2006-07 BRAZILIAN SUGARCANE HARVEST SETS RECORD AT 475 MILLION TONS

Via Ethanol Brasil

Arab-Brazilian News Agency
November 30^th, 2006

Sao Paulo – Brazilian sugarcane production for the 2006-07 period is expected to come in at 475.7 million tons, according to an assessment carried out by Cohab, the Brazilian National Supply Company (Companhia Nacional de Abastecimento). The current production is the largest in history and is 10.3% above the previous harvest, which totaled 431.4 million tons.

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ANHYDROUS ETHANOL IN BRAZIL AT LOWEST PRICE SINCE SEPTEMBER 05

Via Ethanol Brasil

After two months of stability, ethanol prices took a dip last week. The ESALQ/CEPEA index for anhydrous ethanol dropped 1.32%, listing a weekly average of R$0.85204 per liter (~US$0.40), before taxes. This is the lowest nominal value recorded since September 2005. Hydrous ethanol was at R$0.74903 per liter (~US$0.35), a drop of 1.25%.

An increase in supply put pressure on prices, even as mills headed toward the end of the milling season. Distribution centers, on their turn, did not show any great interest in picking up the excess.

All data are from CEPEA - Centro de Estudos Avançados em Economia Aplicada (Center for Advanced Studies in Applied Economics).

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ROBERTO RODRIGUES, BRAZIL’S FORMER MINISTER OF AGRICULTURE, STARTS NEW VENTURE IN BIOFUELS

From IstoE Dinheiro Rural (a prime agribusiness publication)
November 2006 edition

(Note: Read interview with Roberto Rodrigues at the end of the article)

Go to original

Roberto Rodrigues, after serving for almost four years as Brazil’s Minister of Agriculture, is about to launch a new fund to finance projects in ethanol and biodiesel.

By Fabiane Stefano

The life of former minister Roberto Rodrigues is as busy as when he was in command of Brazil’s Ministry of Agriculture. In the past, as a government officer, Rodrigues met daily with businesspeople, representatives of rural associations, and farmers.

Now, he follows the same disciplined routine – but on the other side of the table. After almost four years as Minister of Agriculture, and a sabbatical of four months, Rodrigues is once again active, working as a university professor, community organizer, and, for the first time, as an entrepreneur in the agribusiness industry.

Mr. Rodrigues, an agricultural engineer, is setting up an investment fund to finance projects in ethanol and biodiesel. In an interview with ISTOE DINHEIRO RURAL magazine, Mr. Rodrigues gives details about his plan, which will use both Brazilian and foreign capital. “People who invest along with me have a good chance at success”, says the former minister. “I won’t let them plant sugarcane where it won’t grow. Nor will they sell ethanol at the wrong time. It’s very sound, and, at the same time, very, very serious”.

Rodrigues will act as a fund manager, bringing together the financial and technical areas. He will also give the final word on the selected projects. “I have been talking to Brazilian and foreign banks”, he says. He plans to launch the fund by the beginning of December.

The most attractive factor is the name of Rodrigues himself. In addition to having served as Minister of Agriculture, he is an agricultural engineer and is considered one of the main rural leaders in Brazil, having presided over organizations such as the Brazilian Rural Society and the Organization of Brazilian Cooperatives.

There is no shortage of parties interested in doing business with him. At the beginning of October, a director from Holland’s Rabobank sent the former minister an email stating that he was interested in coming to Brazil to discuss the fund.

“I can attract investors who are really committed to the project”, says Mr. Rodrigues.

For the time being, the former minister does not want to talk about numbers. But he hints that the fund should be launched with at least $200 million. “With $150 million, for instance, it would be possible to build a profitable plant, with a milling capacity of two million tons of sugarcane per year”.

The fund, however, won’t limit its activities to agroindustrial activities. It may also act in the acquisition of land and in participations in other ventures through stock acquisitions. Even a foray into stock exchanges has been contemplated. “I want to head a project that involves the entire productive chain behind agroenergy”.

In addition to his business venture, Mr. Rodrigues has taken up, once again, institutional and academic roles. He has been invited by the Federation of Industries of the State of Sao Paulo (Federacao das Industrias do Estado de Sao Paulo) – FIESP to preside over the organization’s Agribusiness Board (“Conselho Superior de Agronegocios”). The goal of the Board is to present proposals to state and federal governments to develop the agribusiness chain. In his very fist work meeting, at the beginning of November, Rodrigues will introduce Silvio Crestana, president of Embrapa, who will give a presentation on technology used out in the field. The idea behind the presentation is to convince almost a hundred Board members to approve the creation of a research fund with privately-owned monies.

Mr. Rodrigues will also head the recently-created Center for Agribusiness Studies (Centro de Estudos no Agronegocio) from Fundacao Getaulio Vargas (FGV), one of Brazil’s leading business schools.

The former minister’s presence at FIESP and FGV will create synergy between the two institutions. The ultimate goal is for FGV to carry out the studies that will allow for the execution of proposals coming from FIESP. Mr. Rodrigues will work pro bono in both capacities. “I don’t want to be the president of anything in the future”, he says.

It is precisely as a counselor that Mr. Rodrigues will participate in the Board of Directors of Agrenco, a multinational company that deals in grains and is currently expanding its activities in Brazil.

As an academic, Mr. Rodrigues will continue teaching a course on the management of cooperatives at Unesp, a university located in the city of Jaboticabal. Even in the days when he was Minister, the professor never stopped teaching the course, one that is always in high demand by students, in spite of its academic rigor.

Mr. Rodrigues has also taken up a position as a researcher for the Institute for Advanced Studies at USP, Latin America’s largest university, where he will coordinate multidisciplinary projects in geopolitics and economics. “The first project will analyze the true environmental impact of agriculture in the Amazon region”, he says.

Another field in which the former minister has taken up a role is the lucrative lecture circuit. As a gifted public speaker, Mr. Rodrigues will talk about agribusiness to companies and institutions, for a fee. “I was a bit hesitant to charge, because I have been doing it for free all my life”, he says.

Even with so many engagements in his new life as a private citizen, Mr. Rodrigues will continue to make frequent visits to Fazenda Santa Isabel, his farm in Jaboticabal. Dedicated to the production of sugarcane, the family property is managed by his son, Paulo, who is also an agricultural engineer.

At the farm, in a den full of memories of his rural upbringing and past, the former minister corresponds with people from all over the world. Every three months, he writes a letter to over one-hundred former classmates from his college days. The quiet of the farm also allows him to devote time to the four books he is currently writing. Two of them gather articles that he has written over forty years of a life dedicated to rural Brazil: one about agribusiness, another on cooperatives. Mr. Rodrigues has also been working on a novel. The theme? Agribusiness, of course, but from the point-of-view of four friends bonded by a secret. Yet another pretext to talk about his favorite subject.

INTERVIEW:

Roberto Rodrigues gave an exclusive interview to ISTOE DINHEIRO RURAL and spoke about his plans in the private sector, the largest of which has to do with a project in the sugar and ethanol industry.

The whole world is paying more attention to ethanol. Is agroenergy the wave of the future?

It certainly isn’t a fad. The central issue if the supply of energy. I was never a supporter of the idea that humanity should depend on a fossil product, one that is finite, poorly-distributed, and explored by a very small number of people. After World War I, civilization was built on oil. I protested that idea in the 70s. I have spent a lifetime defending agroenergy. And now I believe we are on the threshold of a new civilization.

What is Brazil’s role in the sector?

Brazil has real competitive advantages. I believe we can double the production of ethanol per hectare in Brazil. With climate and logistics, there is a 50% chance of a project working out. Land is no longer relevant. The other 50% have to do with technology and management. And we have technological standards capable of winning this war.

Can’t this rapid expansion in sugarcane lead to problems in the future?

What bothers me most is that the whole issue is seen by some as a passing fad. There are many foreign investors who want to be in Brazil. And that may make a poorly-executed project look better than it really is. A severe agricultural crisis has to do with abundance, not scarcity. Scarcity can be taken care of in six months. Abundance takes five years. In ten years, we will have a lot of ethanol. If the investor carries out a project on land with a low yield, he may go bankrupt. So he has to be very careful.

In the future, will the sugar and ethanol industry make as much money as now?

If things are done properly, the farmer may not make as much money, but he certainly won’t go broke. I have experienced two crises firsthand. And I can tell you: it is not easy. We cannot throw away the chance of developing a much larger, universal project, simply because of hastiness and unchecked ambitions.

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AGRICULTURAL PLANNING: THE SECRET BEHIND BRAZIL’S ETHANOL SUCCESS

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By Marcelo A. Coelho

An old Brazilian saying goes, “Toss a seed into the soil and it shall grow”.

Thirty years after the inception of Pro-Alcool, Brazil’s federal ethanol program, agricultural techniques have advanced by large strides, making the planting of feedstocks a very precise science. It is no longer sufficient to throw a seed into the ground for it to sprout, as had been the case since Brazil was discovered by the Portuguese in 1500.

When contemplating plans for establishing an ethanol-producing industrial unit, other elements now come into play: sugar-producing capacities, energy sources, carbon credits, yeasts, fine chemicals, and biodiesel production – all of these are complementary, self-reinforcing elements that have to be assessed as a whole when selecting the right land for industrial development.

Logistics issues (side roads, highways, railways, access to ports, etc.), water systems (sources, rivers, lakes, or any spring on a farm property), soil analysis (chemical and physical properties of the soil), and terrain (topography), climate and precipitation characteristics, in addition to Brazilian legal constraints regarding the environment, are all factors that determine whether a certain property is right or not for a given project.

Once this information has been assessed, and any necessary adjustments have been made, then the “Agricultural Plan” may be drawn up. The Plan contemplates the harvesting schedule, agricultural equipment, reaping methods (mechanized or non-mechanized), the different types of sugarcane to be planted, the development of seedbeds, labor requirements (amount, sourcing) – all these items are taken into consideration.

The Agricultural Plan allows investors to calculate the requirements for milling equipment (at present and in future expansions), and, as a result, the scale and scope of distillation and co-generation equipment (distillation columns, conveyor belts, choppers, tanks, sugar driers, turbines and cauldrons, activating mechanisms, etc.), as well as of output (fuel ethanol, neutral ethanol, sugar, yeasts, etc.).

In short, the Agricultural Plan and the studies that precede it are the most important item of a business plan in the sugar and ethanol industry. They also substantiate other items, such as industrial and operational plans, human resources, market analyses, marketing studies, product assessments, financial plans, environmental issues, and social responsibility projects.

In Brazil, a few companies stand out in the execution of these preliminary studies. One of them is Marchini do Brasil, which has operated out of the city of Ribeirao Preto, interior of Sao Paulo state, for over thirty years.

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BRAZIL TO SIGN INTO LAW REQUIREMENT THAT GASOLINE CONTAIN 23% ETHANOL, UP FROM 20%

As in many other democracies, Brazilian laws are written by legislators in Congress, then sent to the Brazilian President to be signed.

Once signed, they go into effect. But they only really become the law of the land once they come off the press at the “Diario Oficial da Uniao” (“Official Daily of the Brazilian Union”), the publication that lists, among other items, new laws, public biddings, appointments to offices, and anything else that concerns the Executive branch in Brazil.

On Monday, November 20th, 2006, the “Diario” will announce that the federal government of Brazil heretofore requires that all gasoline sold in Brazil be 23 parts ethanol and 77 parts actual gasoline.

Known by Brazilians as “gasoline” because it is the only alternative to hydrous ethanol for fueling cars and light trucks, the product is called “gasohol” in the U.S. and would be dubbed E23 by most experts.

With a stroke of the pen, Brazil has now managed to reduce its gasoline consumption by 3.75%.

(To read the actual law, click on the link above on Monday, November 20th, and use the site's search function)

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BRAZIL-ITALY SEMINAR DISCUSSES OUTLOOK FOR ETHANOL, BIODIESEL

BioEnergy World 2006 is the name of the event that will be held between Novermber 29^th and December 3^rd, 2006, at the Fiesta Bahia Hotel, in the city of Salvador, located in northeastern Brazil, in the state of Bahia. Speakers will address issues such as liquid biofuels (biodiesel and bioethanol); biogas, produced from animal and vegetable byproducts; biopellets (wooden pellets that come from sustainably-grown sources); gasification; electricity cogeneration from agricultural residues through gasification and clean development mechanisms.

On December 1^st, an overview of bioenergy in Bahia will be presented. Specific possibilities of cooperation between Italy and Brazil will also be addressed. On December 2^nd, technical visits will be offered.

The seminar is being organized by BioEnergy Events & Services (BEES), which belongs to Consultoria Empresarial Brasil-Itália (Cebi). The state government of Bahia is also promoting the event. Call +5521 2233-8002, or email info@bioenergy-world.com.br.

Follow what's happening in the Brazilian ethanol market on Ethablog, the only blog in English dedicated to Brazilian ethanol.