Sugarcane is a very efficient production unit: every ton has an energy potential equivalent to that of 1.2 barrels of petroleum.
Brazil is the largest world sugarcane producer, followed by India and Australia. On average, 55% of Brazilian sugarcane becomes alcohol and 45% sugar.
Sugarcane is grown in Brazil's South-Central and North-Northeast regions, which allows two harvest periods. Production therefore continues during the whole year. Depending on when it is planted, sugarcane takes between one year to one year and a half to be ready for harvesting and processing for the first time.
In Brazil, on less than 1% of the land suitable for farming, 4.5 million hectares of sugarcane have been planted (this is 19% of the United Kingdom's area and 8% of France’s territory), to obtain a raw material that allows the production of a natural, clean and renewable energy.
This same plantation can be harvested up to five times, although significant investments must be made at each cycle to maintain productivity. Sugarcane is the power that supports the 307 existing ‘energy powerhouses' in Brazil, 128 of which are in São Paulo.
The sugarcane, sugar and alcohol production process in Brazil, that uses sugarcane covering 4.5 million hectares of land shows an important difference to that of other countries: from the plantation to the sale of the final product, everything takes place without government intervention or subsidies, an even more significant fact when the complexity of the area's production chain is considered.
The sugarcane raw material generates sugar, anhydrous alcohol (a gasoline additive) and hydrated alcohol for the internal and external markets, with different price and demand dynamics. Supplying these markets without significant variations requires planning and management efforts.
Over centuries, this had been carried out by the government; starting in 90's, in a process that was concluded in 1999, responsibility was totally transferred to the private sector, and what exists today is a free market system without subsidies, where sugar and alcohol prices are set according to variations in supply and demand. Sugarcane prices are set according to raw material quality, to prices effectively obtained by the final producers and their percentage participation in the products' final price.
In order to carry out this management and create stability for production/demand of the industry's products, the private sector has sought to create market tools, such as futures’ operations, and to open new markets for sugar and alcohol, by breaking down protectionist barriers, besides striving to transform alcohol into an environmental commodity.
Follow what's happening in the Brazilian ethanol market on Ethablog, the only blog in English dedicated to Brazilian ethanol.
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