expect in terms of unit cane costs for the next crop year? And my second question, I think it's a follow-up on Isa's question, because that productivity dynamic was very clear. Like, in the last third part of the period, you would have lower yield. So how comfortable are you to operate in a short window? And when do you think it will be more prudent to get that 20% that is still exposed? I just want to have a better idea of how far do you think you could wait for that sugar price to evolve?
Well, we are getting to the end of June.
We are heading towards the second half of June. So I think until the middle of September, we will have more clarity in terms of how sugar production will evolve, and with that, we will make a decision in terms of whether or not we will accelerate our hedging. In regards to cost, we believe that this year will be a more economical crop year, because when you have lower crushing but higher TRS, your unit cost is lower because you have lower labor cost, you consume less diesel oil. In addition to that, there are some very important inputs because prices were down, so we believe that there will be about 5% in BRL in terms of, you know, cubic meter of sugar. And then we will be able to reduce the comparison year-on-year without considering CONSECANA, either up or down.
We are just referring to the cost that we can control. This is our best estimate today.
Thank you. That's very clear.
Our next question comes from Thiago Duarte with BTG Pactual. Go ahead, sir.
Hello, Felipe. Good afternoon, good afternoon, everyone. It's always good to speak with you. I have two questions. First, about the CapEx guidance, and I understand you spoke briefly about this. There was a part of the CapEx of last year came to this year because the CapEx last year was kind of high, so part of it was transferred to this. I just want to quantify the extent that significant portion of what we have talked in terms of increases and associate it to the two-row harvester, the biogas project that's been completed.
So I'm not sure whether we can try to match the amount invested, what to expect in terms of EBIT and EBITDA generation for these two projects in particular, because I understand that from what is left of major investments, or if you finish execution in the ethanol unit, these are the two big expansion difference for the results of the company, in addition to the prices. So how much do you think, if you have BRL 500 million less CapEx, how much do you think this can generate in terms of results for the company? The second question has to do with dividends. Dividend payout as in the prior crop season. In the prior crop season, you paid, like, a policy 40% of the cash net income. This year, if I understood you well, we're considering 25% of net income.
So I don't understand why it changed, given that the leverage of the company is super low. You had the payments, you see if the-- from the registered. So because this program, the way the leverage is low, flow CapEx is not that robust. So the discussion regarding capital allocation can gain momentum. I'd like to hear more about this.
Let's start with the second question first. The reason why the board of directors proposed a minimum payout of 25% was because of the buyback. We have a large buyback program that is ongoing. We have 60%-70% that is already done. When you match that with the dividends proposed, we talk about a total shareholder remuneration of 50% of the net income. So that's part of the policy. We understand that the buyback is part of shareholders' remuneration.
And in the share price performance coupled with the company's operating efficiency, despite the market being a little complicated, we believe that this is the best capital allocation. And that is why the decision was made to retain a little, not pay 40%, but to accelerate the buyback program. To your first question regarding cash generation. Putting BRL 500 million Thiago, kind of half of it is the biomethane project. Biomethane project gives us an EBIT of about BRL 40 million, and this is a project that is 90% leveraged, with and at the end, the gas flow for support is a lower rate compared to the market, so that it makes sense, and we're going to have return on the project. Without these funding conditions, we would not be able to make the project viable, because at market cost, it would not be possible.
We have already sold the biomethane for compounds, so this is a project that is one- third sold, and return - leverage return will be above 30%-35%. The other half can be broken down into BRL 150 million, approximately, for the sugar project. Which we are removing the to produce more sugar, so I will have a higher share of sugar in the mix starting in the next crop season. So I think my largest plant will have 70% share of sugar in the mix. So if you look at last year, we had a sugar price. It's not 100% above annual price. And for this year, it's between 30% and 40% higher. The payback project, well, it's going because have project in two years. Harvest big efficiency gain comes in terms of diesel consumption.
About 40% diesel consumption, and the cost reduction in terms of labor. With this, in the case of the two-row harvester, we have loan facilities of BRL 50 million, yes, with around 50%, depending on the price and ethanol price assumptions.
Super clear. Thank you very much.
Well, thank you, Thiago.
Next question from Mr. Gabriel Barra with Citi. Please go ahead, Mr. Barra.
Hello, Felipe. Thank you for taking my question. The first one, based on the EBIT guidance, to understand the initiatives a little. You spoke about your two-row harvester. I don't know whether I'm being too optimistic, but this seems to be a very interesting business for the company in terms of yield and production for the future years. Could you elaborate more in terms of deployment, impact on yield, each crop?
I mean, like, not just in terms of soil compaction, yield, and the interval of planting. If you can elaborate, that would be interesting. And my second question. Throughout the quarter, there was a discussion of MP 1227, and then discussions went back and, and this was not a but my question is regarding the risks. The government is trying to increase their taxes, and I'd like to hear about the risk of another discussion of increasing taxes in your industry. Do you believe that these are material risks? I'd like to hear your input on this. Thank you, bye.
Regarding to the harvester, yes, it will perform well compaction. As part of the return of the project, we do not include any yield in the project. We can say.
So far, to this, we are doing this new, which is an innovation and tests conducted. But it is true, and it's also a great gain. But just efficiency in itself, the cost reduction we're going to get. So we're optimistic about the project, the return on investment. Regarding the timeline, let's check. If we have soil in quite good conditions, we try to for this first ramp. And then we expand to Boa Vista and to the other two. So it might take about two to three years that we will have harvesters, like two-row harvester. Of course, there are some areas where this will not be able to be planted. In terms of soil conditions, not.
But he will be able to buy the new technologies, but just, yeah, express. The whole sector, we export sugar, which is my ideas of net income, net revenue. For expected projects, we don't think that it can be taxed further overalls, but applied to the whole tree, and then this act. It happened radically within private administration, taxes. If this happens, it doesn't mean we need to have higher citizens or control, which was approved I think two years ago. Now has to maintain the tax difference compared to other source, because it's so... It's actually going to be just for us. So actually, of this regard, that limited the use of PIS/COFINS tax payment of raw taxes. So as we would be impacted by that, but I guess and such risks have been eliminated.
Thank you.
Our next question comes from Mr. Luiz Carvalho from UBS. You may proceed, sir.
Hello, Felipe. Good afternoon. Thank you for taking my question. Felipe, I would like to relate to capital allocation again. I think you already talked about the projects, but I would like to have a better understanding now that some of your projects have been concluded, and there was a recovery of the ethanol business, as you said. I would just like to understand better in terms of capital allocation going forward, I would say, in the next 12-24 months. The second point is about the weather of the past two weeks. It's been much drier than the ideal climate. Do you think that this environment is already contemplated in your scenario? And how much of that represents a risk in the guidance you gave us?
Luiz, I have some questions. I will start with the second question.
Yes, this drought scenario, of 45 days with no rain, is already included in the guidance. We probably in the next 70 days, we are not anticipating any rain. There should be some rain at the end of the season, only. But rain at the end of the season, it does not improve the current season. It only, you know, impacts the next coming season. That's the cane that I'm planting today that should be getting some rain in the midst of September and early October. Now, related to your first question about capital allocation, all the large projects I had have been already announced: sugar, biomethane. Today, we were looking at the expansion of corn-based ethanol at Boa Vista. As we said, it is possible.
I mean, we have energy available in the unit to have another plant, the same size I have, to add additional corn tons at Boa Vista. And so this is the project that maybe would make sense for us to invest. But even before the decision, the decision probably should come by the end of the season. We're initiating the studies for the Unit 1 and 2, and we're just checking the ethanol market dynamics. I would say that if the ethanol market hadn't been as erratic as it was last year, where for several months it operated at 60% of parity without any reaction, probably we would be able to make another effective decision to double our ethanol plant.
But the way things were, we decided to wait for a while to check on the consumer behavior in the next coming months, to see, in fact, whether we will make a decision, whether we will go ahead or not in the second phase. The fact is that corn, around BRL 45 per bag, which is the current price in the Goiás region, this is a very attractive project if you look at current ethanol prices, because return on capital is quite reasonable. But this is a decision that we will make only by the end of the year.
Very clear. Thank you.
Our next question comes from Mr. Pedro Fonseca from XP Investimentos. You may proceed, sir.
Good morning, Felipe, and everyone else. Thank you for taking my question. I would like to hear more about corn-based ethanol.
If you can share with us an upgrade in terms of your inventory information, and what kind of opportunities you anticipate for corn prices? Even considering the next crop season, you know, the off-season crop or safrinha inventories in the domestic market, what do you anticipate for the corn market? And still, speaking about corn-based ethanol, can you tell us what is your view about the DDG market? We are seeing some investments in corn-based ethanol. The DDG supply is increasing in the country. Do you see any risk in this regard, and whether you are looking at some pricing for distribution channels, or maybe to open an export channel? On that same note, on corn-based ethanol, you talked about return on the investment at, at corn, at BRL 45 per bag. What is the return that you anticipate?
This is a line that we got from what you said when you referred to a very erratic ethanol market. So these are my questions. Thank you.
Well, thank you for your questions. I mean, corn inventory information today, in terms of purchasing, we still have to purchase about 150,000 tons of corn until the end of this crop season. We could even buy an additional 5,000 tons. So in fact, the yield in the region was quite good. We are seeing that prices are at a very attractive level. So if the level remains at 40 or 45, we will have full inventory.
I have a static capacity of 250,000 tons of corn in two warehouses, so that we could have good inventory when we go over to the next season at a lower price for next season, when compared to the current prices of corn. The second question about DDG market, in fact, there is a new DDG supplier, because there is a huge number of corn-based ethanol. Once, you know, you look at what happened in the past few years. And in addition to that, there is the price of soybean meal. So DDG and soybean meal are competitors, if you look at the amount of protein. So we are looking at some export channels. The market is not yet open or not yet developed, so we are working on that. So for now, we are selling to the domestic market.
But from the initial project, we see the DDG prices that are between 10%-15% lower than what was initially anticipated. And on the other hand, corn prices is also—are also lower, so one thing compensates for the other. But in fact, there is a large volume of DDG, and the soy prices are also down, and it's a, a big competitor in this market. And finally, about corn returns. I would rather not give you a lot of details, because we are now evaluating CapEx, and CapEx is quite different if you think strategically. If you have to do ethanol tanking and, and buy corn, CapEx may vary between 20%-30%. But if I give you a number of return, you may hear from other companies, totally different numbers.
But maybe their assumptions are different because maybe they do not need to store ethanol. The fact of the matter is that given current prices, the project would give good returns. But I think we still have to wait and see the performance of ethanol prices, and how these prices will evolve in the next coming years. Corn-based ethanol, we are producing. It's part of our producer project, our first plant. So any investment in corn-based ethanol today, it would require less years to produce, and the return certainly is lower as well when compared to other plants. So maybe capital allocation today, the best thing would be to rebuy shares rather than to do the investment. But until the end of the year or maybe next year, we will make some decisions to that end.
It's very clear, Felipe. Thank you.
Next question is from Ms. Julia Rizzo of Morgan Stanley. Ms. Rizzo, you may begin.
Good afternoon. Can you hear me?
Yeah. Good afternoon, Julia.
I'd still like to ask about ethanol. Someone spoke, there was an expectation of ethanol price, second half. So you could, could you have that expectation? What is the ethanol price or ethanol selling price in sugar equivalent? Perhaps I'll have a follow-up question after.
Julia, we expect to rise. It is possible that we have ethanol price-demand that is quite strong, and we can see it connecting quite recovery of sort of the until April . So there is a, we're closed to get to 70%. And the last number I remember, central compound, I think sugar is being about 25% higher than ethanol. So if we think that ethanol, but actually sugar is about 18 or so. Short 1,000, because the ethanol between 15 and 16. I'd, I'd like to make the ethanol and sugar. And one comment, which I actually forgot to mention, and these investments we approved last year, and investment to put the São Martinho, with the max sugar and the max will be 70% approved and 64%, and the 65%. And the share of a 100% anhydrous .
But for hydrous, in other words, price and next and upward. So in São Paulo, probably will depend on the results of the São Paulo clients, because they depending us to rely on what? To depend on ethanol, of course. I have anhydrous ethanol, which is ethanol that I sold monthly based on the anhydrous ethanol price plus the plus. So if we have an opening up the next year, we can invest this. So by our next year, we're in a very comfortable situation of being, of this will be 100%, whereas it was up to the price of ethanol. Well, say, I will, is that it is purely ethanol unit, we have better efficiency. We can have a cash cost, which is a little better and bills. And we have the benefit of producing a program, so we end up being a little bit pushed.
Yeah, that is exactly what it's all about. I follow a question was, to what extent do you in the industry, is it better to produce ethanol, given that the sugar-ethanol gap was very much reduced with that at 18-odd, and there's a benefit working capital tax? The other point is that perhaps you can help me with the difference in production cost, and you expect for the currency with ethanol mill and price. When about BRL 50 per bag, we are talking about cost difference of around 20%. Right?
An order of magnitude here, Julia. Goiás, I'm only talking about Goiás. When I look at some other state, also the cost is a little higher because when different states, it's like the older mill. Have a consolidated the numbers and provide the industry. I think that São Paulo is more representative of Central and South.
For the industry, but the industry, it is 30%-35%. If you produce agricultural, you're not making money. I would actually. A lot of it, too. So we made flat, different, even with today's prices, with the average of the industry, less efficient deals where you're burning. Oh, you need to just open for your price for corn, and you should close down the plant, opening it. Conditions get better, but you. And if you have to be ethical and go and sell out, you have to do because when money is on average, you can make money. The book that is very restricted. Price.
To what price of sugar and at what price of ethanol, and the producer in São Martinho would like to produce ethanol?
Well, consider stock price. The equivalent is something close to 300, 300 cubic meter. Considering making decision to produce, the price, ethanol would cost us BRL 1,000, which today, in current conditions of oil prices, it would be practically impossible.
Okay, thank you very much.
Thank you.
Please hold as we collect more questions. As a reminder, if you want to ask questions, please press star one at the bottom of your screen. That concludes the Q&A session. I'd like to turn it over now to Mr. Felipe for his final statement.
Thank you very much for joining us on this call. To wrap this last quarter and hear from myself and my. Thank you.
Thank you all for participating, and have a good day.