Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's second quarter 2022 results conference call. Today with us we have Mr. Mariano Bosch, CEO, and Mr. Charlie Boero Hughes, CFO. We would like to inform you that this event is being recorded and all participants will be in listen only mode during the company's presentation. After the company's remarks are completed, there will be a question- and- answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's management and on information currently available to the company.
They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecoagro and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.
Good morning and thank you for joining Adecoagro's 2022 second quarter results conference. Before going into the results of the quarter, a brief update on our distribution policy. As you know, we have committed to distribute via dividends and buyback a minimum of 40% of the net cash flow from operations generated in the previous year. In May 2022, we marked a milestone for Adecoagro as it was the first time in our history that we made a cash dividend payment. We paid out the first installment of $17.5 million, and in November of this year we will pay the second installment. As announced, this will amount to a cash dividend distribution of $35 million, approximately $0.32 per share.
At the same time, we continue buying shares under our buyback program and during the first seven months of the year, we repurchased 2.7 million shares, totaling more than $20 million. Now, going into the highlights of the operations, I would like to start with the sugar, ethanol and energy business. During the quarter, Adjusted EBITDA went up by 42% year-over-year, despite an increase in costs. This was thanks to our commercial strategy, which enabled us to sell most of our production at the peak of prices. Two clear examples of this. One, we started the quarter with our tanks full of ethanol, and in April, when ethanol prices hit levels 35% higher than sugar, we emptied our tanks and even sold our day to day ethanol production.
Second, in June, when domestic ethanol prices dropped, we exported part of our anhydrous ethanol to Europe and achieved an average premium of 15%. Exports are a possible outlet for our production because we have the necessary certifications and the industrial capacity to reach the alcoholic content required in Europe. It was because of our high degree of asset flexibility and our low sugar commitments that during the quarter we were able to divert 80% of our TRS to ethanol, the product trading at a premium in our region. Maximizing ethanol production also allowed us to generate more carbon credits and to produce more vinasse. Vinasse is the byproduct used to produce biofertilizers that we spread in our own fields, and it is also the main input for our production of biogas.
Regarding carbon credits, so far we have reached $7 million in sales and secured prices as high as $40 per CBIO. We expect to make $20 million in 2022 only from the sales of these carbon credits. As you know, the year started slowly in terms of crushing volume because we wanted to secure cane availability. We are now accelerating our pace to reach our crushing forecast for the year, which remains unchanged at roughly 11 million tons. We have entered into the second semester of the year with good cane availability. Agricultural productivity indicators fully recovered from the 2021 frost event, and we are also entering with enough storage capacity to carry over our production until year end if needed.
Now moving to our farming business. Harvesting activities of our crops and rice businesses related to the 2021-2022 season are practically finished, totaling over 1.1 million tons of grains production. Adjusted EBITDA in our farming business presented a year-over-year reduction, partially driven by the solid results of 2021, when we captured high commodity prices and lower costs. This year, there was a mixed performance in terms of prices and yields. In the case of yields, for instance, rice, peanuts, and corn second crop were lower compared to the previous campaign. At the same time, the global inflationary environment led to an overall increase in costs in dollar terms, which pressured margins, including higher cost of agricultural inputs as well as higher logistics costs.
These are the times where our constant discipline and strategy of focusing on increasing operational efficiencies and being the low-cost producers is more important than ever. It is the only way to achieve sustainable profits, even during the current circumstances. Now, before concluding, I would like to mention that three weeks ago, we published our first integrated report together with our 2021 audited sustainability report. There, we reinforced our commitment to the three ESG pillars. Over the past 20 years, since we founded Adecoagro, we created over 6,600 jobs, providing opportunities in regions where there weren't. We also contributed towards improving the educational levels of the regions where we operate. When we arrived to Angélica and Ivinhema, two cities in Mato Grosso do Sul, their educational levels well below the national average. Today, I'm proud to say that both cities outperform Brazil's score.
We are also working on promoting the development of women in agribusiness by offering trainings such as how to operate tractors, and that will provide them with necessary tools to get jobs in the region. From an environmental point of view, we manage over 520,000 hectares of farmland under a sustainable production model, which fix huge amounts of carbon in the soil. In terms of energy, over 90% of the Adecoagro's total energy consumption is self-generated renewable energy. These are just a few examples of the work we have been doing, which is now being overseen by our ESG committee to make sure it continue to be integrated into the company's overall strategy. To conclude, I want to reiterate my gratitude to all our employees, contractors and stakeholders for their hard work and commitment.
I am proud of the company we have built together over the past 20 years and excited about the opportunities ahead. Now, I will let Charlie go through the numbers of the quarter.
Thank you, Mariano. Good morning, everyone. Let's start on page 4 with a brief analysis on the rains in Mato Grosso do Sul. As seen on the top tables, rains in our cluster during the second quarter of 2022 were 103.4% higher than during the same period of last year and 3% higher than the 10-year average. After a dry start of the year, receiving above average rainfalls during March and April allowed our sugarcane plantation to continue to recover from the impact of 2021's frost event. Better cane availability, in turn, enabled us to increase our crushing pace and continue to take advantage of the constructive price scenario. Let's move ahead to slide 5, where I would like to discuss our sugarcane crushing.
During the second quarter, our crushing volume amounted to 3.3 million tons of sugarcane, only 5% lower than last year. This was thanks to our 27.3% increase in harvested area, which allowed us to compensate for lower productivity indicators, as we will see next. On a year-to-date basis, crushing volume reached 3.6 million tons, 35.7% lower compared to the same period of last year. This was fully explained by the dynamics of the first quarter, namely the late start of crushing activities, as expected, and the fact that harvesting activities were mostly concentrated on reform areas with limited growth potential. Nevertheless, we expected to make up for the slow start in the following quarters and reach our crushing volume in line with last year.
For instance, we accelerated our crushing pace, and in July 2022, we marked a new monthly record of 1.5 million tons crushed in our cluster. Please jump to page six, where I would like to walk you through our agricultural productivity. As we are expecting, sugarcane yields during the quarter were 24.5% lower compared to the same period of last year, reaching 60 tons per hectare, while TRS content presented an 11.8% reduction to 119 kg / ton. These reductions, which resulted in a 33.4% drop in TRS production per hectare, were fully explained by the lagging impact of 2021's adverse weather conditions, as most of the harvested area was cane below its optimal growth stage.
Sugarcane yields during the first half of the year reached 59 tons per hectare, while TRS content reached 117 kg/ ton, marking a year-over-year reduction of 24.6% and 7% respectively. Our strategy of mostly harvesting reform areas enabled us to allow areas with greater potential to continue to grow, liberate area to plant new high-yielding cane available for next harvest season, and maximize ethanol production and capture attractive prices. Let's move ahead to slide 7, where I would like to discuss our production mix. In the second quarter of 2022, both hydrous and anhydrous ethanol traded at an average price of $0.23 and $0.252 per pound sugar equivalent, 19.1% and 30.6% premium to sugar respectively.
Thus, we diverted as much as 79% of our TRS to ethanol to profit from higher relative prices compared to the 59% reported in the previous year. To further take advantage of price premiums, 43% of our total ethanol production was anhydrous ethanol compared to 34% during the second quarter of 2021. This high degree in flexibility constitutes one of our most important competitive advantages, since it allows us to make a more efficient use of our fixed assets and profit from higher relative prices. Year to date, we diverted as much as 80% of our TRS to ethanol, the product trading at a price premium. Although production of both ethanol and sugar was lower as a consequence of the reduction in crushing volume, this was offset by higher average prices.
We were able to capture attractive prices thanks to our higher inventories at the start of this year, which were 56% higher than in 2021 in the case of ethanol and 75% in the case of sugar. Let's please turn to slide 8, where I would like to discuss our selling volumes and average selling prices by product. As you can see on the left chart, ethanol reported a 16.6% increase in selling volumes to 258,000 m3, mostly driven by anhydrous ethanol sales, which increased by 37.5%. Moreover, average selling prices were up 45.4% year- over- year to $0.249 per pound, thanks to our commercial strategy of clearing out our tanks at the peak of prices and our flexibility to sell into the domestic market and export markets.
In the case of sugar, there was a 75.8% decrease in volume, which partially offset the 19.7% increase in average selling prices. The lower volumes sold were driven by lower production due to both lower crushing and lower mix, as well as by higher carryover relative to sales. In energy, higher average selling prices were fully offset by a decrease in selling volumes as a consequence of lower crushing and of our commercial decision to carry over bagasse in order to benfit from higher expected prices. Regarding carbon credits, let me remind you that due to the efficiency and sustainability in our operations, ranked among the hig hest in the industry, we have the right to issue carbon credits every time we sell ethanol.
Year to date, we sold 387,000 CBIOs, 2.5 x higher than the previous year, at an average price of $18.3 per CBIO. Following the end of the first semester, we cleared out our stock of CBIOs at an average price of $29 per CBIO, achieving prices as high as $40 per CBIO before the drop in prices in mid-July. Please jump to page nine, where I would like to walk you through our sales. Net sales amounted to $164 million during the second quarter of 2022, marking a 10.9% increase compared to the same period of last year. Higher revenues are fully explained by a 98.8% increase in ethanol sales during the quarter.
Volumes sold were mostly concentrated in April, when ethanol prices peaked, driven by a delay in the beginning of harvesting activities in Brazil. We took advantage of this scenario and conducted a monthly record sale of 125,000 m3, effectively clearing out tanks at an average price of $0.264 per pound sugar equivalent. During June, we began building inventory to be sold towards year-end at higher expected prices. In addition, to profit from higher prices abroad, during the quarter, we exported 10,000 m3 at a time when domestic prices traded at lower levels. This represents a competitive advantage as we are one of the few players in Brazil certified to export ethanol and who can reach the level of purity required in Europe.
Moreover, we sold $5.2 million worth of CBIOs under the RenovaBio program. On the other hand, sugar sales were $20.2 million, marking a year-over-year reduction of 71.7%. Whereas energy sales amounted to $9.5 million, 15.6% lower versus prior year. On a year-to-date basis, net sales amounted to $232 million, marking a 5.6% year-over-year increase. Out of this amount, ethanol sales were $186 million, 71.7% higher compared to the previous year, partially offsetting the 71.1% reduction in sugar sales. CBIO sales reached $7.1 million during the first six months of the year, whereas energy sales were $11.2 million, marking a 24.6% year-over-year reduction.
Despite the late start of harvesting activities, and thus the lower production, our commercial strategy to carry over stocks from 2021 enabled us to benefit from the constructive price scenario, in particular, to capture the hike in ethanol prices, both domestically and in export markets. Finally, to conclude with the sugar, ethanol, and energy business, please turn to slide 10, where I would like to discuss the financial performance. Adjusted EBITDA during the second quarter was $104 million, 41.8% higher year-over-year.
These solid results were mainly driven by the aforementioned increase in sales, a $10 million year-over-year gain in the mark to market of our unharvested cane, led by higher expected yields and prices, coupled with an increase in Consecana prices, which resulted in a gain in the mark to market of our harvested cane, and a $9 million year-over-year gain in the mark to market of our commodity hedge position driven by a decrease in prices. Results were partially offset by an increase in costs, mostly fertilizers, fuels, lubricants, in addition to the slight reduction in volume. These same drivers explain the 22.7% year-over-year increase in Adjusted EBITDA during the first semester, which amounted to $162 million.
In terms of breakdown, during the first half of the year, ethanol accounted for 81.5% of total Adjusted EBITDA generation in the sugar, ethanol, and energy business, considering other operating income, while sugar accounted for 14.5%. To conclude with this section, I would like to briefly comment on the outlook of our sugar, ethanol, and energy business for the second semester. One year ago, when our sugarcane plantations was hit by a regional frost, we communicated to the market what we believed would be the potential implications for our business. In line with our expectations, and as explained above, we entered into an in-harvest period from December 2021 to mid-March 2022 to allow our sugarcane to continue to recover from the impact of frost.
In terms of productivity, yields were impacted during the first semester, as expected, but presented a gradual recovery between the first and second quarter. We expect it will return to normal levels towards the second half of the year, as there will no longer be sugarcane impacted by the frost. Lastly, we are now accelerating our crushing pace to make up for the slow start of the year. That being said, our operational focus for the year was designed with these events in mind and seeing as our view has so far materialized, our focus for the full year remains unchanged. I would now like to move on to the farming business. Please direct your attention to slide 12. As of the end of July 2022, we harvested 271,000 hectares or 93% of total area and produced over 1,000,000 tons of aggregate grains.
The remaining hectares are expected to be fully harvested in August. Regarding our rice business, this quarter we included 12,000 hectares related to our recent acquisition of Viterra's rice operations, which had an average yield of 7.3 tons per hectare and marginally increased this campaign's average yield from 6.8-6.9 tons per hectare. As anticipated, being geographically diversified enabled us to mitigate weather risk. Let's move to page 13, where I would like to walk you through the financial performance of our farming and land transformation businesses. Adjusted EBITDA in the farming and land transformation businesses amounted to $20 million for the second quarter, 38.4% below the same period of last year. The decline is fully explained by a lower contribution from our crops and rice businesses into the overall results.
Year to date, Adjusted EBITDA was $56 million, 37.3% lower than the previous year, due to the aforementioned lower contribution, which fully offset the improved performance in our dairy business. Higher costs driven by a global inflationary environment, coupled with a mixed performance of yields and prices, were the main reasons towards the decrease. As known, inflation in the United States amounted to 8.5% for the last 12 months, whereas in Europe it reached 8.9%. This caused a pressure on margins across industries and geographies. In our crop businesses, Adjusted EBITDA amounted to $6 million in the second quarter, marking a 63.4% reduction compared to the same period of last year. Results were mainly impacted by higher costs in US dollar terms, mostly seen in agricultural input costs, such as fertilizers and diesel, as well as logistics costs.
Moreover, we reported a year-over-year loss of $6 million in the mark-to-market of our forward contracts due to higher commodity prices. Nevertheless, results were partially offset by a 66.9% increase in gross sales, coupled with a year-over-year gain of $5 million in the mark-to-market of our biological assets on higher harvested area and better prices. Year-to-date, Adjusted EBITDA was $24 million, 28.5% lower versus the previous year. It was mostly explained by higher costs in US dollar terms driven by global inflation and mixed performance in terms of yields, with peanut and corn second crop presenting a 4% and an 11% reduction, respectively, coupled with a $12 million loss in the mark-to-market of our forward contracts.
Adjusted EBITDA in our rice business was $5 million during the quarter and $13 million in the first semester, marking a 49.4% and 65.4% year-over-year reduction, respectively. Results were mainly impacted by lower yields and a 9% decline in prices at the moment of harvest. Thus, this resulted in a year-over-year loss in the mark-to-market of our biological asset and in the net realizable value of our agricultural produce after harvest of $3 million in the second quarter and of $20 million in the first six months of the year. Regarding yields, the decrease was caused by the impact of La Niña in some of our rice farms. We are confident that the acquisition of Viterra's rice operations will contribute to mitigate weather risk and increase our geographic diversification in the region.
Moreover, EBITDA generation was also negatively impacted by higher costs in US dollar terms, which pressured margins. Moving on to the dairy business, Adjusted EBITDA amounted to $7 million during the second quarter. That is compared to the previous year, whereas during the first half, it amounted to $14 million, marking a year-over-year increase of 17.6%. In both cases, results were explained by an increase in both volume and average prices and our continuous focus on achieving efficiencies in our vertically integrated operations. Again, results were partially offset by higher costs in US dollar terms driven by the global inflationary environment. In the case of land transformation, although no farm sales were conducted, the positive results reflected the mark-to-market of an account receivable corresponding to the latest sale of farms in Brazil, which tracks the evolution of soybean prices.
Let's now turn to page 15, which shows the evolution of Adecoagro's consolidated operational and financial performance. On a year-to-date basis, gross sales expanded 27.7% year-over-year to $588 million, whereas Adjusted EBITDA amounted to $205 million, marking a 2.7% decline compared to the same period of last year. In terms of production, we expect crushing volume to end in line with last year as we are accelerating our crushing pace. However, it is worth to highlight that despite lower year-to-date crushing, we were able to capture high prices thanks to our commercial strategy. To conclude, please turn to slide 16 to take a look at our net debt position. As of June 30, 2022, net debt amounted to $830 million, 5.3% higher compared to the previous quarter.
This was fully explained by a 9.4% increase in gross debt, partially offset by a 31.8% increase in our cash position. As a reminder, cash generation is concentrated in the second semester of the year, whereas the first has the highest working capital requirements as our crops are planted and harvested. Thus, we expect to reduce our indebtedness as we finish with harvesting activities and start collecting sales throughout the next quarter. On a year-over-year basis, net debt increased by 11.5%. This was mainly driven by the impact of adverse weather conditions in Brazil, resulting in a year-over-year reduction of 3.5 million tons in our crushing volume and negatively impacting our last 12-month results, coupled with a higher working capital build-up, mostly on account of higher input costs.
We believe that our balance sheet is in a healthy position, not only based on the adequate overall debt levels, but also on the term of our indebtedness, most of which is long-term. Our net debt ratio was 1.9 x in this quarter, flattish versus the previous quarter. At the same time, our liquidity ratio reached 1.3 x. This clearly shows the full capacity of the company to repay short-term debt with cash balance without raising external capital. Thank you very much for your time. We are now open to questions.
Thank you. The floor is now open for questions. If you have a question, please press star one on your touch tone phone at this or any time. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Questions will be taken in the order they are received. We do ask that when you pose your question that you pick up your handset to provide optimum sound quality. Please hold while we poll for questions. Our first question is from Isabella Simonato with Bank of America. Please go ahead.
Good morning, everyone. Guilherme here from Bank of America. Two questions from our side, in terms of the sugar and ethanol business. First, congratulations on the commercial execution in this first half. Looking forward, if you could just share your thoughts in terms of the mix that you expect to crush in terms of ethanol and sugar. Just in terms of the commercial strategy, when you look in terms of hedges for this season and the next one, what is your strategy there? We saw marginal improvement in terms of the volumes hedged of sugar. If you could share your thoughts going forward, please. Thank you.
Hi, Guilherme. Thank you very much for your question. We also have in the website another question from Eduardo Muniz related to the same point. The question is related to the tax reduction in Brazil, what are the impacts to your strategy for the rest of 2022? Is anhydrous ethanol production preferable? Are anhydrous prices sustainable? How do you see the trend for the ethanol exports? Better sugar production for second half and is the prices dropping, can expect strong EBITDA growth margin expansion year-on-year. I think your question plus this question in the website will be answered by Renato that can give more color on this. Renato.
Okay, thank you for the question. Starting with sugar, we remain very positive with the sugar outlook. We think that the drop of price a couple of weeks ago was a technical movement, nothing related to the fundamentals of the sugar. Actually, we are positive with the sugar scenario. If you take the supply side of the equation, we think that the Center-South TRS production is going to be in line with last year, a little bit more crushing and a little bit less TRS per ton. The mix, I think, is going to increase a little bit towards sugar, approximately 1%, which represents approximately 1 million tons of sugar.
It's not a big change because the mills were already maximizing sugar before the tax change. Also because in the third quarter, it's more difficult to have more flexibility because the TRS content is very high. The sugarcane is rich and mills are trying to crush as much as possible. Also the European crop is having some issues, so we expect a lower crop from Europe. I think that there are a lot of points in the supply side. Going to the demand side, the lower price increase the demand for sugar from the destination.
We think that a good indication of that is a strong cash premium and a strong line up. Here, just a point regarding Adecoagro, since we have not hedged our total position, we have hedged now 63% of our 2022 production at $0.1958 per pound. We are being able to capture the spot market premium, approximately 2%, this cash premium that I was just mentioning. Also, the market is predicting a sugar deficit in the Q3 and Q4, which is maybe more positive for price. I think the last point on sugar, the current price of sugar, is below the Indian parities, so the market needs the Indian sugar.
We believe that the sugar has to increase close to 19 or even a bit higher to attract Indian sugar. At those levels, we might increase our hedging position. Regarding the ethanol outlook and strategy, we are also positive with the ethanol. Independent from the tax change, which clearly puts some pressure in the hydrous ethanol. We are positive with the S&D scenario. The TRS production is the same thing as I said to sugar. The TRS in the Center-South of Brazil will be similar to last year. The fact that the mills are maximizing sugar and increasing 1 million tons of sugar will put more pressure in the hydrous market.
The exports that have been increasing a lot. I think the exports are more than 80% higher than the same period of last year. It's consuming more ethanol. We can see that demand is also recovering. UNICA reported some numbers now, and we can see that the demand is recovering. The parity rate at the pumps is close to 7%, which would incentivize the consumption. I think most important, our strategy was carryover at our hydrous production. We have a lot of flexibility in our tanks because as was mentioned, we sold our production in April at very high levels, more than $0.26 per pound. We have a lot of tanks to store hydrous right now, and that's exactly what we are doing.
We are maximizing the anhydrous. We can produce almost 7% of anhydrous ethanol of the total production in our mills. We can also dehydrate the hydrous that we have in the tanks because we have a lot of bagasse to produce energy to dehydrate. Eventually we can produce even more anhydrous dehydrating the hydrous that we have in the tanks. We are delivering our anhydrous contracts. Anhydrous contracts has approximately between 15%-20% premium over hydrous. We are delivering our contracts today at a price of $0.21 per pound. Also, we are taking advantage of the international market to export.
We have already exported 8,000 m3 , and we think that we can export some extra 20,000 m3 , reaching 100,000 m3 in total. These exports have a premium over 15% over anhydrous in the internal market. Here, I think it's important to highlight that not all the mills can do those exports. You need to have the certification, as Mariano mentioned at the beginning of the call. We have the Bonsucro certification, and we have the peneira molecular, which is the equipment to produce anhydrous that we can reach 99.7 degrees of alcoholic level, which is required by the European market.
I think depending on the scenario, we might dehydrate more, but it is still that's the main strategy at least for now. Regarding the sugarcane that I think Mariano asked in the second part of the question, as we have been discussing, the first semester we were having lower yields than we expected due to the frost of last year, and also because of our strategy to prioritize the harvest in the beginning of the year of the cane with lower potential growth. Basically, we crushed only replanting areas. Now that we are moving to the second semester, we can see that the yields are recovering very fast. Actually, the sugarcane fields are looking very good.
As it was mentioned in July, we have a monthly record crushing in our cluster in Mato Grosso do Sul. We crush almost 1.6 million tons of sugarcane in a month. Also, I think it's important to mention that early this week, we had 55 millimeters rain in our cluster in Mato Grosso do Sul, which was fantastic for the sugarcane outlook, supporting the improvement towards the end of the year and in the next year. As the season advance, we expect to catch up the crushing gap, finishing the year with a crushing similar or slightly higher last year.
By doing this, our costs will be diluted. We expect that the total costs this year will be 10%-15% higher than last year, something close to the inflation. I think that were the questions, right, Mariano?
Thank you, Renato.
Thank you.
Thank you.
The next question is from Lucas Ferreira with JP Morgan. Please go ahead.
Hi, everybody. Can you hear me?
Yes, perfectly well.
Oh, okay. Thank you. I have two questions. The first one maybe also to Renato about the quality of the sugarcane and the damage that was caused by the last year event. My question is, Renato, if we have like a normal rain season during the summer, how will be the quality of your sugarcane next year for the next season? How fast can crushing recover if you have no weather issues during the summer? The second question to Mariano and Charlie. If you can talk about the outlook for the following season in the farming and rice businesses regarding your expectations on weather and also costs.
If you can comment on how that, especially the fertilizer line impacted you this season and how, regarding, considering your purchases, how should we think about this fertilizer line going forward? Thank you.
Thank you, Lucas, for your question. Renato, do you want to comment on how the sugarcane is looking?
Hi, Lucas. As I was mentioning, the sugarcane is looking very good. All the sugarcane that we are harvesting now, they are regrowing. This, the, this, ratoon crop that we call, is looking very, very good. The fact that a year that we didn't have much rains in key periods, were very good because we didn't have damage during the harvester's operation. We are very optimistic about the sugarcane for next year. We didn't have any frost this year, so we have basically finished the window that we have frost in Mato Grosso do Sul, so no frost this year. We are very optimistic about next year.
We expect to increase our crushing in at least 10% compared to this year. I think next year is going to be a transition year because we are recovering from a lot of weather bad events. It's a year of recovery and probably will reach our full capacity or get very close to our full capacity, not next year, but in the following one.
Very clear, Renato. Thank you. Lucas, regarding the outlook for the following season, we are very well positioned today in rice and crops for next season. We are starting the planting season. The amount of water we have already in the reservoirs for the rice operations are very good and enough to have a very an excellent season. Regarding the crops, all the fields are ready to start the planting. We have all the necessary inputs. We have acquired more, and that's why you see more inputs and more working capital for this season in order to be well prepared for the planting season, that is what will be reflected in 2023 numbers. Just to give you a little bit more color, the campaigns are shown in the following year.
The campaign 2021 is what we reflected in the numbers of 2021, on the 2021 year, that for rice and crops was an excellent year. That excellent year of 2021 has to do with very low cost at the planting time and all the price increase in 2021. That was an exceptional year, the 2021, when we analyze all the history of our results in crops and rice. When we go to the following year, that is the current year, we are having not that good results, because we have a small increase in prices, 10%-15% increase in prices, and almost a 40% increase in the price of mainly freight, fertilizers and chemicals.
All that increase in prices is being reflected in the current campaign that we just finished that is reflected in this current year, 2022. For next year, 2023, that is what we are starting to plant right now, is where we think we are much more optimistic because the price increase has already occurred and we are still bullish in the price of the commodities that we will have to, we will be harvesting. Here I would like to make a special point in our perspective for rice production. Rice is something we are feeling, we are seeing very well demanded today. All this general drought and excess of hot is and there is a lack of water all over the northern hemisphere, including the U.S. and Europe.
We see a lot of demand from Central America that was used to be supplied from the U.S., and now we are opening that supply, even in reducing some of the export quota, the import quotas that they have or the import limits that they have in Central America. Also in Europe, we've sold this year 35% of all our production to Europe, something that had never happened. We see that demand increasing because Europe has this problem, this climatic problem I have just mentioned. When they look for rice, they cannot supply their needs from Asia, that is the cheaper rice, and they need to come here to South America.
The demand from South America is being higher because they have the necessary quality that they need, the traceability, the security that they need when they are sourcing for this product. That's why I wanted to make this special point in rice, where today for us, that we have improved a lot in the logistics, our ports, and adding Uruguay, we are becoming a main supplier from South America, including rice from Uruguay and Argentina. We position ourselves in the commercial discussions as the, probably the main supplier from South America to those origins.
Perfect. Just one quick clarification. The fertilizers you're gonna be using the 2023 crop season with the one you're starting to plant now. How much that increased over 2022? Just so we have an idea.
The main impact is 2022. The impact we increased, so the numbers we are reflecting today increased 40%. Now, from that 40% to today is almost flat.
Okay, perfect. That's what I wanted. Thank you very much.
Yeah.
Again, if you have a question, please press star then one. The next question is from Henrique Brustolin with BTG. Please go ahead.
Hi, good morning, everybody. One question on my side on the sugar and ethanol business as well. I just wanted to hear from you when we look forward, how do you see the current environment to continue expanding the sugarcane fields you have in your current cluster? And when you think about your installed capacity to fill that up, how much do you believe, you know, improved yields should help that, and how much should come from a bigger area expansion? That's my question on the sugar and ethanol side.
Okay. Thank you very much, Henrique, for your question. Renato, do you want to comment and then I can complement?
Yes, yes. Thank you for the question. Our current area of sugarcane is almost enough to supply our industrial capacity. Our industrial capacity in the cluster in Mato Grosso do Sul is around 12.5 million tons, and in Monte Alegre, 1.2. We have an area almost enough to supply all the cane that we need. Of course, we depend on the yield that we are discussing. If you have a yield between 85 and 90 tons per hectare, we are fine. We are still planting new areas because we think that we always can crush a little bit more than that.
In the industry, we always can remove some bottlenecks and crush a little bit more. We have a lot of farms in our cluster in Mato Grosso do Sul that are very strategic, very close to our mills, so we can reduce the average distance of our sugarcane fields. Take it into consideration, as I said before. Next year is a transition year, so we should be crushing in Mato Grosso do Sul close to 11 million tons of sugarcane. I'd say 1 million tons more than this year and probably reach something between 12 and 12.5 on the following year. I don't know, Mariano, if you want to comment.
No, yes, clear. The 12.5 is only in Mato Grosso do Sul adding the 1.2 of UMA, reach the 13.7 that we always talk about as a total amount that we will be crushing. Just that clarification. On top of that, I would add to your question that you've seen all over Brazil sugarcane area being reduced. In this specific area of Mato Grosso do Sul, because of the particular competitive advantage of the sugarcane over the soy and corn, it's been a different case. We've been continuing to increase our sugarcane area comparing to these areas because it is more competitive because of the combination we always talk about, the soil and climate and what is more profitable to do in that specific areas.
That's why we are so optimistic to complete our crushing capacity. On top of that, as Renato was saying, we can go even further when we think in the long-term project of the organic growth of this area that can continue to improve.
That's very clear. Thanks very much.
This concludes the question- and- answer session. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.
Thank you everyone for participating in the call, and hope to see you in our next event.
Thank you. This concludes today's presentation. You may disconnect your line at this time, and have a nice day.