Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's first quarter 2021 results conference call. Today with us, we have Mr. Mariano Bosch, CEO, Mr. Charlie Boero Hughes, CFO, and Mr. Juan Ignacio Galleano, Investor Relations Manager. 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, the CEO. Mr. Bosch, you may begin your conference.
Good morning, and thank you for joining Adecoagro's 2021 first quarter results conference. As you may have seen in our release, we continue delivering strong operational and financial results. Adjusted EBITDA marked a new record high for the first three months of the year, and an increase of almost 80% compared to last year. The results achieved prove the success of the investments we did that are driving our EBITDA and cash generation as we projected. During the past five years, we have invested approximately BRL 400 million across all our businesses in projects that are generating returns on invested capital of over 25%. These investments have improved the efficiency and sustainability of our operations, enhanced our competitive advantages, and allowed us to be better positioned to face all different scenarios.
Just as important as the consolidation of our investment is the commitment of our team, our focus on efficiencies, and our strategy of being low-cost producers. It was thanks to this that in 2020, we achieved solid results despite the challenging environment, and it is also the reason why we are now able to benefit from the improved price scenario and generate higher results. Moving on to the performance of our businesses. In our sugar, ethanol, and energy business, one of our competitive advantages is the fact that we operate under a continuous harvest model. This means we can crush sugarcane nonstop year-round, even during the first quarter, which is the traditional inter-harvest period. Actually, we crushed a record high for the first three months of the year. It allowed us to dilute fixed costs and capture good sugar and ethanol prices.
Achieving this crushing volume was possible thanks to the investment we did to expand our sugarcane plantation, increase the capacity of our mills, and enhance efficiencies at every stage of production. A very relevant aspect of our production system is the high flexibility we have to switch from producing sugar to ethanol and vice versa. We make the decisions of which product to maximize on a weekly basis, given the changing environment. For example, we are currently maximizing ethanol production since it is trading at a premium to sugar, when two weeks ago, we were maximizing sugar to capture the higher prices. We believe that throughout this year, we will see a healthy competition for the TRS of the cane that will provide support to both sugar and ethanol prices. Before moving on to the other businesses, I would like to make a brief comment on the weather in Brazil.
As you know, the Center-South region has been experiencing a dry weather for the past months. As we are based in Mato Grosso do Sul, which has a different weather dynamic, we experienced a humid first quarter. This means that our sugarcane is better prepared to go through the current drier weather with less implication than the Center-South region. In our farming and transformation businesses, every segment outperformed last year's figures, more than doubling our Adjusted EBITDA. Once again, I would like to insist that this is a result of our teamwork and of our bigger, more efficient, and vertically integrated operation. A clear example is our rice business, which almost doubled its EBITDA. Throughout the past years, we put a special focus on productivity as a key variable to minimize cost per ton, the grain quality, the efficiency throughout the value chain.
With this in mind, we carried out specific investments which enabled us to do a full turnaround of the business at the same time as we improved the sustainability of our operations. This was only possible thanks to the team spirit and innovative approach of our people. They work with passion and dedication to coordinate the enormous logistics surrounding the production of rough rice and delivery to our mills, obtaining a quality product in time to be sold throughout the different commercial channels. Moving to our crop businesses, we are currently undergoing harvesting activities with yields in line with our forecast. In this segment, diversifying into higher value-added crops was a key to drive EBITDA generation. This investment in our peanut and sunflower facilities allowed us to vertically integrate our operations and maximize our results.
In our daily operations, we continue delivering strong operational results and improving our productivity indicators even as we populate our fourth free stall. This higher volume of milk evidences, among other things, the importance of our fully integrated process, which enables us to offer high-quality products to customers in the domestic and the export markets. As mentioned in our past release, last year, we became free cash flow positive for the first time since 2017. Now that the results are in front of us and that our five-year plan is in its final stages, we are confident that the cash flow generation will continue to increase in the upcoming years. We have reached the debt levels we think is adequate and well-structured. Just like 2020 marked a turning point for us in terms of cash generation, 2021 will mark the year when we start distributing cash to our shareholders.
This is a priority, and as you can see, we have already started doing it through our buyback program. As of today, we have already repurchased 1.5 million shares. To conclude, I would like to take a moment to reflect on our journey during these past years. In our Investor Day of October 2018, we communicated to the market that we had embarked on a five-year investment plan. This represented a huge challenge for the company, but we had the conviction that we would be able to complete it with success. Now, we are very proud of our achievements, which translate into the results we are presenting today. I would like to reiterate my gratitude to all the operational management team.
It is thanks to their daily effort and hard work that we are one of the lowest cost producers in the entire world, and we are generating attractive and sustainable margins for all of our shareholders. Now, I will let Charlie walk you through the numbers of the quarter.
Thank you, Mariano. Good morning, everyone. Let's move to page four with a brief analysis on the rains in Mato Grosso do Sul. As seen on the top charts, rains in our cluster in Mato Grosso do Sul during the three-month period of 2021 were 60.8% higher than during the same period of last year and 20.2% higher than the 10-year average. Precipitations were registered throughout the quarter, but were especially concentrated in January, with registered rains doubling the 10-year average level. As can be seen in the bottom left chart, the frequency and distribution of rainfall caused interruptions in our crushing activities, leading to a 10.1% decrease in milling per day. This was fully offset by an early start of milling activities in our cluster, which resulted in an 87% increase in total milling days and 76.1% increase in effective milling days.
We were able to achieve these higher results because our teams were readily available to restart crushing activities and because, as opposed to the first quarter of 2020, we had good cane availability, thanks to our strategic decision to reduce our milling pace during last year. As a result of this, crushing volume reached 2.1 million tons of sugarcane during the first quarter of 2021, 58.3% or 800,000 tons higher compared to the same period of last year. Please jump now to page five, where I would like to walk you through our agricultural productivity. During the quarter, sugarcane yields reached 75 tons per hectare, while TRS content reached 112 kg per ton, marking a 15.4% and 14.3% increase, respectively, compared to the same period of last year. The combination of these two effects resulted in a TRS production per hectare of 8.4 tons, 31.9% higher year-over-year.
The year-over-year gap is explained by the strategy we adopted during the first quarter of 2020, with the aim of capturing the high ethanol prices observed during that quarter, while being mindful of securing cane availability for the rest of the year. We maximize the harvest of hectares with low productivity potential, thus allowing the sugarcane with highest potential to continue growing and recover from the impact of the 2019's adverse weather conditions. Let's move ahead to slide six, where I would like to discuss our production mix. As you can see in the top left chart, during the first quarter of 2021, sugar traded at a premium of 10.2% and 5.1% to hydrous and anhydrous ethanol, which traded on average at $0.146 per pound and $0.155 per pound respectively.
In this context, all our efforts were focused on maximizing sugar production, except for a few specific days when ethanol traded at a premium. As can be seen on the top right chart, during the first quarter of 2021, we diverted as much as 40% of our TRS to sugar, compared to 5% during the same period of last year, resulting in a sugar production 15x higher. I would like to insist that this high degree of flexibility constitutes one of our most important competitive advantages, since it allow us to make a more efficient use of our fixed assets and sell the product with the highest marginal contribution.
It is worth pointing out that the sugar mix achieved marked a record high for the first quarter of the year, as the content and quality of TRS observed during the first month of the year usually favors the production of ethanol. Despite producing a less alcoholic mix compared to the first quarter of 2020, ethanol produced increased year-over-year as a consequence of the greater crushing volume and TRS content, allowing us to capture good ethanol prices. During the first quarter of the year, ethanol accounted for 70% of total EBITDA generation in the sugar, ethanol, and energy business, considering other operating income, while sugar accounted for 28%. Let's please turn to slide seven, where I would like to discuss quarterly sales. As you can see on the top left chart, ethanol sales volumes decreased by 14.1% year-over-year.
This is mainly explained by our commercial decision to increase our carry to benefit from higher expected prices. Ethanol's average selling price measured in BRL increased compared to the first quarter of 2020, but was lower measured in U.S. dollars, standing at $0.157 per pound in sugar equivalent and representing a 3.7% year-over-year reduction. All in all, net ethanol sales during the quarter reached BRL 43.4 million, 17% lower compared to the same period of last year. Allow me to briefly point out that the ethanol volume sold enabled us to continue issuing carbon credits under the RenovaBio program, and thus capture an additional revenue stream registered in the other operating income line. In fact, during the quarter, we sold 102,000 CBIOs at an average price of BRL 31.9 per CBIO, equivalent to $6 per CBIO.
In the case of energy, selling volumes reached 120,000 MWh, marking a 12.3% year-over-year increase. Average selling prices were lower, both measured in BRL as well as in USD, standing at BRL 30.3 per MWh, implying a 23.2% decrease compared to the same period of last year. Overall, net sales totaled BRL 3.6 million, 13.7% lower compared to the first quarter of 2020. Sugar sales during the quarter reached BRL 25.2 million, almost 9x higher than during the first quarter of 2020. This increase was driven by a 26.4% increase in average sugar prices, which reached $0.183 per pound, and an increase of over seven times in selling volumes. Our strategy to maximize sugar production, coupled with the increase in crushing volumes, resulted in a greater volume available for sale to capture the higher sugar prices observed during the quarter.
In addition, we exported over 2,700 tons of certified organic sugar produced in our UMA mill, capturing an average price premium of 50.3% over VHP sugar. In this way, we not only have a highly efficient cluster model in place, but also continue to add value to UMA. Finally, to conclude with the sugar, ethanol, and energy business, please turn to slide eight, where I would like to discuss financial performance. Adjusted EBITDA during the first quarter of 2021 was BRL 58.2 million, 42.1% higher compared to the same period of last year.
In addition to the higher net sales, the increase was explained by a cost reduction measured in cents per pound as a consequence of the higher crushing volume, the depreciation of Brazilian real, and attained efficiencies at the farm and district industry level, and a BRL 26.5 million gain derived from the mark-to-market of our sugarcane, of which BRL 15 million has already been harvested and hence is realized margin, while the balance will become cash in the upcoming quarters. This was partially offset by a loss derived from the mark-to-market of our commodity hedge positions, led by the increase in prices. I would now like to move on to the farming business. Please direct your attention to slide 10. We have completed planting activities for the 2020 and 2021 harvest year, reaching over 262,000 hectares, 9% higher than the previous harvest season.
This increase is mainly driven by an increase in peanuts and sunflower planted area. Two crops, which are a good fit into our crop rotation system, offer higher margins and strengthen our diversification strategy. Harvesting activities are well on their way, but it is worth pointing out that the intensive rains registered during March in Argentina led to a slower harvesting progress achieved during this quarter compared to the same period of last year. However, harvesting activities have since been resumed with no impact on yields. Let's move to page 11, 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 reached BRL 56.2 million in the first quarter of 2021, BRL 31.5 million or over 2x higher year-over-year.
The increase was mostly attributable to the farming business, which registered a year-over-year increase in Adjusted EBITDA of BRL 28.7 million, showing the benefits of having bigger, more efficient, and vertically integrated operations. The crops business generated an Adjusted EBITDA of BRL 17.9 million, more than four times higher than during the first quarter of 2020. The increase was explained by a BRL 5.8 million gain in the mark-to-market of our biological assets, driven by an increase in commodity prices, especially soybean and corn, despite lower yields and lower harvested area, and a BRL 9 million cost reduction due to the enhanced efficiencies and the depreciation of the Argentine peso, which led to a dilution of costs in U.S. dollars. This was partially offset by a decrease in gross sales, explained by a 43.8% reduction in selling volumes, mainly due to the slower harvesting progress achieved during the quarter.
The rice business generating an Adjusted EBITDA of BRL 28.3 million, 86.7% higher compared to the same period of last year. This increase was explained by a 11.9% increase in yields and an increase in prices, which led to a BRL 13.7 million increase in the mark-to-market of our biological asset and agricultural produce, and a BRL 3 million increase in gross sales driven by higher average prices, which fully offset the lower selling volume. We were able to achieve these results because for the past years, we have focused on three main goals. Productivity as the key variable to minimize cost per ton, grain quality to improve industrial efficiencies coupled with traceability to be used as a commercial tool, and efficiency throughout the value chain by focusing on synergies at every level.
In this line, by carrying out investments to improve logistics and enhance efficiencies at the farm level, we were able to achieve higher yields and reduce costs per ton. By diversifying our product portfolio, working on our own genetics, and achieving a customer-centric view, we successfully increased our average selling price. The dairy business generating an Adjusted EBITDA of BRL 4.7 million in the first quarter of 2021, 48.8% higher year-over-year, mainly driven by a 14.5% increase in gross sales on account of the higher selling volume, mainly derived from the export market, and our continuous focus on achieving efficiencies in our vertically integrated operations and increasing our productivity levels in every stage of the value chain. It was partially offset by the lower price of milk and by the higher cost of cattle.
Our land transformation businesses registered an Adjusted EBITDA of BRL 5.1 million, explained by the gain in the mark-to-market of an account receivable corresponding to the latest sales of farms in Brazil, which was positively impacted by the increase in soybean prices. Let's now turn to page 13, which shows the evolution of Adecoagro's consolidated operational and financial performance. During the first quarter of 2021, we achieved solid results both from an operational and financial point of view. Adjusted EBITDA totaled BRL 109 million, 78.7% higher compared to the same period of last year, marking a new record high for the first three months of the year. We were able to achieve these high results and capitalize on the rally in commodity prices, thanks to the investments we carried out since 2017 across all our businesses.
As we projected, these investments are driving our Adjusted EBITDA and cash generation and have been offering attractive returns. To conclude, please turn to slide 14 to take a look at our net debt position. As you may see in the bottom left chart, our net debt as of March 31st of 2021, reached BRL 732 million, BRL 97 million higher compared to December 31st of 2020. The 3.1% reduction in gross debt was fully offset by a 38% decrease in our cash position. This is explained by the fact that cash generation is concentrated in the second semester of the year. From a seasonality point of view, the first quarter has the highest working capital requirements, since during this period, all of our crops are planted and most costs incurred, but only a small amount of the crops are harvested and sold.
As we continue harvesting throughout the second and third quarter, we expect to reduce working capital invested and debt. On a year-over-year basis, net debt during the quarter was 2.9% higher than during the first quarter of 2020, also explained by the decrease in cash position. This was mostly driven by a 64.4% increase in inventories led by our commercial strategy to carry stocks in order to benefit from high expected prices, especially sugar and ethanol. The decrease in accounts receivables due to the greater sugar maximization and the increase in planted area in the crops, rice, and sugar, ethanol, and energy businesses, as well as the increase in milking cows in our dairy business. Net debt ratio reached 1.88x , in line with the fourth quarter of 2020 and 18.8% lower than the first quarter of last year.
At the same time, our liquidity ratio, which is calculated as cash and equivalents plus marketable inventories divided by short-term debt, reached 1.84x . Any value above one point shows the full capacity of the company to replace short-term debt with cash balance without raising external capital. We consider our balance sheet to be in a healthy position based not only on the adequate overall debt levels, but also on the terms of our indebtedness, most of which is long run term debt. Thank you very much for your time. We are now open to questions.
Thank you. The floor is now open for questions. 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. Today's first question comes from Thiago Duarte with BTG Pactual. Please go ahead.
Hello. Good morning, Mariano. Good morning, Charlie. Thanks for the call. I have three questions. I'll try to be brief. I'll start with the sugar and ethanol and energy segment. As you mentioned in your opening remarks, Mariano, that there's been growing concerns on the poor rainfall levels that should be affecting cane yields across the Brazilian Center-South. You already mentioned that Adecoagro clusters weren't as affected, which is great. I wanted to hear your views on how you think that it will affect sugar production in the Center-South of Brazil, sugar and ethanol production in the Center-South of Brazil in general in this ongoing crop. The reason why I'm asking this is because I suspect that the industry will continue to maximize sugar output, that ethanol output will be the one sacrificed by lower feedstock availability.
I wanted to hear your views on how we should expect Adecoagro to react to this scenario in terms of production mix. The second question is related to capital allocation. Based on the current environment, it looks like you're headed to a very good free cash flow generation this year, coming from better commodity prices and the phasing out of your five-year investment plan. Can you please remind us what's the ideal or the target leverage ratio that you are aiming, and whether you should be able to come out with a stronger dividend cash distribution policy beyond the share buyback that you have been executing? If you see room for another round of capacity expansion and attractive investment opportunities across your business units. Just how we should see capital allocation between dividends and cash distribution and investments.
Finally, my third question is on the rice business. You have been showing a very good progress in this quarter in particular, very good contribution from the rice business, in terms of yields and in terms of prices as well. Can you comment a little bit on the outlook and the sustainability of those margins, in particular, in terms of how you see the pricing outlook going forward? Thank you so much.
Thank you, Thiago, very much for your questions. I'm going to take first your first question on the sugar and ethanol outlook for this year in general and our strategy there and how is the climate affecting, and I will ask Renato to give more color on this. Renato, can you answer Thiago?
Hi, Thiago. Thank you for your question. I think it's becoming clear that the dry weather in the Center-South, Brazil is going to have less TRS than everyone was imagining. I think most analysts are saying a drop in about 10% of the TRS produced. I think it's becoming clear that Brazil has not enough TRS to supply the 36 million tons that the world needs from Brazil, and also to supply the recovering ethanol market that should be increasing approximately 6% this year. 6% in ethanol market is equivalent of 2.7 million tons of sugar equivalent. Different from the last two years, we think that the two products, sugar and ethanol, will be trading close to the parity. Last year, we saw sugar paying much more than ethanol. There are a lot of switch from ethanol to sugar, I think almost 11 million tons.
The year before, it was exactly the opposite. This year, we think that we'll be seeing a healthy competition to the same TRS from sugar and ethanol. That's why we think that both products will have good prices. Our strategy in this scenario is to be as flexible as possible to turn or to change the mix in a weekly basis, as Mariano mentioned before, taking advantage of the product that is more profitable at that particular moment. Just as a reference, today, hydrous in Mato Grosso do Sul is equivalent to $0.19 per pound, and an anhydrous, $0.20 per pound. Now we are maximizing ethanol.
Yeah, Renato, Thiago, anything else on the sugar and ethanol? Is that okay?
No, that's okay. Okay. My follow-up would be how he thinks the mix in the Center-South of Brazil will behave once he believes the two products are going to be trading at parity. The consensus was there was going to be a maximization of sugar output, and whether he thinks there's going to be more TRS diverted to ethanol, not from Adecoagro, which is clear, the strategy, but from the whole industry or the industry in general.
I understand your question, Thiago. As we mentioned before, we think that the parity will be similar, even in the Center-South, not as in Mato Grosso do Sul, because Mato Grosso do Sul the parity is a little bit different, but closer than the last two years. Since most players in the Center-South is very advanced in their hedging, I think they'll keep maximizing sugar, at least when the prices are very close as we are today. We think that most projections, and we believe that they are correct, the Center-South will try to produce the 36 million tons that everyone is expecting from Brazil.
Okay. Thank you, Renato.
Thank you.
Just to complement Thiago, this is why our strategy is to continue to be open on the sugar price. That's in general or compared to the rest. I will go to the second and third question that you asked. On the third question, that is the rice operation. Thank you for that question, and it's an opportunity to point out again, the amazing job that the full team of the rice operation have done. This is something we've been pursuing for several years. This has been very specific investment that have been done in planters, for example. We changed the whole strategy of how to plant. That means 45,000 hectares were planted at a very efficient rate, and that is something that we can continue to sustain. On the whole irrigation system, that is very dedicated. There is a lot of technology being applied here.
We have technology applied on every place where Internet of Things are connecting all the different flows of water to move. This makes us not only more efficient in terms of economic, furthermore, more sustainable also. All this operation is improving every year, and we expect to continue to go through because this is a continuous improvement that is going on there. People is learning more. The team is more solid. The team knows more on how to execute it. All these investments that we did are very relevant, but the most relevant thing is how the team is working to make all these things come up together. On the commercial part or the logistic part, this is a huge logistic challenge. There are three different mills, five to eight different farms or places where we are harvesting.
All that movement, the quality of rice that we were able to achieve this year is the best in the last eight years. It's even better than what we were projecting. On top of this, we are being able to segregate the different varieties. With this segregation of the different varieties, we are able to reach different clients all over the world. These clients are knowing which is the specific variety that they need for their specific different brands. All this relationship that we are creating with our clients all over the world, that includes the full traceability of the seed or of the product, is something very, very good that is going on. That's why we see these results very sustainable.
We see all this, the commitment, the technology that is being applied, and we are very optimistic regarding what's going on in the overall rice business and how we've been improving in the last two, three years, the results of this rice business. When we look at the general prices of rice, they are okay, better than what they've been five years ago, but they are not even near the historical high prices. Overall prices can continue to increase. We are in this position. We are the lowest cost producer because of what I was just mentioning. Thank you for the opportunity of asking about rice, and it's becoming a relevant business for us, but we never spend a lot of time explaining all the details that goes on in that specific business.
Finally, your second question, that is this question on the capital allocation, and what would be the leverage ratio that we are willing to have. It's clear we've been always talking about below 2x the EBITDA. That's what we've been saying in the last three years, and we wanted to be there in order to think about distributing our results with our shareholders. We are clearly there. We are also very well structured in terms of the debt. So you've seen that in the presentation that Charlie explained indeed. So, it's clear that in terms of debt, we are very comfortable today, and so how are we thinking to distribute this capital and what could be potential CapEx or growth projects? As I mentioned in the introduction, our first priority is to distribute part of this cash that is being generated with the shareholders.
2020 was the year where we became free cash flow positive. 2021 is the year where we are distributing part of this cash with our shareholders, and we are currently discussing, and as we've been saying, that we are going to try to structure a much more clear distribution policy. We are working on that, as we've been saying. We are in the middle of that process, we will come up some point of this year, with the distribution policy. This distribution policy will talk about a percentage of the operating free cash flow. What is the operating free cash flow? It's the cash that the operations are generating after discounting the maintenance CapEx, the interest, the taxes, and the working capital needs.
That amount of money that is increasing, and we are profiting for all what the investments that we did, not only in rice, of course, in the sugar and ethanol business, in the crops as we've been mentioning before, and also in the dairy. All that cash being generated, a portion of that is the one that will be distributed through buybacks or dividends or a combination. That is the discussion we are currently undertaking. In each one of the businesses that we are operating, we continue to see growth opportunities or we continue to see improvement, things that are synergies, things that makes us more sustainable. I would mention a small example of the biomethane that is happening with our sugar and ethanol operations. There, we are collecting the methane from the vinasse in this biomethane plants.
We are involved in a project where we are concentrating this. We are trying with some trucks in order to be able to move them with this. There are projects like this that are very interesting and with synergies with our current operations, so that will continue to occur. As I mentioned before, the first priority is to distribute part of the cash that we are generating within our shareholders.
Mariano, thank you so much for your detailed answers. Very helpful. Thank you.
Our next question today comes from Lucas Ferreira with JP Morgan. Please go ahead.
Can you hear me?
Yes, perfectly well.
Okay. Sorry. Hi, guys. My questions are somehow follow-ups of Thiago's questions. The first one, if you can briefly talk about the CapEx itself. With the company generating more cash, I assume you guys have probably some projects in the pipeline, maybe efficiency projects. How big the CapEx can be this year, next year? Because I'm talking about the expansion CapEx. If you can give us a color. The second question, more specifically, guys, about the free cash flow to be generated in Argentina. I don't want you guys to make any projections here, any forecast or guidance, but looking at the EBITDA guys generated in Argentina in the first quarter, and the bio asset formation, you should have a very strong year in Argentina, and I suppose that if the markets don't change much, also a very good 2022.
If I'm not mistaken, you still have over $150 million, close to $200 million in debt in Argentina. Given that this business consumes very low CapEx, it should be generating a lot of cash in Argentina in the next couple of years. Beyond paying the debts, what can be done? Are you guys planning to pay fully that debt? What will be done in the future with the cash generation and more specifically generated in Argentina? These are my two questions. Thank you.
Thank you, Lucas, for your question. First of all, in terms of the overall CapEx that you were asking. We expect CapEx to continue to be in line with what you've seen last year. We don't see significant changes there. All these projects are projects that have ROIs above 25%, as we've been mentioning, what we achieved. What we are continuing to do is more or less within the same things. We continue to see very specific small projects in each one of the businesses that we are undertaking. In general, what we have happened till now is in line with what you've seen in 2020. For now, you should continue to expect in that line. Moving to the part of Argentina, we always think about Argentina and Uruguay all together. The business is being generated in the two countries at the same time.
Yes, we are generating good returns. We are also having interesting small CapExes, as I mentioned, in the case of rice, and you can see the same thing in the case of sunflower or in the case of peanuts on the overall crops and also in the dairy business. There are many things that are growing there, and as we continue to invest, more or less in line with what we've been doing in the sugar and ethanol business. Argentina and Brazil are similar in terms of the amount of money that is generating. In terms of debt, we think on the debt as the whole company. Sometimes we have intercompany debts in order to be more efficient, but that's only the case.
In general, you have to analyze our total debt, that we are very much in line with where we want it to be.
Thank you.
Our next question today comes from Guilherme Palhares with Bank of America. Please go ahead.
Good morning, everyone. Thank you for taking my questions. Two questions from our side. First is relating in terms of the input cost of the agricultural business. We see that fertilizers cost probably are rallying right now. If you could share some other thoughts for the next season as well in terms of cost that you expect per hectare. The second question on the sugar and ethanol business is looking at the productivity gain that the company achieved this first quarter, what we could expect for the remaining of the season as the company is pursuing greater capacity utilization. If you could talk about the yield that you are expecting, and the extent that our yield should actually persist throughout the season, that would be these two questions. Thank you.
Hi, Guilherme. Thank you. I will take the cost part of the agriculture in general, and then Renato will talk in more details about what we can expect on our sugar and ethanol yields and milling capacity. In terms of cost, as you mentioned, the cost of fertilizers are increasing, and the cost of transportation with increasing cost of oil is also increasing, and there are some costs are as all the different things that we sell are increasing in a relevant number. There are costs that are increasing. Part of that is being offset by the improvements that we are having in every single line of our operations, but the overall cost can continue to increase.
As you see that our sales are improving the price by way more than that, our margins in general are improving, but we can expect an increasing of the overall cost of the agriculture in general. That is one point. Then on the sugar ethanol, I will ask Renato to go more in detail on what could be our expected yields for the rest of the year and our milling in the overall.
Okay. As Vitor mentioned, Mato Grosso do Sul has a different weather pattern than the other regions in the Center-South. We had good rains in the second semester of last year. Actually, we had 200 millimeters in August. Even in January of this year, we had 200 millimeters. The cane outlook for the first quarter was very good. That's why we have the crushing record in the first quarter. The weather became drier in March. Actually, the last rain that we had was in the beginning of March. If the weather persists dry now, we expect that we are going to have a yield reduction that will be partially offset by the TRS content in the sugarcane. Today, the TRS is 4% higher than we forecasted. In our mill in Minas Gerais, I think the weather is more similar to the other regions in the Center-South.
Remember that our mill is approximately 200 km from Ribeirão Preto, so it's suffering more with the lack of rains. We expect to have a yield reduction between 5% and 10%. I think if you put all those variables together, higher TRS and lower yields, we'll be probably processing 5%-10% more TRS than we did last year.
Perfect. Thank you.
Ladies and gentlemen, as a reminder, to ask a question, please press star then one at this time. We will pause momentarily while we poll for questions. Ladies and gentlemen, this concludes the question and answer session. At this time, I'd like to turn the floor back to Mr. Bosch for any closing remarks.
Before closing the call, I wanted to thank you all for joining the conference. The market outlook of the products that we produce is looking promising, and we are in an unbeatable position to take advantage of such a favorable scenario. Again, this is only possible because of the strategic investments we've made across our operations during the last couple of years. We believe we are in an excellent position to generate good financial results that we are already distributing to our shareholders throughout our buyback program, and we plan to continue doing so in a more structural way during the coming years. Last, I would like to reiterate my gratitude to all our operating teams that are doing an outstanding job, and to our shareholders for their continued support. Thank you, and see you in our upcoming events.
Thank you. This concludes today's conference call. We thank you all for attending today's presentation.