Morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to AdequilAgro's First Quarter 2021 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO Mr. Charlie Burrow Hughes, CFO and Mr.
Juan Ignacio Galliano, Investor Relations 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. Before proceeding, let me mention that forward looking statements are based on the beliefs and assumptions of Addeco Agro's management and all 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 Addecoagro and could cause results to differ materially for 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 2021 Q1 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 1st 3 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 5 years, We have invested approximately RMB400 1,000,000 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 a consolidation of our investment is a 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 It's a fact that we operate under a continuous harvest model.
This means we can crush sugarcane Non stop year round, even during the Q1, which is a traditional inter harvest period. Actually, we crushed a record high for the 1st 3 months of the year. It allowed us to dilute fixed cost and capture good Sugar and ethanol prices. Achieving this crushing volume was possible, thanks to the investment we did to expand our sugarcane 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 2 weeks ago, we were maximizing sugar to capture the higher prices, we believe that throughout this year, 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 dynamics, we experienced a humid first quarter. This means that our sugarcane is better prepared to go through the current dryer weather with less implication than the central 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 the specific investments, which enabled us To do a full turnaround of the business at the same time as we improve the sustainability of our operations. This was only possible, thanks to the team's speed and innovative approach of our people.
They work with passion and dedication to coordinate the normal 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 4th 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 press 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 5 year plan is in its final stages, we are confident That the cash flow generation will continue to increase in the upcoming years. Moreover, 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 1,500,000 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 in a 5 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 Our achievements, which translate into the results we are presenting today.
I would like to reiterate my gratitude To all the operational and management team, it is thanks to their daily effort and hard work that we are one of the lowest crop 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. Now let's move to Page 4 with a brief analysis on the range in Mato Grosso do Sul. As seen on the top charts, range in our cluster, Mato Grosso do Sul during the 3 month period of 2021, We are 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 cost Interruptions in our crushing activities leading to a 10.1% decrease in milling per day. However, this was fully offset by an early start of milling activities in our cluster, which resulted in an 80 7% increase in total meeting days and 76.1% increase in effective meeting days. We were able to achieve these high results because our teams were readily available to restart crushing activities and because, As opposed to the Q1 of 2020, we had good cane availability, thanks to our strategic decision to reduce our milling pace during last year. As a result of these, crushing volume reached 2,100,000 tonnes of sugarcane during the Q1 of 2021, 58.3 percent or 800,000 tonnes higher compared to the same period of last year. Please jump now to Page 5, where I would like to walk you through our agricultural productivity.
During the quarter, Sugarcane yields reached 75 tonnes per hectare, while TRS content reached 112 kilograms per tonne, 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 GRS production per hectare of 8.4 tonnes, 31.9 percent higher year over year. The year over year gap is explained by the strategy we adopted During the Q1 of 2020, with the aim of capturing the high ethanol prices observed during that quarter By being mindful of securing cane availability for the rest of the year, we maximized 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 20 nineteen's adverse weather conditions. Let's move ahead to Slide 6, where I would like to discuss our production mix. As you can see in the top left chart, during the Q1 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 Q1 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 Q1 of the year, as the content and quality of TRS observed during the 1st month of the year usually favors the production of ethanol. Despite producing a less alcoholic mix compared to the Q1 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 Q1 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 7, 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, Ethon's average selling price measured in reales Increased compared to the Q1 of 2020 but was lower measured in U. S.
Dollars, standing at 0 point one five seven dollars per pound And representing a 3.7% year over year reduction. All in all, net ethanol sales during the quarter reached 43,400,000, 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 Renova VEO program and thus Capture an additional revenue stream registered in the other operating income line. In fact, during the quarter, we sold 1 100 and 2000 CBOs at an average price of BRL31.9 per CPU, equivalent to $6 for Sibayo. In the case of energy, selling volumes reached 120,000 megawatt hour, marking a 12.3% year over year increase.
Average selling prices We're lower both measured in reals as well as in dollars, standing at 30.3 per megawatt hour, Implying a 23.2% decrease compared to the same period of last year. Overall, Net sales totaled $3,600,000 13.7 percent lower compared to the Q1 of 2020. Sugar sales during the quarter reached €25,200,000 almost 9x higher than during the Q1 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 7x 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 tonnes of certificate organic sugar produced in our Yuma 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 Ooma. Finally, to conclude with the Sugar, Ethanol and Energy business, please turn to Slide 8, where I would like to discuss financial performance. Adjusted EBITDA during the Q1 of 2021 was CAD58,200,000 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 at Brazilian real and attained efficiencies at the farm and industry level and a EUR 26,500,000 gain derived from the mark to market of sugarcane, of which BRL15 1,000,000 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 'twenty one harvest year, Reaching over 262,000 hectares, 9.9% higher than the previous harvest season. This increase is mainly driven by an increase in peanuts and sunflower planted area.
2 crops which are a good fit into our crop rotation system offer higher margins and strengthen our diversification strategy. Harvesting activities are well underway, But it is worth pointing out that the intensive rains registered during March in Argentina led to a slower harvesting progress Since being resumed with no impact on yields. Let's move to Page 11, where I would like to walk you through the financial performance our Farming and Land Transformation businesses. Adjusted EBITDA in the Farming and Land Transformation businesses reached 56 €200,000 in the Q1 of 2021, €31,500,000 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 €28,700,000 showing the benefits of having bigger, more efficient and vertically integrated operations.
The Crops business generated an adjusted EBITDA of DKK17,900,000 more than 4x higher And during the Q1 of 2020, the increase was explained by a €5,800,000 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 €9,000,000 cost reduction due to the enhanced efficiencies and the depreciation of the Argentine peso, which led to a dilution of costs 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 generated an adjusted EBITDA of 28,300,000, 86.7 percent higher compared to the same period of last year. This increase was explained by 11.9% increase in yields and an increase in prices, which led to a $13,700,000 increase In the mark to market of our biological asset and agricultural produce and a €3,000,000 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 3 main goals: productivity as the key variable to minimize cost per tonne 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. And 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 generated an Adjusted EBITDA of €4,700,000 in the Q1 of 2021, 48.8 percent 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 staple. Our Lantraformations businesses Registered an adjusted EBITDA of DKK5.1 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 Q1 of 2021, we achieved solid results both from an operational and financial point of view. Adjusted EBITDA totaled €109,000,000 78.7 percent higher compared to the same period of last year, marking a new record high for the 1st 3 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 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 31, 2021 reached 732,000,000, €97,000,000 higher compared to December 31, 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 2nd semester of the year. From a seasonality point of view, the Q1 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 2nd 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 Q1 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 higher 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 Land Energy Businesses as well as the increase in milking cows in our dairy business. Net debt ratio reached 1.88x, in line with the Q4 of 2020 and 18.8% lower than the Q1 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 repay 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. 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, Adriano, there's been growing concerns on the poor Rainfall levels that affected should be affecting cane yields across the Brazilian center south. You already mentioned That Adecco clusters weren't as affected, which is great. So 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 So that ethanol output will be the one sacrificed by lower feedstock availability. So wanted to hear your views on how we should expect the coagri to react to this scenario in terms of production mix.
The second question is related to capital allocation. So 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 5 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 Or if you see room for another round of capacity expansion and attractive investment opportunities across your business units. So just how we should see capital allocation between Dividends and cash distribution and investments. And finally, my third question is on the rice business.
You have been showing 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. So 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. So Renato, can you answer Thiago?
Hi, Thiago. Thank you for your question. I think it's becoming clear that the dull weather in the center south, The Brazil is going to have less TRS than everyone was imagined. I think most analysts are seeing a drop in about 10% The TRS produced. So it's I think it's becoming clear that Brazil has not enough TRS To supply the 36,000,000 tons that the world needs from Brazil and also to supply the recovering ethanol markets That is increasing that should be increasing approximately 6% this year.
6% in the ethanol market is equivalent of 2,700,000 tons of sugar equivalent. So different from the last 2 years, We think that the true products, sugar and ethanol, will be trading close to the parrot. So last year, we saw Sugar paying much more than ethanol. So there are a lot of switch from ethanol to sugar. I think almost 11,000,000 tons.
And the year before was exactly the opposite. This year, we think that we will be seeing a healthy competition To the same TRS from sugar and ethanol. So that's why we think that both products will be 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, hydros is being Mato Grosso So is equivalent to $0.19 per pound And then hydro is $0.20 per pound.
So now we are maximizing ethanol.
Clear. Renato, Thiago, anything else on the Shuvan ethanol? Is that okay?
That's okay. That's okay.
My follow-up would be the
How he thinks the mix in the center south of Brazil will behave once he believes The 2 products are going to be trading at parity, whether because the consensus was there was going to be 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 It will be sooner even in the center south, not as in Matrico do Sulipur, Matrico do Sulipur, Matrico do Sulipur, the part is a little bit different, But closer than the last 2 years. But since the most players in the center south is very advanced in their hedging, I think they are maximizing sugar at least when the prices are very close as we are today. So we expect we think that they are Most projections and we believe that they are correct. The center itself will try to produce the 36,000,000 tons That everyone is expecting from Brazil.
Okay. Thank you, Renato. Thank you, Renato. 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.
Then 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 that were planted at a very efficient rate and that is something that we can continue to sustain. Then on the whole irrigation system that is a 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.
So 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. So 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.
Then on the commercial part or the logistic part, this is a huge logistic challenge. There are 3 different mills, 5 to 8 different farms or places where we are harvesting. So all that movement, the quality of rice that we were able to Achieved this year is the best in the last 8 years. It's even better than what we were projecting. On top of this, we are being able to segregate the different varieties.
And with this segregation of the different varieties, We are able to reach different clients all over the world. So these clients are knowing which is the specific variety that they need For their specific different brands, so all these relationships that we are creating with our clients all over the world That includes the full traceability of the seed or of the product It's something very, very good that is going on. So that's why we see these results very sustainable. We see all this 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 2, 3 years, the results of this Rice business. And when we look at the general prices of rice, they are okay, better than what they've been 5 years ago, but they are not even near the historical high prices.
So overall prices can continue to increase. And we are indeed positioned. We are the lowest crop producer because of what I have what I was just mentioning. So 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. Then finally, your 2nd 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 2 times EBITDA. That's what we've been saying in the last 3 years and we wanted to be there in order to think about this Reviewing our results with our shareholders. We are clearly there. We are also very well structured in terms of the terms of the debt. So you've seen that in the presentation that Javi explained indeed.
That's just 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 project? As I mentioned in the introduction, our first priority is to distribute part of this cash that is being generated with With the shareholders, 2020 was the year where we became free cash flow positive. 2021 is the year where We are distributing a 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. So we will come up Some point of this year with a distribution policy. This distribution policy We'll 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.
So that amount of money that is increasing and we are Profiting for all what the investment that we did, not only in rice in the of course, in the sugar and a half business, In the growth, as we've been mentioning before and also in the dairy, so all that cash being generated, A portion of that is the one that will be distributed through buybacks or By bus, our dividends or a combination, that is the discussion we are currently undertaking. Then 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 will mention a small example of the biomethan that is Happening with our sugar ethanol operations, there we are collecting the methane from the vinyas in this bio Methane 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 these. So there are projects like this that are very interesting and With synergies with our current operations, so that will continue to occur. But as I mentioned before, The first priority is to distribute part of the cash that we are generating within our shareholders.
And our next question today comes from Lucas Ferreira with JPMorgan. 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.
So with the company generating more cash, I assume you guys have Probably some projects in the pipeline, maybe efficiency projects. So how big the CapEx can be this year, next year? I'm talking about The expansion CapEx and if you can give us a color. And the second question, more specifically guys about Free cash flow to be generated in Argentina. So not I don't want you guys to make any projections here, any forecast or guidance, but Looking at the EBITDA you guys generated in Argentina in the Q1, in 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. So if not mistaken, you still have over $150,000,000 close to $200,000,000 in debt in Argentina. So but given that this business consumes Very low CapEx. You should be generating a lot of cash in Argentina in the next couple of years. So beyond paying the debts, what can be done?
So when Are you guys planning to pay fully that debt? So what will be done in the future with the cash generation and more specifically generating in Argentina? Yes. So these are my two questions. Thank you.
Thank you, Luca, for your question. 1st 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 change All these projects are projects that have ROIC above 25% as we've been Mentioning what we achieved, so what we are continuing to do is more or less within the same things. We continue to see very specific small project in each one of the businesses that we are undertaking. So We've in general, what we have happened till now is in line with what you've seen in 2020. So for now, you should continue to expect in that slide.
Then moving to the part of Argentina, We always think about Argentina and Uruguay altogether. So The business is being generated in the 2 countries at the same time. And Yes, we are generating good returns. We are also having interesting A small CapEx is, 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. So there are very 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. So Argentina and Brazil are similar in terms of The amount of money that is generating. And in terms of debt, we think on the debt as the whole company. So 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.
And 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 reading in terms of the input cost The agricultural business, so we see that fertilizers cost probably Are rallying right now. So if you could share some of your thoughts for the next season as well in terms of cost that you expect Hector, and a second question on the sugar and ethanol business.
Looking at the The activity gains that the company achieved this Q1, but we could expect for the remaining of the season as the company Pursuing Iguiter capacity utilization, if you could talk about the yields that you are Expecting and if this better yield should actually persist throughout the season, that would be these 2 questions. Thank
you.
I would take the cost part of the agriculture in general and then Renato will Talking more details about what we can expect on our sugar and ethanol yields and milling capacity. In terms of costs, as you mentioned, the cost of fertilizers are increasing And the cost of transportation with increasing port 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.
But as you see that the 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. And then on the Shu and 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 meeting in the overall.
Okay. So Matuboros Vousug has a different weather pattern than the other regions in the center itself. So we had good range in the 2nd semester of last year. Actually, we had 200 millimeters in August. Even in January of this year, we had 200 millimeters.
So the Canadian outlook for the Q1 was very good. That's why we have the crushing record in the Q1. The weather became drier in March. Actually, the last rain that we had was in the beginning of March. So 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 view is approximately 200 kilometers from Ribeiro and Puerto. So it's suffering more with the lack of rains. So we expect to have a yield reduction between 5% 10%. If you put all those variables together, Higher TRS and lower yields, we will be probably processing 5% to 10% more EGRAs than we did last year.
Perfect. Thank you.
We will pause momentarily while we poll for questions. And 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 favorable scenario. But again, this is only possible because of the strategic investments We've made across our operations during the last couple of years, and 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. So 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.