The profitability of horticulture creates a price differential in the price of land, between the Metropolitan and Los Ríos regions in Chile
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If agricultural land is considered on its own in Chile- without any projections to urbanize it for housing or tourism – it is estimated that land prices range from USD 6,000 to USD 60,000 per hectare, with the Metropolitan Region having the highest values.
Today’s horticulture investments seem to be more profitable in the areas of Linares, Longaví and Parral, areas that have better prices, and in addition to that they usually have better access to water and have had a climate that promotes the investment of high yielding crops.
In the southern areas, there are changes too. with many leading national companies relocating their cherry trees in the Rio Bueno area to the south, for example, to lengthen the time of maturity of the crops for a particular export market.
Changes in Land Use
The improved profitability of horticulture is the main reason why new and current growers are looking for other places to relocate and plant. This has led to a change in land use. Annual crops such as wheat or oats have given way to plantations of fruit trees such as blueberries, cherries, and European hazelnuts.
The price of land depends on multiple factors such as access to water, climate, proximity to urban areas, location and soil quality, “but above all will be the potential profitability of any new project that could be developed.
Although the value of the hectare does not decrease or increase immediately in tandem with the mature planted fruit trees it will have an impact at some stage if product prices begin a trend line up or down.
For example, the fall in the price of nuts has not yet had an effect on in the value of plantations with mature walnut trees.
Chile is suffering from a complicated livestock situation, where 70% of meat is being imported for consumption, which makes farmers look for other ways to survive.
Small dairy farms like everywhere in the world where they are not subsidised tend not to be profitable for the investor leaving only the large industrial units with any sort of future.
“That obviously this will lead to those who have the opportunity to change land use to horticulture to do so or sell up.
Water: the key for a successful horticulture
There are many factors that affect the price of the agricultural hectares, the distance to towns for soils, drainage, labor, roading etc, however above all water is the main aspect to consider when setting prices because it is directly linked to the profitability of any project. It is estimated that “70% of the value of land depends on freshwater availability.
Without good access to water, land values drop considerably.
Therefore, areas with water sources (rivers or aquifers) safe and abundant are highly valued and have a more direct relationship with the value of the land than over the quality of the soil.
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