Brazilian firm Datagro Consulting reduced its projections for the sugar cane harvest for the 2006-07 season in
Plinio Nastari, Datagro’s President, explained that the drop in production reflected the effects of the recent drought in
Sugar production in
Sugar prices on the international market showed a sharp decrease in May, losing almost 200 points and signaling that the upward tendency seen in the last months is beginning to lose some of its thrust.
“The foundations are beginning to change”, noticed Julio
On the international market, the future prices of the commodity withdrew nearly 15% in May. Over the past 12 months (until June 6th, 2006), however, the commodity presented an increase of almost 80%.
According to Martins Borges, the world’s sugar harvest in 2005-06 (from October to September) was fairly even, with a slight global deficit, a factor which helped sustain prices. This scene began to shift with the recovery of Asian countries, such as
Despite a tendency to equilibrium in supply in 2006-07, Brazil has in its favor the fact that the European Union is reducing, as of this year, its participation in the international market, because of sugar reforms carried out by the European bloc, and also because the World Trade Organization ruled in favor of Brazil, Australia and Thailand. The WTO has determined that the E.U. will have to reduce subsidized sugar exports. Job Economics and Planning believes that the greater production of ethanol, above all in
And that is already happening in the Brazilian market. Sugar prices in
On June 6th, the 50-kilo sack closed at R$ 49.42 (approximately US$ 22.46) in Sao Paulo, up 92% in relation to the same period last year, according to the daily survey carried out by the Center for Advanced Studies in Applied Economics (Cepea). According to Mr. Borges, the expectation among analysts is that sugar prices will remain constant in the domestic market at least until July, due to contracts already signed by refineries and mills with foreign clients.
Sales of hydrated ethanol dropped to 333 million liters in April 2006, 14.8% below the amount measured in March and 2.11% below April ’05, according to data released by the Brazilian National Petroleum Agency (ANP). In April, when ethanol prices reached all-time highs, consumption was at its lowest level in fifteen months, after having peaked in December, when it reached 509 million liters.
The data from December had been inflated due to a change in legislation, sponsored by ANP, that required refineries to color the product in order to avoid fraud, as some of the hydrous ethanol (ethanol mixed with C Gasoline), was being sold as if it were anhydrous. Sales have decreased since then, drawing back to 465 million liters in January, 444 million in February, and 390 million in March ‘06.
The drop in sales for hydrous ethanol followed the general tendency for fuels in Brazil in April, according to the data released by the government agency. The total sales of fuels by distribution companies totaled 6.93 billion liters, with a 4.3% drop in relation to April ’05 and 9.3% less than in relation to March ’06. The greatest drop was seen in diesel, which sold 9.02% less than in April ’05. The decrease reflects the low consumption by farms, which have been affected by a drop in agricultural production, by the low international prices of export commodities, and by the drought which has hit the South of Brazil. Farms are one of the biggest users of diesel oil.
C Gasoline, mixed with ethanol, was the only fuel that saw an increase in consumption in April, out of the eight that are tracked regularly by ANP. In all, 1.92 billion liters were sold in that month, with a 1.04% increase in relation to the level sold in April
2008 marks the one-hundredth anniversary of the arrival of the first ship bringing Japanese immigrants, who came to
The Brazilian government isn’t interested in these agreements because, according to Mr. Arslanian, the model proposed by developed countries demands total freedom for capital transfers, including from stock markets, and the power, given to foreign private investors, to take legal action against the Brazilian government should litigation arise. “Even when we talked with the Europeans”, says Mr. Arslanian, “we withdrew the issue of investment agreements; however, if
Japanese diplomats say that there is, indeed, a strong desire to establish a trade agreement. They say that, after Lula’s visit in 2005, the scene has changed in
Free trade discussions have to overcome the resistance of Brazilian industrialists, who fear Japanese competition. And because
In August, the bilateral committee headed by Mr. Batista will present to President Lula and Prime Minister Koizumi a series of suggestions to strengthen bilateral relations. The centerpiece is likely to revolve around the production and sale of ethanol to the Japanese market, as was the case during Lula’s visit to
Based on the chart and our past experience, we may conclude that:
Note: production data are in units of equivalent anhydrous ethanol, which is calculated by reducing hydrated ethanol by a factor of .93 – this yields the average alcoholic rate in ethanol used as fuel in
According to information collected in April 2006 by researchers from Brazil’s Control Unit for Total Technical Assistance (CATI), working in tandem with researchers from the Institute of Agricultural Research (IEA) – both of which belong to the Department of Agriculture and Supply of the State of Sao Paulo, the amount of land devoted to sugar cane is foreseen to increase 5.4% in relation to total planted area when compared to 2005, totaling 3.87 million hectares in 2006.
From "Environment Brazil" ("Ambiente Brasil")
Some environmental issues must be addressed for ethanol to really become a sustainable fuel. These problems stem from the facts, among others, that planting sugar cane is a monoculture; that the employees hired by farmers, especially in Brazil’s less-developed regions, work under primitive conditions; and that the crop is harvested in a manner that often resorts to burning the sugar cane, a practice which has dire environmental consequences.
Burning the straw from the sugar cane plantation is done to make manual labor cheaper and easier, increasing each worker’s productivity from two to five tons per day. The costs of loading and transportation are also reduced, and the mills have their efficiency raised, as they do not have to stop to have the straw removed. On the other hand, when these practices are used over an area of 3.5 million hectares (approximately
Several studies have concluded that burning the residue from sugar cane plantations releases carbon-based gases, ozone, nitrogen gases and sulfur (which is responsible for acid rain), in addition to also producing soot (which contains carcinogenic substances). Burning also provokes significant losses of nutrients in the soil and tends to lead to the development of erosion and weeds, as the soil is less protected. Hospitalization due to respiratory problems, intoxications, and asphyxiation increases considerably during the burning season.
There are also problems with the effluents that come from industrially processing sugar cane. If possible, these effluents should be treated and used as fertilizers. Without proper treatment, effluents ejected into rivers jeopardize the survival of several fresh water animals and plants. They also affect the low-income population, which depends on fishing in local streams and lakes for a living.
Fueling a flex-fuel vehicle with ethanol instead of gasoline over a one-year period meant that a car owner in
The analysis was carried out by a researcher from the Center for Advanced Studies in Applied Economics (CEPEA), Maria Cristina Marjotta-Maistro, and by an undergraduate student of Agronomy from Esalq/SP, Guilherme Augusto Asai.
Nearly five years after the launch of flex-fuel vehicles, the use of ethanol in lieu of gasoline offers significant financial advantages. If the difference between the price of ethanol and gasoline had remained at 53% in the past five years, as it was last year, savings on fuel would have totaled US$ 1,625.00.
The CEPEA study also showed that, in the five years since flex-fuel vehicles were introduced in
“Fortunately, we should be able to quickly close a deal in
Internally, BHL hopes to produce 2.1 million tons of sugar in the 2007-08 season, which will come on top of an expected production of 1.6 million tons during the season that begins on October 1st, 2006. BHL produced more than 800,000 tons of sugar in the 2005-06 season, which closes on September 30th, 2006.
The increase in production follows plans to almost double processing capacity, to 96,000 tons per day, increasing the capacity of existing plants. “The purpose is to meet domestic demand”, says Mr. Raman. The company’s current capacity is 52,600 tons per day.
The company’s capacity to manufacture industrial alcohol will also grow, rising in 2007-08 to
This is the first in a series of five installments about
“Growing Sugar Cane in
My comments on the news item above: assessing the environmental impact of growing a large sugar cane (or corn, or cassava) crop will be an integral part of the development of an ethanol market in other countries. In the above case, representatives from different stakeholders will gather to analyze the impacts of the sugar cane monoculture in the northwestern part of Sao Paulo state - an area about the size of the Netherlands.
As ethanol consolidates its presence in the U.S. and Europe, expect a large number of firms, associations, and unions to develop with it. These organizations will deal with a wide range of issues (environmental, economic, legal, occupational safety) and would do well to look to Brazil's 30+ years of experience to guide them. H.O.
by Mônica Scaramuzzo
June 12th, 2006
Evergreen’s investments strengthen the growth tendency for foreign investments in the field. At present, there are five international groups with direct investments in Brazil - Louis Dreyfus, Tereos, Adeco Agropecuaria, Evergreen, and Kidd & Company, which is negotiating the purchase of Coopernavi, from the Brazilian state of Mato Grosso do Sul (see chart). Together, they are responsible for 4.5% of the production of sugar and ethanol in
The recent increase in foreign participation is considered significant, since the sector is pulverized and has 320 sugar and ethanol refineries, according to Júlio
The wave of mergers and acquisitions in the sector began picking up momentum after
Over the last five years, investments in mergers and acquisitions have been estimated, at present value, at US$ 3 billion. US$ 1 billion from this amount involve foreign corporations. Mr. Borges, in a conservative estimate, believes that foreign groups will double their share over the next five years.
Foreign capital started flowing into the country in 2000. The first groups to arrive were Louis Dreyfus, which controls Coinbra, in 2000, when it acquired the Cresciumal refinery, in Leme, Sao Paulo state, and Tereos (formerly known as Beghin-Say), in 2001, when it purchased Guarani Sugar, which has two plants in the interior of Sao Paulo state. Louis Dreyfus has been plowing ahead with its expansion plans and today has three refineries. The Tereos group recently announced US$100 million in investments for its third refinery in the country.
Mr. Borges believes that European groups have turned their attention to
“Valor Economico”, the Brazilian equivalent of the “Wall Street Journal”, has ranked the Virgolino de Oliveira Group and Guarani Sugar as two of the best Brazilian companies in human resources management. This is good news for the sugar and ethanol business in
As management practices improve – a trend clearly seen in
The expression comes from the food (typically, rice, beans, cassava, and, on good days, a piece of meat or an egg) that workers packed into tin cans at home in the early morning hours before heading off to work. By lunchtime, their food was cold; out in the field, where they had to meet quotas of several tons of sugar cane cut every week, they had no means of heating their meal – hence, “cold chow”.
The 16th Brazilian Conference on Irrigation and Draining (Conird) will be held in the city of The Cerrado is the world’s most biologically rich savanna. It has over 10,000 species of plants, of which 45% are exclusive to the Cerrado, and it stretches across nearly 500 million acres of
The Cerrado has yet to live up to its full agricultural potential. Brazilian farmers have just recently learned how to correct the soil’s natural acidity, a process that can be executed inexpensively using calcium and magnesium. Planting sugar cane in the Cerrado, however, presents major challenges, such as controlling environmental impacts (which may overflow into the Amazon basin) and overcoming the logistics obstacles presented by a precarious or inexistent infrastructure.
Due to the abundance of cheap land open to investments, however, foreign corporations seeking to do business in Brazil would do well to take a close look at the region's agricultural potential. The benefits may very well outweigh the costs, especially as land prices go up in the interior of Sao Paulo state, Brazil's main sugar cane-planting region.The GSO holds bimonthly meetings, during which it discusses experiences and cases, providing information for the development of professionals working in the field. The group includes representatives from refineries, agribusiness corporations, suppliers, and consultancies, as well as private and public entities related to Occupational Safety and Health.
The meeting will take place on June 30th, in Sao Joaquim da Barra, interior of the state of Sao Paulo.I worked with Tom MacDonald from April to August 2007. He has a long track record at the California Energy Commission with fuel ethanol, wit...
