Hi everyone. My name is Cristiano Veloso. I'm the founder and CEO of Verde AgriTech. I would like to thank you all for attending our call to present the results for the fourth quarter of 2022, and the full year of 2022. If you're watching this presentation online, please subscribe to our YouTube channel. Please share the content so all the people who might, like you, be interested in Verde AgriTech on our trajectory, on our growth, on our plans, on our achievements, please make sure you subscribe and you share. I've also would like to thank over 100 people who have just checked now and are attending this call live with us.
I look forward to interacting with all and each one of you throughout this presentation. I hope it will be as exciting to all of you as it has been for us as a journey. The excitement we expect for the coming years is shared among all of us. Today's presentation, we're gonna organize it in four different blocks. For the first block, I will be addressing Q4 results. I'm gonna be going into a little bit more detail about what we saw happening during the quarter. I will be talking a little bit about the guidance for this current year and what we're seeing happening in the marketplace at the moment. After this first part of today's presentation, our Chief Financial Officer, Felipe Paolucci, he's gonna go into more detail on the numbers, on the results, on details.
We've looked at the several questions we've received, and we've tried to address as many of those questions as possible throughout his presentation, and that will be the second part of today's presentation. In the third part of today's presentation, I'm gonna be talking a little bit about our vision for the coming years. Very importantly, we welcome and we recognize the several new shareholders that have joined us in the last few days. I think it will be important for everyone to see the reason, not just myself, but everyone else in the company works as hard as we do in terms of growing and moving the project forward.
In the last part of today's presentation, we will be going, as usual, over the several questions we have received, and we will make sure we can discuss each and every one of those questions, lots of you have very kindly shared with you. Starting today's presentation. By the way, if you have any questions during today's presentation, you can always go to the question and answer button at the bottom of your screen, and you can type in questions there. In addition to the ones we've received ahead of the meeting, you're also welcome to be sharing questions throughout the presentation. I will now share my screen. We can begin the presentation. As usual, before we begin, I would like to remind you all that our presentation contains forward-looking statements.
In addition to that, we like to be very straightforward about the risks and what it is like being part of a growth story. We like to say we're not good enough if you're risk-averse, if you're looking at very short-term gains, if you're expecting a slowdown growth so the company can pay dividends in the near term. We're not a traditional potash company. This isn't a commodity we're selling. It's a new product with its benefits and disadvantages. If you don't do well with changes, probably we're not the best company. It's natural, it will happen. If you don't understand how difficult it is developing new technology and market for innovative products likew ise.
By all means, and I think it's important to talk about that given how many new shareholders we're very happy to have joining us in the last while, please do join our journey if you truly believe we can together be changing the world into a better place. In my update, there's something quite special there as well in the third part of the presentation. If you're looking for a real-world technology company, if you understand how the development of our project and what we're doing is a significant way for protecting the Amazon rainforest. If you understand how by switching from conventional chemical fertilizers for our technologies, how we can truly make the planet healthier, how we can start growing healthier foods. Very good idea as well is to watch a very good documentary available on Netflix called Kiss the Ground.
Finally, the same way we should all be very worried about the health of our gut microbiome for different reasons, the soil biodiversity, soil microbiome is just equally as important. Starting with our presentation today, if you're in Canada, if you're in the United States, you can go on some of your local garden shops, you can also go on amazon.com, and you can order our product. It's sold in the United States, sold in Canada as Super Greensand. You can read some of the several product reviews we have, and you can even use our 5% off coupon code with the little code shown on this screen. If in China, we're also exporting the product to China, Thailand as well. Please reach out if you're in those jurisdictions, and we can also introduce you to our local distributors there.
Starting with the presentation. We're gonna be talking about the past here, and to a certain extent, also about what we're seeing in the first quarter of this year, with some implications on specific guidance for 2023. As a company, I have to say we're very focused in the growth, we're very focused on the next five, 10, 15 years. You all know the number we're going after. You all know we're here on a quest to 50 million tons of annual production. You all know how important we believe this is for the world, for Brazil, for farmers, for everyone's health. This is really what drives us on a bigger picture.
Having said that, we recognize how important as well it is learning from what we see in the marketplace and using that to improve decisions as we go along. The first point I wanted to highlight here on this presentation is the rollercoaster we've seen with potash imports. We had a very atypical year in 2022 when the war triggered a significant wave of orders for potash. Definitely benefited from that because there were several people approaching us worried about shortage of potash, placing orders. Q1 of last year was extremely busy. What wasn't completely known at the time as well, because everyone at the time thought there would be a major shortage of potash, was that this didn't happen.
As the war progressed in the other months, it became clear that there was no shortage of potash coming into the market from Russia or Belarus. We saw record amounts of potash being imported into Brazil. You can see in the greenish bar how much more it was in comparison to 2021. At the same time, we saw a very big increase in potash prices on the back of the war. In the second half of the year, the opposite happened. There was a major glut. There was plenty of potash loaded in storage facilities all over Brazil. Prices started coming down. We had several reports of significant amount of potash exchanging hands at prices much lower than were being advertised.
That price came down very hard. If at some point we and everyone else expected in the first quarter of the year that there would be this shortage, the opposite happened. There was too much of it in the marketplace. What also happened in Brazil, a lot of it to do with climate, a lot of it to do with potash prices being perhaps too high, is what you can see on the left-hand side of this slide. Potash consumption in the country dropped significantly. Significantly.
For us to grow about 50% as we did in 2022, in a year where our competitors actually saw their results shrink by approximately 10%. Is something I'm very proud of the achievements delivered by our team that worked very hard on delivering those results. What also happened, and we can see on the right-hand side of this slide, is that the actual consumption declined a lot. We can see how the national production of potassium chloride decreased again. This is the only potassium chloride, the only KCl mine in operation in Brazil. I remember when I started about 20 years ago, the production was about 400,000 tons, and back then people were talking about that mine running out of ore. You can see how it keep shrinking.
And what's exciting in terms of the power of the Brazilian agriculture, in terms of the importance of Brazil to supply food to the world is what we see in this, in this slide. Even though we saw a reduction on the demand of fertilizer in 2022 in comparison to 2021, the planted area in Brazil actually increased. You can see the forecast here for not just a bounce for this year, but equally a forecast for an even greater increase in planted area. Talking for our new investors, we're very thankful to see you join. We're very excited to have you on board. We look forward to interacting with you as well.
When you think about agriculture, when you think about agriculture in a scale that can make a difference in feeding a growing population we have in, you know, getting to 9 billion people, a country needs to have three key characteristics. The first one being plenty of water available. The second one, a climate which is favorable for agriculture. The third one is significant agricultural land. When you look at all countries in the world, only two countries gather those benefits: plenty of water, plenty of agricultural area, and the favorable weather. Those two only countries are Brazil and the United States.
The big advantage though Brazil has in comparison to the United States is the fact that because the climate in Brazil stays throughout the cold growing region constantly above 15, 20 degrees, we can actually do two growing cycles per year, whereas in the United States, you can only do one. When we see the area, the planted area in the hectares here, we need to take that into account as well, that it's actually grown twice per year. The problem we saw, again, going back to, you know, what we learned, what we saw happening in 2022 was that the year-end stock, this is how much potash was left in stock among potash distributors spread over the country, was significantly greater than last year.
All fertilizers in general, especially potash with a very significant amount left in stock. This is especially given the very slow market we saw in Q4, which the press release went into detail on the reasons, we've been talking a little bit about them here as well. The next slide shows a little bit what we not only saw at the second half of last year, but also what we're seeing in the beginning of this year. The bulk of fertilizer demand in Brazil comes from soybeans. Soybeans and corn when you grow two crops in Brazil in two different harvests. Price had a big spike during the first quarter of 2022. This coincides with an outstanding first quarter we had in 2022.
There was a bit of a drop, recovered, but then as the year begun in 2023, price for soybeans has been coming down a lot. The general mood when you talk to farmers in Brazil is very negative. Most farmers are anxious about prices coming down, about the decisions they have to make, and about how low it can go. On the top of that, when it comes to fertilizers, we have seen and they have seen a significant decrease in potash prices, which continued in 2023.
If you're a farmer and you're trying to decide what you're gonna do for the year, on the one hand you look at the, you know, cost of your inputs coming down, but the other hand you also see the cost of what you're gonna sell coming down heavily. What most farmers tend to do in a situation like that is to postpone the purchase of fertilizers as much as they possibly can. In order to be able to make the best decision. This is what we're seeing right now. Q1, the beginning of the year, has been very slow, significantly slow, and you can understand why in comparison to last year.
The bright sign we have here, and you can see there's been a little correction here in the very last chart, and this is something I would encourage you, each and every one of you, to be following closely, is the price of soybeans in Brazil. You know, it's available on the internet. You can track that. If you do that, you're gonna be doing the same thing as pretty much every farmer in Brazil does daily. Something else happened for the last couple of years, which has impacted Brazil in general, but has impacted a lot, coffee. Coffee had been our main market, and this year, and last year, soybeans significantly overtook it.
The climate situation we've seen with La Niña was a significant change of climate which resulted in not just drought, but especially frost in the key coffee-growing regions. When you grow coffee, you expect, because of the characteristics of the coffee tree, you expect to have one year of high production, one year of low production, and this will always alternate. What we've seen after 2020 is very atypical because we've seen 2022 and to a certain extent, even in 2021 as being very bad years for coffee production. Talking about the fourth quarter of this year, this has a major impact for us because most of our sales historically in the fourth quarter of the year had been for coffee farmers.
You can see on this slide how in 2020, we had 113 coffee farmers buying products from us in 2020. This goes with the sales through coffee. You can see how in 2022, that number decreased to only 50. It's sad. Several of our customers, we talk to them and they'd say, "Well, you know, like, I'm not gonna buy any fertilizers. I lost my trees. You know, I don't even know what I'm gonna do with them. I'm gonna have to replant them.
I'm gonna have to cut them off and then start it all over again." There were several discussions like that, which saw the percentage of sales made to the coffee sector in the fourth quarter of the year slide all the way from 25% down to 5%. Before Felipe takes over from here, I think what has happened has happened. The very important thing as we grow the company, as we look to accelerate the growth, is to take lessons from what we saw happening. I think one key lesson I take from that is it doesn't matter if there's a war, it doesn't matter if everyone's telling you there won't be enough potash to grow food in the world. It doesn't matter if all media and everyone is freaking out and panicking about fertilizer supply.
You probably need to be more conservative when you look at your expected production, because for reasons outside your control, the situation might not turn out to be as bad as everyone else thought. When I look in retrospect from the whole of 2022, it is an important lesson. The second one is on this slide. Can you just imagine if we had adopted a strategy where we would have focused exclusively in the agricultural region, in the vicinity or very close to where our mine is located? Had we done that, the negative impact we would have in our sales in Q4 and even Q3 last year would be significantly greater than they were.
I say that because in the vicinity of our project in the state of Minas Gerais, around where we are, most of the market is for, is for coffee. You know, my state, Minas Gerais, is not... You know, grows about 2/3 of every coffee grain exported trade in the world. Had we done that, we would have been in a very difficult situation. It's. We were lucky that we acknowledged that earlier on, and we made a strategic decision that it makes sense to sell further away from where we are based as a way to mitigate risks, as a way to mitigate commodity risks, but also as a way to mitigate adverse climate risks. Nowadays, we sell pretty much all over Brazil. With exception of the Amazon region.
We have a much more diversified customer base. Inevitably, you will always have a greater exposure to soybeans, but that is because soybeans account for about 60%, 70% of all potash consumed in Brazil. You can't run away from the impact of soybeans. We have been able to, by diversifying, we have been able to reduce this impact the coffee sector suffered, you know, in Brazil. This concludes the first part of today's presentation. Now, Felipe will go in a little bit more detail on the results. Here, he will try to address some of the questions we've received, but by all means, please go ahead and share all the questions. If you're watching this online, thank you for the first part.
I hope you stay with us for the rest of the presentation. If you're watching it online, I'm humbly proud to share with you we have 140 people in this call. I'm sure there are several of our 141, several of our long-term supporters or long-term co-owners. I'm pretty sure and very happy to say there should be several new, and I know because I've been talking to a lot of people in the last hours, very happy to see a lot of new funds and investors join the AgriTech, and we look forward to grow the company together with you. Felipe, please go ahead.
Yes. Thank you, Cristiano. Thanks everyone for joining our presentation today. I will start now with the Q4 and full year 2021 highlights for the company. As you can see in the charts, we had cash utilized from investing activities increasing by over 10 or 15x almost in Q4 2022 to over $12.6 million. Also a similar growth in the year to over $42 million. Trade and other receivables increased by 90% in Q2 in 2022 to $28.5 million. This is also something that we'll explore later on talking a bit on the cash flow projection. The total balance for CapEx and working capital in December, we had over $38.1 million so far.
In CapEx, capital expenditures increased to $41 million in 2022 compared to only $2.2 million. It's a very, very significant growth on investments here from the company as well. On the profitability side, revenue increased in 55% in Q4 2022 despite our volume decrease. This was mainly driven by price growth, price increase. Also we had in full year an increase in the total revenue of $80.3 million compared to the prior period, it's over 109% growth. On volume, we decreased in Q4 7% on sales to 125,000 tons compared to 134,000 tons in the prior quarter.
We increased in the year by 57%, achieving 628,000 tons sold compared to 400,000 tons sold in 2021. On EBITDA side, we've decreased Q4 by 47% to $1.3 million compared to $2.5 million Q4 2021. In full year, we increased over 270% to $23.9 million compared to $6.5 million in 2021. In the profit and net loss, we had a net loss in Q4 of $1.3 million. In the other side, in full year, we had over $17.8 million on profit in full year 2022.
On operations, as we've already exposed in our press release, we finally concluded Plant 2, and we are now ready to produce and sell 3 million thousand tons of product. That's our current capacity and what we are looking for in the coming periods. Cristiano, can you please move forward? You are sharing, right? Yes, thanks. Now we can see a chart that we have our key financial statements. In the coming charts, I will explain a bit more a few points that I think are, that are more relevant and answer a few questions. One, and first one that I'd like to answer, is related to the interest income expenses that we had in the quarter.
As you can see in the footnote, we had over $500,000 that impacted our result in Q4. They were due to a specific type of loan with 2 banks in Brazil. These loans were close to $6.3 million. This is the part of the impact on the interest rate. However, if you compare year-over-year, you can see also that the interest expenses increased, but these are mainly driven by our additional loans for the group. I have also charts that will shows how we wanna pay and we will pay for these loans that we have currently in the group. Yes, Cristiano, please move on for the form. Next one. Yes. This chart you can see the key metrics by ton.
You can see in the first table, that we had an average sales per ton, an increase of 67% in Q4. To $135 per ton against $81 last, in 2021. Also an increase of 86%, for full year 2022. This was mainly driven by the potash price increase during 2022, as you are aware. In the, in the size of gross margin, we can see also an increase from 75%-76% and 74%-78% in the full year. It's also good to highlight, and I have a chart as well, to say that our production cost per ton increased, yes.
We have a few points that has been raised, for example, Q4, the fixed cost dilution, lower volume means higher cost. You can see also diesel cost increase of over like 45%-50% year-on-year. This is a very significant impact for our cost in our product. In the second table, we can see the same numbers, but excluding freight revenue, which is quite relevant for us. As you can see, we had a revenue per ton of $61 in Q4 2022, against $54 in 2021, Q4. Also a relevant growth as well of about freight in full year of over 76% growth.
In the end of the day, the gross margin has increased in Q4 as expected, from 62% to 48%, in the year end, full year, we had an increase from 62% to 65%. That's it for this chart as well, Cristiano. As I've mentioned, the production cost, this table can see, also the cost per product that we have. It's important to highlight that, for example, we do have micronutrients in bags, for example, like sulfur, like boron, that increase the cost per ton sold, the average cost per ton. We have also, a lot of the difference between types of packaging that we sell. If we're selling bulk or big bag, the big bag sometimes is more expensive than the bulk entire cost of the product.
That's quite relevant as well. Also important to highlight that Plant 1 just produces, just produce all the portfolio of the company. We have bulk, we have big bag, we have box and other products. In Plant 2, we are focusing on K Forte bulk, huge volumes, big volumes, just one type of product. You can see that with the charts that have cash costs, assets depreciation, total cost expected. In the fourth column, you can see what we've assigned that's not controllable costs by us, which is basically like packaging, transportation, electricity, nutrients, amount of cost that is not in our hand. It's like commodities or driven by the market.
This impacts a lot, but you can see, for example, from the first product, which is the cheapest product that we have currently is the Plant 2 K Forte bulk product. We have a total cost of $13 against a cost that could go up to $55 in the bags produced at Plant 1. Once we just, if you just compare cost per ton sold, it's not a fair comparison. The idea from now on is to disclosure the cost per unit of product. That's the key point for you to understand better our cost.
Just before we move to the next slide, Felipe, I think it's important to say, even though our cost is much higher for BAKS, we also make a lot more money on those micronutrients, close to, you know, around 50%. Later on in the presentation, we have a slide showing that, Felipe.
Yes, Cristiano. Now, we have the key metrics yearly on sales since 2018, when we had the first commercial year with our factory. Besides, we have started in 2017 to sell product, but in 2018, we had our factory opened in Q4 2018 with 29,000 tons. We've achieved last year, 2022, over 628,000 tons, which is a very growth thinking on volume, on tons. It's not only license or things like that, but it's a supply chain that's involved in here that's quite complex to grow it that much. Now, we are expecting in 2023, as you are aware, and I have also details later, two scenarios for...
Not scenarios, but a range for our budget that goes from 800,000 tons up to 1.2 million thousand tons. That's what we are thinking now. Important to say and highlight that's not the end. That is just the beginning. We are working and preparing ourselves, the company and everyone in the market as well to achieve our PFS scenarios. We have three scenarios, 10 million tons, 23, and 50 million tons per year. Our actions are being taken and planned to achieve those three scenarios in the coming years. That's the key point. The second one, it's the same type of slide, but now just focus on revenue.
You can see as well that it came up from $1 million per year to achieve now last year over $80 million. For this year now, we'd expect to be close to the last year in the worst case. In the top range, we would achieve $115 million per year of revenue. Also, you can see the right side of the table, we can achieve over 10 million tons, it will be $2.5 million and $5 million of revenue and the 50 million tons per year scenario. Revenue aside, also you can see that beginning 2018, we found negative EBITDA. 2019, we were like breakeven.
2020 onwards, we started to deliver profit or EBITDA, positive EBITDA to the company, achieving last year $24 million on EBITDA. Five times growth, four times growth against the prior year. 2023, as Cristiano has raised before, we have a few points in the scenario in the marketplace that we are planning to achieve the best case scenario a bit higher than before. As I said before, we should look to the long term, and the long-term perspective is still positive, and we still forward in looking for these targets for the company. Yes. The last one, Cristiano, on these charts are the earnings plus EPS per ton.
The EPS side, we had negative EPS since 2018 to 2019. 2020 was close to zero. Now we had last year $0.34, and we expect this year a lower earning per share in the best scenario. In the worst case scenario, a very low or a low earning per share due to the market conditions, et cetera, and that expectation. As I said before, again, we have a green light scenario and a great perspective for the future, from $6 to $23 per ton per share EPS in the coming years.
Just one point here, Felipe, just to share the long-term sales price we've adopted for the pre-feasibility study is about $350-$360. At the moment it's $450. So significantly lower than what the current potash price is. Those EPS per share, they come from our pre-feasibility study. I strongly recommend. You know, I'm sure the long-term shareholders here, they've read the document already, but especially given the number of new shareholders who have joined the company in the last few hours, it's a great document. It's very detailed. It was put together by a team of independent engineers and market experts, so you can see in detail the path, the trajectory towards this EPS.
Of course, those numbers here, they assume no dilution, which has been also one of our focus, to keep growing in a disciplined way in order to avoid dilution. It's our target. We're not saying we will be able to achieve there, but certainly when you look at how the business plan can be structured and can be grown, it's something possible. It's something we've been working on.
This chart, we have split on 2022 to 2024, a full year sales general and admin expenses. As you can see, the first chart is related more to sales expenses and sales and marketing expenses, fees based paid to sales agents. The third one is the biggest one by far, which is the product delivery freight. We have a chart as well that we show in the coming one, that we have the split between FOB and CIF.
Last year was a very unstable year with freight, with diesel price increasing like really fast and this drove our clients to decide most of them to switch from FOB to CIF to avoid this kind of diesel risk on their final cost. For this reason, we had that big expensive on freight. We do expect for 2023 that this will remain as is. If a mix between 70% on CIF and 30% FOB, that's what expected. On general expenses, we do have invested additional values year and amount on IT and software expenses.
Last year, we changed our ERP from a local ERP that we had before to SAP, which is quite relevant to highlight here. We've made this change last first of July, it's been going well. We have SAP Business One, this is much more accurate and it's ready for us to grow and together with this ERP it's faster, et cetera. Of course, it's more expensive, investments are made on that and on license on Salesforce as well for our employees. These are the key points that made our IT and software expense grow. Okay, Cristiano, I think that's the one. On this one, like I said before, FOB against CIF.
We can see in the right table, the amount that we sold on FOB. For example, 2022 was even lower than 2021, decreasing over 5%, even the company growing like 100%. That's, that made the change in the mix, as I said, from 52% in 2021 on CIF to 71% in 2022. A positive point on that is that when we have CIF, the timing of delivery is much more under our control. We are able to identify and have a larger number of TPLs closer to our factory or in the way of our factory that could bring more competitive freight.
In the final end of the day, we have a lower price in the farm gate, for the client and even for us. it's the... win-win situation. Although of course we have a higher credit risk once we assume the freight to the customer. Yes, Cristiano.
Just one comment here on distribution costs. The downside of having the sell further way from where we are is of course your distribution cost increases. The advantage, as I said earlier, is that when a commodity, especially coffee suffers, we spread our risks. The disadvantage, you know, obviously costs more to transport, so we make less money when we sell the product. Very importantly, there will be a phenomenal new slide added to the presentation, where we show a very detailed breakdown of where our product, where in Brazil our product gets to in an economic way, depending on potash prices. One thing you should all be assured, some of the questions were along that, is whatever we're selling, wherever we're selling, we're making money.
Even if prices were to decrease, there is a lot of buffer there. For that last buffer, for that last piece of information, I suggest you look at our pre-feasibility study, because on the market study, it has a very detailed breakdown of our net sales price, how much we actually receive depending on which one of the regions of Brazil we work from.
Sorry, I wasn't muted. 2023 onwards, the company has changed. Not the company, but due to the circumstances of revenue, we had to change our taxation type in Brazil. Before we used to be like assumed profit company that will have a percentage of the total revenue. For 2023 onwards, the company will be under a real actual profit method, which is a percentage of the profit before taxes. You can see a very simple table here that I demonstrate against the profit before taxes. The percentage we had in 2021, just the subsidiary. This is one of our two subsidiaries in Brazil, [Veiga Utilizan], which is the one that sells to the final customer.
We did have in 2021, 9% only on taxes. 2022, we had 11%. This year we expect from 34%-38%. It will depends on the profitability per quarter. We can have for example a quarter like Q1 or Q2, I don't know, but with like a zero profit. This would equal us to a zero tax. If I have a like BRL 1 million profit, probably I'm gonna pay... Not pay, but probably need to book BRL 340K as taxes. It's important to highlight that we have a kind of lot of regulations that we can add or exclude from the tax payable to the government.
For example, we will be able at this year to exclude up to 30% of the taxes due to our part prior period losses before 2018. Also we do have a type of investment in Brazil that could be deducted as well from the taxes which is called Lei do Bem. Additional to it, we have like other federal taxes that could also be used as credit to reduce this amount to be paid. What it means is that in the P&L, you're gonna see probably hopefully 34% of taxes in the year-end. However, in the cash perspective, it could be zero impact this year because we have a lot of credit of taxes that could be used for the business.
This is a good point that also will help us in our cash flow in the year-end. The next one is related to loans. One question.
Yeah. Just another comment here on tax. Right now with the new president, with our new president in Brazil, there's a lot of discussion about taxation and some of the proposals are to reduce corporate taxes. There might be some positive news as well at this front. If you look at most countries, Brazil has taxed quite heavily corporations. Just so you understand, Brazil tax very heavily corporations at 34%, but in Brazil, dividends aren't taxed. The proposals at the moment, discussions at the moment are about reducing the corporation tax and starting to tax dividends. That would have some sort of benefit if this does go ahead as it's being discussed.
That's. This chart here shows our profile of loans. You can see in the left side, the green line that the loans that we have currently and when we expect to pay them from Q4 2022 up to Q4 2026 when the amount gonna be really small. You can see the table as well on the right side, the numbers. Then the gray line is the payments that we have to make. You can see in Q2 now or Q2 2023 is the biggest amount that we have to pay. This is what's. This is mainly driven by the soybean timing to receive from customers. We do have collect season now from final March until beginning of May.
This is more than expected. As you can see, we do have heading to 4,022, trade receivables valued at over $28 million, which will also contribute to reinforce the company's cash flow. This is a good point to highlight. Also the group average current loans rate is close to 15.4% per annum. Yeah, those are the key points. The idea is to have long-term debt and not short-term debts. These ones that you are paying now in Q2 were short-term debts in six months that made, like the one I mentioned before, the reverse effect on your suppliers in Q4. After this one, we have one for December, no one else. No other one planned to be made on this, on this type of loan. Yeah.
After this one, I move back to Cristiano and after all the stories. Sorry, what? We have the guidance as well. The guidance I've already disclosed and also yesterday in the numbers, sales target per ton, we have a range expected from 800,000 to 1.2 million, and revenue on $78 million up to $115 million. EBITDA from $9.3 million to $24.5 million. On EPS, earn per share of $0.04 per share up to $0.29. If they also supported, I will include here, cash held by the company expected for the year-end would be from $21.9 million up to $35 million. This would be cash held plus receivables, trade receivables on hand.
In the right side, we have the assumptions that we used to conclude and to make this guidance, with the CIF price on 450, 10% discount, resulting in a final price of 408.05. CIF, as I've mentioned, on 70% against 30% before B. Sales channels, 47% direct sales and 53% indirect sales, which will be distributors or represent our sales agents. Also, capital expenditure in several projects expected to be between $4 million and $6 million, which is much less than last year. Now it's time to reduce CapEx and use up what it made already. That's the team. Thank you, Cristiano.
Thank you, Felipe. We currently have 144 people on the call. We have 63 questions so far, I'm looking forward to answering those questions very shortly. Photo of one of our mine pits during the rainy season. That's why you see that much water. Through most of the year, though, you know, there wouldn't be water there. What Verde AgriTech controls is a very unique mine which hosts over 1 billion tons of reserves. It's a potassium ore, and out of it, we've done our feasibility study, looking at the expansions. Out of it, we've been developing the market. In addition to the 1.2 billion tons of mineral reserves, we have an additional 1.8 billion tons of inferred resources.
That sort of size of an asset is very rare and is what most people look for. It's what's called, what's known as a world-class asset, something to be developed, something to change industry, something to last for generations. In the case specifically of our technology, something that can have a significant impact on the planet. We've invested a lot of money developing the project since we began in 2005. About $50 million in drilling, technology development. Drilling alone, we did about 45,000 meters, lots of assays, a lot of agronomic trials. Then we started building our operations. The biggest investment, of course, came in 2022, which was fully funded from accumulated profits and from some debt we raised from commercial banks.
Over $100 million of money spent on the ground to take the project to where we are right now. As we developed the asset, as we progressed the company, we looked at different expansions, we looked at different models, we looked at the different alternatives. The snapshot I present to you is what we are pursuing as a company. It's what drives us. It's what our team, our sales team, our engineers are working towards, which is to produce 50 million tons of a product which would be supplying in addition to potash, sulfur, and micronutrients. When you look at the economics of this project as proposed, they are significant.
At the time when the study was done. A discount rate of 8% was appropriate nowadays, most certainly would be a greater discount rate given what has happened with interest rates. If you look at that 8% outdated discount rate, what we're working towards at the moment has a net present value of about $15 billion. Very competitive when you look at the co-cash cost curve among the other companies. It's very positive. I'll just close a window here. Felipe went through the slide where we look at our growth. I've spoken about it before, many of you will remember, the new ones joining us today, new investors, new corners, Cohen is joining us today.
Selling the initial 30,000 tons of this product, most of that I sat face to face with farmers to negotiate and make those sales, was very hard. I remember back then telling people in general that the first 50,000 tons of our product to be sold were gonna be the most difficult ever to be sold. They were, because even though we had a lot of trials at that time, we were telling people and convincing people to switch from potassium chloride, something that had made them very successful, to something new with a number of benefits, but still an unproven product.
You fast-forward four, five years from 2017 when we began or 2018, I won't say it's easy selling the product because it's never easy selling anything to a farmer. It's always hard. Certainly we're in a very different position now to what we were back then. I have no doubt we have created the foundations to keep accelerating our growth. This is a photo of one of our mine pits to the left-hand side. To the right-hand side, you can see Plant 2. On the next slide, you can see a nice photo as well of Plant 1 on the top right-hand side. When it begun back in 2017, there was literally just one simple line. The plant evolved over the years, was expanded several times.
This area you can see to the left-hand side, we didn't use to have access to it. We had to have access to it to park trucks, because, you know, there wasn't enough place anymore given the volume, the volumes, and it has been very exciting to see it. It has been very exciting to see all this develop, all this growth. Has given us the expertise to build on every time we build another plant and especially as we plan our future expansions. Not only we've developed a mine, not only we've built plants, not only we've developed markets, but we've also been very busy with research and development. We developed six technologies.
There's a sixth technology here called Dust Control, but each one of those technologies brings different benefits to the product, different benefits to the farmers. We have about 10 patents we filed. Some of them have already been granted. We're not just a mining or just a fertilizer, just a crop nutrition company. There's a strong technological angle to what we do. The first technology, which really excites us, is Bio Revolution. We were and are to the best of our knowledge, the first and the only company to be adding microbes to mineral fertilizers in a very large scale. The first microbe we added is called Bacillus aryabhattai, which has a number of benefits, a well-recognized microbe, and we've been working on others. Biologicals is an area of growing interest. It's an area farmers appreciate the benefits.
Other companies have been investing in this space as well, and we are very proud to say we are one of the biggest players in the Brazilian market. The other technology we launched, it allowed us to create a new product. This new product is called BAKS. The technologies that allowed BAKS to exist are MicroS and 3D Alliance. Starting with the benefits of this product to farmers, we can see on this slide a comparison for a farmer in Brazil that grows... That's usually what happens. They will first grow soybeans, and then they will come, following that, they will grow corn. If you're doing the conventional way, you're gonna be applying different fertilizers, you're gonna have five different operations.
If you choose to apply BAKS, you can reduce the number of operations from five to four. Because of the technology in BAKS, we can increase the efficiency of some of the micronutrients required, such as copper, such as zinc, or macronutrients such as sulfur. Because we can source raw materials in a competitive way, we can transfer some of those gains to farmers. When you look at the overall cost for the farmer, it would be reducing costs and would still be getting a sizable margin as a company out of those added micronutrients to the product. We're not just a potash company, it has evolved. The other advantage here when we look at BAKS is that because it's with 3D Alliance, we have a uniform combination of different nutrients.
When farmers apply fertilizers to the field, there won't be segregation. A big problem a farmer will have in Brazil when you're applying conventional fertilizers or blended fertilizers, is that the density of each one of those fertilizers is very different. If you look at, for example, KCl, potassium chloride and urea is much lighter than KCl. If you put them both together in a formulation, potassium chloride is going to be thrown by the equipment much further away than urea, causing too much nitrogen in one area and not enough in the others, which compromise productivity. BAKS resolves that. It's a product that has been growing. We've been doing a fantastic development with this product and something we're very excited about.
This is the same simulation, this time looking at coffee. You can see how a conventional management or nutrition of coffee, you're gonna be applying first MAP with micronutrients, the farmer is gonna have to come back three more times to apply a combination of nitrogen and potash. When they apply just to our product, they can apply just BAKS, which comes with all the micronutrients, come with phosphate, come with the potash, later on, they only need to come back to reapply urea much faster, much simpler operation. You reduce costs and improve the operations. When you look at eucalyptus, which is another very exciting market in Brazil, it's eucalyptus used for pulp and paper, a massive market. The number is even more staggering.
You know, you have to make three applications when you're planting eucalyptus. When you're using our product, BAKS eucalyptus, you can just make one application. The product already has all the nutrients needed in a gradual release way, with the technologies we have inputted, which help to transform. This is all very good, all very exciting, it takes time. We need to go sit down with farmers, explain it all. They need to test, especially large corporate growers where we have several layers of convincing, but it's where I believe our growth and will come from the coming years. You're not just resolving one problem to the farmer, you're not just supplying potash, you're supplying the whole package.
More than supplying the whole package, you're doing it in an efficient way for healthy farms. BAKS has another phenomenal technology, it's MicroS Technology. Brazilian soils are very poor in sulfur. Sulfur is a secondary macronutrient. Because of the characteristics of Brazilian tropical soils, whenever you apply sulfur as sulfate, a lot of that is lost before crops can update the nutrients. With our product, which we apply to elemental sulfur, which is a residue from oil refineries, we can make it a very efficient gradual release source of sulfur, as we've seen from trials and from customer testimonials. This brings some more margins to the business.
When you look at, for example, sulfur, which we add to the product from 1%-5%, when you look at the cost, this is true from 20th of January, and what we sell it in the product later on, we have about 50% margin. When you look at all the micronutrients we've been adding, boron, zinc, copper, we have added margins to the business, which range from 60%-30%. It's a specialty business, it's technology. It's not just supplying potash. Very different to how most companies operate. We've been able to develop a direct relationship with our customers. When you look at the so-called direct sales, it has accounted for about 60% of all sales, has grown from 2021.
When you add here the sales agents, which were brokers who introduce us to farmers, and then we do the sale, we look after the relationship, you can see how currently about 92% of all our sales are managed directly by us. It's very unique, puts us in a very strong position and has been very important for our growth. You can see, for example, how during Q4, which was as we mentioned, a very tough quarter for the whole space. You can see how our direct sales really made a difference. How the relationship we've been building with our customers over those years was very important on growing as a year, when the market shrank by 10%. We will carry on with all of that.
We're gonna carry on developing all of that and something very important for this is artificial intelligence. We use something called Salesforce. We've been using Salesforce for several years. Every single conversation, every single communication with our investors gets logged on the system. Phone calls get recorded, WhatsApp messages get recorded. Some months ago, we started using the artificial intelligence platform for Salesforce called Einstein, which already tells us who is the customer more likely to buy from us again, or a customer which we might be losing or someone where there is a great opportunity. This is changing a lot now with ChatGPT. Salesforce announced they're launching their Einstein GPT. I've seen demonstration of what this thing's gonna be doing, and it's absolutely amazing. The...
Because we already have all this data in the system, how this data will get transformed into business opportunity, actionable, which goes all the way from how you respond to the message to the specific contact or what's happening with which one and creating a specific cadence throughout the relationship, it's absolutely amazing. Something very exciting about. The only reason we're gonna be able to fully benefit from that is because of all that investment we made over the years in our CRM, and because of how we were and have been structured as a company. Working very hard on artificial intelligence, something we're very excited about. We're using something else called Jasper for our marketing initiatives. It's been also transformative and starting with [confusion] as well.
The whole team, everyone works with ChatGPT. For those of you who haven't fully appreciated how transformative artificial intelligence is for business and how it will be, I would encourage to have a look at it. It's amazing the edge it is giving to companies and we're certainly gonna be benefiting and doubling down on all of that. When I mentioned earlier how good our team is, our sales team, how, you know, how efficient we are in this process, I also recognize that for us to get 50 million tons, which is our target, we will need partners. Especially if we wanna get there as fast as we want to.
The most obvious partners for us are very large distributors of fertilizers and agricultural inputs. Very happy to say, this is completely different for 2023, completely different. We never had that before, since 2017. For the very first time, we will have big distributors working alongside us. Wasn't the case before. It was just us. We have the two biggest ones in Brazil. Lavoro recently went public on Nasdaq. AgroGalaxy, public in the Brazilian Stock Exchange. Those are partners with whom we hope to be carry on and growing in the coming years. We did announce the partnership with Lavoro last year. One thing that we learned from the relationship is that just the current model we have, which is inside sales plus the distributors wouldn't work.
In the last few months, we've been training, hiring, and developing a technical team, a field sales team that for the very first time will be supporting those new groups. This is a print screen I took a few hours ago. This is from one of our Salesforce screens. It's something we use called Salesforce Maps, which is really cool. What you can see on the screen with each one of those red dots here, those are all shops or stores owned by some of our new distributors, AgroGalaxy and Lavoro. What you see in red are already some of our recently activated field sales executives. What they do, agronomists, they go from each one of those stores, they visit the customers, they train the teams for the distributors. They multiply the knowledge. They help answer questions.
They help to train local staff. They help to amplify our sales capability. We are gonna be reaching, by the end of April, 10 field sales, working in the key regions. Those of you who aren't familiar with where the mine is, the mine is right here where my mouse is. It's something completely new which I believe will be crucial in accelerating our growth. The very interesting thing about this is how we have technology to help us. When you look at how the other companies do that, it's pretty much blind. We have this strong technology framework with Salesforce Maps, with Einstein, we can pretty much switch all on the system. In the same way, like I can see in the system here, this is all dynamic.
The same way I can see the location for each one of those distributors, I can see here leads, I can see opportunities, I can see which client hasn't purchased. More important than me seeing it, our team on the ground on their phones, depending on where they are, depending where they're going, they can have a very good view of the opportunity in the area, where they need to go, how they need to focus their time, and how they can be more effective. It's something we're very excited, something very new for 2023. It won't happen overnight. There's an education process needed here, but I think it's something which we will be essential for us to get to the 50 million tons.
Very proud again to say we are partnering or we're doing this together with the two largest players in Brazil, Lavoro and AgroGalaxy, with a combined number of employees they have working in the field in the thousands with presence in hundreds of different agricultural cities in Brazil. I think this can be very important for us. Carbon sequestration. There isn't much I can detail at the moment. There were some questions. There were several questions that came about carbon sequestration. Those of you who are familiar have been following us know we've been doing a lot of work in that area and there's already public information one can find on Google, which helps to connect some dots.
When we look at the potential here for us, it would catapult the company once Plant Phase 3 is fully commissioned into one of the world's largest carbon sequestration project. It has that sort of potential. It has that sort of scale. It's something we're very excited, something we hope to be updating all of you throughout the year, hopefully very soon. It's big. It's big. It's unbelievably how exciting this is shaping up to be. Before we start the questions, there's a final update I wanted to say because again, there were several questions on that front. As we look at growing, as we look at the 50 million tons, one very important step in that process is getting the permit to build a railway.
For 50 million tons, we need to build a rail. It's 60 km, 80 km rails connecting us to an existing rail line. There was a press release at the end of last year. We made the filing at the end of last year. There was a change in government. I'm very encouraged to say that the engagement with the new government has been very positive. We are very excited about how open it has been to business, how open it has been to helping to transform Brazil into a better place. We're very happy about the interactions.
I think one of the first steps we're gonna see in terms of this, I hope to be this rail because it requires a federal authorization for us to be entitled to developing this rail, which is essential for us to move towards the 50 million tons. If you're watching it online, thank you for staying with us for about an hour and 23 minutes. More importantly, thank you for all of you, 137 people at the moment, co-owners who have been following us during today's call. Now we move on to the fourth and final part of our presentation today. We have 96 questions to be answered.
I will try to be as comprehensive and detailed as possible when I answer the questions. Some of those questions I think will be better answered by Felipe, especially some of the technical questions. If anyone feels like the question wasn't properly answered, please by all means, add the question again, or send us an email or reach out directly to us. First question. This is not a question, but a humble suggestion. Please keep us in the loop as often as you can via the website and not via SM. I don't know what SM is. Investors can take bad or good news. Thank you for the suggestion. One point to say, we have a monthly update, which I have to apologize, it wasn't published in the first quarter this year.
The reason it wasn't published is because the same team who handles it also helps putting together the audit, the Q1 results, the investor relations. It's a full package we need to file in this Q1 with the annual information form and then the AGM. I just decided to tell them to focus on this package, but we shall soon resume sending the monthly update. Next question. As always, a very good question from this gentleman. I will allow Felipe to answer, but it is a technical question. The question is: Can you provide additional detail regarding the CAD 24.1 million CapEx under land and buildings? Does this include the costs of the upgrade to the road running to the mine site and Plant 2? How much is land purchase versus construction cost?
How do you intend to amortize the construction costs over the useful life of the road? Felipe.
Yeah. Yeah, Cristiano, these questions follows the second one, but we will start the first one then. At the 24.1 million, we do have land, but not more than 1% or 2% of maybe 3% of this amount. Yes, it does include the access investments is made, and we expect to amortize these investments, according to the standard of accountants, which is between five years to 25 years of depreciation. This is how expected. Also we do have already included in our cost projected for this year, it's around CAD 3 million as amortization included in the costs. As I, as I have, also disclosed in a chart, the cost per item, per product, we do have there a depreciation cost as well.
The second question, it was: Can you provide additional detail regarding the CAD 17.1 million CapEx under plant and equipment? How much is related to Plant 2, and how much is related to upgrades to Plant 1? Just for everyone to understand, this CAD 24.1 plus the CAD 17.1 combines the CAD 42 million that I've presented before. In the end, I'd like to highlight that maybe 90% of the investments are made in Plant 2 and 10% in Plant 1. This is the key point. Thank you.
Thank you, Felipe. The other question is about bonus awarded in 2022. Have them been paid already? Have this been paid yet in 2023? The answer is no. Another question about payment for me. There was a bonus awarded and was based on achieving specific targets by the board, the shareholders. Can you please share the targets that were met to earn the bonus? Yes. There is a document, it's the management information circular. It gets published in a few weeks, and there is a description of that. I know the compensation committee has been working with a consultant, a remuneration consultant on that topic, and I'm pretty sure will be all disclosed there. The next question: Regarding your share sales, you sold shares in December.
During Q3 release November, you probably had a good idea that Q4 would be bad, but there was no warning. There was no warning for almost six months while you sold shares. Some shares sold at five and report three months late. How should investors view the sales from the EFCO lens? I own nearly 20% of the company, and the feedback I've been given by several investors is how they felt all along I was doing the right thing about minimizing my position in the company. There's a very short window when sales can be made and there's a procedure one needs to follow before they are made, which were duly followed. The next question: What is the situation with the dividend plan? Haven't heard anything on this proposal for a long time.
The payment of dividend isn't something we believe would be sensible to be done given the very challenging market we've seen happening this year with the significantly drop of potash prices and soybean prices. It's something to be monitored. Next question, again, about compensation. It's something important. I appreciate the question. It's something that will be fully disclosed in the management information circular. It's something handled independently by the remuneration committee. Next question: Was the road cost all written off in the fourth quarter or capitalized over quarters going forward, i.e. is the road cost all behind us, or is there more costs to be written off going forward? Felipe, do you wanna?
Yes. No. We did have, in this 1st trimester, expenses that were also capitalized. Answer the first part of your question, it is capitalized and won't be expanded everything now. It's capitalized, yes.
The other question. Has the board considered including cost control efficiency targets as a specific part of the CEO bonus regime rather than just production volume, sales, revenue, and net earnings? I shall take that suggestion to them. I know they're working or they've worked with an independent consultant on that aspect, so I can probably assume this was considered. One important element here, I think there's a good slide on the presentation which shows from our costs how little control we have over it, given the impact we have in our production cost from items which are completely outside our control. That's an important slide that I think helps to illustrate this element here. Next question. What was the final cost of the road repair due to flooding? We don't have that number.
We don't have that number separately. Would you be able to estimate, Felipe? If there was, like, a specific allocation, or we can look at the specific cost for the delay and the added work required on the road because of the flooding.
No, not really. It was included. It's impossible to estimate now.
Okay. Next question. Why such a modest growth in 2023? Less than 50% capacity. Is it concerned with market or logistics or both? It's market. Given the downward revised 2023 guidance and the significant investment in the new headcount in 2022, can we expect to see headcount growth scaled back in Q1 and the balance of 2023 in order to help maintain bottom line profitability? Yes. Absolutely. There has been a lot of focus on efficiency. There has already been some good achievements there. Next question. Have you been in touch with the new government? Yes. Any news on that front, soon to be disclosed? Any positive surprise to watch, wait for in 2023 not mentioned.
I think during the presentation we've covered some we're looking forward to. The number of customers there is a table there showing, but there was a slight reduction in the number of customers, mainly because of coffee, and there was an increase in the number of planted area, which is very encouraging, which demonstrates farmers have been using our product in a greater percentage of their total planted area. The other important indicator we have there is the EGR, the earned growth rate, which shows from all growth, what % of it was from repeat customers and from referrals.
The number is very good, especially because it's a number that is built on the back of not a staggering positive number, which was over 100% EGR from in 2021. Other question. How have the sales been in the year 2023 so far? Busy or not? It's an important question here. Essentially, you're already asking for some sort of visibility in 2023. Anyone that looks at the chart of potash prices and the chart showing soybean prices can independently see it has been a very challenging beginning of the year, especially if you compare it against 2022, because in Q1 2022, we had the best of all worlds. We had very high soybean prices.
We have, you know, the potential issue with the supply of fertilizers. People were panicking. When you look at our Q1 result in 2022 was phenomenal. Absolutely phenomenal. Absolutely phenomenal for what you would expect from a Q1, no matter what. If you look at the charts which are available on the presentation on that growth, you can see how it was already an outlier. Q1 2022 was about 100,000 tons, and Q1 2021, it was around 15,000 tons. That massive growth was driven by soybeans. That massive growth was driven by the threat of supply war. We need to look at Q1 last year as a very atypical Q1. This year we have, you know, a very negative situation.
I think it's important to keep that in mind when we start thinking about Q1. Our main quarters are, and will always be Q2 and Q3. Given the reduction in 2023 production guidance, does that suggest that all the anticipated production will be coming from Plant 2 or a mix of Plant 1 and 2? It's a mix of Plant 1 and Plant 2. The reason it's a mix is because on Plant 1 we produce bags and we produce Bio Revolution, K forte and Bio Revolution. On Plant 2, we produce K forte. How easy is it to ramp up or down production in response to demand? Extraordinarily easy and fast. That's the advantage of having now a Plant with a lot of capacity. Next question. The deal with Lavoro.
Has the deal with Lavoro helped in the last quarter? I see no Verde products on their website. Is it just a brick-and-mortar deal? Lavoro, we're really only starting to work with them from a day-to-day basis. Those larger distributors like Lavoro and AgroGalaxy, they are very dependent on boots on the ground from our team, and we didn't have that to offer. We put the team together, and it has really started working initially a few weeks ago. Essentially you have the sales team like Lavoro, AgroGalaxy, and they need to be trained. They need to understand the project, how to sell it, they need some coaching. We need to do some site visits with their team, and then things start developing. It's, it's not a short-term fix.
The relationship with Lavoro and AgroGalaxy is something very important, very strategic, but it's not something we're counting on for short-term results. Next question. What about the U.S. listing? It was expected and then last year, then January, and it's still pending. I can't comment on the U.S. listing. What I can comment on is that, when we look at what we're doing, an importance of what we're doing to the world. There are some countries that are more dependent than others of our success. For some of those countries, you have certain geopolitical issues connected. Next question. How are sales distributed between different crops, percentage of coffee, soybeans? We're gonna add that to one of the newsletters so you guys can see how much we've been selling to each one of the crops.
You will see that in 2022, soybeans was the crucial one. Next question. Can you discuss your 2023 EBITDA projections in detail based on a guidance revenue should be either flat or up 40% to $115 million. EBITDA ranges from $9 million-$24 million. What is driving the lower EBITDA on a higher top line? With higher top line growth, I would have assumed Verde would have benefited from operating leverage. Felipe, do you wanna discuss?
Yes. Yes, I can comment on that. What we can see is that we cannot just analyze the total revenue of the company and imagine that, and presume that the end, the bottom line will be following the same trend. As I've mentioned, we have freight impact on this. For example, 2023, the cost per ton on freight is very similar to the second half of last year. In the other hand, the potash price has decreased. What happens then? The net price excluding freight decrease. Just for example, I have it here, we had last year a revenue excluding freight, as I've presented on $83 per ton. For 2023, excluding freight, our expectations have decreased from $83 to $52 per ton.
Of course, this $30 that we are losing is on price, and we cannot compensate it on freight. This goes to the bottom line and makes our EBITDA do not follow the trend of the price or the revenue of the company. That's it.
Thank you, Felipe. Next question. Are you providing discounts to K Forte and BAKS? If so, can you discuss how much you're discounting your product? We do offer discounts to motivate farmers to take stock, to motivate farmers in certain times. It varies, you know, depending on the time of the year, depending on location, depending on the number of situations. There is another question about Nasdaq. There's a question here about me selling shares. You originally committed to sell your shares in a structured way, yet you sold shares. Why would you make a commitment and sell it? There was a structured way which was put in place at CAD 9. There was shares sold from diversification point of view over the months.
You know, I still own about 20% of the company. What factors are behind lowering full year 2023 guidance tonnage from 2 million and 2.8 to 2.2 million tons? I think we were to address that throughout the presentation. How does this lower guidance affect the company's plans for growth, considering current capacity is approximately 3x guided sales? It's a good question. The fact we have such a big monthly production capacity now allows us to very fast react to market demand and market circumstances. The CEO of Nutrien has recently said that he sees potash prices getting very tight this year. And if that turns out to be true, we have this massive production capacity, which we can very quickly address market imbalances given the expansion we've made.
Next question is another technical question here. Further generate a taxable income of $20.4 million in 2022. Note nine states, no deferred tax asset has been recognized in the financial statements. The directives are not sufficiently certain as there will be a future taxable profit to utilize these tax losses. Can you comment on this pessimistic outlook of the board as it sends a very negative message to investors? I think this is like conventional wording from auditors. Felipe, do you wanna?
Yes, I think so. That's not our board opinion for sure. What I can include here is that the profit that we had last year, we cannot use it in the future to compensate loss. Just to explain it a bit, since 2018 or, sorry, 2019, the company is under the real profit. Before actual profit, we had like $8 million on losses that we'll be able to compensate from now on. The profit we've made generated 2022, 2021, 2020, since we used to pay taxes only on the net revenue, these ones we cannot report anymore.
What we have from now on is just $7.5 million around that we'll compensate up to 30% limited, maximum. Yes.
I'm sure if you want to approach and engage with us, we would be more than happy to have a conversation. It's about those suggestions in terms of from technical elements in the financial statements, please do reach out. Does the company maintain the same expectation for full price of potash stated in PFS? If not, is expansion to the 50 million ton scenario still viable without raising capital? That expectation floor price comes from a consultant. We've seen other long-term potash prices from other analysts which are higher than his estimate. The average I've seen, if I look at all the reports I've seen, it looks at an average long-term potash price, which is about CAD 20 or CAD 30 higher than the number used on the 50 million tons production scenario.
Is it viable without raising capital? I think it all depends on how fast or we accelerate development. This because it's scalable, we can certainly coordinate growth in a way that the next phases of growth they can be built only and if there is enough capital. Can you estimate an EPS for 2023 if potash price average is $600 ton for the year? I think it would be fair to give a moving EPS estimate depending on the potash price, instead of assuming it will be $450 for the year, which is a guess, wild as $250 or $1,050. That's the problem. You're absolutely right. That's the problem with those guidance.
It's obviously easier for established company growing very slowly to make guidance than it is for a company trying to grow very fast as us. Certainly the price of potash makes a ginormous difference on EPS, on profitability. Is it possible for potash prices to reach $600? Of course, yes. Is it possible to come below our guidance? Yes. What's gonna happen? I don't know. Whoever knows the answer, please tell me. It's a good point raised here. What do you plan to do about Plant 2 vulnerability to adverse weather conditions? The problem we had last year was with the road. It was very restricted to the location of... and to where the road is during the construction.
It's not something we would expect to happen again. It was part of the construction works. There's another question here about the compensation committee. I think there will be this is better known, will be this managed information circular. What are you planning to do to increase sales beyond Brazil? Brazil is our focus, but we have, as you know, some efforts looking at international markets. There is an international sales manager who handles leads. We've been making some exports to China. It's quite exciting this year. It's the product with added microbes, Bio Revolution, which is getting exported. Specific on the question what we're doing, you know, we're really focused on Brazil and we have this one guy who handles opportunities.
It's not, you know, a niche focus, so he has enough focus. How are you planning to mitigate vulnerability to climate phenomena that affects coffee yields? Another way of asking this is what are you doing to decrease your reliability on sales to items that are not required purchase by end consumers? If I understood the question correctly, it's what I mentioned during the presentation. We're looking to diversify from a geographical point of view. That way, we're less dependent on specific crops. Which plants could benefit from the application of a product and what's your sales plan to address each of the potential sales markets, both in Brazil and globally? Every crop benefits. Every crop needs potash. In terms of focus, we focus on the crops that represent the bulk market consumption in Brazil.
Those crops are soybeans, corn, sugarcane, coffee, eucalyptus. Together, this represents about 85%+ of the whole potash consumption in Brazil. Another question about compensation. Who are the top 10 salary bonus recipients for year 2023? This gets disclosures as well, detailed in the management commission circular. The next question, what drove the 1,000% increase in interest expense between Q4 2022 and Q4 2021? Is this interest expense expected to be persistent recurring costs? Do you know that, Felipe?
Yes, the coming two years at least. As you know, we do have a significant level of loans that we've raised to pay out for the company growth and also the Plant 2 investment. Yes, we do expect not as Q4, a bit less, but yes, I do expect to have level of interest rate for the next eight quarters.
What were the thoughts on paying for the 25-50 million tons expansion if the production growth rate has slowed? Without the coffee growers, what does the EGR look like? That's very good questions. I mean, yes, in terms of the expansion, it's scalable. We can make capital expenditure when there is liquidity and the market is right. We don't need to dilute. We don't intend to dilute. In terms of the EGR, yes, if we hadn't been successful in expanding markets, our EGR would have been crushed because of what happened with the coffee sector. I think the fact we got a 30% EGR is phenomenal, and it's a testament to the excellent work done by our marketing and sales team. Another comment here. Many disappointed investors. Thoughts on earning back their trust.
I think the best way to earn back their trust is to be transparent about what's going on, which is what we're trying to do here now, addressing the issues for what they were, and, you know, not hiding from what are some painful situations we are facing. Obviously, we need to remember that we're working here for growth. Even though the near-term results are very important, and they help us learn, we are not in this company, we're not doing this for 1, 2, 3, 4 million tons of production. There's much more which we are, which we're focused on. There's a question here about all the more glauconite deposits in Brazil. We have made some a replication of the bulk of it.
Of course, there are some minor concessions and, the grade is a bit different, and there are other companies pursuing different routes, from glauconite, including the production of potassium sulfate, instead of a direct application product. Certainly no one has anything as big as we have, as advanced as we have. Also, very importantly, no one holds as many patents to do with the technology and the usage of this mineral as we currently do. Has the company filed for an up listing on U.S.? That's a comment about Nasdaq I've already addressed. Has the company approached Brazil's new government about the potential for carbon credits to be issued for Verde's, for the use of Verde's potash? It's not really the Brazilian government that issues carbon credits.
You have some international agencies that do that from a voluntary carbon credit market. It's a fascinating market and amazing how much capital there is looking for to buy carbon credits, and certainly a shortage of good projects. Other question, what caused this incredible share price decline? My view is that it was a guidance reduction. We announced the guidance reduction to a much smaller number and with more detail as well on EPS. There you have a big impact from taxes. That is the main reason. At the beginning of 2022, you announced that the guidance for 2023 is 2 million tons.
In the earnings you really reduced it, you cut it by about 50%, 800,000-1.2 million tons. How do you explain such a massive decrease? It's what we're seeing from the market in Brazil, from soybeans and people fighting very aggressively to sell potash. Whereas most of last year, the expectation was for a glut in potash supply driven by the war. Why are you investing in expanding your capacity beyond the current 3 million tons, when the top guidance for 2023 is less than half of that? To expand the capacity is not something you do overnight. There's a lot of regulatory work required in terms of permits, that unless you start, in some cases several years earlier, you won't have it when you need to.
For those of you who have been following us for longer, you will remember how for several years even, we were restricted in terms of supply by the permits we had. It changed last year when we had the license issued for 2.5 million tons. It's important to be ahead of that. Obviously, we're not going to be making any investment which would be material or wouldn't be in connection to really the preparations for growing markets. Talking about dividends. What about the dividend that you promised your shareholders about one, two years ago? As you will remember, there was a committee put together by the board with independent board members that looked into paying dividends. There was a study that was carried out.
This was done in context of last year and the war, price of potash, potential restriction in potash supply. Situation is completely different now. Completely different now, as we have discussed throughout the presentation. What's the cost of producing BAKS sulfur and boron products? Almost twice the cost per ton of K Forte. It's because sulfur and boron are very expensive, we need to buy them from the market. We transform them, the good news is as we transform them, we make money along the way. BAKS was supposed to be margin enhancing. Yes, the margin goes up, but it's about 60%. There's a slide in the presentation where there is that number. Next question. Verde's delivery costs from plant to farm are very high.
Is there any way you can reduce these? It will vary during the year. Obviously what we've spoken about in terms of the diversifying the locations in Brazil where you sell has advantage and disadvantage. The advantage is that you're less susceptible to variation or to the impact of specific crops. The disadvantage, on the other hand, is that you do have a higher cost of distribution. Given the much lower production costs of Plant 2, are you considering closing Plant 1 for a while? No, because Plant 1 does BAKS and Bio Revolution, whereas Plant 2 only does bulk K Forte. What was the cost of the roadworks plus the cost of building Plant 2?
The number disclosed when you add all CapEx, everything, but there's all this stuff there is about $40 million. The reason why debt and debt interest is now so high, I think Felipe addressed that. Now that this road and plant costs should be lower in 2023, will this mean Verde will try and pay down as much of this debt as possible? For a growth company, if properly managed, debt is a way to accelerate growth. Our customers, when they buy our product, they also don't buy in advance. They need credit, so there's a working capital mismatch. Having some debt in the balance sheet in a responsible way is something that will be a part of our, of our growth. Verde results discussed in some detail.
The Verde results discussed in some detail, the percentage drop in sales made to coffee farmers from 9% of sales to 5%. No comment on the crop producers that buy the other 95% of Verde's products. Why is this? Presumably, these other crop producers must have bought more products in 2022 than they did in 2021. What are the prospects for growing these other markets? Correct. The bulk of those sales are soybeans, which also account for the most or the bulk of potash consumption in Brazil. Next question. Since production costs are much higher from Plant 1, wouldn't it be smart to shut it down and produce only from Plant 2 as long as capacity is sufficient?
I think, you know, advanced Plant 1, it does BAKS and K Forte Bio Revolution, whereas Plant 2 does K Forte in bulk. Given the lower potash price and elevated oil price, does this impact the area you deliver to? You mentioned in an earlier call that you won't sell at a loss and focus on more local sales if the potash price has dropped. Correct. We will never sell at a loss. We've never done it. Even at lower prices, we can still make significant amount of money selling to places as far away as Mato Grosso state. Is there a price point where Verde would initiate a share buyback? If shares fallen off, it might be more value accretive than the aggressive marketing spend into a soft commodity market.
It's a point to think about. The next question. Given that producing K Forte bulk at Plant 2 is so much cheaper than Plant 1, that's the same question about. This is about the second part of the question is exactly what we're doing. Plant 1 only does BAKS and Plant 2 does K Forte in bulk. That way you get the best of both worlds. You sold shares three times in December. The next day, you have reported only two transactions. There was a delay in filing which I understand was rectified. The number given to me was wrong, and that's what happened.
Given that producing K Forte in bulk at Plant 2, that's another question about the same question. I'm gonna try to... There's a lot of repeat questions here. I'm trying to make sure I don't read when... Just curious, does Verde export to Thailand at all? Yes, we export to Thailand. Yeah. Wouldn't it be safer to focus on financial deleveraging at this time of harmful interest rates before proceeding with expansion projects? We're going ahead with expansion projects at this time rather than making payments. I'm a private investor from Vienna currently considering investing in Verde AgriTech. I've been following your company for quite a while, in order to be able to make a thoughtful decision, I would appreciate if you could answer me the following questions.
How big is the potential market for your product and services? Well, I think the best way is to look at our pre-feasibility study. It has a full-on commercial analysis there. It's available on our website. When you look at the 50 million tons of production scenario from our feasibility study, that would represent about 50% of the total Brazilian potash market. Next question. How many competitors do you have, and why should customers buy from you instead of competitors? How is your company different from its competitors? We have several competitors. Nutrien, Mosaic, Atlas, SQM, Uralkali, Belaruskali, Yara. Some of these companies, they sell products they manufacture themselves, they produce themselves in Brazil, like Nutrien. Some of those companies, they sell in Brazil as fertilizers.
I think the advantage of our product is it's chloride-free, it's salinity-free, it's gradual release, it has a number of other nutrients and it costs to the farmer the same or less than conventional fertilizers. It's chloride-free, it improves soil biodiversity, which is different from potassium chloride. How does your sales process work in detail? We have an inside sales team which manage the relationship with our customers. We have leads that come to our sales team via our marketing team. We have all the way from digital ads to referrals, which come from our own customers. We have our agents who are on the ground, independent agents who broker make relationships, introductions to customers, and now we have the distributors also working for us. Another question here.
Has there been any progress in forming a relationship with blenders? Blenders, they need to sell granulated products. Our product is a powdered product, so it doesn't work to add a powdered product to a blended, to a granulated product. It's incompatible from a business perspective. How many different revenue streams or products do you have, and how do you expect them to develop in the future? We have a range of technologies, a range of products and it depends from crop to crop. I'm just looking at the number of questions here, and we still have about 50 questions to go through. What I'm thinking about doing here, instead of. Because I'm feeling a bit like I'm not giving, you know, enough attention. It's.
It's a lot of questions still, and I wanna make sure each and every one of those questions get answered. What I would suggest is that we've been doing this two hours nonstop or two hours and 10 minutes nonstop. I would suggest we take a 10-minute break. You guys can grab a coffee as well. Hopefully coffee from Minas Gerais State grown with our product. Since it's chloride-free, it tastes better. We can resume with the questions. If you're watching it online, don't worry, we are gonna cut this 10 minutes. You're gonna jump straight through to the other questions. Let's pause now, and we will resume in 10 minutes. We're back. If you're watching it online, it didn't take very long.
If you're here live, thank you for waiting the 10 minutes. I'm glad to say we still have nearly 100 people who decided to wait the 10 minutes, so thank you for staying with us. The next question: What is the rate of recurrence of purchases by customers today? It's pretty good. The best way, though, for you to manage that in a company like ours, which is cyclical, and sometimes farmers don't need to reapply fertilizers, like, for example, eucalyptus, or sometimes they are just leasing land rather than doing it year after year, is to look at something called EGR, earned growth rate. There's a press release on that. If you Google, you're gonna come across it. We have announced our EGR from last year, which was 30%. We're very pleased.
Last year had been 100%. Very hard to keep going on with positive numbers after big growth. It shows how our growth has been driven mainly by repeat customers and referrals. Referrals, which are just as important as repeating customers. Next question: How does the customer concentration look like? Do you have major customers who are responsible for a majority of revenue? No. It's very polarized at the moment. There isn't a major dependence from one or a handful of customers. The next question: How does the insider ownership currently look like? I own about 20% of the company, and board of directors and other management own another 2% or 3%. Next question.
with outstanding receivables at year-end of $28.5 million, can you share your internal approach to managing the timely collection of this significant drain on Verde's cash resources? I will let Felipe talk a little bit about the internal approach.
Yeah. Yeah.
Before Felipe talks about it's part of the game. You can't be in agriculture in Brazil. You can't be selling crop nutrition products, if you don't give credit to farmers. You don't give credit to farmers, you're not gonna sell anything. We don't have a choice here. Please go ahead, Felipe.
Yes, we do have this. It's very common in the fertilizer market that the year-end, the companies have a very significant amount on receivables. Many of the farmers have cash. For example, soybeans now in from end of March to May, coffee from September to November. It's quite common and usual there to need to financial them for this reason. Depending on the part of the time of the year, we might be having like eight-nine months on payment terms, receivable terms. For example, in the year-end, we have, like, 90 days only. What we do to mitigate this, we have credit lines that we could do and anticipate these receivables banks if you want to.
We have another kind of operations that could make financial operations as well, if needed. As I've mentioned before, they had most of the receivables free to collect and to include in our cash to help us to pay the debts that we have this year. That's the point.
Thank you, Felipe. Is there much of a demand difference between granulated and powdered product? Would having a granulation plant have helped diversify the demand through this weak market? It's a good question. Yes, some farmers, they much rather use granulated products. It's something we've been investing in this technology for several years. We've made some breakthrough recently in terms of how to granulate our product with the very low cost. It's something that at some point we will be pursuing and building. Of course, there's a capital expenditure associated with building one of those granulation plants, but it's something in our radar. Next question. In Q4, average revenue per ton sold was CAD 135, which was higher than full year 2022 of CAD 128.
How was Q4 higher than average when Q4 was a poor quarter relative to the prior three quarters for 2022? That's a good question here. Is, you know, like, because potash prices have been sliding as we saw, how come Q4, the average was higher? The answer comes from the fact that we do forward sales. If a farm approaches now to buy product to be delivered next year, we will sell. Usually there's a bit of a lag on the impact of potash prices, both when it goes up or it comes down. We saw that happening during Q4. The next question. What kind of challenge, if any, did the company experience over the last five years? Oh, there was a lot. Oh, there was a lot. A lot.
I think, I think we could spend another couple of hours here just talking about everything we learned, everything we saw happening. We did do something. We recorded a video which is available on our YouTube channel, with the name of Growth Mindset, inspired by Carol Dweck, who coined the term, that we talk in detail about everything we learned over those, over those years. I think it's probably better if any of you are interested in, in the journey to watch this video because it goes into detail. Of course, if you have any questions or wanna raise any points, please do reach out to us directly and we'll be glad to talk more about it. What kind of challenge, if any, does the company experience right now?
I think the main challenge right now is navigating this challenging market. It is fighting competition, because there's so much potash in the market, it's getting very aggressive. It's very important for us to move a little bit away from this from this red ocean towards BAKS and Bio Revolution, which are more bluish. I wouldn't say a challenge, but something that's been demanding a lot of our energy and focus as well is this new team we have activated, our field sales team that has started working with Lavoro and AgroGalaxy, as well as increasing the relationship with some of our biggest customers. From a project development point of view, we remain active on the work required for the expansions, even though we're not deploying capital CapEx.
There is still a lot of conversations with the government in different fronts. I had mentioned the rail and, which is going really well and will be a major milestone, you know, if accomplished. I could go on and on because there is a lot. There is a lot. I think what we all see as a public company in terms of the challenge and in terms of what gets done is it doesn't always make justice to the hard work put by all of our team moving the project forward. It's not easy being a small company in a market dominated by giants. I'm very, very proud of all the hard work, all the effort our team puts to allow us to keep moving forward.
Next question. Where do you see your company in five, 10 years? I've said that before, and I'll repeat. Some companies, they grow because they, you know, because they grow, because it's a business opportunity, because they can locate capital in a positive way. All other reasons. In our case, we have to grow because the world needs us. We have to grow because as potassium chloride gets replaced with our product, we start growing healthier food, we start improving the soil microbiome. As I even mentioned during the presentation earlier on, there might even be a sizable impact on carbon sequestration. It's growth, growth. That's our driver. In a sustainable way and above all, in a shareholder friendly way. Different to other companies who have issued millions of shares to fund its growth and caused sizable dilution.
If you look at our share capital structure today, it's extraordinarily similar to what it was when we went public in 2007, 16 years ago. I was talking recently to one of the people who worked back in that IPO in 2007, and I was showing, you know, showing to him, and he wouldn't believe. He said, "Oh, I've never seen that happening before. A company should become profitable like it was with operating assets, operating mine, a plant, with that small amount of dilution." The next question, what are your plans for growing the company? How scalable is your business? It's very scalable, and this is one of our biggest advantage. The next phase of growth, it can be as big or as small as we wish. It's modular.
If we decide that instead of building a 10 million tons per year plant as the next step, if we decide to build a 1 million tons granulation plant, we can. If we decide to build a 500,000 tons plant, we can. It's very flexible. Next question, are you looking for acquisitions? No. We're not looking for acquisitions. We think we already have a very unique large asset which can support our growth for generations. The sole focus is developing this asset. Next question, do you have new products in development or already launched? Yes. During the presentation, I went through some of our line of products we've been working on. The microbes we're working on from Bio Revolution point of view.
I think when we talk about carbon, it's not a product itself, but it's something big. Are there any catalysts to look out for in the next 12 months or later? A lot of catalysts. We have this rail, which would put us in a different situation altogether, which I hope to have some news soon. I think it's very relevant because we have a new government in Brazil, and more than words, action matter. I think it will be a big demonstration of how important our project is, especially given the size of the rail permit we're asking at 50 million tons per year, would be one of the biggest rail connections in the country. Carbon.
Certainly, certainly in the next 12 months as well. We're working, we've been working for a very long time, and it's something potentially transformative from what we're doing. Hopefully it will get to materialize the way we hope. So it's something we're excited. Obviously, when we look at the next 12 months, there's also other permits we've applied to grow even further production, which I would expect to have those results coming up as well. Delivery of sales as well. You know, it's looking challenging from a commodity point of view, from a market role, but I see the fire every day in the eyes of our sales team and excitement and I wouldn't be surprised if great things come out of it.
There's a few questions here again about the newsletter. We paused it while we're working on the audit, on the materials. It's a lot of filings which need to be done for Q1. We will resume it. There's a suggestion here about posting a video about our plant and operation. We will look into it. It's a good suggestion. There's another question here about dividends which we've commented on. There's a question here about, can you help me with my financial model? How can I project fertilizer prices? Is there any kind of spot price? Maybe I could use the potassium spot price to try to predict revenue, or is it not compatible with Verde AgriTech's pricing policies? When we sell, it's based on potash prices.
You need to take into account that when we sell via agents get a percentage. When sell via distributors, they equally have a percentage. Depending on the commercial situation at the time of the year, there are discounts which are given. Also there is a mix as well of K Forte and BAKS. When we sell BAKS, it's you have all the nutrients added to it. So you have copper, boron, zinc. They have their own margins, which are about 50% and changes it. When we disclose all those results, we disclose those results as an average, so it makes a bit trickier. The other element here is the transportation. Some of our farmers, they will buy product FOB.
Some of our farmers, which is just free on board, just deliver the mine or the plant. Some of our farmers will buy product CIF, in which case transportation is added to the cost of the product. All to say it's not necessarily easy to be doing a model to replicate all of those variables in the business. The pre-feasibility study has a good discounted cash flow, looking at each one of those elements I've just mentioned in detail. Please have a look at the pre-feasibility study, have a look at our financials, please do reach out if after you've progressed, if there's something else we can help you. I noticed in the fourth quarter and full year-end 2022 results that your net profit and EPS results were reduced.
Was that based on the unexpected road improvement costs that were necessary in order for Verde to operate its business? If so. The answer is there's some capital expenditure there. I think as Felipe mentioned, there was also some recognition of interest which had to be made from an accounting perspective in Q4, which already accounts for interests from the life of the loan. I believe throughout Felipe presentation, he covered those technical elements here. There has been a lot of marketing videos, articles lately about the benefits of this product. Do you have a quantified feedback about the reaction of farmers to those efforts? Yes. We monitor very closely leads coming from marketing and ROI calculations, everything else.
We measure all of that very, very carefully. A question. Do you own or rent the parking area to the south of Plant 1? We rent it. Was this part of the original land purchase when the plant site was purchased? No, it's a different owner. If leased, how much do you pay a year for the area? I won't disclose that, but it's a good commercial arrangement for both parties. Why was the return of capital framework not mentioned currently after the first mention? Well, yes, it's asking about return of capital. I think the market has, as I mentioned, has been changing so fast this year that, you know, focus really had to change.
Can you talk about your liquidity and solvency position if there's another one or few quarters similar to the challenging quarter in Q4? Can you talk about contingency plan if there's a quarter or two occur again? Felipe, you discussed this in very detail. Do you wanna answer that one?
Yes. Yes, as I have mentioned in the presentation as well, we do have currently on-hand receivables for the coming months that is more than enough to pay all the obligations with banks during this year. And also we do have alternatives to make it even for longer term if needed, which means exchanging short-term loans for long-term loans. That would be an alternative as well for banks. Yes, we do have a few alternatives, and I do not expect... Even with remain similar to Q4, the coming quarters, I think that there will be no issue to pay for the debts.
Thank you, Felipe. There's another question here I think you can help. A question about the tax rate from January 2023. The wording in the slide is quite confusing. For clarification, does the effective tax rate change from under 10% in 2022 to like 35% in 2023 and future years?
No. Brazil, we have like three-four types of taxation for companies that from our side to bigger ones have two types, the one that used to be up to January 1st this year. From now on, I do not expect to have changed any more on this. What you can see there is like once we have very small profitability, for example, or even though we can have negative results in one quarter, this means that we will pay zero of taxes because the tax is only applicable if on the profit. If Q1 we have zero profit, for example, we're gonna have zero tax. Or if we have a negative profit as well.
Q2, if we have up of $1 or BRL 1 above in the subsidiary, then we're gonna pay 34% of tax. This means in a, in a protected scenario, if you have like, $10 million loss in one quarter, and then you have $10 million profit in the next three quarters, and then this means that in the year end you have zero profit, however, you paid tax in Q2, in Q3, and Q4. For this reason, the percentage may change. On that scenario of 800 tons, for example, we're gonna see a higher level of taxes because probably something like this might happen in Q1, for example. Nobody knows yet, but that's the reason this percentage might vary.
I do not expect to have a lot of variation from now on, from 2024 onwards. You know, because 34% and that's it.
Thank you, Felipe. The next question is, can you make your social media posts in English? It's in Portuguese or Spanish at the moment. Can't read it. In Spanish will always be in Portuguese when it is targeting our customers. The whole focus of our social media is on our customers, on market development. The algorithm, for some reason, might be showing it and shouldn't be out of the target people, but this is our focus. Next question. When will management information circular be published, and how we access it? The management information circular is issued usually in April or May. Might be April. It's a document that's it's available on our website and or SEDAR whenever it is, whenever it's published.
This is a good question here. How much does a single big bag cost? Oh, boy, this price has changed a lot. When we started and to what it is now, nearly tripled in price. I know the last contract we signed, Felipe, is lower than last year. Do you have the very last number?
Yes, I do. It's, let's say, as we mentioned, when I joined Verde in 2019, we used to pay $5 per bag, around. Then it went up to $15-$20. Currently we have like $12-$15 per bag. It's, it depends. It's not very controllable. What we do to mitigate inflation and costs, we have a long-term contract with one supplier, which quite can trust on him, et cetera. We have set up a price for the next five-six months already, and he owns also a stock for us there in his factory. I think we are okay for this year with a good price that we've made a good negotiation there in the last 2022.
Continuing to answer your question, his question, yes, the cost of the bag is included there in the table that I've showed before. About recycling, we've tried before once with some customers. The logistics is very complex, and most of the clients says that they will use this bag for other purpose later. We charge for the bag as well. That's the idea. That's the point. It's not waste. They use it for other purpose later.
The question: Is there an option to recycle these for multiple uses to reduce distribution costs? We looked into recycling them at different times throughout our journey. We try to incentivize the farmer to return those bags to us. We try to buy secondhand bags, but it's always chaotic and you end up, you know, it doesn't work. It doesn't work. We did try. Unfortunately, it does not work. What you do have is like some smaller companies that specialize in that, and then they try to put together a bunch of mixed bags and sell. Like for someone like us, you can't. We tried. We looked into different ways. It's something we looked into doing as well.
Yes, the selling price, as Felipe said, whenever we're selling the product, we add the big bag cost to the price of the product in bags. Next question. The cost of transportation is about 92% of the total sales cost. Do you have any way to reduce this transportation cost? Electrification of the operation. It's trucks. Not very economic at the moment to have electricity-generated trucks. We really rely on diesel, unfortunately. This calculation here about our cost of transportation being 92% of the total sale cost, it will vary depending on the mix of FOB versus CIF. It will vary during the time of the year. There are several variables here, but it's undeniable that transportation is a major element.
The transportation cost, logistics is a major element of the whole business. Next question. Would you be able to provide monthly updates regarding your major KPIs like sales, production, freight cost, et cetera? We've looked into that in the past, there's an issue about audit and about disclosure and about variability and a bunch of stuff. We don't disclose all of those KPIs. In the monthly newsletter, we try to keep people as updated as possible. You guys did really well in Q1, Q2, Q3 of 2022, it would be nice to not extrapolate the growth and the trend if we were given this monthly update. Understood. Freight transportation costs eroded Q4 profits. Do you expect this to be a significant issue going forward?
What really eroded Q4 profits were dilution of fixed costs, was the interest rate recognition, because when you look at the freight transportation cost, of course, it didn't help, but on its own, it wouldn't make the actual sales transaction uneconomic, unless of course, volumes aren't as big as one expected. Next. All in all, thanks for your candid transparency and the willingness to answer some of the tough questions. Thank you for your words. But it's my job. You know, it's my job. I think every CEO should expect to do that. Would be interested in some kind of follow-up about the geopolitical issues as it regards expansion into US.
I think this needs another, you know. It's a bit of a. It's something I don't feel like I can talk in detail. Sorry. Are you going to reduce marketing expenses in the short term as the commodity market weakens? It's a tricky one, isn't it? Because if you reduce your marketing expenses, it means you're not being seen by your customer as much as you want. It's all about finding that balance between making the right investment in marketing and getting the best of investment, the best return. We measure it very carefully. We try to measure it very carefully, and it's something we do. And that's something else artificial intelligence has also been helping us.
This is phenomenal, absolutely phenomenal how it will carry on being more and more relevant. I was talking to an expert, and he was talking about how some companies, given the AI revolution, we're gonna, you know, still in early days, but has begun. Some companies should consider recognizing the value of the data they hold in their balance sheets. He was just saying, you know, AI is all driven by data, if you were, like we were, able just to accumulate it and structure it in a way, and this is very, very valuable. Extraordinarily valuable. He was talking about some examples of companies which he believes the data itself is gonna be worth more than the company.
I don't think it's our case, but I know like from other competitors, from other companies, we are in a completely different league. There's a company in Brazil that was acquired in the fertilizer space for $hundreds of millions, and I spoke to the acquirer, and he was telling me the company didn't even have a CRM. It didn't have a CRM. It was like crazy, you know. You look at that sort of extreme situation and what we've been accumulated because what You know, we're talking about our thousands of customers, but in addition to our thousands of customers, at the moment, we have nearly 20,000 people in our database to whom we've been communicating somehow for the last few years.
We have all of that log, each interaction, each communication, each response, whatever the person looked, what happened in each case. All of that is what I think AI will be making a massive difference. Next question. Might you consider hosting an in-person AGM in Brazil this summer for shareholders who would like to visit the plant and mine site based on shareholders paying their own way to the event so as not to add any cost burden to Verde? We're very open to opening our doors and hosting trips from shareholders. It needs to be done in a structured way, in an organized way. We've done it several times in the past. Please do reach out and we will put together a trip for sure.
We need to look at the best time, we can gladly organize it. It's a pleasure. In terms of the AGM itself, as you know, we're now a Singaporean company. We're truly Singaporean company. We're working to develop the Asian markets out of Singapore. One of the important elements in that Singaporean connection is that AGM gets hosted in Singapore. This will be the location for the AGM. Anyone who wants to make the arrangements, we'll be happy to host them and meet them in Singapore. The AGM will be some point in June, before or after that, we are very excited to have people visiting our operations.
Can you give us some of your views into the future with respect to the opportunity and competition, given what you have seen over the last year? The future will never be easy. Probably it's easier than it was when we begun. If I had $1 for every person who told me we would fail when we begun production in 2017, I probably wouldn't need to sell any shares to diversify. I probably would be very diversified just out of this $1 I would be given. It has been amazing to see people acknowledging how wrong they were. There's still a lot of work to be done, and it's not easy being a small company in a market dominated by giants.
In a very competitive market, where we face all sorts of issues and I'm just lucky. I think we're just all very lucky with the team we have in Verde, how dedicated they are. Take the opportunity to thank Isabella and Luisa, who worked very hard in the last weeks, but especially in the last few days, to put together the presentation, all the materials, press release, everything. Thank you, Luisa and thank Isabella. You've done a phenomenal job. Yeah. In terms of competition, I think we'll only get worse in terms of when you look exclusively potash, exclusively the commodity.
I think that's why it's so important to do what we are doing from the new technologies, from the older technologies, from the all, you know, incorporated solutions and from how we approach it with our customers, not just as a company trying to sell a product, but really a company obsessed about its customers trying to come up with comprehensive solutions for their crop nutrition and to a certain extent, crop protection, business. Can you please try to estimate the market conditions for the year 2024 and beyond? In other words, how long do you expect the current challenging conditions to last? I don't know. I won't even try. I like to plan for the worst and expect the best. That's what we're doing.
CEO of Nutrien came out with a public declaration saying that, you know, expect the market to be tight, hopefully you're correct. Someone has mentioned here another mining company. What are the comparisons with Verde? I think the main comparison is that we're focused on what we are from a technological point of view. These other companies focused on potassium sulfate. We have several patents protecting our business model. We have a very strong relationship with thousands of customers and a relationship with the strongest distributors in the country now who are working together to collectively grow the market for our crop solutions. Are there any studies ongoing which could prove the upgrade on crop yields scientifically? Yes, there are. There will always be.
We just received something very interesting on eucalyptus, after two years, which helps to support BAKS. There's always research going on. Are there any updates on the timing of the railroad being built? There aren't updates on when the railroad will be built. The key milestone is the permit, it's the concession, the authorization for you to build one. This is highly regulated and would be a major, an enormous milestone for Verde to be able to sign an agreement with the new government to be looking into the construction of this 80 km rail connection between our operations to an existing rail line in Brazil. There was a press release put out at the end of last year. I strongly recommend you all to reread it. How is the terrain for 90 km rail line?
Is it flat or is it rolling hills? Some of it is rolling hills, a lot of it is flat. How many bridges will be required for the rail line? I don't know from memory. I don't think any bridge. I might be wrong. I can't from my, you know, out of my mind think about any river being crossed here. Something you might be interested to get the discussion in French amongst investors. Glad to know about our French investors and thank you for your support as well and your interest. Out of a curiosity. Well, let's investors can be customers too. Read the English in social media posts. You're right. You're absolutely right.
However, when we do some minor marketing in English to customers, we mainly use Amazon. Amazon has a pretty good platform for targeted engagement with people who, you know, perhaps added your product to their shopping basket or stuff like that. I'm sure there would be a lot more we could be doing in terms of international market, but one needs to focus. One needs to focus. As someone I respect a lot once said, you're really only focusing when you don't do something you would love to be doing. You don't do something that would be really exciting to be developed. Really important, really exciting, but you don't do that at the you know then because it's something else which needs your time and energy. It's only when you do that, you're truly focusing.
Not doing something, you know, was important, you know, wasn't very exciting, this isn't really focusing. It's really the other way. Thank you, Paolucci, Cristiano, for answering all those questions and being extensive. I wish next quarter and years to come will be easier for Verde and is nice for investors. Thank you for your kind words. Funny enough, this was the very last question we had here among 116 questions posted at three hours after we started. Probably Fidel Castro would be very impressed by our attempt to beat him on his long speeches and interactions. It is our job. We're very thankful for your support. We're very thankful for your interest in the company. We acknowledge our mistakes.
We try to learn from our mistakes as fast as we can and adapt to keep growing. We're really looking towards the next few years. We're really working now very hard to create what we believe the future should be looking like. This is really where my energy mainly goes and it's crucial for us really to create the future we believe we will succeed. Thank you for the long time shareholders. I know lots of you have been following us for several years. I know some of you who reached out to say, you know, glad to see an opportunity to increase the position. I feel sorry for the ones who left, if we disappointed them somehow. I wish that hadn't been the case. I wish them well.
I look forward to the next few years of our growth and development. There's a lot to happen this year. There's a lot of very exciting stuff we're working on, we hope to very soon start updating the market. Some of those I have made reference during this call. If you're watching it online, please make sure you share this video. If you liked it, please hit like. It's when you click that like button that YouTube will tell other people like yourself who might be interested in the company, might be interested in what we're doing. We appreciate your contribution.
I would like to share that from the 140 people that had started the call, were present 145, 150, we still have about 70 people towards the end after this long 33 hours journey. Thank you. Stay well. I look forward to seeing you all again and hear from you very soon. Bye-bye.