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SERGIO SCHLESINGER
SUPPORT
Rua Morais e Vale, 111
5º andar – Centro
20021-260
Rio de Janeiro – RJ
Brazil
Phone: +55 21 2189 4600
Fax: +55 21 2189 4612
www.actionaid.org.br
COVER PHOTO: CESAR GUILLOTEL / CG TEXTURES
ActionAid Brasil
NEW WOOD FOR OLD FIRES – THE FEVER FOR AGRIFUELS
PUBLISHED BY
SERGIO SCHLESINGER
NEW WOOD
FOR OLD FIRES
THE FEVER FOR AGRIFUELS
SERGIO SCHLESINGER
1ST EDITION
RIO DE JANEIRO, BRAZIL, 2008
New wood for old fires
The fever for agrifuels
TEXT
Sergio Schlesinger
ORIGINAL TITLE
Lenha nova para a velha fornalha – A febre dos agrocombustíveis,
published by FASE, 2008 (ISBN 978-85-86471-37-7).
ENGLISH TRANSLATION
Leah Mary Gray
PUBLISHED BY
ActionAid
SUPPORT
FDCL – Forschungs und Dokumentationszentrum Chile Lateinamerika
TNI – Transnational Institute
Heinrich Böll Foundation
GRAPHIC DESIGN
Mais Programação Visual
www.maisprogramacao.com.br
PRINTING
WalPrint Gráfica e Editora
PRINT RUN
1,500
New wood for old fires: The fever for agrifuels / Sergio Schlesinger –
Rio de Janeiro : ActionAid, 2008. 104p.
ISBN 978-85-89473-11-8
1. Agrifuel – Brazil 2. Bioenergy 3. Agrifuel – small farming
4. Agribusiness 5. Biodiesel 6. Ethanol 7. Soy 8. Sugarcane
9. Pulp 10. Monoculture 11. Environmental impacts
12. Social impacts I. Sergio Schlesinger
This publication was carried out with financial support from the European
Community. The opinions expressed herein are those of the author and do
not represent the official opinion of the European Community.
The publication was produced within the framework of the cooperation
project ”Handel-Entwicklung-Menschenrechte” of the Heinrich Böll
Foundation, Forschungs und Dokumentationszentrum Chile Lateinamerika
(FDCL) and the Transnational Institute (TNI).
More information at: http://www.handel-entwicklung-menschenrechte.org
CONTENTS
INTRODUCTION
5
SUGARCANE
9
SOY AND BIODIESEL
37
PAPER, PULP AND CHARCOAL
59
SYNTHESIS AND CONCLUSIONS
87
INTRODUCTION
The exhaustion of the world’s petroleum reserves, so often announced, is now an
ever increasingly closer reality. Consumption of this commodity today far outstrips
discoveries of new reserves, and has gained an even greater impulse with the rapid
economic growth of the world’s most populous countries – China, and India.
Ten times more petroleum is burned today worldwide, than fifty years ago.
The escalation of petroleum prices as a result of this panorama seems irreversible. At the same time, the world has finally realized that global warming is a
fact and that burning fossil fuels is a decisive contributing factor to this problem.
From the beginning of the 21st century, the sum of these factors has stimulated the search for, and production of alternative sources of fuel made from various
agricultural products, which are traditionally used as food sources. In an attempt to
combat this dependency on petroleum consumption, the present economic model
seeks to maintain its greatest addiction: limitless economic growth at the cost of
renewable natural resources.
In itself, the use of plant-based fuels is not a novelty. In the U.S. the Model T –
first car manufactured by Ford – already in 1866 could be powered by ethanol
made from corn. In 1900 during the Paris exhibition, the Frenchman Rudolf Diesel
demonstrated that peanut oil could be used to power diesel engines. Since 1978
Brazil manufactures cars powered exclusively by ethanol. In 1986, at the height of
the Proálcool program, 76% of Brazilian automobiles were equipped with motors
fueled by ethanol produced from sugarcane.
The recent increases in petroleum prices – and the impression that these are
here to stay – has stimulated programs for the production of agrifuels worldwide.
The global need for fuels necessary for the development of these programs will
probably lead to radical transformations in agriculture.
5
The use of corn, sugarcane, soybeans, wheat, palm products, and many other
plants as fuel is causing an increase in prices of various food products. The continued
increase in food prices is arguable, since their relative price reduction (in comparison
to those of industrialized products) is a historic tendency. However, the adverse
effect of such increases at this moment in time is unquestionable, considering that
over two billion people still earn less than US$ 2.00 per day.
The most important among the programs to substitute agrifuels for fossil fuels,
is that of the U.S, for substituting part of its gasoline consumption, to ethanol made
from corn. With over one quarter of the world’s total number of cars, the U.S. plans
to substitute 20% of the gasoline consumed in the country for ethanol by 2017.
Towards this goal, production of ethanol in the U.S. should increase by 110% between mid-2007 and the end of 2009. It is estimated that already in 2008, the U.S. has
reserved ten percent of all the corn produced in the world for its ethanol program.
Since there are no suitably large areas for agricultural expansion in North
America, increased corn production comes at the expense of a reduction in other
crops, such as soy and cotton. Thus, the program is already affecting prices not only
of soy, corn and cotton, but of other products as well. Since corn and soy are the
principal components of animal feed, the prices of meat, milk and dairy products
have also increased steadily.
Chinese economic growth is also responsible for a greater need for these animal feed components, as traditional dietary habits are influenced by other factors.
With serious environmental problems, over the last few years China gradually became an importer instead of an exporter, of soy. In 2007 China exported less than
half the volume of corn exported in 2001, and in a few years it will become an
importer also of this commodity.
Apart from China, many other countries are also developing programs for plantbased fuels in substitution of fossil fuels, even though their land areas are not ideal
for domestic production. As with ethanol, consumption of biodiesel has also caused
increased international prices of many vegetable oils such as soybean, dendê-palm,
sunflower seed, and others.
Today the large consumer markets see Brazil as the country with the greatest
potential as “world provider”, from animal to human consumption, and now also
for agrifuel. Europe, China and Japan, having used up a large part of their natural
resources, are focusing on Brazil as the world’s granary, where these essential
resources can be obtained at low cost, in exchange for high priced industrial
products, gains in the financial sector, on intellectual property, etc.
The possibility that expansion of these agricultural activities may cause social
and environmental problems is the cause of grave concerns. The debate regarding
effects on food availability and increases in food prices already occupies major space
in the media. Concerning the environmental aspect in particular, Brazil’s potential
6
INTRODUCTION
importing customer countries seek assurances that they are not purchasing products raised at the cost of forest degradation – the main concern, as always, is the
potential destruction of the Amazon forest.
The threat to native vegetation, however, is not limited to the Amazon, or
even to Brazil. In Malaysia, for example, a major portion of the original forests has
been destroyed in recent years, due largely to increased world demand for dendêpalm oil, and projects for the expansion of biodiesel production and exports are
already underway.
Consequences for Brazil
This scenario is seen by the Brazilian government as a great opportunity to significantly increase the country’s exports, with ethanol taking the lead. While it endeavors
internally to concentrate the control of distribution and exports in the hands of
Petrobras, ethanol sales are a priority item on the agenda for international trips of
the President of the Republic.
On the other hand, over the next few years, the production of biodiesel will
probably be only to supply the internal market. The goal of the Brazilian government
is to substitute part of the country’s diesel oil consumption for vegetable oils,
starting in 2008. Although the National Program for Production and Use of Biodiesel
(Programa Nacional de Produção e Uso de Biodiesel) incentivates family-owned
agricultural production, the increased participation of soybean oil from large
plantations in the production of biodiesel is undeniable.
However, automotive petroleum derived fuels are not the only ones being
substituted by renewable fuel sources. In the case of steel production, charcoal –
from native or planted forests – is another energy source. Brazilian steel mills plan
major investments for increasing steel production. Charcoal, which is used in other
industrial sectors, is also an important Brazilian export item.
Various single crop cultivations dominate Brazil’s agricultural sector. Three of
these, occupying the greatest land areas, are related to the production of agrifuels,
and shall be analyzed below: soybeans, sugarcane and artificial, manmade, forests –
principally of eucalyptus. These cover a total area equivalent to Italy and the Netherlands together (approximately 33 million hectares).
An analysis of the expansion of these cultivations cannot, by itself, reveal all the
resulting impacts. Both Brazilian agricultural and cattle raising activities are enjoying
rapid growth. According to the Ministry of Agriculture between 2002 and 2007 international sales of Brazilian agroindustrial products increased 135% (from US$ 24.8
billion to US$ 58.4 billion). Between January and May of 2008, agribusiness exports
totaled US$ 27.2 billion, 25.3% over exports during the same period of 2007. 1
1
Exportação de agrícolas até maio cresceu 25,3%, divulga Mapa. Agência Estado, 09/06/08.
7
Over the last few years sugarcane plantations have expanded in areas close to
large consumer centers where, though land is relatively more expensive, large profit
margins compensate the outlay. In the state of São Paulo production of corn and
soybeans, as well as cattle raising activities have dramatically declined. However,
Brazilian production of corn, soybeans and meat products increased significantly
over the same period.
In this study, we will analyze what overall effects the expansion of these
agricultural activities have on national territory, with special emphasis on the
dislocations caused by them and the effects of this process on small farmers and
the environment.
8
1
SUGARCANE
Traditionally used worldwide for the production of sugar, the expansion of sugarcane historically has closely followed the world population growth. Since 1970
Brazil has been using ethanol made from sugarcane as an automotive fuel. Recently,
Brazil again became a large consumer of automotive ethanol with the introduction
of flex-fuel for automobile engines, which allows for any proportion of gasoline/
ethanol mixture.
Today, ethanol from sugarcane is considered to be the most promising substitute for automotive gasoline fuels. This is the main reason for the high rates of
expansion of Brazilian sugarcane production, the characteristics and perspectives of
which are analyzed in this study.
As with other food products, world consumption of sugar has been growing
rapidly over the last few years due to high economic growth rates in Asian countries,
notably China and India. Sales of Brazilian sugar also benefited from the decision of
the World Trade Organization (WTO) to eliminate sugar subsidies, following a complaint brought by Brazil, Australia and Thailand against the European Union (EU).
With the defeat in the WTO, the EU will be obliged to substantially lower
the guaranteed price subsidized to the sugar beet farmers until 2009. Brazil thus
hopes to increase its exports to Europe and other regions traditionally supplied
by that area.
In Brazil, already the largest world exporter of sugarcane products, these facts
have led to significant increased areas of cultivation and product manufacturing.
These traditionally domestic-owned activities can now count with a strong influx
of foreign capital.
On the other hand, the rapid expansion of these activities have given rise to
concerns in Brazil, and worldwide, for many reasons. Firstly, the impact that the
9
expansion of agrifuel plantations may have on food prices. As sugarcane ethanol
becomes an important export item, the possible consequences for family farmers
and for the environment, as a result of the territorial expansion of plantations, as
well as the awful working conditions of cane cutters – are some questions that
have mobilized national public opinion, with repercussions at international levels.
The Brazilian government has repeatedly declared that the expansion of sugarcane
plantations will not affect the Amazon or the Pantanal, neither will the production
of foodstuffs suffer. At the same time, many infrastructure projects such as ethanol
pipelines, are under way.
It is, however, necessary to consider other indirect impacts resulting from this
new sugarcane “success story”. Land prices all over Brazil in recent years have risen,
and this has greatly affected rural activities. Other plantations, as well as cattle raising
activities, appear to be transferred exactly to those areas the government insists will
not be occupied by sugarcane plantations. In this chapter, we will present the main
social and environmental impacts of the present sugarcane expansion cycle in Brazil.
Production
Brazil is the largest world producer of sugar and sugarcane products with approximately 30% of the world’s total harvest, followed by India, China, Thailand and
Mexico (Graph 1). According to FAO estimates published in May of 2008, world
production of sugar for 2007/2008 should reach 168 million tons, an increase of
1.1% over 2006/2007 production of 166.1 million tons. Global consumption was
estimated at 158.2 million tons in 2008. (FAO, 2008)
Three quarters of the world sugar production comes from sugarcane grown in
tropical zones in the southern hemisphere. The five main producers of sugar, who
are also the largest consumers of the product, were responsible for approximately
59% of global production in 2006/2007. Of this total, Brazil produced 29.7 million
tons of sugar, followed by India with 25 million tons and China with 10 million tons,
as shown in Graph 1 (Guarani, 2007).
These numbers regarding 2007 production have meant excess offer on the
international market, due to the recomposition of the harvest in traditionally large
producer countries, like India and Australia. After two consecutive bad harvest years
because of climatic conditions, these countries recuperated their production and
productivity rates in 2007.
The production of ethanol worldwide has increased more rapidly than that of
sugar in recent years. The average rate of increase of 10.5% per annum since 2000
means a production of approximately 53 billion liters in 2007. Sugar production in
the same period grew only 3% per year.
10
SUGARCANE
GRAPH 1
Main sugarcane producers
(2006/2007 crop)
Source: F. O. Licht
The relatively high international price of sugar, comparatively to that of the
previous period, also encouraged these countries to resume their normal production
levels. As a result of the higher supply, international sugar prices fell by 42.1% in 2007.1
In April of 2008, following the trend of generalized global increases in food products,
the price of sugar in world markets had risen 29% in comparison with the same
month in 2007. (FAO, 2008)
GRAPH 2
International sugar prices
2005 to Apr/2008
Source: FAO (2008)
1
Guarani. Comportamento do Mercado de Açúcar e Etanol no 1T08. 16/04/08.
11
In the case of ethanol, and against all market expectations, the prices in
the U.S. did not increase as much as those of gasoline. On the contrary, ethanol
prices fell. What seemed to be a great opportunity for Brazilian exports, did not
materialize. In May of 2008, the international price was lower than the cost of
production. The reason undoubtedly was increased sugarcane production in the
main producer countries allied with increased U.S. production of corn ethanol.2
Brazilian production
The turnover of the sugar and ethanol sector in Brazil, according to the Ministry
of Agriculture, is R$ 40 billion per annum, and generates over a million direct jobs.
This sector is responsible for 2.35% of the country’s agricultural GDP and 26.5 of
the Agriculture GDP. According to DIEESE, it is also one of the sectors that generates
most jobs in the country – over 3.6 million direct and indirect jobs (DIEESE, 2007).
Brazil produced 501.5 million tons during the 2006/2007 harvest, which closed
in November 2007 (CONAB, 2008). The estimates for 2007/2008 are 558 to 580
million tons, an increase of 11.3% to 15.6%. Of this total, approximately 90% should
be produced in the Central-Southern area (South, Southwest and Central-Western
regions) with 10% in the North and Northeastern regions.
Seven million hectares have been planted with sugarcane during 2007/2008,
23% more than for the previous harvest year, according to Conab (National Supply
Company) estimates, in the first annual sugarcane survey made in November of 2007
(CONAB, 2007). The Ministry of Agriculture estimates that 13 million hectares will
be planted in 2015.
GRAPH 3
Brazilian production of sugarcane, sugar and ethanol
Sources: Unica and Conab (2008).
(*) Conab projections.
2
12
Álcool não acompanha alta do petróleo e prejudica exportação. Gazeta Mercantil, 03/06/2008.
SUGARCANE
Territorial distribution of production
Sugarcane production is spread over 22 states. The largest producing region is the
Southeast (68.4%). São Paulo state is the biggest Brazilian producer, with an estimated 319 million tons in 2007/2008, and is responsible for 58.5% of the country’s
total production. The State of Paraná is second, with an estimated 46.2 million tons,
followed by the State of Minas Gerais (41 million tons).
Conab´s survey also showed that the states with the largest growth in land
areas of sugarcane plantations are: Bahia (52%), Ceará (40%), Mato Grosso do Sul
(26.8%), Paraná (26.6%) and Minas Gerais (21%). Led by Paraná, the Southern is
the region will have the greatest estimated growth in production, 34%, followed by
the Center-West region (22.1%).
The information contained in Conab´s survey shows that the driving force for
this expansion, is ethanol production. The volume foreseen is the highest ever
recorded: 26 to 27 billion liters, 15 to 20% over the previous year. Sugar production
should increase by 8% to 12 %, reaching approximately 34 million tons. Of the total
sugarcane processed in this period, Conab estimates that nearly 53% will be for
production of ethanol and 43% for sugar.
TABLE 1
Brazil – Principal sugarcane producing states
2006/2007 and 2007/2008 Harvest Years
State
AREA (millions of ha)
PRODUCTION (million t)
06/07
07/08
Var.%
06/07
07/08
Var.%
SP
3,288.2
3,679.5
11.90
284.8
319.0
12.00
PR
436.0
552.0
26.60
34.1
46.2
35.30
MG
420.0
580.2
21.00
33.5
40.9
21.80
AL
402.7
412.0
2.30
25.1
27.1
7.90
GO
234.9
281.8
20.00
18.7
23.1
23.60
PE
369.6
371.5
0.50
18.9
21.1
11.80
MT
209.7
225.5
7.50
14.0
15.6
11.30
MS
160.0
202.8
26.80
12.7
16.7
32.00
Other
642.1
658.3
2.5
32.7
40.2
2.3
Total
6,163.2
6,963.6
13.00
474.8
549.9
15.80
Source: Conab (2007).
Obs. Data extracted from the 3rd sugarcane survey, in November 2007. In 2008, though Conab informed
that the total area foreseen was 7.6 million hectares, no data per State was published in its first survey,
in April 2008.
13
Domestic market
Besides being the largest producer, Brazil is also one of the largest consumers of
sugar in the world, with 11.4 million tons used in 2007. According to Guarani (2007),
increased consumption in Brazil is mainly a result of greater production of industrialized food products with high sugar content. Food products, especially of soft
drinks, chocolates and ice creams, are responsible for approximately 55% of the
domestic sugar consumption.
As for ethanol, Brazil consumed about 9.2 billion liters in 2007, approximately
50% more than in 2006.3 Brazilian legislation establishes that the percent of ethanol
to be mixed with gasoline should be between 20% and 25%. The government uses
this variation to stabilize domestic prices of sugar and ethanol. With the recent
introduction of flexible, gas/ethanol vehicle motors, in 2003, the domestic consumption of ethanol has increased even more.
Ethanol has been used as an additive in automotive fuel since the 1930´s.
During the first international petroleum crisis in the mid-1970´s, the government
promoted the manufacture of cars powered by hydrated ethanol, implanting the
Proálcool program. As a result, the number of ethanol-powered cars increased significantly, reaching a peak of 90% of all cars sold in the country, in 1988. Demand for
ethanol-driven cars fell over the next decade as a result of lower petroleum prices
and the subsequent elimination of government subsidies to ethanol producers.
According to The Brazilian National Association of Vehicle Manufacturers
(ANFAVEA), sales of flexible fuel cars increased from 48,000 units in 2003, to
over 2 million units in 2007, representing over 86% of total vehicle sales in that
year.4 In April of 2008, the National Petroleum Agency (ANP) informed that for
the first time in over 20 years, sales of fuel ethanol in Brazil were higher than
those of gasoline, with an increase of 56% in the first two months of 2008 in
comparison with the same period of 2007, while the increase in gasoline consumption was a mere 2.9%.5
Besides this, most of the cars in Brazil are still powered exclusively by gasoline, suggesting there is ample room for increasing the proportion of flexible motor
vehicles in renovating Brazil’s motor vehicle fleet, with increased production of
these vehicles thereby stimulating demand for hydrated ethanol.
3
Agência Brasil. Consumo de álcool combustível aumentou 49,39% em 2007. 22/02/2008.
4
Vanessa Stelzer. Montadoras vendem 2 milhões de veículos flex em 2007. Reuters, 07/01/08.
5
Nielmar de Oliveira. Consumo de álcool supera o de gasolina pela primeira vez em 20 anos.
Agência Brasil, 10/04/08.
14
SUGARCANE
Sugarcane in the brazilian energy matrix
The increase of sugarcane which already put this commodity high on the list of
Brazil’s energy sources, reached an unprecedented peak in 2007. According to
preliminary data published by the National Energy Balance in April of 2008, by
the EPE (Energetic Research Company), the participation of sugarcane products
(such as ethanol and bagasse) in the composition of primary energy sources used
in the country was 16%, second among the most sought after sources – right
after petroleum and petroleum derivatives, 36.7%, and over hydroelectric power,
14.7% (EPE, 2008).
GRAPH 4
Brazil’s Energy Matrix – 2007
Source: EPE (2008).
International trade
Sugar
Sugar accounted for 46.7 million tons of international trade, in 2007, equivalent
to about 41% of the total world production. Brazil’s participation in this amount
in the same period was approximately 39%. The European Union with 18%, and
Australia with 9% participation, being the second and third largest world exporters of sugar.
15
The international sugar market is strictly controlled and protected in many
countries through subsidies and import restrictions. The U.S. and the European
Union both stand out as having import restrictions. The latter is now under pressure
from exporting countries to reduce restrictions on sugar imports.
In 2003, the WTO established an arbitration panel against the European Union,
at the request of Australia, Brazil and Thailand, for allegedly exceeding the subsidy
limits to sugar exports established by international agreements and general market
practices. The panel decided in favor of the appellant countries, and in June of 2005
the EU announced plans to lower the prices paid to sugar producers by approximately 40.6% over a period of two years, furthermore to reduce production by more
than one third, up to 2012.
With this action the prices paid to sugar producers would decrease from € 650
to approximately € 386 per ton. As a result, European exports could fall by 5 million
tons of sugar per annum, or approximately 10% of all world sugar sales (Guarani
2007). The Brazilian sugar industry expects to sell 50% more to new markets with
the end of European subsidies.
Ethanol
Over the last few years, international sales of ethanol have increased dramatically,
mainly as a result of the rise in petroleum prices. Ethanol production is concentrated
in very few countries. In 2007, the U.S. and Brazil accounted for 88% of all ethanol
produced globally. Both China and the EU have increased their respective production to quite significant levels, as shown in Graph 5.
GRAPH 5
Ethanol – Main producing countries in 2007
Source: RFA (2008).
16
SUGARCANE
Brazilian exports benefit from the fact that the raw material used is sugarcane,
resulting in much lower production costs than the ethanol produced in the U.S.
from corn.
Like sugar, exports of ethanol also face import tariff and non-tariff barriers, as
shown in Table 2. For this reason, the Brazilian government has been striving to
make international sales of agrifuels, particularly of ethanol, an important subject of
trade negotiations and bilateral agreements.
TABLE 2
Import tariffs applied to ethanol:
main countries
COUNTRY
TARIFF
USA
Brazil
Argentina
Thailand
India
Canada
European Union
2.5% + US$ 0.54/gallon
20%
20%
30%
186%
US$ 0.19/gallon
US$ 0.87/gallon
Source: RFA (2007)
Global production of sugarcane has been stimulated as a result of the projected increased use of ethanol. The EU, for example, has declared that all fuels must
include 10% of renewable raw material in their composition, by 2020.
GRAPH 6
Costs of ethanol production
Source: Cambridge Energy Research Associates
17
In Japan, the mixture of 3% in gasoline is optional; in China, 10% is obligatory
in nine provinces; in India, since 2006, a 5% mixture is obligatory. In January of
2007, the U.S. announced its goal for substituting 20% of automotive gasoline by
ethanol up to 2017. U.S. imports of ethanol have steadily increased since 2004.
Exports
According to the Foreign Trade Secretariat (SECEX), Brazilian exports of sugar
totaled 19.4 million tons in 2007. Compared to the exports of 18.87 million tons
in 2006, this is an increase of 2.6%, and compared to 2000, they almost trebled.
Due to much lower international prices in 2007 the total value of these exports
fell by 17%, to US$ 5.1 billion. Brazil also became an important world exporter of
fuel ethanol in the last few years. According to the Brazilian Confederation of
Agriculture and Cattle Raising (CNA), foreign trade increased six times between
2005 and 2007.
In 2007, Brazil exported 3.5 billion liters of ethanol (over 3.3% of 2006), with
billing of US$ 1.478 billion (7.9%, less than in 2006). Even with the fall in prices, the
value of ethanol exports practically doubled compared to 2005, US$ 765 million.
The main buyers were the U.S. – 1.8 billion liters, Japan, the Netherlands and
Sweden. Brazilian exports of ethanol are expected to triple within four to five years.
According to Guarani (2007), in spite of the additional tariffs applied to
Brazilian ethanol, exports to the U.S. increased by 577.7% in 2006 alone, compared
to 2005, from 260.7 million liters to 2 billion liters of ethanol. In 2008, according to
Unica projections, exports of ethanol from Brazil should reach 4.5 billion liters.6
Part of this total volume was exported directly and part through the Caribbean,
under the Caribbean Basin Initiative agreement, which allows up to 7% of the U.S.
needs for ethanol to enter the country free of the US$ 0.54 per gallon tariff charged
to countries that are outside this agreement with the U.S. Even with the 25% tariff
plus US$ 0.54 per gallon (equivalent to 3.785 liters), Brazilian ethanol cost the U.S.
consumer US$ 1.75 a gallon, less expensive than the US$ 1.90 for local ethanol
produced from corn, which is highly subsidized.
With head offices in Bermuda, Infinity Bio-Energy, which was founded in 2006,
purchased eight plants with a mowing capacity of 14.5 million tons up to April of
2008. Four of these are already in operation, two are under construction and two
others at project stage. Infinity is one of the companies seeking to benefit from the
CBI agreement through partnerships with firms based in Panama and the Dominican
Republic, for dehydration and final processing of Brazilian ethanol.7
6
Flávia Oliveira. Exportações podem alcançar meta este ano. O Globo, 16/05/08.
7
Infinity Bio-Energy. Visão Global. April 2008. www.seminarios redetribuna.com.br/seminarios2008.
18
SUGARCANE
TABLE 3
Brazilian exports of ethanol: 1998 to 2007
Year
Million
US$ FOB
Liters
(billions)
Average Price
(US$/m3)
1998
36
0.118
301.21
1999
66
0.407
161.70
2000
35
0.227
153.07
2001
92
0.346
266.57
2002
169
0.759
222.86
2003
158
0.757
208.56
2004
498
2.408
206.68
2005
766
2.592
295.31
2006
1,60
3.428
468.20
2007
1,47
3.541
415.14
Source: MDIC.
The new investments and presence
of foreign capital
As often happens in the financial markets, news about new investments in sugarcane production and construction of new installations follow one another in rapid
succession. According to the Valor Econômico newspaper, the National Bank for
Economic and Social Development (BNDES) foresees investments of US$ 50 billion for all phases of ethanol production in the country, between 2007 and 2011. 8
Of the estimated total, US$ 12 billion refer exclusively to projects of new production
plants for sugarcane and energy from bagasse. Of this total, the BNDES may finance
US$ 3.2 billion.9
The Federal Government’s for Growth Acceleration Program (PAC) forecasts
investments in the order of US$ 8.1 billion for the expansion of ethanol production,
including Petrobras participation. Of these, US$ 6 billion will be invested in new
installations in the Southeast region: US$ 4.2 billion, or 70% of total investments,
but none in the North and Northeast regions. The other US$ 2 billion will be spent
on infrastructure for the transportation of ethanol. An ethanol pipeline is already
projected linking Senador Canedo-GO to São Sebastião-SP. A second one, still in the
study phase, will be constructed between Cuiabá-MT and the Port of Paranaguá-PR.
8
BNDES prevê R$ 100 bilhões em investimentos à produção de álcool. Valor Online, 16/04/07.
www.valoronline.com.br.
9
Inovar e investir para sustentar o crescimento. Conference by Luciano Coutinho, BNDES President,
May 2008. www.desenvolvimento.gov.br. Accessed on 09/06/08.
19
FIGURE 1
New ethanol plants
Source: Ministry of Planning, Budgets and Management
As of April 2008, Brazil had 370 sugar and ethanol producing units. Its sugarcane production is expected to increase from 475 million tons in 2007, to 700 million
tons in 2014. This will demand investments for 114 new installations. There are 43
units presently under construction in Brazil.
TABLE 4
The largest Brazilian sugar and ethanol
companies – 2006
Ranking
in Brazil
Company / Head Offices
9
52
76
81
109
112
118
126
135
145
Copersucar / São Paulo-SP
Cosan / Piracicaba-SP
Usina Nova América / Tarumã-SP
Usina Caeté / Maceió-AL
Usina Coruripe / Coruripe-AL
Santa Elisa / Sertãozinho-SP
Usina da Pedra / Serrana-SP
Usina Bonfim / Guariba-SP
USAÇÚCAR / Maringá-PR
LDC Bioenergia / São Paulo-SP
Source: Exame magazine.
20
Value of Sales
(in R$ million)
5
1
1
1
643,10
544,40
230,40
150,00
795,90
771,80
720,60
702,80
677,20
626,50
SUGARCANE
These expectations are also based on the possibility of expanded ethanol
consumption in Brazil and in other countries, especially in the U.S., where demand for
ethanol may reach 132 billion liters per annum within the next ten years. This volume
represents approximately three times the present world production of ethanol.
According to BNDES calculations, just to supply domestic demand, Brazilian
ethanol production must be increased from the present 17.5 billion liters to 24
billion in 2011. Exports of ethanol are estimated to triple between 2007 and 2012,
reaching 9 billion liters.
Petrobras will also heavily invest in the production and trading of ethanol.
The company intends to close a deal with Japan who will substitute 3% of its gasoline consumption for ethanol, by 2010. Petrobras will also participate in the construction of ethanol installations projects and ethanol pipelines. It will also have a
10-20% participation in the capital of five new plants, with an estimated total production of one billion liters of ethanol/year.10
The sugar and ethanol industry in Brazil is today almost entirely locally
owned. According to Datagro consulting estimates, in August of 2006 foreign capital participation in national companies of the sector was a mere 5.7%. In August
2007, this percentage more than doubled to 12%. 11 The profits from the production of sugarcane based ethanol have attracted an extraordinary volume of foreign
capital. Thus, between 2000 and mid-2007, US$ 2.2 billion were invested in
ethanol production.
Exame magazine’s annual edition publishes two distinct forms of foreign
capital participation: “on the one hand there are the international consortiums
belonging to businessmen, and funds interested in investing capital in a promising
business venture, with no direct involvement in its management and operation; on
the other are the companies who already invest in the sugar-ethanol sector abroad
and the trading companies who participate, or wish to participate more actively in
the international ethanol trade”.
The best example of the first is the Hungarian mega investor George Soros,
owner of a fortune estimated at US$ 8.5 billion. He became one of the partners in
Adecoagro, that purchased the Monte Alegre Plant in Minas Gerais in 2006, and is
building another plant in Mato Grosso do Sul. Together with partners like James
Wolfensohn, former World Bank President, and the founders of Sun Microsystems,
Vinod Khosla, and America Online, Steve Case, Brenco will invest US$ 2.2 billion in
the construction of ten plants.
21
On the part of companies, the interest of foreign groups was aroused even
before the explosion of internal demand for ethanol thanks to the success of cars
with flexible fuel motors. The first to show interest were the French Tereos and Louis
Dreyfus, in 2000. In February of 2007, the Louis Dreyfus group, who already controls the plants of Luciânia, in Minas Gerais, Cresciumal and São Carlos, in São Paulo,
purchased four plants of the Pernambuco group Tavares de Melo, and also started
building a fifth unit in Mato Grosso do Sul through its Louis Dreyfus Commodities
Bioenergia (LDC). Tereos, that presently owns 6.3% of Cosan shares, and may still
this year increase its share participation in that company, also has a 47.5% share in
Franco-Brasileira de Açúcar (FBA) and 100% of Açúcar Guarani. Cosan purchased
Esso in 2008, for US$ 826 million.
An increasing number of foreign groups interested in participating in this promising sector, followed the example of the French pioneer groups, among them large
multinational groups active in the agribusiness sector, like Cargill. In June of 2006,
Cargill, purchased the Central Energética do Vale do Sapucaí (Cevasa), located in
Patrocínio Paulista, interior of the State of São Paulo for R$ 75 million, becoming
majority shareholder.
FIGURE 1
Where the money comes from
Who the main foreign investors are
GROUP
PROFILE
BUSINESS WITH ETHANOL
Adecoagro
Active in milk, meat, grains, sugar,
and ethanol sectors. Its main
partner is the Hungarian investor,
George Soros
Owns a plant in the State of
Minas Gerais and is constructing
another in the State of Mato
Grosso do Sul. Plans to invest
R$ 1.6 billion up to 2015
Brenco
Investment fund headed by
former Petrobras President,
Henri Philippe Reichstul
Has US$ 2 billion to invest in
ethanol plants in the Midwest
region
Cargill
American group, one of the
world´s largest grain and food
producers
Bought 63% of Cevasa shares,
a plant owned by Mauricio Biagi
Filho, in Patrocinio Paulista (SP)
Global Foods
Merged with the Santa Elisa group
to create National Company of
Sugar and Alcohol (CNAA)
Plans to invest R$ 2 billion in the
construction of four plants in the
Staes of Goiás and Minas Gerais
Tereos Group
With head offices in Lille, France,
it is one of the largest European
sugar producers
Owns 100% of Açúcar Guarani,
47.5% of Franco Brasileira de
Açúcar (FBA) and 3% of Cosan
Source: Exame magazine, June 2007. www.portalexame.abril.com.br.
22
SUGARCANE
Other groups interested in a share of the Brazilian market are Pacific Ethanol,
whose billionaire shareholder is Bill Gates, founder of Microsoft, the German group
NordZucker SudZucker, active in the European sugar market, and BHL from India,
owner of sugar plants in that country.
According to Datagro, “of the ten largest Brazilian companies in the sector,
four already have foreign capital participation: Cosan, Bonfim, LDC Bioenergia
and Guarani. A fifth company, Santa Elisa, recently entered into partnership with
the American group Global Foods to form the National Company of Sugar and
Alcohol, with plans to invest R$ 2 billion in the construction of four production
units in Goiás and Minas Gerais”. 12 KPMG Consulting informs that, of the nine
joint ventures and purchases in the sector in 2007, six involve foreign groups.
The same is true for business ventures in 2006, with the same number of foreign
groups participating.
In the midst of this euphoric scenario notwithstanding, Benedito Rosa do
Espírito Santo, a researcher of Ipea – Applied Economics Research Institute (Instituto
de Pesquisa Econômica Aplicada), warns that the nascent foreign market is still
“unstable” and will suffer “spectacular changes” in the medium term due to the
influence of the technology of ethanol production from cellulose. He affirms that
“should a crisis occur along the way, there will be enormous excess production and
a high level of vulnerability”.13
New applications for sugarcane
During this study, we noted that the estimates for the expansion of sugarcane
plantations do not take into consideration any applications other than sugar and
ethanol. However, the end of the petroleum era – or simply the rise in prices – will
demand the creation of alternatives for a number of goods. Today the raw material
used for producing practically all the polyethylene in the world is naphtha, a petroleum derivative.14
To this end, according to the newspaper O Estado de São Paulo, Dow Chemical
will set up a subsidiary with Crystalsev (a Brazilian sugar and ethanol trading company) in order to build the world’s first integrated ethanol-chemical complex, with
sugarcane as the basic raw material. Construction of the project, located in the
Center-Southern region, will begin in 2008, and operations will start in 2011.
The objective is to manufacture 350,000 tons per annum of polyethylene, one of
12 Altamiro Borges. O etanol e a invasão estrangeira. ADITAL, 27/06/07. Available at www.adital.com.br.
13 Ipea vê exagero no apetite por etanol e recomenda foco no mercado doméstico. Valor Econômico,
08/06/07.
14 Agnaldo Brito. Dow Chemical e Crystalsev farão plástico a partir de cana. O Estado de São Paulo,
20/07/07.
23
the most important resins used in the manufacture of plastics. 8 million tons of
sugarcane will be necessary to produce 700 million liters of ethanol. This is not
the first such initiative in the sector. A similar Project was announced in June 2006
by Braskem, the largest Latin American petrochemical company.15
Territorial expansion of plantations
There are many estimates regarding the amount of acreage to be planted with
sugarcane in years to come. According to the Institute for Agricultural Economy
(IEA) – an agency linked to the São Paulo Agriculture and Supply Secretariat –, in
2015/16 sugar plantations in Brazil may cover 12.2 million hectares, processing 902.8
million tons of sugarcane and producing 26 billion liters of ethanol.16 This land area
corresponds to almost double the acreage planted with sugarcane in 2007/2008.
The BNDES foresees that Brazil may play a decisive role towards the global
10% goal of gasoline substitution (220 billion liters). So that Brazil can capture
50% of this market, its production of ethanol will have to reach approximately 110
billion liters, seven times more than the present level. In a simplified calculation,
which accounts for the present levels of productivity and profits from ethanol production, Horacio Carvalho estimates that there must be 28 million hectares of plantations (Carvalho, 2007). This area is approximately equal to the total acreage of
soya and sugarcane plantations in Brazil, in 2007.
For Benedito Rosa do Espírito Santo, a researcher of Ipea, the land area planted
with sugarcane, when compared with the 18 main crops in the country will expand
from 12.7% in 2007 to 17% in 2013/14. By his calculations, the percentage of land
destined for ethanol production will increase from 6.6% to 12% of the total crop
area in the same period.
The Correio Braziliense newspaper also describes the advance of sugarcane in
the Central-Western region as a whole,17 where areas of pastures, soybeans, corn
and cotton plantations are giving way to sugarcane crops. The town of Senador
Canedo (GO), 18 km from Goiânia, is a good example of this accelerated expansion.
Though producing no ethanol, it is an important center for the distribution of fuels.
With the news that Petrobras will invest US$ 750 million in building an ethanol
pipeline linking the town to Paulínia (SP), Canedo lives in expectation of being transformed into one of the world’s largest redistribution centers. In 2012, the transport
capacity of the ethanol duct will reach 8 billion liters.
15 EUA e Brasil esperam produzir álcool a partir da cana-de-açúcar. Jornal Última Hora, 19/07/07.
16 Produção de cana poderá superar 900 milhões de toneladas em 2015/16. JornalCana, October 2006.
www.jornalcana.com.br.
17 Luciano Pires. Cana muda eixo da economia no Centro-Oeste. Correio Braziliense, 29/04/07.
24
SUGARCANE
FIGURE 2
Location of sugar and ethanol plants in Brazil
Source: Interdisciplinary Nucleus of Strategic Planning (Nipe)
Some Municipalities and States start defensive action
against sugarcane expansion
In the absence of any planning of land use or study of possible impacts on the part
of the federal government, some municipalities located in the areas of sugar crop
expansion are elaborating their own legislation in order to regulate and minimize
the possible negative effects of this expansion.
The euphoria prevalent in Senador Canedo is in stark contrast to the concerns
in Rio Verde, a municipality in the State of Goiás. According to its mayor, Paulo
Roberto Cunha, where sugarcane is planted, jobs “are fewer and more difficult to
find”. Recently, as informed by the Correio Braziliense, the town’s authorities regulated this activity, determining that only 10% of its arable land could be occupied by
sugarcane plantations. The municipality is concerned in maintaining the cultivation
of existing crops such as corn, cotton and soybeans, that supply the Perdigão industrial complex and generate more jobs and taxes in the region.
25
In Sacramento, located in the State of Minas Gerais, legislation approved by
the Chamber of City Councilmen in 2006 limits the sugar plantations to 20% of the
municipality’s total land area. Among other norms, it also establishes a minimum
distance to springs, licensing norms, and forbids the clearing of crushed by burning
in areas less than five kilometers from any town.18 In Mato Grosso do Sul, the state
government restricts the planting of sugarcane in the Paraguay river basin.
The São Paulo state government suspended receipt of requests for the installation or expansion of sugar and ethanol plants for a period of 120 days, when it
observed that there was an exaggerated increase of requests for the installation
of new plants, and therefore decided to carry out a careful assessment of the effects
of this expansion. The decision also has another objective: to evaluate if the licenses
are being used as an excuse to sell out to international groups or if they are really
for investment purposes. The government is greatly concerned that sugarcane may
become an exclusive crop in São Paulo. 19
The states of Goiás and Paraná also plan to increase controls on the expansion
of sugar plantations. In the case of Paraná, the government announced the creation
of an agricultural zone for sugarcane, in order to prevent its expansion into other
crop areas and forests.
Sugarcane in the Amazon?
The fast growing expansion of sugarcane plantations in Brazil, as well as the possibility that ethanol may become one of the most important commodities on the
international market, has given rise to grave misgivings both in Brazil and other
countries, especially in Europe. The main focus of these concerns is the Amazon.
It is undoubtedly because of these concerns that President Lula in his speech in
Brussels on the occasion of the International Conference on Biofuels, in July 2007,
declared that “if the Amazon was suitable for planting sugarcane, the Portuguese
when they introduced its cultivation in Brazil so many centuries ago, would have
planted it there”. President Lula stated that sugarcane plantations were located far
from the Amazon that has no suitable land areas for this crop.
That same day, journalist Altino Machado pointed out the President’s error:
“Lula created an embarrassing situation when he repeated misguided, contrary,
information received from his Political Advisors. There are already large installations
in the Amazon, in Presidente Figueiredo (AM), Ulianópolis (PA), Arraias (TO), and
18 Lei limita a 20% a área a ser plantada de cana-de-açúcar no município. O Estado do Triângulo,
09/07/06.
19 Guilherme Barros. SP suspende pedidos para a instalação de usinas de álcool. Folha de São Paulo,
16/05/08.
26
SUGARCANE
another half dozen in Mato Grosso. According to the last Conab survey of May
2008, last year sugarcane production in the region known as “Amazônia Legal”,
encompassing areas in the States of Mato Grosso, Tocantins, Maranhão, Amazonas
and Pará”. 20
Besides which, still according to Altino Machado, during this same period,
three new processing plants were either being built or being projected: Álcool Verde
plant, in Acre, was already operational. Two other plants are planned – one on the
BR-364 interstate, outside Rio Branco towards Porto Velho (RO), and another in the
municipality of Capixaba, in the State of Acre, on the BR-317 interstate highway,
called the Pacific Highway.21
The day before this, the Diário do Pará newspaper had published an article
showing that the Ministry of Labor, in a single operation to suppress slave jobs in
the country, found 1,108 persons working in subhuman conditions on a farm owned
by Pagrisa (Pará Pastoril e Agrícola S.A.), in Ulianópolis. The workers slept in overcrowded quarters and worked in cutting and gathering sugarcane.22
In fact the survey data for the period 2007/08 (Conab, 2007) shows that
sugarcane production in “Amazônia Legal” increased from 17.6 to 19.3 million tons
between 2006 and 2007. In the State of Mato Grosso, for example, there was an
expansion of 10% in areas of sugarcane plantations, while in the State of Tocantins,
the increase was 13% and in the Amazon, 8%.
Impacts on the environment
The repercussions of this article as well as the realization, on the part of the government and the sector’s businessmen that the entry into new markets for ethanol
would require an environmental certification, provoked immediate actions from the
government. On July 17, 2007, the Minister for Agriculture, Reinhold Stephanes,
announced that the Brazilian government would forbid the planting of sugarcane in
the Amazon and the Pantanal.
The Minister also informed that sugarcane cultivation will be forbidden in areas
the government considers unsuitable for environmental reasons, or where the plantations may conflict with other food crops. Other areas may be specific regions in
the Cerrado (savannah-like vegetation) or Pampa Gaúcho. 23
20 Altino Machado. Lula erra em Bruxelas ao negar cana-de-açúcar na Amazônia. Amigos da Terra
Amazônia, 06/07/07. www.amazônia.org.br.
21 Blog of Altino Machado, 20/07/07. www.altino.blogspot.com.
22 Recorde: fiscalização resgata 1.108 “semi-escravos” de fazenda em Ulianópolis. Diário do Pará,
03/07/07.
23 Eliane Oliveira e Luiza Damé. Governo reage a pressões e decide proibir plantio de cana na Amazônia
e no Pantanal. O Globo, 18/07/07.
27
On the same occasion, the Minister informed that the government will carry
out an ecological and economic zoning map (ZEE), to be concluded in July of 2008,
that will designate permissible areas for sugarcane plantations as well as those
where incentives will be given for this crop, such as an additional official rural credit
and fiscal exemption. “The map will indicate where sugarcane may be planted,
and the areas will incentives for planting, such as degraded pasture land”, he said.
The ZEE will take into consideration the climate and soil conditions in each micro
region in the country.24
The Minister also declared areas in the Atlantic Forest and indigenous reservations will be off limits. The areas where sugarcane planting are to be encouraged are
pastures, whether degraded or not; in this case, sugarcane plantations will be
allowed in the Amazon and the Pantanal regions also. These measures should
benefit both producers and exporters. “The entire process, from planting to the
quality of ethanol produced, will receive socio-environmental certification”, declared
Stephanes. The measures do not include already existing plantations.
For this purpose, the government launched the Brazilian Biofuel Certification
Program, with a view to supporting the exports of agrifuels through a process of
voluntary certification, showing aspects of the product’s quality, level of energy
content and impurities, as well as production process environmental and social
sustainability.
Accessing the Embrapa-Cana internet site, however, shows there is cause
for concern with regard to the parameters on which the government could rely
when elaborating a zoning map which considers the effective impacts on the
environment observed up to now in Brazil. Titled “The Impact of sugarcane on the
environment”, as follows:
“With the exception of a few studies carried out by Embrapa Satellite Monitoring, there has been little solid, wide ranging studies to evaluate the environmental impact (AIA – Analysis of Environmental Impact) of the present
location of sugarcane plantations. There are no known other evaluation
studies of environmental impact of the spatial/temporal evolution of land
use in sugarcane areas over, for example, the last 30 years.
Regarding the analysis of environmental impacts of the techniques and
technologies used in sugar and ethanol production – which include the
burning of dried sugarcane plant residue – three subsystems were profoundly altered with the implantation of the PROALCOOL Program, in S.
Paulo and should be considered simultaneously: the planting of sugarcane
24 Mauro Zanatta. Governo vai proibir o plantio de cana na Amazônia e no Pantanal. Valor Econômico,
18/07/07.
28
SUGARCANE
(agriculture subsystem), its transformation into sugar and ethanol (industrial subsystems) and lastly, transportation subsystems. The overall environmental and socio-economic consequences of these changes in the regions
directly or indirectly affected by them, in spite of their importance and
magnitude for the country, are still unknown.
There is no known adequate evaluation study of the environmental impacts
of sugarcane production, not even a pilot anywhere in S. Paulo or in Brazil,
as far as any knowledge exists.”25
However, wherever it is present, the expansion of sugarcane cultivation tends
to consolidate the economic model which dominates Brazilian agriculture. This model
is firmly established in large areas of monocultures, in the artificiality of activities
through cultivation of genetically modified crops, industrial fertilizers, intensive use
of toxic herbicides and substances, heavy mechanization and usage of agricultural
aviation (Carvalho, 2007). This model is associated with a long list of damaging
environmental impacts, such as contamination of waters an soil by agro-toxics and
herbicides, compacting of the soil as a result of heavy agricultural machine use,
destruction of native forest areas, air pollution due to burning of sugarcane plantations and destruction of the biodiversity.
As described by Laschefski and Assis (2006), the burning of sugarcane plantations which occurs in approximately 80% of cultivated areas, is the most visible
problem to the environment caused by the national sugar-ethanol sector. These
burnings are done to facilitate manual cutting of sugarcane, reduce transportation
costs and compensate losses of up to 20% of the harvest. The gas emissions resulting
from these burnings (carbon dioxide and monoxide, methane and other gases)
together with aerosols and particulate elements greatly influence climate conditions
and may contaminate more distant regions. As a result, these burnings not only
represent a grave environmental impact, but are also causing health problems in the
populations of regions in the vicinity of sugarcane plantations.
Impacts to family farmers
The valorization of land in Brazil and especially in the main areas of sugarcane
expansion, is already displacing not only large agricultural and animal husbandry
activities, but also those of family farmers.
According to Benedito Rosa26, “this may cause impacts on the production of
250,000 hectares in the regions of the Minas Gerais Triangle, south of Maranhão,
25 Available in www.cana.cnpm.embrapa.br. Accessed on 11/10/07.
26 Ipea vê exagero no apetite por etanol e recomenda foco no mercado doméstico. Valor Econômico,
08/06/07.
29
southeastern Piauí, northern Tocantins and northeastern Pará”. In his words, sugarcane plantations may increase from 300,000 to 800,000 hectares in Goiás. “Today,
the area planted already corresponds to 160% that of corn in Goiás”. In São Paulo,
the difference reaches 300%. “In the interior of the state, the hectare which used
to cost R$ 4.7 thousand in 2001 now is worth R$ 10.2 thousand”, in 2007".
The eagerness for sugarcane based ethanol production is the main reason
for the significant rise in land prices in 2007 in many regions of the country. The
O Globo27 newspaper informs from July of 2006 to June of 2007, the average value
of land in Brazil was 11.64%. Land values increased significantly exactly in the
regions of the greatest sugarcane expansion: the Southeast (17%), Center-West
(12.2%) and South (11.64%).
In Araraquara, in the interior of São Paulo state, grain crops and cattle
raising are being substituted by sugarcane crops, causing a 70% increase in land
prices in this period. The expansion of land cultivated with sugarcane, and the
consequent increase in land prices, are pushing other crops and pasturelands to
new areas. According to the IEA-SP (Institute for Agriculture Economy), this was
a 54% increase, between 2002 and 2008. 28 The preferred regions are the Minas
Gerais Triangle, south of Goiás, and east of Mato Grosso do Sul. Besides these,
Paraná, Tocantins, Maranhão, Pará and Bahia have also expanded their sugarcane production.
The land occupied by sugarcane in the region of Araraquara doubled between 2001 and 2007, reaching approximately 480,000 hectares, between new
and already occupied land areas, according to a preliminary survey carried out by
the Araraquara Regional Agricultural Development Agency (EDR), of the São Paulo
State Agricultural Secretariat.
Many crops typical of the region such as oranges and coffee, as well as cattle
raising, have been substituted by sugarcane plantations. Some reflexes of this rapid
and continuous expansion are already being felt in retail prices as, for example
milk, which increased about 50% by mid 2007. Consumers are already paying more
for other basic foodstuffs, such as rice, black beans and corn. According to Paulo
Cavasin of the EDR29, “Milk prices rose because there is a lack of pastures in the
state. Where there was cattle, today there is a sea of sugarcane, and this will also
happen with other crops.
27 Aguinaldo Novo. Produção de etanol faz preço da terra ter valorização histórica no Brasil.
O Globo, 07/06/07.
28 Área agrícola ocupada pela cana-de-açúcar no Estado de São Paulo cresceu 54% desde 2002 e expansão
ainda continua em SP. Folha de São Paulo, 01/06/08.
29 Fernanda Manécolo. Área de plantação de cana duplicou nos últimos sete anos. Tribuna Impressa
de Araraquara, 16/07/07.
30
SUGARCANE
The expansion of sugarcane plantation areas in São Paulo is also concentrating
production in the hands of large plants and suppliers, eliminating small producers.
According to a study carried out by Pedro Ramos, professor and researcher of the
State University of Campinas (Unicamp), today only 25% of the cane crushed in
processing plants comes from independent suppliers. The other 75% are produced
by the plants themselves.30
Among independent producers, the number of small producers also decreased.
In 1995/96, 27.6% of the sugarcane producers supplied up to 4,000 tons to plants.
In 2005/06, this percentage decreased 18%. The participation of suppliers producing 10,000 tons or more increased from 53.2% to 64.9%, in the same period.
It can also be foreseen that increased mechanization will accelerate this process.
With the announcement of approximately 90 new investment projects for
installations all over the country, the sugarcane planters are migrating from their
regions of origin to accompany the expansion of plants, according to Manoel Ortolan, President of the Organization of Cane Producers in the Center-South Region of
Brazil (Orplana)31. “There is a still disorganized migration of producers to the west
of São Paulo state and to the Center-West.”
Orplana still does not have a map showing this movement, but informs that
a good many producers are buying and leasing land in pasture areas. “The number
of sugarcane producers is on the rise. There are many small grain farmers interested
in cultivating sugarcane,” he said. The areas close to plants already in operation
or under construction are rapidly valorizing. The price of land within a 30 Km
radius from these plants has increased by four times the price before the appearance
of the installations.
Still according to Orplana, leasing is the most common practice in the partnership between landowners and plants, which also contributes towards land price
increases. In leasing his land, the owner does not have to pay for the planting and
receives a contracted sum (or receives for production by hectare or on the actual
harvest). In Goiás, there are cases of a hectare being leased for up to R$ 30,000.
In Mato Grosso and Mato Grosso do Sul, prices vary from R$ 10,000 to R$ 15,000.
The situation in the Northeast
According to the O Globo newspaper, writing on the abovementioned subject, the
values of land areas destined for sugarcane production in the Northeast, especially
the Zona da Mata in the State of Alagoas, increased 84% when, on average, land
30 Mauro Zafalon. Pressionado a produzir mais, trabalhador atua cerca de 12 anos, como na época
da escravidão. Folha de São Paulo, 01/05/07.
31 Fornecedores de cana se preparam para expansão do setor. JornalCana, outubro de 2006.
www.jornalcana.com.br.
31
values in the region are much lower: 8.6% between mid 2006 and 2007. Sugarcane
production in the region has practically not changed in the last ten years: it decreased
from 60.47 to 55.34 million tons between 1990 and 2007.
Cane production costs in the Northeast are much higher, since part of its
cultivation is on steep slopes where the use of machines is difficult and making it
labor intensive. Thus, the Northeast, which is responsible for 13% of national cane
production, (Conab, 3rd survey, 2007) generates 35% of jobs in this activity. Many
northeast producers have started sugarcane and ethanol production in the Minas
Gerais Triangle, São Paulo, Goiás and Mato Grosso.
According to the Folha de São Paulo, the period between harvests in the
Northeast – from March to September – means unemployment and the threat of
hunger for 100,000 rural workers in the States of Pernambuco and Alagoas. The mayor
of São Luiz do Quitunde, in Alagoas, Cícero Cavalcante, declares that there is 80%
unemployment in the municipality during this period.32
In Pernambuco, according to Pastoral Land Commission (CPT), since the beginning of the 1990´s, approximately 200,000 jobs have been eliminated. Approximately 120,000 people who lived on small farms on land owned by cane processing
plants and producers, and planted manioc, corn and fruit to survive, lost their homes
and livelihoods.33
In São Paulo also, the independent cane suppliers lost ground due to the
increased concentration of production by large plants. Up to the end of 1990, half
the cane crushed for sugar and ethanol production in the Northeast was supplied
by independent producers. Today, their participation in total production is approximately 30%, according to the Folha de São Paulo.
Arnoldo Campos, one of the principal managers of biodiesel program in the
Ministry for Agrarian Development, informs that the Ministry is planning to enter
the debate on ethanol in defense of the entry of independent producers in this
market. For Arnoldo Campos this is more complicated than the program for biodiesel due to the logistics of ethanol, since sugarcane is a highly perishable crop and
cannot be stocked like grains for production of biodiesel. “However, we are looking
for solutions, such as small sugar mills that could pre-process the raw material”,
declares Campos.34
In practice, according to Almir Xavier, leader of the MST in Pernambuco, viability
of sugarcane in small properties is minimal. “It is a hard, intensive cultivation with
32 Elvira Lobato. Nordeste vê à distância explosão do álcool. Folha de São Paulo, 08/07/07.
33 Alagoas: sem trabalho durante a entressafra da cana, famílias não têm o que comer. Folha de São Paulo,
08/07/07.
34 Verena Glass. FAO defende etanol mas não tem fórmula de sustentabilidade. Agência Carta Maior,
09/07/07.
32
SUGARCANE
profits of only R$ 6,000 per year for a plantation in the Pernambuco Zona da Mata”,
he explains. In some cases this is the only option of the settled, who on the other
hand, spends up to 3 months just eating manioc. “He is not capable of planting
anything else, because sugarcane demands full attention. The latter ends up being
extremely bad for the planters food security and for quality of life in general”,
states Xavier.
The increasing rise in land values and the practice of leasing land for expanding sugarcane plantations thus cause profound changes in agricultural production, generation of jobs in rural areas, on migratory tendencies, food supply and
availability of land for agrarian reform.
The situation of workers on sugarcane plantations
Working conditions in the Brazilian sugar and ethanol sector are especially precarious, even among all rural workers in the country. This precariousness also makes
it difficult to gather information on the real number of workers in the sector.
According to sources used by DIEESE (Unica estimates), in 2007 approximately
between 780,000 and one million workers were employed in the sector, for the
cultivation and harvesting of sugarcane (DIEESE, 2007).
Based on the National Research by Homestead Sampling – PNAD – the IBGE
informs that the direct jobs existing in 2005 in the sugarcane production sector, was
519,000, an increase of 25% over 2000, while production itself increased by approximately 40%. According to this same source, in 1992 there were 647,000 workers.
It is estimated that at present, harvesting activities in about 25% of Brazilian
sugarcane plantations have been mechanized. Machine cutting reduces the numbers of workers and, therefore, the bargaining power of unions through strikes.
(DIEESE, 2007)
In Ribeirão Preto, interior of the State of São Paulo and the center of almost
60% of the country’s sugarcane production, satellite monitored tractors, electronically controlled fertilizing machines and precision harvesters are used. 50%
of the plantations in that area are fully mechanized. Historically, Ribeirão Preto
has always been the focus of rural worker battles for better work conditions and
quality of life.
The State where mechanization has been more rapidly introduced was São Paulo.
Mechanization was the answer found by the production sector to salaried migratory
worker claims and society opinion against the practice of clearing by burning in
preparation for planting crops by hand. According to the IEA-SP survey, in 2007
mechanization corresponded to 40.7% of total area planted (Fredo et al, 2008).
In Goiás, the level of mechanization is 39%, in Minas Gerais 18%, in Mato Grosso
do Sul 31% , in Mato Grosso 80%, in Paraná 11%, 3%in Rio de Janeiro and in
Espírito Santo, and almost nil in the Northeast states (DIEESE, 2007).
33
Mechanization, though considered inexorable, is slow. The introduction of
mechanized harvesters depends on many varying conditions such as development
of new sugarcane strains, availability of capital, possibilities for irrigation and
decrease in availability of cheap labor.
In those regions where the activity is predominantly manual the new cane
cycle, marked by high productivity, forces workers to harvest 15 tons of sugarcane
daily. On average, the cane worker is now required to cut 10 tons per day of sugarcane, in comparison to 6 tons daily in 1980.
According to Maria Aparecida de Moraes Silva, of UNESP (São Paulo State
University), this additional effort shortens the work cycle in this activity, leading the
workers to retrocede to standards of productive working life expectancy lower than
those in existence prior to the abolition of slavery. In the 1980´s and 1990´s, the
productive working life expectancy was 15 years, whereas it has become 12 years
from 2000 onwards. According to the historian Jacob Gorender, the productive
working life of slaves in agriculture was 10 to 12 years up to 1850, before the slave
traffic was forbidden.35
The noncompliance with labor laws, collective labor agreements and conventions are the hallmark of work relations in the sector. A study on the work conditions in cane plants in the State of Paraíba, mentioned by DIEESE (2007), concluded
that the workers suffer enormous losses due, among other reasons, to a reduction
in the established base salaries, increased work load through the irregular classification of sugarcane; errors or frauds committed in weighing and conversion activities; and the non-payment of salary inclusions such as weekly paid rest, vacations
and 13th salary.
“The workers during a harvest year, in Paraíba lose out on an estimated nonpayment of 1.92 million minimum salaries (US$ 877.84 million). For each
day worked, the laborers lose two. Only for salaries, it is estimated that the
losses are approximately 60% of salaries. Errors or frauds in weighing activities account for a 21% reduction in salaries. The study points out a series of
union measures to fight the situation: increase of worker control over production and simplification of calculations, formation of delegates in key positions;
oversight campaigns; denunciations to, and pressuring official agencies.”
(DIEESE, 2007)
Another recent study by UNESP, mentioned by the Folha de São Paulo, shows
that the expansion of sugarcane is attracting a growing number of workers from the
Northeastern states such as Maranhão and Piauí, to São Paulo. In 2000, sugarcane
production in São Paulo attracted only 100 cutters from Maranhão. In 2006/07, this
number increased to 7,000 workers only from Timbiras-MA.
35 Mauro Zafalon. Cortadores de cana têm vida útil de escravo em SP. Folha de São Paulo, 29/04/07.
34
SUGARCANE
The study also shows the cause-and-effect relation between sugarcane expansion in the Center-South region, the decrease in cattle raising in this region, and the
migration tendencies of rural workers. With the expansion of cane plantations and
increased land values in the Center-South, cattle farmers are moving to the North
and Northeast, including Maranhão, where the formation of new pastures occurs in
areas of babaçu nut cultivation which is the livelihood of families in the region.
Without this regional crop, these families are forced to become cane cutters in
São Paulo in order to survive.
In the State of Piauí, where the same research was carried out, small farmers
are driven out by plantations of soya, another crop that has migrated from the main
area of cane expansion in search of lower priced land.
The dynamics of territorial migration of the population in Brazil are discussed
in the chapter “Synthesis and Conclusions”.
35
Bibliography
CNA. Agropecuária Brasileira: balanço de 2006 e perspectivas para 2007. Available at
www.cna.org.br.
CARVALHO, H. Impactos econômicos, sociais e ambientais devido à expansão da oferta
do etanol no Brasil. Curitiba, julho de 2007. Available at www.landaction.org.
CONAB. Acompanhamento da safra brasileira. Cana-de-açúcar. Safra 2007/2008.
Primeiro Levantamento. May 2007. Brasília, CONAB, 2007.
Terceiro Levantamento. November 2007.
DIEESE. Desempenho do setor sucroalcooleiro brasileiro e os trabalhadores.
Estudos e Pesquisas, year 3, n. 3. DIEESE, 2007.
EPE. BEN 2008. Balanço Preliminar, informe à imprensa. May 2008.
FAO. Food Outlook. Global Market Analysis. May 2008.
FREDO, C. et al. Índice de Mecanização na Colheita da Cana-de-Açúcar no Estado de
São Paulo e nas Regiões Produtoras Paulistas, June 2007. IEA-SP. Análise e
Indicadores do Agronegócio, v. 3, n. 3, March 2008.
GUARANI. Visão geral dos setores de açúcar e etanol. Açúcar Guarani S.A., 2007.
Available at www.cvm.gov.br/dados/ofeanal/RJ-2007-06441.
LASCHEFSKI, K. e ASSIS, W. Mais cana para o bioetanol, mais eucalipto para a biomassa
e o carvão vegetal. GT Energia FBOMS, mimeo, August 2006.
MAPA. Balanço nacional da cana-de-açúcar e agro-energia. Ministério da Agricultura,
Pecuária e Abastecimento. Brasília, 2007.
MME. Oferta de biocombustíveis líquidos. Ministério das Minas e Energia/EPE, Brasília, 2007.
RFA. Ethanol Industry Outlook. Renewable Fuels Association, 2008. Available at
www.ethanolrfa.org/objects/pdf/outlook/RFA_Outlook_2008.pdf
RODRIGUES, D. e ORTIZ, L. Em direção à sustentabilidade da produção de etanol de
cana-de-açúcar no Brasil. Amigos da Terra Brasil and Instituto Vitae Civilis.
February 2007. Available at www.vitaecivilis.org.br.
UNICA, 2008. Estatísticas da produção. Available at www.portalunica.com.br.
VALDES, C. Ethanol demand driving the expansion of Brazil’s sugar industry. USDA, 2007.
Available at www.ers.usda.gov.
36
2
SOY AND BIODIESEL
In 2006 FASE carried out a series of studies on soy, analyzing Brazilian and global
production, as well as the expansion of soy plantations in various parts of Brazil.1
Hence, the present study will present only the most recent facts in the sector such as:
Brazilian and worldwide updated industrial data regarding production, consumption
and trade of soy; information on the rapid concentration of land areas for soybeans
production in the country; and particularly new facts about the growing utilzation
of vegetable oils as fuels in Brazil and in other countries.
Production
In 2006/07, the production of soybeans in Brazil reached a record 58.5 million tons
(Conab, 2008), 6.1% over the previous harvest year. This corresponds to approximately 25% of the worldwide production of 236 million tons. During this same year,
20.7 million hectares in Brazil were planted with soybeans, almost 9% less than the
previous year. Increased production, even with a reduction of plantations, is explained
by better climatic conditions over the last year, especially in the South, where production increased by 25.7% (Conab, 2008).
For 2007-08, forecasts published in May of 2008 showed total cultivated land
areas of 21.2 million hectares, an expansion of 2.6%. The estimates indicate that
there may be an increase in soybeans plantations all over Brazil. The greatest increase
will be in the North (20.4%). Expansion in the Northeast and Center-West regions
will be much less, 7.9% and 5.6%, respectively. In the Southeast and Southern regions, the calculations show a reduction of -4.7% and -1.3%, respectively.
1
Sergio Schlesinger: O grão que cresceu demais, May 2006. Sergio Schlesinger e Silvia Noronha:
O Brasil está nu! O avanço da monocultura da soja, o grão que cresceu demais. Dezembro de 2006.
37
At State level, Roraima (172.7%) is where Conab foresees a greater increase
in acreage planted. The second largest expansion in the country is also in the
North: 21.9% in the State of Pará. Blairo Maggi, the world´s biggest individual
soy producer, and State governor, estimates that the production of soy in Mato
Grosso will increase by 26% in 2007, reaching 20 million tons (compared to 15.3
million in 2007).2 Conab estimates a gross production of 17.7 million tons (+15.52%).
In any event, Mato Grosso, will continue to be the largest soybeans producing
state in Brazil.
Concerning volume, a production of 59.5 million tons is expected (+1.9%).
Still according to Conab, the increases in land cultivated and soybean harvests are
mainly a result of the higher market prices obtained over the previous years. Table 1
shows Conab estimates for acreage planted and production per region.
TABLE 1
Soybeans: Estimated area planted and production
for 2007-08
Region
North
Area
Million
Var.
hectares
%
Production
Million
Var.
Tons
%
494.3
20.4
1,415.4
31.1
Northeast
1,570.1
7.9
4,397.9
13.7
Central-West
9,615.7
5.6
29,072.5
9.7
Southeast
1,400.4
(4.7)
3,947.3
(1.5)
South
8,138.7
(1.3)
20,669.6
(9.9)
Total
21,219.1
2.6
59,502.6
1.9
Source: Conab Acompanhamento da safra brasileira de grãos 2007/2008 –
Oitavo levantamento – May 2008.
In fact, a record US$ 567 a ton (US$ 34 per 60 kg bag) was obtained in 2008,
on the Chicago Commodity Exchange. According to the Agribusiness Watch
(Observatório do Agronegócio), based on news published by the Correio do Povo,
this is the highest quotation ever in the history of the Exchange, which was
founded in 1982. 3
2
Brasil conquistará a liderança da soja. SBCTA, Feb. 2007. Available at www.sbcta.org.br.
3
Observatório do Agronegócio. Valor da soja atinge pico histórico. Available at
www.observatoriodoagronegocio, 21/02/08.
38
SOY AND BIODIESEL
Exports
Exports of soy in 2007 were 38.5 million tons, 2.9% less than in 2006. Higher
international prices, however, counterbalanced amounts exported with a 21.6%
increase in value: reaching US$ 11.323 billion, as against US$ 9.308 billion in 2006,
representing 7.1% of total Brazilian exports. Soy continues to be the main Brazilian
agribusiness export product, 19.5% of its total exports in 2007. In February 2008,
Abiove (Brazilian Association of the Vegetable Oil Industry) estimated total exports
of soy would be 42.4 million tons, (an increase of 10.1%), earning revenues of
approximately US$ 16.477 billion (+45.5%).4
TABLE 2
Brazil – Exports of the soy sector – 2007
2007
Volume (1,000 tons)
Value (US$/ton)
Value (US$ million)
Soybeans
23,734
283
6,709
Soy meal
12,474
237
2,957
2,343
707
Soy oil
Total
38,551
1,656
11,323
Source: MAPA (2008) and Abiove.
GRAPH 1
Brazilian Agribusiness Exports
Source: MAPA (2008)
4
ABIOVE. Exportações do complexo soja. Available at www.abiove.com.br. Accessed on 06/03/08.
39
According to Fapri (U.S. Food and Agricultural Policy Research Institute),
estimates for 2007 Brazilian soy exports in 2008-2009 would be greater than
those of the U.S., making Brazil the largest world exporter of this product. Again
according to this source, Brazil´s participation will increase from 40% of total soy
exports to 59.5% in 2016-2017, while U.S. exports will decline from the present
41.3% to 29.4%.
On the other hand, long-term projections published in January 2008 by the
U.S. Department of Agriculture (USDA) indicate that in ten years soy exports from
Brazil will be almost triple U.S. sales. According to the USDA Report on Agriculture
Projections, Brazilian sales of soy will increase from 42.4 million tons (in 2007/08,
as per Abiove projections) to 62.9 million tons in 2017/18. This is a more than the
total 2007/08 harvest. U.S. exports in the same period will decrease from 26.5 to
22.5 million tons.
According to the U.S. government, the country’s production of soy should
stabilize over the next few years with increased corn production. At the same time,
the production of biodiesel will stimulate the demand for soy in the U.S.
In Argentina, exports will reach 9.1 million tons in 2008/09 and then stabilize at 8.5 million. The country is basically an exporter of soy meal and oil rather
than beans.
Still according to the USDA, purchases by China, the biggest world importer
of soy, will increase from the present 33.5 to 36.2 million tons in 2008/09, reaching
583 million tons in 2017/18. Exports to the European Union, second largest importer, will remain stable at between 14 and 15.5 million tons in the same period.
World production and consumption
Although the U.S. continues to be the largest world producer of soybeans, the rates
of expansion of soybean production in Brazil and Argentina are still the highest in
the world, at 6.1% and 16.5% respectively, in 2007. In the U.S., soy production in
the same period increased by 4.1%.
The consumption of soy in China continues to be the single most important
reason for increased soy consumption in the world. According to the USDA, apart
from China’s increasing demand for soy the decline of cotton and fish based
animal feed supply, stimulated the consumption of soy meal, which rose 18.5%
in China, with a 9.7% increase of soybean imports in 2006. China alone is responsible for 44% of global soy imports and practically all increases of soy imports in the world. 5
5
40
USDA. Oil crops yearbook, summary. March 2007.
SOY AND BIODIESEL
Concerning international prices, all soy products: beans, meal and oil, increased
between 2006 and 2007. According to Abiove, soybeans and soy meal increased
by 25.4% and soy oil by 41%. However, in 2008, international soy prices reached
the highest levels in ten years. Soy oil, for example, reached an unprecedented
record price of US$ 900 per ton in February 2008, compared to an average of
US$ 720, in 2007.
Regarding soybeans and soy meal, the territorial expansion of corn plantations in the U.S., due to American government subsidies for ethanol production,
is resulting in a significant decline in land planted with soybean. This decline is seen
as the main factor for the high international prices for soy products
Another important factor for the increase in soy oil prices is the global interest
in the use of rape-oil, soy oil, dendê-palm oil and other vegetable oils for the production of biodiesel in response to higher petroleum costs. The European Union,
in particular, expanded its production and consumption of agrifuels originating
from oleaginous seeds. As a result, the price of rape-oil has been steadily increasing
since 2005, and was the determining factor for higher prices of soy and other
vegetable oils.
TABLE 3
Soybeans – Main producers – 2002/03 to 2006/07
millions of tons
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08*
U.S.A.
75.010
66.778
85.013
83.368
86.770
70.360
Brazil
52.000
51.000
53.000
55.027
58.376**
61.000
Argentina
35.500
33.000
39.000
40.500
47.200
47.000
China
16.510
15.394
17.400
16.350
15.970
14.300
India
4.000
6.800
5.850
6.300
7.690
9.300
Paraguay
4.500
3.911
4.050
3.640
6.200
7.000
Canada
2.336
2.263
3.042
3.161
3.460
2.700
Other
6.933
7.385
8.391
11.374
11.604
8.190
Total
196.789
186.531
215.746
216.559
237.270
219.850
Source: USDA. World Agricultural Production. January, 2008
* Forecast
** Source: Conab (2008)
41
GRAPH 2
Distribution of global soybeans production –
2007/08 and 2016/17
Source: MAPA/FAPRI and USDA
Based on FAPRI (2007) estimates, global soybean production will reach 280
million tons in 2016/17 (27% over 2005/06). This production should intensify in
Brazil, the U.S. and Argentina who will be responsible for 85% of global production.
Brazil’s participation will be 33% and that of the U.S., 30% (see Graph 2). Still
according to FAPRI, the land area given over to soybean cultivation in the world
should increase from 93.4 million hectares in 2006/07, to 106.3 million hectares in
2016/17. Production will increase to approximately 60 million tons, in comparison
with the volume for 2006/07.
Land ownership concentrated mainly in Mato Grosso
The expansion of soybean cultivation in Mato Grosso – the largest national producer of soybean – has been determined by a movement which has intensified
over the last three years of crisis, namely the growing concentration of land in the
hands of large farming and cattle raising groups that lease land owned by medium
sized producers. The Mato Grosso Association of Soy Producers (Aprosoja) estimates that this type of activity will increase rapidly, with lease contracts for ten
or more years.
42
SOY AND BIODIESEL
According to Marcelo Duarte, executive director of Aprosoja, the withdrawal
of medium-sized producers from this activity can be found in their lower capacity
to ride out crisis’ motivated by price fluctuations and dollar devaluations, aggravated by problems of logistics such as transportation. He believes that, in spite of
the high agricultural indebtedness in the state, almost R$ 10 billion in 2007 – the
land area planted with soy will not decline. “The latter because the large agricultural
groups that have advantages in terms of logistics and in the purchase of raw materials, since they deal in large volumes of production, will continue to lease land from
smaller producers who are heavily indebted and can see no way to recuperate their
losses in view of the present level of profitability of soybean cultivation.”, he says.
José Nardes, a soy producer and President of the Rural Union of Primavera
do Leste, is one of the producers who signed a ten-year contract for leasing two of
his three areas, each with approximately 2,000 hectares, to a large soy producer in
the region. According to him, his neighbors and the majority of the medium-sized
producers in the region – considered one of the biggest soy producing areas in the
state – also leased out their land. “Besides the debts incurred, the producer’s profits
were halved”, laments Andrades.6
The National Program for Biodiesel
The National Program for the Production and Use of Biodiesel, was launched with
the objective of stimulating family farmers to supply an alternative raw material to
fossil fuels. The government launched a social seal and guaranteed fiscal exemptions
to the plants buying raw material from small producers. In terms of the trade balance,
the program aims at reducing purchases of diesel oil, which was responsible for
50% of Brazil´s consumption of liquid fuels in 2007. (Vieira, 2007)
Domestic consumption of diesel oil in Brazil was approximately 42 billion liters
per year in 2007, 80% of which was used by the transportation sector, 16% in
agriculture and 4% by industry and other sectors. In order to supply the demand
of its fleet of 2.3 million trucks, buses and pickups, Brazil imports 6% to 8% of
the diesel consumed in the country – 2.5 to 3.4 million liters a year. The mixture of
2% (B2) biodiesel became obligatory at the beginning of 2008, and required 840
million liters annually to supply the domestic market (Rodrigues, 2007). The next
phase of the Program which calls for the mixture of B3 (3%) biodiesel to diesel oil, as
from July 2008, will require an annual production of 1.68 million liters.
The Ministry for Agrarian Development instituted and regulated the concession of a certificate – the Social Fuel Seal – recognizing that the biodiesel producer fulfills the conditions required to receive fiscal incentives. To obtain this
6
Área avança, mas com concentração. Gazeta Mercantil, 15/06/07. Available at www.truman.com.br.
43
certificate, the producer must purchase at least 40% of his oleaginous raw materials
from family farmers in the Northeast and Semi-Arid regions, 30% from farmers
in the Southern and South-Eastern regions, and 10% from the North and CentralWestern regions.
Thus, the biodiesel producer must have signed contracts with the respective
raw material producers in order to obtain this certificate. To ensure the participation
of small producers, the regulations also foresee the contractual participation of a
rural workers´ organization such as CONTAG, FETRAF or ANPA (Bermann, 2007).
The government thus wants to ensure that the information set out in contracts is
transparent, which is not the case in other segments of the food production chain,
where integrated production is the norm.
According to the Minister for Agrarian Development, Guilherme Cassel, the
social fuel seal of approval permitted the organization of communities: “There are
already 540,000 hectares in the hands of family farmers with 97,000 families
involved in the production of biodiesel, over 50% of which are located in the
Northeast. With the auctions and objectives for this year (2008), this number will
be 200,000 families. However, it is necessary to produce seeds, guarantee credit,
implements, adapt agricultural insurance and give technical assistance. Pronaf
(National Program for the Strengthening of Family Farming) signed over 70,000
contracts with more than R$ 100 millions in financing. These people never had a
formal work contract. They were migratory workers. For the first time the Brazilian
government is offering a program involving social organizations and private companies. The latter binds people to the land.”7
The federal government offers tax reductions or exemption on fuels, which
vary by region and producer category. At present, the maximum incentive of
100% federal tax exemption for fuels is given for biodiesel produced in the North,
Northeast and Semi-Arid regions, as long as the raw materials are purchased from
family farmers, in both cases. The maximum federal tax reduction for purchases
from non-familial producers in the above mentioned regions, is 32%. In May of
2008, fiscal incentives for castor-oil and palm oil purchased from family farmers
agriculture were extended to other raw materials.8
According to Arnoldo de Campos, coordinator of the Ministry for Agrarian
Development (MDA) Program, in spite of this: “The government does not know
what the biodiesel in the country, is made from.” The Brazilian Civil Cabinet also
announced that “there is no mechanism for the systematic tracking of the amount
of biodiesel or the raw materials that are used for its production.” According to the
Ministry’s advisors the government does not wish to control production. And the
7
Época Negócios. Entrevista com Guilherme Cassel: biodiesel social e econômico. 05/06/ 08.
8
Leoanrdo Goy. Governo amplia desoneração a produtores de biodiesel. Petrobio-Biodiesel, 16/05/08.
44
SOY AND BIODIESEL
Ministry of Mines and Energy informs it also carries out no survey of the raw
materials used by vegetable oil industries in their biodiesel mixture.9
The coordinator of the MDA Program says the origin of biodiesel becomes
even more difficult to verify because the National Agency for Petroleum, Natural Gas
and Biofuels (ANP) does not require detailed information on production from the
company that wins the auctions and supplies the products for distribution. The ANP
only inspects the final oil product to ensure it is within specifications.
“What often happens is that the vegetable oil industry mixes soy oil with
other types of vegetable oils. There is no control over the production process”,
explains Campos.
During the first years of the program, reverse auctions were held by the National
Petroleum Agency, for marketing biodiesel. Up to April of 2008, nine auctions were
held at which Petrobras purchased approximately one million liters of biodiesel that
started to be delivered in 2006. The auctions fix a reference price and the winning
companies are those offering biodiesel at the lowest prices. A study of the result of
these auctions, based on the profile and location of the supply companies, shows it
is possible to know only the preponderance of soybean oil in the mixture, which is
approximately 90% relatively to the total negotiated volume.
Second in importance is castor-oil, and its production production is extremely
concentrated in the State of Bahia, which in 2008, is responsible for 78% of
castor-oil produced in Brazil. According to Conab, from February 2008, plantation
acreage increased from 155,600 to 170,000 hectares (+14.4%) between 2006
and 2007, due to the euphoria created by biodiesel.10 However, the next month’s
survey (in March) carried out by Conab, in view of the prices obtained in the first
auctions, showed that the area cultivated in Bahia would expand only 1.7%, to
158.2 thousand hectares.
According to MDA´s Arnoldo de Campos, the biodiesel industries participating in the auctions have a varied profile. These are usually large companies from
the chemical and vegetable oil sector, thermoelectric sector and cattle industries
(such as Bertin).
The biodiesel market in 2008
According to the ANP, Brazil produced 400 million liters of biodiesel in 2007.
This volume is 480% greater than in 2006, or the equivalent to 48% of Brazil’s
consumption in 2008 mixed with petroleum based diesel.11
9
Jeferson Ribeiro. Governo não sabe do que é feito biodiesel no Brasil. Invertia, 03/05/08.
10 Patrícia Künzel. Biodiesel tem futuro incerto no Brasil. Gazeta do Povo-PR, 07/05/07.
11 Brasil produziu 399 milhões de litros de biodiesel em 2007. www.biocomb.com.br, 15/02/08.
45
The principal producer States are: in first place, Goiás, with 111 million liters,
followed by Bahia (69 million liters), Ceará (47 million liters), Rio Grande do Sul
(43 million liters) and São Paulo (36 million liters). Other States with significant
production are: Piauí (30 million liters), Maranhão (23 million liters) and Tocantins
(23 million liters).
For Aluísio Sabino, of Casa do Consultor 12, “results show that today, producing biodiesel is not profitable”. Stimulated by ample government incentives,
many companies invested in the sector. There are 49 ANP approved plants, with an
installed capacity of 2.5 billion liters/year – almost triple the quota necessary to
supply 2008 needs.
The implantation of another 47 plants awaits the agency’s authorization.
When all plants are in operation, production capacity will reach 3.8 billion liters/
year. “There has been an explosion in the sector that has led to competition and this
knocked prices way down,” says Jorio Dauster, president of Brasil Ecodiesel administrative council, the largest company in the sector, with six plants.
In an auction held by ANP in November of 2007, Petrobras purchased 380
million liters of biodiesel for an average price of R$ 1.86 per liter – even though the
reference price was R$ 2.40. This price does not even cover the costs of production,
estimated at R$ 2 for fuel made from soy oil, which is the most economically viable
option. Why then, did companies agree to deliver the product at a loss?
The explanation is that, with so many plants already in existence companies
are eager to close contracts with Petrobras thereby guaranteeing some return on
their investment. After all, the auctions already held by ANP guaranteed a supply
of biodiesel for the entire first semester of 2008, and there will be no other real
chance for sales in the near future. “Our plants cannot stand idle for six months”,
says Dauster.
In view of the high prices of raw materials, the sector is divided. “Some companies thought it better to invest in this initial phase of the program, even at a lower
than production cost, others that it was not worthwhile to carry on at a loss”, says
Odacir Klein, former Transport Minister and director of the Brazilian Union for
Biodiesel (Ubrabio). The Bertin group was one of the companies that initially opted
for not participating in the auctions, but now in 2008, actively does so.
However, the companies that sold the product at auctions have to deal with
a difficult equation. It is therefore, believed that some companies will not deliver
the auctioned biodiesel, in repetition of what happened in 2007. In that year, with
the market operating in test mode, only 400 million liters were delivered, less than
half the volume sold.
12 Biodiesel: bom de marketing, ruim de lucro. www.casadoconsultor.zip.net.
46
SOY AND BIODIESEL
The production of biodiesel for January 2008 was 51.78 million liters, 15 million
liters less than domestic consumption needs. To cover this deficit, the companies
sold their stocks accumulated over 2007.13
According to information published by ANP, Binatural, Fiagril and Oleoplan,
who had promised to deliver biodiesel from January 2008 on, did not report their
production numbers for December and January. ADM and Bertin also did not have
any production in December and January. Biocapital reported its December and January
production numbers, but much less than the promised monthly delivery volumes.
Granol and Brasil Ecodiesel would have had to increase their production by approximately 30% in order to fulfill their auction commitments in a timely manner.
BSBios, in January, produced more than the total volume of biodiesel sold in
auction, which is to be delivered up to June 30. Considering the recent authorization
to export biodiesel, the company, established in Passo Fundo-RS, may have found a
profitable outlet for its biodiesel.
In order to reduce the risk of a product shortage, the regulating agency included
penalties for companies who do not deliver the promised quantities, forbidding their
participation in future auctions. “The objective of the first auctions was to stimulate
the production of biodiesel and, therefore, there were no punitive clauses in the
contracts. Now, this is no longer a possibility”, says Edson Silva, ANP supply.
When the Brazilian program for biodiesel was conceived in 2005, the market for
agricultural commodities was not good. Since then, however, the perspectives have
changed. Better income in China and India increased the consumption of vegetable
oils by 6.5%, in 2007, and a new increase in demand of 6% was estimated for 2008.
Besides this, the advance of agrifuels also influenced the vegetable oil markets.
As biodiesel becomes more important for the global energy matrix, its connection
with petroleum increases. “This means that higher petroleum prices result in higher
prices for vegetable oils”, says James Fry, director of the British consulting company
LMC, specialized in the agricultural commodities market.
Pressured by companies, the National Council for Energy Policy decided to
impose the mixture of 3% biodiesel as from 1st July 2008, in Brazil. The annual 1.6
billion surplus production capacity has made the government forestall the goal of
5% biodiesel mixture, set for 2013, to 2010.
The government also accepted the demands from the industries to introduce a
series of changes in the rules governing auctions in order to raise existing prices.
These acceptance of these demands resulted in significant price increases of biodiesel
sold at the eighth and ninth auctions held in April of 2008. The average price went
from R$1.86, in November 2007, to R$ 2.18, an increase of 17.2% in five months.
13 Produção de biodiesel fica abaixo do consumo. BiodieselBr.com, 17/03/08.
47
The announcement of these new rulings contributed to stimulate the production of biodiesel in 2008. In February, Brazilian production reached a record
75.9 million liters, and in March production was 61.8 million liters.
The most imposing results belong to ADM, that established a new monthly
production record. Its plant, located at Rondonópolis-MT, produced 11.7 million
liters, surpassing the previous record of 10.5 million liters produced by Granol of
Anápolis-GO, registered in February of that same year (see Graph 3) ANP stocks have
guaranteed that the required mix is adhered to since the production of biodiesel in
the year is greater than consumption.14
GRAPH 3
Ninth biodiesel auction: volume sold by company
(April 2008 – thousand liters)
Source: ANP.
The high prices and sales have again brought optimism to the sector and some
companies, based on this perspective, have announced new investments for the
next few years. In the second semester of 2008, the sector plans to sell over 660
million liters, making Brazil the third largest biodiesel producer in the world, second
only to Germany and the U.S.A.
The government also plans to encourage the so-called BX market, in which the
companies use a greater amount of biodiesel in their own fleets. Vale do Rio Doce,
for example, mixes 20% biodiesel in the diesel used in their locomotives. “This may
be a new frontier for national biodiesel because exports of this product will take
some time to develop”, says Silva, of ANP.
14 ANP divulga produção de biodiesel em março. BiodieselBR.com, 20/05/08.
48
SOY AND BIODIESEL
GRAPH 4
Total volume produced by Brazilian biodiesel plants in 2008
(in m3) – January to March 2008
Source: www.biodiesel.com.br.
According to the Ministry of Planning, the PAC – Growth Acceleration Program,
launched in 2007 by the Federal Government, foresees investments of R$ 1.2 billion
in new biodiesel production plants, up to 2010. Twenty of these would start operations in 2007 and 26 in 2008.15
15 Ministry of Planning, Budget and Management. Programa de Aceleração do Crescimento, 2007-2010.
Power-Point presentation available at www.planejamento.gov.br
49
FIGURE 1
New Biodiesel Plants
Source: Ministry of Planning, 2007.
The pressures of biodiesel industry
With regard to the auction purchases by Petrobras, the producers demanded that
these should no longer be at fixed prices. In fact, these producers want to have the
option of selling soy oil either in the auctions or to foreign markets. The soy
agribusiness thus wants annual readjustments based on international soy oil prices.
This is a risk the distributors of fuels, who are accustomed to relatively stable diesel
prices, do not wish to incur.
The demands can also be explained by the increased price of soy oil on the
Chicago Commodities Exchange, from US$ 400 per ton in 2005, to US$ 567 in April
of 2008. And this tendency should continue for some time to come. A comparison
between the price for a barrel of petroleum and that of soy oil was published on the
site biodiesel.com.br in March 2008.
“In the first eight months of 2006, the average price per barrel of petroleum
remained at US$ 65, while the price for soybean oil was US$ 80, or 23% more than
that for petroleum. Today, petroleum costs US$ 100 per barrel, and soy oil US$ 238
(Chicago Exchange values). Soy oil costs 138% more than petroleum. In the last
eighteen months, while petroleum prices increased 54%, soy oil increased by 198%,
almost triple the price of petroleum. The real reason for these high levels of vegetable
oil prices was a global increase biodiesel demand, which reduced all available stocks
to minimum levels.”16
With this, the profit margins of producers are reduced or even zeroed out.
According to Tom Waslander, partner of Brasilpar, with biodiesel prices close to the
16 Petróleo X soja. www.biodiesel.com.br, 06/03/08.
50
SOY AND BIODIESEL
selling price at auctions, and the cost of soy oil at US$ 500/ton, annual return of
investment is higher than 25%, and is very attractive, explaining the sector’s interest
in the Program. However, while biodiesel prices have remained stable, the price for
soy oil is US$ 600/ton, and so the project’s profitability is almost nil.
These accounts can certainly explain why, up to March 2007, Soyminas, of
Minas Gerais and the first officially approved Brazilian biodiesel producer, had not
fulfilled a single supply contract two years after starting operations. In 2008, Soyminas
closed its production unit at Cássia (MG). This unit produced oils from sunflower
seeds, turnips and soybeans.
The company also announced it plans to sell to foreign markets. “We have many
foreign customers interested in purchasing biodiesel, and at much more attractive
prices”, says Valter Egídio, President of the company’s administrative board. According
to him, the demand in Europe is high, but there is also a growing interest for this
fuel on the part of Japan. “We plan to participate in the next auctions, but the focus
will be on closing the best deals”.17
Alternative agricultural products
The increase in soy oil prices on the Chicago Exchange leads some government
sectors to believe that, in the medium term, other agricultural products may substitute soybean oil in the production of biodiesel. The Ministry for Agrarian Development estimates that the participation of soy oil in the market which today is 90%,
will decrease to 60% by the end of 2008; followed by castor-oil, with 25%, and the
rest divided among sunflower seed, palm and bovine tallow. “The instability shown
by soy is pushing producers to other products”, says Arnoldo Campos, MDA’s Coordinator General of Added Value and Income.18
The MDA is now assessing the possible use of some alternative products
such as castor-oil and the jatropha. In the medium and long terms, these alternative
products could become even more profitable than soy, due to their high oil yield
per hectare, and because they are more appropriate for small farming activities.
They also do not interfere with the cultivation of foodstuffs.
Whatever vegetable oils are selected, the bottleneck is not in production.
Even if Brazil depended only on soy, there would still be some leeway. Considering
that the country produces 56 million tons/year of this oil, the potential for vegetable
oils would be approximately 11 million tons/year. This amount is about eight times
the biodiesel requirements for 2008. This does not include animal tallow produced
in Brazil which alone could reach this goal, according to government sources.
17 Patrick Cruz and Mônica Scaramuzzo. Sem estímulo, produtores de biodiesel param as máquinas.
www.biodiesel.com.br, 27/02/08.
18 Biodiesel: esse negócio vai emplacar? Available at www.biodiesel.com.br, 02/07/07.
51
The Proposal of soy entrepreneurs for biodiesel
Through Abiove19, the companies involved in the production and marketing of soy oil
defend the full use of soy in implementing the National Biodiesel Program, arguing
that this product is responsible for approximately 90% of Brazil’s production of
vegetable oils. At the same time, they defend the gradual substitution of soy oil by
other oleaginous products with a higher oil content and productivity per hectare.
Two possible uses of soy oil without the need for increasing areas of cultivation are presented (Abiove, 2007). The first is to redirect part of the soybean exports
to domestic production, thereby generating additional volume of soy oil for biodiesel production, and exporting soy meal instead of soybeans. The advantages of
this option are: reduction of idle production capacity, continued entry of foreign
exchange, a greater aggregate value and new jobs. The second possibility would be
to redirect part of the volume of soy oil exports to the production of biodiesel.
As can be seen, the vegetable oil processing industries are very interested in
the National Biodiesel Program. Another publication of the industry shows that the
idle capacity of the sector in 2005 was approximately 10 million tons, equivalent to
a quarter of its total capacity (Abiove, 2006). In view of this interest, the companies
affiliated to Abiove have been pressuring the government to adopt fiscal measures
to make this goal feasible.
The soy industry lobby
In May of 2007, the Jornal do Comércio 20 newspaper announced that the soy
processing industry was negotiating a fiscal package with the Ministry of Finance
for altering taxation on exports and the method of tax compensations, as well as
to reduce tax quotas on soy based biodiesel.
Exactly one year later, in May of 2008, the Ministry of Mines and Energy published a decree extending tax exemptions to biodiesel producers who purchased any
type of raw materials from family farmers in the North, Northeast and Semi-Arid
regions. Previously, this exemption was only applicable to purchasers of castor or
palm oil from family farmers. According to Carlo Lovatelli, President of Abiove, the
objective of these fiscal measures is to stimulate soy processing in Brazil, reducing
the proportion of soybean exports and increasing those of soy meal and oil:
“This is an aberration, but we are making all efforts to see if we can change
this correlation; we must review the tax policy for export incentives with the government, since the aggregate value (oil and meal) is taxed, but not raw material –
exactly the opposite of what others are doing”.
19 Abiove – Brazilian Association of Vegetable Oil Industries – comprises eleven large industries in the
segment, responsible for over 70% of soy processing in Brazil, in 2006. Only Caramuru Alimentos
among the largest companies, is not affiliated to ABIOVE.
20 Indústria da soja negocia pacote tributário. Jornal do Comércio, 03/05/07.
52
SOY AND BIODIESEL
Another measure seeks to accelerate the receipt, by the industry, of the sales
tax credits paid on soy meal and oil. Regarding biodiesel, the Brazilian industry is
lobbying the government to obtain the same fiscal exemptions for soy based fuel as
those granted for fuels made from other raw materials such as castor and palm oil.
The soy industry would thus benefit from the same tax exemptions granted to family
farmers by the National Biodiesel Program.
For Nivaldo Rubens Trama, president of the Brazilian Association of Biodiesel
Industries (ABIOdiesel), biodiesel could be an option for supply when there is a lower
demand for soy oil. “I believe that over the next two years the large crushing industries will change their activities to producing biodiesel in order to increase their mix
options when marketing their products. Moreover, they will focus on large volume
raw materials such as soy”.21
Other Abiove proposals
In order to increase the rural producer’s income, Abiove proposes “the development
of mechanisms leading to diversifying and adding value to the production of grain.
This can be done by transforming the bean and grain producer (of soybean and
corn) especially in the Cerrado, into a producer of meat (poultry and pigs) for export.
While historically, a ton of soybeans is worth approximately US$ 230 (and a ton
of corn, US$ 100), a ton of pork is worth over US$ 1,500. Therefore, the possibility
of an added value to the production of beans and grains by means of producing
meat for export would generate enough income to preserve the environment
through sustainable use”. Such proposals are presented in its publication Produção
responsável no agronegócio da soja (Responsible production in soy agribusiness)
(Abiove, 2007).
Still according to Abiove, this would be the best way to reduce pressure on
new agricultural areas. At the same time, the production of meat in the Cerrado
region would allow the activities of small and medium-sized producers to be integrated with those of large poultry and pork processing companies, “generating many
more jobs in the region. It would thus be possible for the Center-West, to duplicate
the type of agricultural activity existing in the South”.
Abiove argues, in this same publication, that the cycle of soybean monoculture in the region, would decline with this meat production activity. This would
occur as a result of increased corn production (which, according to Abiove, today is
unviable due to the cost of transporting the product to the south) for producing
animal feed, mainly in the State of Mato Grosso. This crop rotation between corn
and soy, in reducing the propagation of pests such as Asian soybean rust, would
also reduce the need for chemical pesticides.
21 Biodiesel aguça o apetite de três multinacionais européias. Joranl DCI, 08/07/05.
53
Abiove also defends the system of integrated agricultural and cattle raising
activities, with the cultivation of beans and grains in areas of degraded pastures, as
a means of recuperating soil fertility and increasing pasture productivity, similarly to
normal crop rotation: in summer corn and soy would be planted, in winter, with the
pastures recuperated, cattle would graze on fodder and in the pastures.
The Ministry of Agriculture also approves this proposal. It confirms that within
the next two years, approximately 30 million hectares of low productivity pastures
will be released for agriculture by integrating agriculture/cattle raising activities.
What is proposed, in fact, is the model of integrated production which already exists
for the production of poultry, pigs and other agriculture and animal husbandry
activities, where the abovementioned aggregated value is appropriated by the
large agri-industrial companies in the sector, in detriment to the small producers.
In order for these proposals to become reality, Abiove defends Brazilian
interests in the most important trade negotiations abroad, such as, on the part of
developed countries: the elimination of import tariffs, of subsidies and special safeguards on domestic production of beef. Abiove argues that the developed countries
have a responsibility in relation to monoculture of soy in Brazil”.
Biodiesel and rural social movements
In April of 2005, the Small Farmers Movement (MPA) and the Landless Workers’
Movement (MST) launched Cooperbio, the first biodiesel cooperative in the country,
in Rio Grande do Sul. In August of 2006, Cooperbio already had 1,500 members,
but the goal is 20,000 members. 25,000 families of 62 municipalities in the northwest region of the state participate in the cooperative which is located in Palmeira
das Missões. Its production capacity of fuel should reach 400,000 liters per day.22
For Romário Rossetto, President of the cooperative, the answer for biodiesel
lies with multioils, and not soy. The Cooperative prioritizes the use of raw materials
such as the castor bean, jatropha and sunflower seed. Not only is their cultivation
natural and environmentally-friendly, because they are not monocultures and do
not require pesticides, but they also yield much more oil than soy. Only 18% oil is
obtained from crushing soybeans, while the castor bean yields over 50%.23
Another factor that distinguishes Cooperbio mentioned by Rossetto, is that
the Project produces energy as well as food, with the farmer participating not
only in all production but in trading activities as well. “In the case of ethanol and
biodiesel, we are working with the idea of integrating energy with foodstuffs.
Including, integrating ethanol with production of milk. For example, one may
22 Suzane Durães. MPA lança primeira cooperativa de biodiesel no País. April 2005. www.mpabrasil.org.br.
23 It must be stressed that, contrary to castor bean bagasse, soybean bagasse has a high commercial value
as raw material for animal feed.
54
SOY AND BIODIESEL
process cane bagasse, increasing milk production. So it is perfectly possible to
produce energy with food”, he claims.
According to Rossetto, many agrifuel companies are being created only to
stimulate the agribusiness of soybean monoculture. “The capital invested in this
agribusiness is totally oriented to soybeans. So the companies are trying to safeguard their investments”.24
As mentioned by Abramovay and Magalhães (2007), the possibility of offering
family farmers new market opportunities, as well as the unique political strengthening of rural unions are the two hypotheses explaining why the unions, particularly those affiliated to CONTAG, are so interested in the program.
There is, however, strong opposition within the rural social movements. To them
the present relationship with processing companies is unacceptable. They want,
not only changes in this system, but also that the government guarantee conditions
for family farmers to develop their own production and industrialization activities.
These segments of the social movements also strongly oppose the social fuel seal
of approval. Fetraf, MST and MPA reject the model that encourages integration
between family farmers and large private companies. In 2007, in Curitiba, Fetraf and
Sindipetro (Petrobras Workers Union) published a manifesto against the seal of
approval. (Abramovay and Magalhães, 2007)
Friar Sérgio Antônio Görgen, of the MPA, proposes that the cooperatives have
responsibility over other phases of the production chain and develop partnerships
with public companies. In spite of criticisms, he considers that the outlook for family
farmers is “getting better”, with the offer of technical assistance and specific credit
lines – today there are the Pronaf Oleaginous, the Pronaf Biodiesel and Agroindustry.25
According to Georges Flexor, of the Multidiscipline Institute of the Federal Rural
University of Rio de Janeiro (IM/UFRRJ), one of the more positive implementations of
the Program is the prospect of new crops and new technologies: “The significant
overall participation of farmers all over the country and the rediscovery of raw materials
such as the jatropha and dendê palm, may be the great contributors to this model”.
He stresses that technically, there is no reason why the cooperatives cannot take on
more of the sector’s chain of production. “The problem is to create a productive and
organizational capacity for large-scale production and obey rules “, he observes.
The Via Campesina warns of the dramatic increases of food prices. “During the
year, wheat doubled in price and corn is almost 50% more than last year. The price
control mechanisms are being demolished everywhere in the world, exposing farmers
and consumers to extreme price variations.”26
24 Raquel Casiraghi. Biodiesel não depende da soja, diz agricultor. Agência Chasque, August 2006.
www.mpabrasil.org.br.
25
Suspensão de selo, otimismo e críticas caracterizam programa. Jornal Alto Madeira – O Guaporé, 06/02/2008.
26 Crise de Preços e Agricultura Familiar. Via Campesina International. 27/02/2008.
55
H-Bio Diesel
In May of 2006, Petrobras announced that as from 2007, at least 10% of imported
diesel would be substituted by H-Bio produced from soy. Initially, the new diesel
would be produced in the Petrobras refineries in Minas Gerais and Paraná (Regap
and Repar), but would be processed in another three after 2009. The idea was to
use 9.6% of refined soy oil exported by Brazil in this initial phase, gradually increasing
the percentage to 15.5% in 2008-09.
However, in August of 2007, Petrobras decided to suspend production of H-Bio
due to the high prices of soy oil. The company explained that, with the prices in
effect at the time, it would be unprofitable to use it in diesel production.
The main difference between H-Bio and biodiesel is that, in the case of biodiesel, the oil made from castor-beans, sunflower seeds or dendê-palm nuts is added
to the diesel at the distributors, after being chemically processed in a transformation
plant. In the case of H-Bio, on the other hand, the vegetable oil is added during the
petroleum refining process together with hydrogen. The result of this mixture is a
diesel which is the same as ordinary diesel, but has less sulphur content and is,
therefore, less polluting.27
In February of 2008, Dilma Rousseff, Minister and Chief of Staff, declared
that the use of biodiesel in Brazil would happen at a slower pace than had been
originally expected. Regarding H-Bio, she confirmed that its production will develop
in keeping with the international prices for soy. She said that H-Bio will be used as a
“flex-fuel”. When there is excess supply, Petrobras could buy all the soy necessary
to make H-Bio thereby balancing supply and demand. The Minister also confirmed
that Petrobras is studying the possibility of producing H-Bio from sunflower, castor
beans and the jatropha.28
Conclusions
The growing use of agrifuels in Brazil and in other countries will influence the soybeans production in the country in many ways. Even if the biodiesel production
from soy did not require increased areas of soybeans plantations, other factors would
determine the expansion of the cultivated areas.
Presently, the determining factor of accelerated growth of soybean cultivation
in Brazil and other countries of the region, is the decrease in land used for soybean
plantation in the U.S., the largest world producer, due to high government subsidies
granted for the production of ethanol from corn.
27 Kelly Lima. H-Bio substituirá diesel já em 2007. O Estado de São Paulo, 20/05/06.
28 Eduardo Magossi. Dilma: alta da soja limitará uso de biodiesel. Agência Estado, 16/02/08.
56
SOY AND BIODIESEL
There is also the possibility that biodiesel, along with sugarcane based ethanol
produced in Brazil may become important export items in the future. Some companies
have announced that they are already negotiating the export of these products with
European countries.
Concerning the domestic market for biodiesel, the continued importance of
soy in the long term will depend on several factors. On the one hand, the Ministry
for Agrarian Development is working towards diversifying the sources of supply,
investing in the participation of family farmers in the National Biodiesel Program.
According to the MDA, 28 industries had been granted the Social Fuel Approval Seal
in February of 2008.29
These companies could benefit over 100,000 family farmers, according to the
MDA. The Ministry estimates that, once these companies are fully operational, they
could involve over 200,000 small farmers in the production process. At present,
approximately 100,000 families are involved in the production of vegetable oils in
Brazil, half of them in the Northeastern region.30
On the other hand, as already discussed, soy industries have submitted a long
list of claims to the government, for increasing the profit margins of soy oil processing
industries. If such measures are implemented, soy oil will continue to be the raw
material of choice for biodiesel production for a long period of time. Should this be
the case, the following problems can be foreseen:
• Continued increases in the price of soy oil, which is an important basic food
item for Brazilians, similarly to what happened recently in the case of ethanol
due to the significant increase in exports of this product.
• Greater control of agricultural product and fuel prices on the part of transnational companies due to petroleum price variations, as well as their growing
ascendency over the production process of these items
“The circle closes when it is perceived that soy production is being taken over
nearly completely by foreign companies. There is an over production of soy oil in
Brazil because its main product, soy meal, which is used for animal feed, is almost
totally exported to Europe. The residue, soy oil, is today a byproduct that is a surplus
for use by refineries. The solution for lowering stocks is to oblige Petrobras to mix
this excess product as biodiesel, to ordinary diesel, which would guarantee that
our enormous energy potential remains in the hands of the imperialist countries.” 31
29 Biocamp é a nova empresa com Selo Combustível Social. MDA, 26/02/08, www.mda.gov.br/saf.
30 Inaugurada a maior usina de biodiesel do país. Adital, 30/01/07. www.adital.com.br.
31 A experiência da produção em massa de biodiesel. Interview with Artur Augusto Alves, of Soyminas
Biodiesel, by José Ricardo Prieto. www.anovademocracia.com.br
57
Bibliography
ABIOVE. Produção responsável no agronegócio da soja. April 2007.
Biodiesel no Brasil: a visão da indústria de óleos vegetais. June 2006.
ABRAMOVAY, R. and MAGALHÃES, R. O acesso dos agricultores familiares aos mercados
de biodiesel: parcerias entre grandes empresas e movimentos sociais. Texto para
Discussão n° 6. São Paulo. FIPE, June 2007.
BERMANN, C. (org.). As novas energias no Brasil: dilemas da inclusão social e programas
de governo. Rio de Janeiro. FASE, 2007.
CONAB. Acompanhamento da safra brasileira de grãos. Safra 2007/2008.
Oitavo Levantamento. May 2008.
FAPRI. World Agricultural Outlook. Food and Agricultural Policy Research Institute.
Available at www.fapri.org/outlook2007.
MAPA. Balanço nacional da cana-de-açúcar e agro-energia. Ministério da Agricultura,
Pecuária e Abastecimento. Brasília, 2007.
Projeções do agronegócio: mundial e Brasil. Ministério da Agricultura, Pecuária
e Abastecimento. Brasília, 2007.
Balança Comercial do Agronegócio – 2007. Ministério da Agricultura, Pecuária
e Abastecimento. Brasília, 2008.
RODRIGUES, R. Biodiesel no Brasil: diversificação energética e inclusão social com
sustentabilidade, in O Futuro da Indústria: Biodiesel. Collection of articles,
series Política Industrial, Tecnológica e de Comércio Exterior – n. 14. Brasília,
DF. MDIC, 2006.
VIEIRA, J. A agroenergia e os novos desafios para a política agrícola no Brasil, in O Futuro
da Indústria: Biodiesel. Collection of articles, series Política Industrial, Tecnológica
e de Comércio Exterior – n. 14. Brasília, DF. MDIC, 2006.
58
3
PAPER, PULP AND
CHARCOAL
It was not so long ago that wood was no longer used as the most important
primary source of energy in Brazil. Only in 1970 was wood supplanted by petroleum, then later by hydroelectric power and more recently by sugarcane products. In 2007, according to the Energy Research Company (EPE), wood and
charcoal were responsible for 12.5% of the primary energy sources used in Brazil
(EPE, 2008).
Even today the amount of wood sourced energy is quite significant. According
to Brito (2007), 69% of the timber utilized in Brazil, in 2006, went towards generating
energy, from planted and native forests.
Tree monocultures
Artificially planted forests presently occupy the fourth position in terms of cultivated land in Brazil, after soy, corn and sugarcane. In 2007 they covered 5.56
million hectares, a 3.4% increase over 2006. According to Bracelpa – Brazilian
Association of Pulp and Paper, Brazil was the sixth country in areas planted with
trees in 2006 (Table 1, below). It is the country that has the most extensive eucalyptus plantations.
The majority of artificially planted forests – approximately 30% – are used
for the production of paper and pulp. The charcoal consumption by the steel
industry is another factor that has stimulated the expansion of tree plantations,
being responsible for 22.1% of wood from these artificial forests. The furniture
and plywood panel industries also are big consumers of timber from planted
trees. (see Graph 1).
59
TABLE 1
Area of planted forests in the World (1,000 hectares)
Country
Country’s
total area
Artificially
Planted Forests
%
Japan
37,380
10,000
India
328,726
32,600
9.92
9,191
800
8.70
China
959,696
45,000
4.69
Indonesia
Portugal
26.47
205,000
9,000
4.39
Spain
50,599
1,900
3.76
Chile
75,609
2,200
2.91
USA
937,261
16,000
1.71
Brazil (2006)
851,488
5,500
0.65
1,700
0,20
Pulp and Paper
Source: FAO/Bracelpa.
GRAPH 1
Percent Consumption of Industrial Timber from Planted
Forests by Segment in Brazil, 2007
Source: Abraf (2008).
60
Between 1997 and 2007, the production of timber for industrial uses grew
45%, reaching 152.6 million cubic meters in 2007. According to Bracelpa, the production of pulp in Brazil reached 11.9 million tons, with an average increase of
7.6% as from 1970, and that of paper grew 5.8% in the same period, reaching 9
million tons in 2007. In this same year, exports of wood products increased 12.4%
in comparison with 2006, earning revenues of US$ 6.1 billion (Abraf, 2008).
The States having the largest plantations are, in order of importance, Minas
Gerais, São Paulo, Paraná, Santa Catarina, Bahia and Rio Grande do Sul. According
to Abraf (Brazilian Association of the Producers of Tree Plantations), the artificial
forests of pine trees are concentrated in the States of Paraná, Santa Catarina and
Rio Grande do Sul, corresponding to 79.2% of the total area of pine plantations
in the country.
Eucalyptus plantations correspond to 64% of the total area of artificially planted
forests in Brazil, the majority in the States of Minas Gerais, São Paulo and Bahia.
Other species, such as black wattle (acacia mearnsii), gmelinaarborea, poplar (populus
euroamericana), rubber-tree (Hevea brasiliensis), teak and araucaria pine, occupy
less than 1% of the area planted with trees in Brazil, or 326,000 hectares.
The speed with which eucalyptus grows in Brazil due to climate conditions, is the
main reason for the accelerated expansion of the monocultures. While in the U.S.
and Canada, it takes 70 years for the tree to become fully grown, and in Australia, its
country of origin, 30 years, in Brazil the tree reaches full maturity in only seven years.
Abraf´s 2008 Statistical Yearbook shows that in 2007, the primary and industrial processing activities of the articicial forest sector generated approximately 665.5
thousand direct jobs and 1.8 million indirect jobs.
According to the Ministry of Planning, the plantations in the States of Pará and
Amapá are used mainly for the production of pulp, especially by the Orsa Group.
The plantations in the State of Minas Gerais have the purpose of producing not
only charcoal for the steel industry, but also for pulp. Those of the State of São Paulo
and the South are primarily used for manufacturing plywood panels and also for
pulp. In the State of Espírito Santo, they are used for the production of pulp, and
the timber from plantations in the State of Mato Grosso do Sul go mainly to pulp
factories in São Paulo and steel mills in Minas Gerais.
Geography of the expansion
Between 2000 and 2007, the area planted with eucalyptus and pine trees by Abraf
affiliated companies increased 183%. According to this entity, it is estimated that in
2020, artificially planted forests will occupy a total area of 7 million hectares in
Brazil. The country’s industrial consumers of forestry products, as well as exports,
are growing steadily. The most important industries are charcoal, paper, pulp and
plywood panels.
61
TABLE 2
Artificially cultivated forests of eucalyptus and pine trees
in Brazil
2006/07 (hectares)
State
MG
SP
PR
SC
BA
RS
MS
ES
PA
MA
AP
GO
MT
Other
TOTAL
Pines
Eucalyptus
Total
2006
2007
2006
2007
2006
2007
152,000
146,474
686,453
530,992
54,820
1,378
28,500
4,408
149
0
20,480
14,409
7
4,189
1,824,269
144,248
143,148
701,578
548,037
41,221
182,378
20,697
4,093
101
0
9,000
13,828
7
0
3,407,204
1,083,744
816,880
121,908
70,341
540,172
184,245
119,319
207,800
115,806
93,285
58,473
49,637
46,146
41,392
3,549,148
1,105,961
813,372
123,070
74,008
550,127
222,245
207,687
208,819
126,286
106,802
58,874
60,872
51,279
57,151
3,751,867
1,235,744
963,354
808,361
601,333
594,992
365,623
147,819
212,208
115,955
93,285
78,963
64,045
46,153
45,582
5,373,417
1,250,209
956,521
824,648
622,045
591,348
404,623
228,384
212,912
126,387
106,802
67,874
65,107
57,158
46,186
5,560,203
Source: Abraf, STPC 2007.
The paper and pulp sector is responsible for 72% of eucalyptus forests planted
by Abraf affiliated companies, followed by the steel sector with 22%, and furniture
segment with 5%. Of the cultivated areas, 75% are owned by industries, 10% leased
from third parties and 15% are what these companies consider “promotion areas”.
These are integrated production areas, a model also used for various other crops
in Brazil, where companies guarantee future purchases of timber from small and
medium-sized farmers.
Still according to Abraf, besides exports, other domestic industrial sectors are
responsible for the expansion of cultivated forests. For example, over the last few
years the manufacture of plywood panels has increased significantly and shows no
signs of slowing down. Investments for new plants are foreseen in São Paulo, Minas
Gerais, Paraná and Santa Catarina.
The expansion of artificially planted forests
The 2008 Abraf Yearbook informs that, as a result of this increased industrial
demand, its affiliated companies plan to invest approximately R$ 20 billion in
expansion projects, between 2008 and 2012. This expansion should occur mainly
in States where production is already high namely Bahia, Minas Gerais and Paraná,
as well as Rio Grande do Sul.
62
Investments in their industrial plants over the next four years are estimated at
R$ 11.9 billion. R$ 4 billion is earmarked for tree planting alone. The other R$ 20
billion will be invested in research and development, road construction, harvesting
and transportation. Just in 2006-2007, these companies invested approximately
R$ 11 billion.
According to Abraf estimates, 600 to 700 thousand additional hectares were
planted with trees in Brazil, in 2007. The largest expansion occurred in the States of
Mato Grosso do Sul (80,000 ha), Rio Grande do Sul (40,000 ha), Santa Catarina
(21,000 ha) and Minas Gerais (15,000 ha). Of this total, 112,000 hectares were
planted on small properties, some being financed by programs such as the Pronaf
Forest, Proflora and other government programs, representing a 38.6% increase in
tree plantation areas (Abraf, 2008).
The State of São Paulo is the largest producer of pulp, approximately 30% of
Brazil’s production, followed by the State of Espírito Santo, with 22%. São Paulo is also
the largest paper producer in the country, with 45% of total domestic production.
Over half the national paper production is concentrated in the Southeastern region
– both the Southern and Southeastern regions together, are responsible for over
90% of Brazil’s paper production.
One of the more important new areas of artificial tree cultivation, is the centersouthern region of Rio Grande do Sul, where the development of a new pulp pole is
foreseen. In 2007 licenses for forestry projects were granted for planting approximately 45,000 hectares. In order to supply the pulp manufacturing units which
Aracruz, Votorantim Pulp e Papel (VCP) and Stora Enso plan to install in Rio Grande do
Sul, these companies will plant approximately 38,000 hectares of trees up to 2015.
The investments of these companies in the State should reach almost US$ 4.5 billion.
It is calculated that, by the end of this period, the artificial forest areas in Rio Grande
do Sul may total 900,000 mil hectares.1
The projects of the three companies together, will cover approximately 300,000
hectares of eucalyptus plantations in that State – almost 3% of its territory.2
New projects are also being implemented in Mato Grosso do Sul, for supplying
its steel industry. In the Northeast, the midwest region of the State of Piauí should
be mentioned, where the State government is implementing the Parnaíba Valley
Forest Promotion Program.
In July 2007, the Rio de Janeiro State government sanctioned a law changing
the ecological-economic zoning in effect up to then, which will make large-scale
planting of eucalyptus forests possible. The law reduces the area for the preservation
1
RS: licenciamento pode atingir 70 mil hectares de florestas cultivadas. Jornal do Comércio, 11/04/08.
2
Marco Aurélio Weissheimer. Monocultura do eucalipto tomará quase 3% do território do RS.
Carta Maior, 08/12/06.
63
of the native forests on large eucalyptus producing plantations, from 30% to 20%.
For plantations of less than 50 hectares, the preserved area is even lower – 12 to
15%. It should be pointed out that the preserved area of Atlantic Forest in this State
covers only 4.3% of its territory. The government believes it is possible to attract
pulp industries to Rio de Janeiro with investments of US$ 1 billion.
TABLE 3
Brazil’s Paper and Pulp Industry –
Main Investments – 2007 to 2012
2007 – Operating
State
Product
US$ Million
Aracruz
ES
Pulp
200
Bahia Pulp
BA
Dissolving pulp
400
Suzano
BA
Pulp
1,350
Klabin
PR
Folding boxboard
TOTAL
1,090
3.040
2008 – 2009 – Being implemented
State
Product
US$ Million
VCP
MS
Pulp
1,500
International Paper
MS
Printing and writing paper
260
TOTAL
1,760
2010 -2012 – In study
State
Product
US$ Million
Aracruz
RS
Pulp
1,800
Veracel
BA
Pulp
1,500
VCP
RS
Pulp
1,500
Cenibra
MG
Pulp
680
Stora Enso
RS
Pulp
TOTAL
1,500
6,980
Source: Bracelpa (2008).
Paper and Pulp
The U.S. and Canada are the largest world producers of pulp. Together they were
responsible for 40% of global production, in 2007. Next, in order of importance are:
China, Finland, Sweden, Brazil and Japan. The principal exporting countries of pulp
are: Canada, the U.S., Sweden, Brazil, Chile and Finland. Together these countries
control 70% of world exports (Montebello and Bacha, 2007).
64
Brazilian pulp production in 2007, reached 11.9 million tons, an increase of 6.6%
over 2006; and its paper production 19 million tons, an increase of 2.8%. With the
2007 production results Brazil recently became the sixth largest producer in the
world, passing Japan which until 2005 occupied this position (Bracelpa, 2008).
TABLE 4
Largest World Producers of Pulp and Paper
2007 (Preliminary)
Pulp
Country
Paper
Thousand tons
1. USA
2. Canada
3. China
4. Finland
5. Sweden
6. Brazil
7. Japan
8. Russia
9. Indonesia
10. Chile
11. India
53,215
23,677
18,160
13,066
12,240
11,916
10,884
7,370
5,672
3,550
3,250
World Total
192,177
Country
Thousand tons
1. USA
2. China
3. Japan
4. Germany
5. Canada
6. Finland
7. Sweden
8. South Korea
9. Italy
10. France
11. Brazil
12. Indonesia
84,073
65,000
31,106
22,655
18,170
14,151
12,066
10,703
10,009
10,006
8,966
8,862
381,551
Source: Bracelpa (2008)
According to Bracelpa, the country’s production of fiber should increase by
8.5%, reaching 12.8 million tons in 2008. With this, Brazil will surpass Sweden as
one of the world’s largest producers of pulp of all types, achieving fifth place in
installed capacity.
In 2009, per Bracelpa, Brazilian production will be on a par with that of
Finland, who today produces 13 million tons/year, and will become the fourth
largest producer in the world. The Brazilian company Aracruz is the largest world
producer of eucalyptus fiber.3
In 2007, exports of pulp and paper reached US$ 4.7 billion, compared to
US$ 4.0 billion in 2006, an increase of 18%. This value should reach US$ 5.3 billion
in 2008, 12.1% over 2007 results. Traditionally, the main destination for Brazilian
pulp is Europe (54% in 2007). Brazil’s largest market for paper is Latin America
(57%), as seen in Graph 2 below.
3
Stella Fontes. Especial: 2008 deve ser o 4º ano seguido de alta no preço da celulose. Agência Estado,
17/12/07.
65
GRAPH 2
Destiny of Brazilian exports in 2007
Source: Bracelpa (2008)
The pulp and paper segment is increasing rapidly as a result of significant
investments in the sector. According to Bracelpa, the volumes of paper and pulp
production and export goals previously forecast for 2012, were already reached at the
end of 2007. Between 2008 and 2012, investments of approximately US$ 8.7 billion
are planned for the sector. The main objective is to supply the growing demand for
pulp and charcoal in the domestic and export markets.
The Brazilian pulp and paper industry comprises 220 companies located in
450 municipalities, in 17 States. In 2005, five groups alone were responsible for
73% of national pulp production. According to Montebello and Bacha (2007), this
is due, in part, to the origin of the pulp and paper sector in Brazil. From the start, the
number of companies on the market was subject to BNDES´ minimum scale policy.
Therefore, the pulp industry in Brazil was born oligopolized.
66
TABLE 5
Evolution of Brazilian timber product exports
US$ thousands
Product
2001
2002
2003
2004
2005
2006
2007
Pulp
1,247
1,160
1,744
1,722
2,034
2,484
3,024
Paper
943
894
1,087
1,187
1,371
1,521
2,006
Sawn wood
229
245
255
294
304
275
257
Composed panels
71
97
121
161
176
175
146
Plywood
156
211
344
521
510
438
422
Charcoal
2
2
2
6
4
3
3
Others
124
165
194
335
201
262
250
TOTAL
2,771
2,774
3,747
4,226
4,600
5,158
6,108
Source: SECEX, 2007. Adapted by STPC
TABLE 6
Paper and Pulp – Largest companies –
Brazil – 2006
Company
Sale Revenues (in R$ millions)
Klabin
3 307.00
Suzano
3 190.50
Votorantim – VCP
3 032.00
Aracruz
2 364.90
Duratex
1 880.10
Ripasa
1 738.90
International Paper
1 144.40
Cenibra
1 090.40
Veracel
799.10
Santher
796.10
Source: PortalExame.
The five largest Brazilian producers of pulp are: Aracruz, Votorantim, Klabin,
Suzano Bahia Sul and Cenibra. In 2006, Aracruz, Votorantim and Suzano Bahia
Sul exported respectively, 96%, 90%, and 76%, of their production. Aracruz has
grown approximately 11% a year in the last 15 years. Between 2006 and 2007, this
company plans to double its present capacity.
67
Growing presence of foreign capital
Foreign capital participation in the paper and pulp sector has been increasing.
In 2006 alone, the Central Bank registered the entry of US$ 1.6 billion in this sector.
In 2004, foreign participation in the production of pulp, represented by the Japanese company Cenibra, the Finnish company Norske Skog and the American companies International Paper and Rigesa, was 1.753 million tons, 18.2% of the total
9.620 million tons produced in the country.
In 2005, of the ten largest pulp producing companies in the country, four
had foreign shareholders. The largest of them, Cenibra is 100% Japanese owned,
after the JBP consortium purchased Vale do Rio Doce. International Paper bought
out the former Champion and is now the owner of Chamex, Chamequinho,
Chambril and HP paper brands. The Norwegian company Norske Skog Pisa, largest
world manufacturer of printing paper, owns the only plant of this type of paper
in the country, supplying approximately one third of Brazil’s domestic consumption
of this paper.4
In 2006, when Veracel reached its full annual production capacity of 900,000
tons, with Swedish-Finnish Stora Enso participation, the foreign capital share in pulp
production accounted for close to 20%: 2.203 million tons of a total 11.1 million
tons (Brazilian production in 2006).
In the paper segment, the American companies International Paper, Rigesa,
Sonoco and Kimberly-Clark, the Franco-American company Schweitzer-Mauduit, the
Finnish companies Norske Skog, Huhtamaki and Ahlstrom and the Franco-English
Arjo Wiggins were responsible for a production of 1.356 million tons of paper in
2004, corresponding to 16.0% of a total production 8.452 million tons for that
year. (Valor Econômico, 2006).
Artificial forests, environmental problems
As a large exporter of paper and pulp, the Brazilian industry suffers pressure from
importing countries where the legislation, consumer organizations and environmentalists demand compliance with the environmental norms in effect in their countries.
For example, in 1990, increased demands required the adoption of sustainable
forest management practices and the extinction of pure chlorine in pulp whitening.
According to Laschefski and Assis (2006), the high water consumption for
production of paper and pulp is one of the worst impacts caused by the sector, that
uses on average 57 m³ of water to produce one ton of pulp. Thus, 577,191,063 m³
of water were used in processing pulp, in 2005. Considering that the average estimated consumption for residential and commercial establishments in São Paulo is
4
68
Lia Hama. O avanço dos estrangeiros. Portal Exame, 11/08/05.
approximately 168 m³/year, the amount of water used by pulp processing companies would be sufficient to supply over 3.4 million homes, or approximately 11.9
million people, over the same period.
Problems with water are also a constant in cultivation areas together with
other environmental impacts which characterize monoculture activities. The available
water tends to decrease as a result of the high consumption which certain species,
such as eucalyptus, need to grow.
“Also, due to the fast growth cycles of plantations – between 5 and 7 years
– as can be observed, the quantity of water changes dramatically, in comparison with normal conditions. Some inhabitants interviewed in 2004 in
the municipalities of Curvelo and Felixlândia, confirmed that there was a
sudden abundance of water after all trees were felled at the same time in
areas near springs. However, because of the high content of solids in
suspension, and chemicals from soil in deforested areas, the water was
not suitable for human consumption. Eucalyptus plantations thus cause
significant alterations even in areas beyond the plantations.” (Laschefski
and Assis, 2006)
The cultivation of eucalyptus and pine trees in large monoculture plantations
depends heavily on agrichemicals; therefore soil and superficial/spring water contamination cannot be avoided, even with controlled application of the chemicals.
Paper and pulp production also generate indirect impacts, especially with regard
to high energy consumption. According to Célio Bermann (2004) in 2004, the paper
and pulp sector was responsible for 8% energy consumption for industrial purposes
and 3.5% of the total energy consumed in Brazil
Charcoal
The latest data published in December of 2007 by the IBGE on charcoal and
firewood production in Brazil relate to 2006. In that year charcoal production
increased 3.3%, for a total of 2.6 million tons. The charcoal obtained from felled
trees declined by 15.7% (2.5 million tons), reversing the tendency observed since
1998. Overall charcoal production was 5.1 million tons, 6.9% less than in 2005.
(IBGE, 2007)
The main producing States of charcoal from artificial forests in 2006 were
Minas Gerais (75.7%), Maranhão (9.8%), Bahia (3.1%), São Paulo (2.9%), and
Mato Grosso do Sul (2.8%). The municipality of Buritizeiro, in Minas Gerais, with
446.8 thousand t, was responsible for 8.7% of Brazil’s total production. The largest
national producers of charcoal obtained from timber are Mato Grosso do Sul
(24.0%), Maranhão (19.0%), Bahia (14.5%), Goiás (11.4%), Minas Gerais (10.5%)
and Pará (8.6%).
69
In 2006, 36 million cubic meters of firewood from artificial forests and
45.2 million cubic meters from natural forest timber were produced, for a total
of 81.2 million cubic meters of firewood, or 0.4% more than in 2005. The main
producers of firewood from artificial forests are the States of Rio Grande do Sul
(37.1%), São Paulo (19.9%), Santa Catarina (13.7%), Paraná (13.6%) and Minas
Gerais (7.2%). The largest firewood producing municipalities were Butiá (800,000 m³),
Taquari (764,000 m³) and Santa Cruz do Sul (752,800 m³), all in the State of Rio
Grande do Sul.
Firewood from natural forest trees comes mainly from the States of Bahia
(24.8%), Ceará (10.2%), Pará (8.6%), Maranhão (7.2%) and Paraná (6.2%). The largest
producer of this type of firewood was the municipality of Euclides da Cunha
(720,000 m³) in the State of Bahia.
The National Energy Balance for 2007 also reveals that firewood and charcoal were responsible for approximately 12.5% of total domestic energy supply
(EPE, 2008).
The main consumer of charcoal is the steel industry, which accounts for 45%
of all charcoal consumption in the country. (Brito, 2007)
Secondly, comes the residential sector. Here wood is used for cooking and to a
lesser degree, for heating. The annual quantity of timber used in this sector is greater
than that consumed by sawmills. Brito (2007) estimates that at present, at least 30
million people depend on wood as the prime energy source for homes in Brazil.
The third largest consumer of wood as an energy source is the industrial
sector, excluding steel: cement, chemicals, food and beverages, paper and pulp, and
ceramics. The greatest demand is by the segments of food and beverages and
ceramics, which consume over 60% of total consumption (Brito, 2007).
Agriculture is the fourth important consumer of wood for energy in the
country, and though there is no precise data on the distribution of this consumption, it is believed that it is mainly used for drying grains and beans. By and large,
the amount of timber consumed by this sector is significantly higher than that used
for the manufacture of panels and similar products.
We will analyze below, in greater detail, the use of charcoal by the steel sector,
which, as already mentioned, is the largest consumer of this product in Brazil – 45%
of the total consumption in 2006.
Charcoal for steel production
Many steel mills in Brazil use charcoal. Approximately 600 kilos of charcoal are used
for every ton of iron produced, or about one ton of trees.
The Brazilian Steel Institute (IBS), in May of 2008, announced that up to the
end of 2015, the companies of this sector would invest approximately US$ 13.2
billion, to increase the annual installed capacity of steel production from 41 to
70
80.6 million tons, an increase of almost 100%. These estimates are mainly based on
domestic sales forecasts.5
The expansion plans of the steel industry have direct bearing on the production of charcoal, which at present is used for approximately one third of Brazil’s steel
production. Besides this, about half the charcoal used in the steel industry comes
from native forests. With this scenario, Abraf believes that by 2010, the additional
volume of charcoal consumed would be 34 million cubic meters, or three quarters
of the charcoal produced today.
“The great majority of integrated mills use coke as a reducer. The production of pig iron using significant amounts of charcoal persists only in Brazil.
In the 1960´s, the Brazilian government imposed severe import tariffs on
coke which led some mills to establish companies for producing charcoal for
their own use. The elimination of import tariffs on coke at the end of the
1980´s, led to a decrease in the use of charcoal on the part of some mills
which depended on this product, such as Belgo-Mineira. However, a few
large Brazilian mills such as Acesita and V&M Tubes, and some independent
pig iron producers still use charcoal.” (Oliveira, 2007)
The criticisms and campaigns on the part of and by the Brazilian civil society,
have recently led to two important initiatives, whereby the steel mills from now on
are to use only charcoal deriving from artificially planted forests. (Abraf, 2008)
The first, by the Government of Minas Gerais in collaboration with private
companies, seeks to expand the present area of artificially planted forests planted
in the State, from 1.2 to 1.8 million hectares, leading to an increase of 50% over
8 years. The second is on the part of the mining and steel segments in the States
of Pará and Maranhão, who are investing in eucalyptus plantations in the Carajás
steel complex. A notable example is the Vale Florestal Amazônia project, of Vale do
Rio Doce, that has budgeted US$ 200 million up to 2010, for planting 150,000
hectares of eucalyptus in degraded areas and recuperating 50,000 hectares of
native forests.
According to the IBGE (2007), charcoal production from extraction practices
fell 15.7% in 2007, relatively to 2006, reversing the tendency observed since 1998.
The increased international demand for iron and steel, however, is increasingly
bringing pressure to bear on deforestation for production of charcoal. This is
especially true for the native forests in Mato Grosso do Sul (Cerrado and Pantanal),
Minas Gerais, Piauí and Pará.
The list also includes charcoal illegally obtained from Paraguayan and Bolivian forests. Alfredo Molinas, Paraguayan Minister for the Environment, confirms
that Brazilian smugglers are responsible for the large proportion of deforestation
5
Cirilo Junior. Siderúrgicas deverão dobrar capacidade de produção de aço até 2015. Folha Online, 15/05/08.
71
in that country, for the production of charcoal. According to the Minister, Brazilian
buyers pay a higher price for charcoal from Paraguayan forests than domestic
buyers, inducing peasants to abandon agricultural activities and dedicate themselves
to exploiting the forests – a more lucrative venture – in many cases, without authorization from the Forestry Services.6
In the case of Bolivia, the MMX steel mill being installed in Corumbá and
owned by the Brazilian businessman Eike Batista, was forbidden to operate in
that country to prevent the destruction of its forests. The company was then
established in Corumbá, and announced that it had bought charcoal from guess
where, Bolivia. 7
According to an article published in the O Globo newspaper in June of
2008, Ibama, in an operation to prevent the illegal use of charcoal, imposed fines of
R$ 414 million on 60 steel mills in Minas Gerais, Mato Grosso do Sul and Espírito
Santo. Another R$ 70 million were levied on the charcoal producers. The inspectors
identified a consumption of 800,000 cubic meters of illegally produced charcoal by
the steel mills in the three States in 2007, sufficient to load 10,000 trucks, that
strung out end to end, would occupy 200 Km of road.
The Siderúrgica Alterosa S/A, with head offices in Minas Gerais, received the
greatest number of fines for using charcoal illegally produced in Paraná and Pará.
Secondly was Siderúrgica Mat Prima Ltda, for irregularities in five States. The list also
includes MMX Metálicos Corumbá Ltda, belonging to Eike Batista, and Gerdau
Aços Longos S/A. 8
According to Sonia Hess, a professor of the Federal University of Mato Grosso
do Sul, Brazil has no laws forbidding the use of native forests for charcoal production. The Brazilian Forestry Code establishes that steel and other industries
that consume charcoal, firewood or other plant raw material are required to maintain forests for rational exploration or plant forests for their own use, directly or
through partnerships.9
The problem, according to Professor Sonia, is that in its sole paragraph, the
Code permits the competent authorities to determine a 5 to 10 year period for
companies to achieve self-sufficiency. Thus, at present, steel mills and other large
consumers may cut down native forests for 10 years without being penalized.
6
Paraguai culpa brasileiros por destruição de florestas. Gazeta Mercantil, 26/10/05.
7
Ato público contra desmatamento no Pantanal e Cerrado. Coalizão Rios Vivos, 08/08/07.
www.riosvivos.org.br
8
Bernardo Mello Franco. Ibama multa siderúrgicas e carvoarias em R$ 484 milhões por uso ilegal
de carvão. O Globo, 12/06/08.
9
Sonia Hess. Carvão vegetal de matas nativas: é necessário e urgente proibir. Jornal da Ciência,
28//06/07.
72
TABLE 7
Independent pig iron production from charcoal
by state/region (tons)
Year
Minas
Gerais
%
Carajás
%
Espírito
Santo
%
M. Grosso
do Sul
%
TOTAL
1993
4.158.727
86,6
398.354
8,3
245.743
5,1
0
0,0
4.802.824
1994
4.543.995
83,4
623.083
11,5
279.761
5,1
0
0,0
5.446.839
1995
4.118.810
80,0
632.216
12,3
334.269
6,5
60.300
1,2
5.145.595
1996
3.344.009
76,7
694.194
15,9
255.593
5,9
65.592
1,5
4.359.388
1997
3.486.668
73,2
942.632
19,8
250.470
5,3
82.800
1,7
4.762.570
1998
3.407.145
68,7
1.218.483
24,6
242.977
4,9
91.500
1,8
4.960.105
1999
3.664.352
67,8
1.390.543
25,8
252.520
4,7
93.998
1,7
5.401.413
2000
4.039.932
65,7
1.652.000
26,9
372.925
6,1
80.520
1,3
6.145.377
2001
4.005.548
61,5
2.021.500
31,1
387.185
5,9
96.000
1,5
6.510.233
2002
4.043.163
59,8
2.245.000
33,2
375.727
5,6
96.000
1,4
6.759.890
1,2
8.103.864
2003
5.193.060
64,1
2.364.500
29,2
450.304
5,5
96.000
2004
6.302.964
62,5
3.102.750
30,7
499.358
5,0
180.000
1,8 10.085.170
2005
5.797.999
59,3
3.228.287
33,0
505.795
5,2
241.653
2,5
9.773.832
2006
5.353.664
56,5
3.452.400
36,5
376.755
4,0
282.800
3,0
9.455.716
Source: AMS.
Labor conditions in charcoal production
The question of the labor conditions in the charcoal works for its production for
the steel industry merits mention. Kiln workers are permanently subject to harmful
working conditions from heat, soot, smoke, noise, gases.
The most common form of charcoal production is manual and by contracting
third parties and is responsible for severe health problems such as cancer due to
inhalation of harmful gases. The lack of stability and absence of basic worker rights
such as a defined work load, weekly rest periods, vacations, social security and
insurance, and accident insurance are the hallmarks of labor relations in this sort.
(Laschefski and Assis, 2006)
Distinct labor organization frameworks are, therefore, found in pig iron and
steel production activities. On the one hand, we have steel mills with workers duly
registered and which comply with international labor standards, thus allowing them
access to export markets, and on the other, the unhealthy conditions of rudimentary
charcoal works with predatory use of natural resources.
73
Formal charges against the conditions of charcoal workers, and the devastation of the environment which characterizes this activity, have compelled mining
and steel companies to include social and environmental clauses in their supply
contracts. The Federal Government, through both Ibama and the Ministry of
Labor, has also carried out stricter inspections in order to reduce illegal activities
in these segments.
Production of pig iron in the Carajás Complex
The Steel Complex of Carajás, a region comprising part of the States of Pará, Tocantins and Maranhão, is the largest producer of iron ore in the world. There are 14
steel industries concentrated within a scant 150 km radius, and includes large-scale
charcoal production for industrial ends.
According to Marcelo Carneiro, professor of the Federal University of Maranhão
(UFMA), the implantation of the Complex is directly related to the implementation
of the Great Carajás Program (PGC) and to the decision of the federal government
and the Pará and Maranhão State governments, to stimulate the implantation of pig
iron production along the Carajás Railway. Pig iron industries were also attracted to
the East Amazon region in the late 1980’s, because of subsidies granted by the Programa Grande Carajás, SUDAM and SUDENE – as well as the existence of abundant
timber for charcoal production in the west of Maranhão and southeast Pará. 10
Still according to Marcelo Carneiro, pig iron production at Carajás almost
doubled in the last ten years, from 384,000 tons in 1995 to 3.45 million tons in
2006. This means that, at present, approximately 11% of total pig iron production and over a third from independent producers (companies who do not own
mills) are concentrated in the municipalities of Açailândia/MA e Marabá/PA, in
Amazônia Oriental.
Today there are 19 steel mills in the State of Pará, with an installed capacity
of 2 million tons of pig iron per year. Their furnaces consume approximately 4.4
million cubic meters of charcoal a year. With the programmed start-up of an additional eight industrial mills, the annual consumption of charcoal will increase to 5.8
million cubic meters. Another 2.2 million cubic meters of charcoal are sent every
year to steel mills in Maranhão. There are also 25,000 additional small iron works, of
which 5,000 with dubious licensing, which hire 45,000 unregistered workers, in
accordance with Pará government data.
These industries consume 12 to 14 million cubic meters of charcoal from firewood in the production of pig iron. There are also 11 lumber yards in the region
10 Marcelo Carneiro. A evolução da atividade siderúrgica na Amazônia Oriental e as questões sociais
e ambientais a serem enfrentadas. Jornal Pequeno, 15/06/07. www.jornalpequeno.com.br.
74
producing 3.3 million cubic meters of logs, as well as extensive cattle raising and
soybeans plantations in this region. All these activities, especially the production of
charcoal, have, for decades, been exerting pressure on existing forest resources and
are the main cause for the deforestation of the Amazon region. It is estimated that
40% of the region’s forest has been destroyed.11
In January of 2006, Ibama fined the Carajás steel mills, in Pará – who had been
in operation for more than 10 years -, over R$ 500 million, and those in Mato Grosso
do Sul, over R$ 23 million, because of their use of charcoal illegally obtained from
native forests.
In April of 2007, approximately 21,000 cubic meters of charcoal – equivalent
to 350 loaded trucks – were confiscated by Ibama near the pig iron factories of
Marabá (PA). This arrest generated over R$ 150 million in fines, mainly for the purchase of charcoal from unproven origins.
In total, eight pig iron producers were inspected by Ibama, in five of which the
charcoal was seized: Cosipar, Sidenorte, Simara, Sidepar and Usimar. Cosipar was
again closed down for operating without an environmental permit. This mill had
been shut down before, but restarted operations after obtaining a temporary injunction against the decision. Ibama, however, appealed and had the injunction suspended. During this operation, Ibama also inspected charcoal works and lumber
yards in Pará, confiscating 2,700 cubic meters of lumber, and shutting down 239
charcoal kilns according to the Repórter Brasil news agency. 12
The inspections were carried out in the municipalities of Dom Eliseu, Paragominas, Rondon do Pará and Ulianópolis, which are responsible for almost all the
charcoal used in the Marabá pig iron installations and a majority of those in Maranhão.
Another result of these actions was the discovery that steel mills had been purchasing
charcoal from companies that fraudulently by-passed forest activity controls.
According to an Ibama survey, the steel mills operating in the Carajás Complex
consume approximately seven million cubic meters of charcoal a year – equivalent to
about 100,000 hectares of deforested land. Ibama estimates that 70,000 hectares
of forest are felled to produce charcoal from unknown origins. Studies carried out in
2006 by the historian Maurílio de Abreu Monteiro, professor of the Amazon Higher
Studies Nucleus of the Federal University of Pará (UFPA), show that non-authorized
felling of trees supplies 57.5% of the wood used by charcoal kilns.13
11 Ribamar Ribeiro Junior. Distrito Florestal de Carajás: Engodo do Governo para satisfazer Guseiros e
Madeireiros!!!, 17/05/07. www.rIbamarribeirojunior.blogspot.com.
12 André Campos. Carvão irregular gera R$ 150 milhões em multas a siderúrgicas. Repórter Brasil,
24/04/07.
13 Paula Scheidt. Desmatamento ilegal fornece quase 60% da matéria-prima de siderúrgicas.
Carbono Brasil, 05/08/07.
75
According to Norberto Neves, coordinator of the above mentioned Ibama operation, illegal activities associated with charcoal works are the norm in the State of
Pará – which are not only related to environmental issues, but frequently employ
workers under slave-like conditions. About 80% of the charcoal works are irregular,
and the majority is not registered. He confirms also that among the licensed operations, some have more kilns and a higher production than allowed by the environmental permit.
In mid-2007, Vale do Rio Doce announced it would no longer supply iron
ore to pig iron producers in Pará and Maranhão that use charcoal from areas
where its production contributes to deforestation in the Amazon. In its contracts
to supply iron ore to the steel mills of the Carajás Complex, the company has
included items that not only require the latter to avoid deforestation but also to
include labor contracts with their employees to prevent any debasing situation
reminiscent of slavery.
Besides pressure by Vale, the Pará pig iron producers face a lawsuit for
environmental dumping brought against them by the U.S. in the World Trade
Organization (WTO). 14
The Forest District of Carajás
Recently, the Ministry for the Environment has begun studies for the creation of the
Forest District of Carajás. During 2007 the Ministry also promoted seminars and
public sessions to present and discuss the project. The District would encompass 25
to 30 million hectares, 40% of which are already deforested.
The conservation areas and indigenous reserves which are protected by law,
correspond to 11% of the projected area (7 indigenous reserves and 1.5 million
hectares under the guardianship of Vale do Rio Doce in the Carajás area). Another
3 million hectares consist of settlements (approximately 400).
For Tasso Azevedo, Director of the Brazilian Forestry Service, “the main activity
in the Forest District will have to be reforestation and recuperation of areas with
species and systems that will allow the steel industry to be supplied by a sustainable
source of charcoal. The plan is to create a chain of production that will transfer
workers from deforestation activities to planting forests for charcoal production”.15
The Project calls for small farmers in the region to start planting eucalyptus
forests. However, it does not have the support of the social movements or rural
workers union agencies. Fetraf and Fetagri have already manifested their opposition
to the project in the public sessions. Other movements, such as the MST, CPT,
14 João Domingos. Regra da Vale protege a Amazônia. O Estado de São Paulo, 22/07/07.
15 Ademir Braz. Distrito Florestal de Carajás: só para alguns. www.forumcarajas.org.br.
76
Peasant Women’s Movement, CIMI, Cepasp, Copserviços, SDDH, Fórum Carajás, chose
not to participate in the sessions.
The representatives of farmer-settlers also oppose the idea of participation
in planting eucalyptus for charcoal production. For Edmilson Valentim, Executive
Secretary of the Forum Carajás, there are no guarantees that the steel mills will
produce charcoal in a sustainable and legal form, which is more expensive than
the exploration of native forests. Besides, the expansion of eucalyptus plantations would aggravate environmental and social degradation, by expelling peasants
from their land.16
On the other hand, companies want changes in the legislation that requires
the preservation of 80% of the forests on properties in Amazônia Legal. Ricardo
Nascimento, President of the Maranhão State Union of the Steelworks Industry,
confirms that “only through the decrease of 50% of the forests will local companies
be able to sustain themselves”, because there are many previous agrarian and
deforestation issues.
The towns included in the Forest District depend almost exclusively on the
production of other States for their food products such as rice, black beans, manioc
flour and vegetables. As a result, many of the vegetables commonly found in
Brazilian homes, are not only too expensive for the local population, but of bad
quality due to the time elapsed from harvests in distant regions.
Mato Grosso do Sul
The demand in Mato Grosso do Sul for reforested timber, considering only the
industrial installations already in operation or about to be activated, as is the case
in most of the Corumbá mineral and steel complex, is sufficient to consume almost
five times the present production, according to estimates by the Association of
Producers and Consumers of Planted Forests of Mato Grosso do Sul.17
Present production of charcoal in the State is approximately 2 million cubic
meters, the majority of which or 1.3 million cubic meters, is consumed in the State
of Minas Gerais. These numbers reveal that in effect, the steel mills in Mato Grosso
do Sul and Minas Gerais are responsible for the extensive deforestation in Mato
Grosso do Sul.
For example, Sideruna, which was inaugurated in 2007 in Campo Grande-MS,
consumes charcoal in quantities equivalent to over one thousand tons per day of
native forest trees. The State’s Public Ministry brought a lawsuit against the company
16 Mário Osava. Eucaliptos e siderurgia incendeiam a Amazônia Oriental. Terramerica, 02/08/07.
www.tierramerica.info.
17 Sônia Hess. As siderúrgicas e as florestas. O Estado de MS, 24/04/07.
77
seeking to forestall the start up of its predatory production activities. However,
two years later, the company was already operating and the Justice Department had
not yet drawn up a formal sentence.
In the Pantanal, a mining and steel pole which is being implanted in the vicinity
of Corumbá foresees the consumption of charcoal made from over 18,000 tons/
month of native trees from Brazilian, Bolivian and Paraguayan forests. The enterprise
includes MMX steel mill, already in construction, belonging to the Brazilian megabusinessman Eike Batista.
In July of 2007, State Congressman Amarildo Cruz (PT), of Mato Grosso do
Sul, submitted a Bill forbidding the production, transportation and consumption
of charcoal from native forest trees. The Bill also creates a fund for reforestation,
with resources supplied by companies who use coke, natural gas or petroleum
derivatives as fuel.18
GRAPH 3
Production of charcoal using artificial forests vs. native
forests – Brazil: 2000-2006
Source: AMS
18 Allison Ishy. Deputado apresenta Projeto de Lei que proíbe uso de carvão vegetal de florestas nativas.
02/07/07. www.riosvivos.org.br.
78
Small farming
According to Bracelpa, at the end of 2007 305,000 hectares of trees had been planted
on approximately 10,000 small and medium-sized properties through the so-called
forest incentive programs, promoted by its members. (Bracelpa, 2008)
Apart from the large forests belonging to private companies, the planting of
forests is becoming increasingly popular as an alternative among small and mediumsized rural properties, especially in view of the programs of forest incentives created
by large paper and pulp, steel and plywood panel industries.
According to Mendes (2005), The National Forest Program – PNF is the main
political instrument for the artificial forests sector. The Program’s goal for 20042007 was to plant 500,000 hectares of forests per year, 200,000 hectares on small and
medium-sized properties and 300,000 through company programs. Still according
to this author, there is an increasing interest in the demand for financing for planting
forests in Brazil. The principal national financing programs for the artificial cultivation of forests are:
• BRDES-FINEM: for large-scale projects of over R$ 10 million, with a loan portfolio of R$ 730 million, in 2005.
• Propflora: for medium and large rural producers with funds of R$ 42.34 million
(July 2004 to August 2005); and
• Pronaf Forest: for small rural properties with funds of R$ 8.23 million (July
2004 to August 2005).
The participation of small and medium-sized rural property owners in eucalyptus and pine tree cultivation is financed by the Banco do Brasil through the BB
Forest program, which is responsible for operating two of these official funds,
Propflora and Pronaf Forest. According to Mendes (2005), the BB Florestal provides
financing not only to mini and small farmers, up to large enterprises, cooperatives,
trading, exporting and processing companies of forest products.
Private forest promotion programs
In these programs, the companies provide technology, cuttings and technical assistance to the producers, while the latter guarantee to sell them their production,
echoing processes existing elsewhere in Brazil in other forms of agriculture.
An example of this is the Forest Savings Program, launched by Votorantim
(VCP) in November of 2004, in Rio Grande do Sul. The program is aimed at the
cultivation of eucalyptus on rural properties in the vicinity of the company’s plantation areas, in partnership with ABN AMRO Real Bank. It includes financing at a fixed
rate of 9% p/a, and guarantees the purchase of wood by Votorantim.
79
The Program is for two cycles of eucalyptus production (14 years) and is similar
to the integrated production models implanted for other types of crops such as soy,
tobacco, etc. The farmer receives an advance to finance planting as from the first
year, and the purchase price is pre-established. Votorantim supplies eucalyptus and
native forest tree cuttings for reforestation, as well as technical assistance. With the
help of the Technical Assistance and Rural Extension Company (Emater), Votorantim
monitors the farmer during cultivation and maintenance of eucalyptus forests
during the first two years.
At the beginning of 2008, there were approximately 600 producers of Rio
Grande do Sul registered with the program, corresponding to over 11,000 hectares
of plantations in that State under this regime. The plan is to expand cultivation by at
7.1 thousand hectares per year, totaling approximately 30,000 hectares in this cycle.
According to Mendes (2005), the main reasons why companies adopt this
strategy are the reduction of investments for land purchases, lower costs for timber,
diversification of raw material sources and a greater integration with farmers in the
vicinity of their installations.
For producers, the forest promotion program is an alternative to traditionally
earned income from their properties, which allows them to use under-utilized or idle
areas. However, a more detailed analysis in 2004 by Silviconsult Engenharia in its
study “Incentives and Monetary Mechanisms for the Maintenance of Sustainable
Forests in the South of Brazil”, described by Mendes, shows that the present models
of promotion present risks to economic, social and environmental maintenance of
rural producers, especially small farmers, among which:
• rural exodus, due to the interest of “self-employed professionals” in buying
small and medium-sized properties to benefit from this model to insure a future
income for their retirement;
• substitution of native forests normally found in legal reserve areas, by pine and
eucalyptus plantations, especially on small properties;
• adoption of management systems which in fact, favor the industrial objectives
of the promoter and not the improvement of the rural producer’s income;
• promotion restricted to properties of over 20 hectares to minimize planting
and harvesting costs;
• government actions as helping agent (technical assistance, distribution of
cuttings, etc.) which are oriented more to the promoters objectives than those
of the producer;
• creating a much higher offer relatively to demand in the medium and long
terms, thereby generating little or no profits from this activity;
80
• inadequate salaries for the rural producer’s work;
• “oligopsonic” condition of the industries, concentrating promotion around
their installations and not offering market alternatives to the producer; and
• preference given by the promoters to leasing, partnerships, advance income
and sales, as against the concept of donation. (Mendes, 2005)
For State Congressman Friar Sergio Görgen (PT-RS), in supporting the large
paper mills, the BNDES is financing the greatest anti-agrarian reform in the country,
especially as the sector has occupied more and more areas claimed by the landless
farmers, in Rio Grande do Sul.
The practice of promotion, he claims, becomes an imposition on small property owners in the regions of eucalyptus cultivation, because it leaves no other
options and becomes a form of aggravated harassment on the part of companies.
“At first, it seems like sound business sense, but after a few years, the system
becomes disadvantageous due to the progressive indebtedness of the farmers”,
explains Frey Sergio.
He also believes this practice is a means to circumvent the law, which requires
the elaboration of Environmental Impact Studies for areas over one thousand hectares with continuous cultivation of eucalyptus. “Production fragmentation has been
a means for not enforcing the law” he concludes.19
As shown by Laschefski and Assis (2006), the occupation of small and mediumsized properties, close to the extensive plantations of large companies, has required
a reconfiguration of crop plantations and a homogenization of the landscape. In a
literal sense, competition with other agricultural products and the transformations
in geography is made clear in the report by the Brazilian Association of Planted
Forest Producers:
“The economic results generated by activities of forest cultivation and the
industrial processing of wood, have contributed to alter the profile of certain
regions in the country. As an example, companies located in the State of
Rio Grande do Sul, where historically the economic activity was concentrated
in annual agricultural crops, have started a wide ranging program of eucalyptus cultivation as a supply source for pulp production, and possibly, strengthening the lumber industry [..]. In Minas Gerais [..] in specific cases, traditional coffee growing areas are being substituted by eucalyptus.”
19 Verena Glass. Deserto verde: BNDES financia R$ 619,3 mi para indústria de celulose no ES e RS.
Agência Carta Maior, 08/12/06.
81
Conflicts in the State of Espírito Santo
The monoculture of eucalyptus in the State of Espírito Santo was started in the
second half of the 1960´s. As demonstrated by Daniela Meirelles and Marcelo
Calazans (2006), a large part of this crop was planted on Federal or communal land
areas, traditionally settled by peasants, indigenous populations, and descendants
of negro slave fugitives, who for the most part, had no formal land titles. A case in
point is the presence of Aracruz Celulose, whose headquarters are located 70 km
from Vitória, the State capital.
The company is today the largest world producer of bleached eucalyptus based
pulp, with a production capacity of 3 million tons per year, in its Barra do Riacho (ES)
and Guaíba (RS) installations. The company’s third manufacturing unit – Veracel
Celulose – is located in the municipality of Eunápolis, in the south of the State of
Bahia, and is operated in partnership with Stora Enso (each with 50% shares).
Aracruz also owns a private specialized port, Portocel, in Espírito Santo, through
which almost all the company’s products are exported. It has tree plantations in the
States of Espírito Santo, Bahia, Minas Gerais and Rio Grande do Sul, with approximately 279,000 hectares of eucalyptus plantations. Its major shareholders are
Votorantim, the Norwegian company Lorentzen, the Safra Group (each with 28%)
and the BNDES, with 12.5%.
In a note distributed in August of 2007, during the Extraordinary National
Congress of Journalists, the Journalists Union informed that the descendents of
Africans (quilombolas) and indigenous populations are fighting to repossess land
areas which Aracruz Celulose either seized by force or bought at ridiculously low
prices during the dictatorship 40 years ago. From the quilombolas the company
seized the major part of the 50,000 hectares belonging to them. From the indigenous, Aracruz appropriated 40,000 hectares, of which 18,070 hectares the Federal
Government recognizes to be indigenous reserve. Aracruz also took over the properties of small farmers, and destroyed 50,000 hectares of the Atlantic Forest.20
According to a survey by the legal department of Funai (National Indian Foundation), during the 1950´s and 1960´s, the government of the State of Espírito
Santo expropriated land traditionally occupied by indigenous people. The area was
later passed on to Aracruz, who then started planting eucalyptus.21
Edelvira Tureta, Head of Funai´s indigenous station in the municipality of Caieiras
Velhas, says that there were tupiniquim family settlements spread over the land now
belonging to Aracruz. According to data from the Indigenous Missionary Council
(CIMI), there used to be at least 37 tupiniquim villages in the region during the first
20 Ubervalter Coimbra. Jornalistas repudiam manipulação da notícia em favor da Aracruz. Século Diário,
06/08/07.
21 FUNAI diz que Aracruz invadiu área indígena. Gazeta do Povo, 28/08/06.
82
four decades of the XX century. Of all of these, only four are left which over the
years, received most of the native indigenous displaced from other village areas.
In the municipality of Aracruz, the native indigenous issue only received official attention in mid 1970´s, with the creation of a Funai station, and 6.5 thousand
hectares were set aside for the native populations of the municipality. After intense
discussions, however, an alternative agreement was signed with Aracruz. Finalized
in 1983, the demarcation contained two thousand hectares less territory than originally claimed. Basically, this included the area of the remainder of villages, with no
physical area for continuing the traditional indigenous lifestyle as it used to be not
too long ago.22
On this occasion, the tupiniquins were not the only indigenous population to
fight for land in Aracruz. In 1967, a group of a few dozens of Guarani indigenous
from Paraguay arrived at the municipality, after a trek of over 20 years. Before
deciding on settling definitely near Caieiras Velhas, they had gone through Rio Grande
do Sul, São Paulo, Rio de Janeiro and Minas Gerais.
In the municipality of Aracruz, an area of 11,009 hectares owned by Aracruz
Celulose, had been claimed by the region’s Tupiniquim and Guarani communities
since 1996. The technical and anthropological report on the original occupation of
the land, drawn up by Funai, proving the constitutional right of the indigenous
populations over the area, were published in the Diário Oficial in March of 2006,
and were contested by the company with the Ministry of Justice. Finally, on 27 August
2007, the Minister of Justice, Tarso Genro, signed the decrees which declared that
the 18,027 hectares claimed by both groups, as indigenous land.
The region of Sapê do Norte, which includes the municipalities of São Mateus
and Conceição da Barra, in the north of the State of Espírito Santo, used to be
inhabited by approximately 12,000 quilombola families, or some 60,000 descendents of Africans, up to the end of the 1960´s. However, with the arrival of Aracruz
Celulose, that confiscated these areas, the number of inhabitants declined to 1,200
families who still today, live in small communities in the midst of the company’s
eucalyptus plantations.
In May of 2007, Incra published a decree by which an area of 9,500 hectares is
recognized as quilombo territory belonging to the Linharinho community. 82% of the
territory was occupied by eucalyptus plantations of Aracruz Celulose, in this period.
There were still 48 families in this region, living on only 147 hectares. The Linharinho
Community was the first to be recognized as quilombola in the State of Espírito
Santo, but studies in the communities of São Domingos, São Jorge, Serraria and São
Cristóvão are already being concluded, lacking only publication of the Incra decree.
22 André Campos. Próximos à cidade, índios buscam espaço para retomar velhos hábitos. Repórter Brasil,
30/04/07.
83
In July of 2007, approximately 500 inhabitants of the quilombola communities of Sapê do Norte occupied the area belonging to the Community of Linharinho,
in Conceição da Barra, to exert pressure for demarcation of the territory recognized
by Incra for quilombola communities. The proposal of the quilombolas in occupying
this land is the formation of a large settlement in the area, for planting of Atlantic
Forest and fruit tree cuttings by the community members, as well as the construction
of homes for its families.23
Eucalyptus in the South of the State of Bahia
In the extreme south of the State of Bahia, eucalyptus plantations occupy approximately 700,000 hectares. Of these, Veracel owns almost 147,000, 73,000 with
eucalyptus plantations. The company also owns a pulp processing industry which
produces 900,000 tons a year of bleached eucalyptus pulp.
According to a study by Cepedes – Center of Study and Research for the Extreme
South of Bahia, with the arrival of the paper and pulp companies, the State lost 70%
of its native forests in fifteen years, from 1970 to 1985. According to recent studies by
the Ministry for the Environment, on the extreme south of the State of Bahia, today only
4% of the original Atlantic Forest still exists in areas of forest reserves. In this region,
it is estimated that half the agricultural land is owned by paper and pulp companies.
Still according to Cepedes, there are approximately 12,000 families camped
along the roads. The forced evacuation from rural areas of quilombolas, small farmers
and indigenous people has resulted in a significant increase of shanty-towns and
the disintegration of family units and groups. The expansion of eucalyptus plantations
in the region occupied the fertile agricultural lands and forced the displacement
of dozens of small producers. The town of Eunápolis is responsible for the largest
rural exodus in the country, over the last few years. The study shows that approximately 60% of the farmers left the rural zone – and the average rate in Brazil is 28%.
The increased rate of displacement coincides with the expansion of monoculture
plantations in the region, which started in the 1990´s.24
Based on studies carried out in the region, Claudia Santana and José Luís
Caetano point out that, “the introduction of eucalyptus cultivation has brought
serious risks to the water, soil, local fauna and flora resources, and also contributed
to making small agricultural ventures unviable. All agricultural land has been occupied, including the areas set aside for agrarian reform, indigenous populations and
the around conservation areas, with important Atlantic Forest reserves.” (Caetano
and Santos, 2004)
23 Rede Alerta contra o Deserto Verde. Comunidades quilombolas reocupam território em posse da Aracruz
Celulose. 24/07/07.
24 ADITAL. Êxodo na Bahia. 27/10/06. www.adital.com.br.
84
Similarly to what occurs in the State of Espírito Santo, the traditional lifestyles
of indigenous communities such as the Pataxó and Tupinambá, as well as landless
people and fishermen, are being destroyed, as a result of the impacts generated by
the expansion of eucalyptus plantations. Three of the largest industries of the sector,
Bahia Sul, Aracruz and Veracel, operate in the region.
In the region of Barra do Cahy, Point Zero of the Discovery of Brazil, a Pataxó
Front for Resistance and Struggle claims approximately 30,000 hectares which are
today covered with eucalyptus plantations. In the Gaxuma village, located in the
east of the area, the indigenous informed that Veracel is destroying native plants,
palm groves, altering the landscape and contaminating water sources.
In Barra Velha, close to the beach, the indigenous, acting on their own account,
managed to put a stop to some plantations, but are unable to effectively hinder the
expansion by Veracel. In Prado, last municipality in the region to introduce eucalyptus
plantations, the migration of the original population is repeated towards the outskirts of the town.
85
Bibliography
ABRAF. Anuário Estatístico, 2008. www.abraf.com.br
AMS. Anuário Estatístico, 2007. www.silviminas.com.br.
BERMANN, C. Exportação brasileira de produtos intensivos em energia: implicações sociais e
ambientais, in Exportando a nossa natureza. Produtos intensivos em energia:
implicações sociais e ambientais. Rio de Janeiro. FASE, 2004.
BRACELPA. Desempenho do setor em 2006 e projeção para 2007. Bracelpa, May 2007.
www.Bracelpa.org.br.
Setor de Celulose e Papel. São Paulo. Bracelpa, May 2008.
BRITO, J. O uso energético da madeira. Revista de estudos avançados, n° 21 (59), ESALQ.
Piracicaba, 2007.
CNA. Agropecuária brasileira: uma visão geral. June 2007. Available at www.cna.org.br.
DORES, A. et al. Panorama Setorial: Setor Florestal, Celulose e Papel. BNDES, 2006.
Available at www.bndes.gov.br/conhecimento/liv_perspectivas/04.pdf.
EPE. BEN 2008. Balanço Preliminar, informe à imprensa. May of 2008.
FERREIRA, S. Da fartura à escassez: a agroindústria de celulose e o fim dos territórios comunais
no extremo norte do Espírito Santo. USP, May 2002. Available at www.teses.usp.br.
IBGE. Produção da Extração Vegetal e da Silvicultura – 2006. IBGE, December 2007.
LASCHEFSKI, K. and ASSIS, W. A produção de Eucalipto e Pinus no Brasil. GT Energia
FBOMS, August 2006, mimeo.
MEIRELLES, D. and CALAZANS, M. H2O para celulose X água para todas as línguas: o conflito
ambiental no entorno da Aracruz Celulose S/A – Espírito Santo. FASE. Vitória, 2006.
MENDES, J. Estratégias e mecanismos financeiros para florestas plantadas. FAO. Curitiba,
November 2005.
MINISTÉRIO DO PLANEJAMENTO. Estudo da dimensão territorial do PPA: estudos
prospectivos setoriais. Documento preliminar para discussão. Brasília, January 2007.
www.planejamento.gov.br.
MONTEBELLO, A. and BACHA, C. Estrutura de mercado e desempenho da indústria brasileira
de celulose: período de 1980 a 2005. Pesquisa & Debate, SP, vol. 18, n. 1, 2007.
OLIVEIRA, V. Siderurgia. Relatório setorial final. FINEP, 2007.
SBS. Fatos e números do Brasil Florestal. SBS, December 2007.
SILVA, CAETANO J.L. and SANTOS, C. S. Os impactos do plantio de eucalipto e da produção
de celulose em comunidades tradicionais no extremo sul baiano. In: II Reunião da
Associação Nacional de Pós-Graduação de Pesquisa em Ambiente e Sociedade,
ANPPAS. Idaiatuba-SP, 2003.
VALOR ECONÔMICO. A indústria de celulose e papel. Análise setorial, 2006.
www.valoronline.com.br.
VOTORANTIM. Relatório Anual de Sustentabilidade 2006. www.votorantim.com.br.
Relatório Anual de Sustentabilidade 2007. www.votorantim.com.br.
86
4
SYNTHESIS AND
CONCLUSIONS
Production from agriculture and cattle raising will reach new records in 2008.
Over the next decade the areas cultivated with soybeans, sugarcane, corn and artificial forests will expand greatly. Average projected numbers for the next ten years
indicate that artificial forests will occupy 15 million hectares – an increase of 150%
in the period. Sugarcane will cover 10.3 million hectares – 50% more than at present
– and grains, 63.8 million hectares – 15.7 million hectares above the present
acreage. According to Cogo Consultoria, the new agricultural expansion will occur
particularly in the north of the States of Mato Grosso, Maranhão, Piauí, Tocantins,
Pará and west of Bahia.1
Exports of Brazilian agribusiness products should also reach a new record in
2008. Between June of 2007 and May of 2008, export revenues were an historic
high of US$ 64 billion, 18.3% over the total exported between June of 2007 and
May of 2007. Apart from the increased price of many agribusiness products exported by Brazil, the volume exported also increased – significantly, in some cases.
A continued increase in consumption of meat, especially in Asia, global food price
increases, and the introduction of agrifuels, are the main reasons for high Brazilian
exports of agribusiness products during the period.
It should be noted that meat, soy and so-called forest products were the
principal items that stimulated the increase in exports. In the case of soy, the main
reason for increased export revenues are higher international prices, resulting from
a decline of almost 15 million tons in U.S. harvests due to the expansion of corn
plantations for ethanol production.
1
Segundo consultoria, Brasil será a ‘bola da vez’ do agronegócio mundial. Gazeta Mercantil, 08/09/07.
87
The increase in domestic U.S. consumption of corn and the consequent reduction of exports of this grain has created an opportunity for Brazilian corn exports in
the international market. Exports of this grain have reached record high volumes
and revenue. Between January and May of 2008, shipments totaled 2.57 million
tons, an increase of 8.1% over the same period in 2007. International sales of
ethanol and forest products have also been increasing steadily.
OECD and FAO predict that by 2016, Brazilian meat exports will account for
almost 30% of total world exports. These numbers demonstrate that, along with
world consumption of meat, the growing use of agrifuels has led to a greater
impetus of Brazilian exports of agribusiness
In their latest Agricultural Outlook, the annual publication of the OECD and
FAO, which contains projections for 2008-2017, these institutions confirm that
for the first time, increasing demand for agricultural products for fuel production
may become the focus of attention. They estimate that at least in the medium term,
prices of agricultural products will remain above historical levels. The study also
foresees that Brazilian production of vegetable oils, namely soy, will achieve an
annual average growth rate of 3.9% in the next ten years. Brazil will thus probably
surpass the U.S. as the world’s most important exporter of these oils, by 2009.
All information and estimates make clear that the international agricultural products market will continue to stimulate the expansion of cattle farming products
for exports. The possibilities for an expanding domestic market for ethanol and
biodiesel are also contributing factors to increased production of these products.
Increased productivity will account for part of this production growth rate.
The territorial expansion of various crops and of cattle farming is, however, already
a reality. In some Southern and Southeastern States such as São Paulo, the expansion of certain crops has happened at the expense of others, since the availability of
areas appropriate for cattle raising activities has reached the limit. In other regions,
such as the Midwest, sugarcane and corn plantations are taking over other crop
areas or forcing their migration to other regions.
Overall, the production of Brazilian agricultural and cattle raising activities
points to continuing record breaking results. Export products such as soy, cotton,
corn, forest products and meat, continue to increase. The fossil fuel substitution
programs in many countries also point to an increased agrifuel market, of which
Brazil plans to participate with a significant share.
Similarly, increased world consumption of steel and the dependence on imports of coke will lead to an increased consumption of charcoal by the Brazilian steel
industry. There is also a growing tendency for steel production to migrate from
developed to developing countries. As has been mentioned, in the case of Brazil,
projections of the Brazilian Steel Institute show that the installed capacity for steel
production should double between 2008 and 2015.
88
The perspectives for growth of the world
consumption of agrifuels
The International Energy Agency – IEA predicts that by 2030, world consumption of
agrifuels will be ten times what it is today. With this, the mixture of renewable fuels
for consumption by transport vehicles, which is presently 1%, will increase to 7%
in the next 23 years. The Agency also foresees that this increase will be due mainly
to ethanol, much more than biodiesel. Brazilian production of agrifuels should
increase more rapidly than that of other countries, from 316,000 equivalent barrels
of oil per day in 2007, to 528,000 barrels in 2012, thus reaching a third of total
world production.2 For the OECD and FAO, the scenario is the same: in 2017, Brazil
will be responsible for 32% of all ethanol produced in the world, only being surpassed by the U.S. (OECD-FAO, 2008).
Today, the corn based ethanol produced in the U.S. allows for a mixture of
less than 4% of gasoline, considering the consumption of automotive fuels in
that country. The goal of the U.S., reconfirmed by President George W. Bush
during his visit to Brazil is to reduce the consumption of fossil fuels by 20% in 2017.
This means that, over the next ten years, only in the U.S, demand for ethanol may
reach 132 billion liters per year.
The production of biodiesel, almost all of which is made from soy oil which
is responsible for 90% of this production, in the U.S., is also on the increase.
Significant investments have also been made in research for the development of
biodiesel from other sources, notably a some types of oil-rich algae (Food & Water
Network, 2007).
After the U.S. and Brazil, Europe is the third largest world producer of ethanol,
mainly in France, Spain and Sweden. European ethanol is, in great part, produced
from wheat and, to a lesser degree, from beetroot. Europe is the largest world producer of biodiesel, being responsible for over 90% of global production. The main
producer is Germany, whose biodiesel is mainly produced from rapeseed. France
and Italy also have significant production of biodiesel. Within the framework of the
European Union member countries, an agreement foresees the substitution of 10%
of diesel oil by biodiesel, up to 2015. Today the mixture is 1% approximately.
The European Union is also developing a system of certification to insure that the
agrifuels produced by member countries or imported, be made through sustainable
processes throughout – beginning with crop planting. This also presupposes that the
producers must reduce the emission of global warming gases caused by industrial
processes, transportation and use of fuels, by at least 10% between 2011 and 2020,
so that the goals for reducing gas emission in the European Union become feasible.
2
Impacto de biocombustíveis ainda será pequeno. Valor Econômico, 10/07/07.
89
China also now produces significant amounts of ethanol, mainly from manioc
root and sweet potatoes but in contrast to other countries, the Chinese government
has restricted the production of this fuel because of the effects on food markets.
China opted to reserve its grain producing areas exclusively for growing food crops.
The limited availability of water in that country was also a deciding factor.
All over the world, the programs for ethanol and biodiesel production are
gaining force. On the other hand, it is evident that the majority of developed countries do not have the necessary natural resources to supply their domestic markets.
In the U.S., for example, according to IEA calculations, it would be necessary to
reserve 20% of arable land for corn plantations in order to reach the country’s 5.75%
agrifuel needs up to 2010.
Japan, which plans to add 5% ethanol to its automotive gasoline up to
2010, has been seeking partnerships with Brazil to insure supplies not only of
ethanol, but also of biodiesel. In the same way that it supported the expansion of
soy plantations in the Brazilian Midwest through Prodecer, the Japanese government is ready to finance ethanol and biodiesel projects in Brazil. This support will
include construction of the necessary infrastructure for transporting the products
to export facilities.
Perspectives for Brazil
Brazil has an enormous domestic potential for agrifuel consumption – both of ethanol
and biodiesel. The low costs of sugarcane based ethanol production as well as the
successive increases in petroleum prices, suggest the possibility of accelerated substitution of automotive gasoline by sugarcane ethanol. The present flexible motors
in cars make this substitution feasible.
However, this tendency may not become fully viable, since the prospects
are that ethanol will become an export commodity, a view stimulated by the
Brazilian government. Also, the increase in exports of ethanol may cause its scarcity
in the domestic market, forcing an increase in price that would discourage this
process of substitution.
Areas of expansion
In the present study information was presented on the most recent expansion of
sugarcane, soybeans and eucalyptus crops. This data will be consolidated herein
by region and federation units, in order to permit an overall view of the effects of
these expansions on Brazil’s territory. Further information on other important crops
in Brazil will be given below, to evaluate the effect expansion of agrifuels has on
Brazilian agriculture and cattle raising.
90
Sugarcane
According to Conab, in 2007/2008, the area covered with sugarcane plantations in
Brazil already totaled 7 million hectares, an expansion of 23%. In terms of territory,
as mentioned, the Southeastern region has, by far, the largest area occupied by
these plantations.
The States with the largest acreage of sugarcane plantations are: Bahia, Ceará,
Mato Grosso do Sul, Paraná and Minas Gerais. The South is the region where a
greater increase in production should be seen, with 34%, followed by the Midwest
with 22.1%.
Soybeans
The official estimates on the soybean harvest for 2007/2008 were published by
Conab in October 2007. These forecast an increase in the area planted of between
2.4 and 5.7%, or 500,000 to 1.2 million hectares. The States that will have greatest
increases will be, in this order: Mato Grosso, Bahia, Goiás and Mato Grosso do Sul.
Specialized consulting firms point out that new areas for this expansion are
to be found in the States of Maranhão, Piauí and Tocantins. New areas in the
States of Mato Grosso, Mato Grosso do Sul, Goiás and Bahia will also be planted.
The estimates also show that acreage in the State of Paraná will be responsible for
a great part of the expansion, adding an extra 1.5 million hectares relatively to
the previous harvest year, while Conab estimates an expansion of little more than
100,000 hectares in the State.
The increased acreage planted with soybeans in Brazil is mainly due to the
fact that, for the first time in ten years, the U.S. plantation areas declined from
30.6 to 25.9 million hectares, in 2007/08, because of the expansion of corn plantations. With this, it is expected that the international price for soy will increase in
2008 as well.
Monoculture tree plantations
For obvious reasons, the plantations of trees do not have the same geographic
mobility over a short period of time, as the other crops analyzed. Besides which,
the location of these plantations is associated mainly with paper and pulp, steel and
pig iron industries.
Thus it is expected that, in the medium term, the principal areas of expansion will continue to be those where tree growth has been good in recent years.
The plantations are located in the States of (by order of importance): Minas Gerais,
Rio Grande do Sul, Bahia and Mato Grosso do Sul. The States of São Paulo, Paraná,
Espírito Santo and Amapá, should also be mentioned.
Rio Grande do Sul is to be the center of the newest pulp processing industry
in Brazil. New industries are being implanted also in Mato Grosso do Sul, Piauí and
91
Rio de Janeiro. In addition, the pressures brought to bear on the Steel Complex
of Carajás opposing its destruction of native forests for charcoal production, will
probably lead to an expansion of eucalyptus plantations in the State of Pará also.
Agrifuels and other cattle raising activities
In direct and indirect ways, the increased use of agrifuels is stimulating the growth
of the three crops analyzed in this study. In the case of sugarcane, the relation is
direct, i.e., the greater part of the additional plantations goes to producing ethanol.
In the case of planted forests, the production of charcoal is only one additional
component of the continuous increase, in global terms, of the consumption of other
byproducts such as paper, pulp and timber.
Concerning soy, the use of soy oil as a fuel does not, at present, require
increased cultivation. But other factors resulting from the growing use of agrifuels
in the world, contribute towards the present rapid expansion of soybean plantations
in Brazil. The decline in plantation acreage in the U.S., the largest world producer,
is a direct result of its substitution by more corn plantations for the production
of ethanol. For these same reasons, the production of corn in Brazil has been increasing rapidly and competing with other crops. The use by many countries of
vegetable oils in general, as fuel, also stimulates demand for soy oil over other types.
All these factors have led to increased soy oil prices, stimulating increased production of the bean in Brazil.
Substitution of Crops
The question is, are agrifuels in fact substituting food crops, or not? This study
has attempted to answer this question through an analysis of the data on crops in
some States where their production is significant. It is possible to reach some conclusions, in spite of insufficient data, especially with regard to Brazilian cattle raising
activities. The most recent official data from the IBGE dates from 2005.
In April of 2008, Conab, published, in the Perfi-l do Setor do Açúcar e do
Álcool no Brasil, data regarding a pioneer survey on areas where crops had been
eradicated following the expansion of sugarcane plantations. The article reveals
that in 2007/08, in the Center-Southern region where the expansion of sugarcane is
progressing rapidly, new plantations occupied crop areas previously planted with
other crops, though most sugarcane plantations (64.7%) occupied land previously
used for cattle pasture.
92
TABLE 1
Share of crops in total expansion of sugarcane
(%)
State/
Region
São Paulo
Corn
4,9
Soy- Coffee Orange Pasture
bean
12,0
0,6
8,6
68,8
New Others Total
areas
2,3
2,8 100,0
Paraná
6,3
32,7
-
-
55,4
-
5,6 100,0
Minas Gerais
7,1
20,9
0,4
0,4
64,0
0,3
6,9 100.0
Mato Grosso do Sul
1,6
7,8
-
-
90,6
-
- 100,0
Goiás
7,1
32,1
-
-
54,7
1,0
5,1 100,0
Mato Grosso
-
68,1
-
-
30,6
1,3
- 100.0
Rio de Janeiro
-
-
-
-
-
-
100,0 100,0
Espírito Santo
-
-
1,7
1,6
93,2
-
3,4 100,0
5,2
17,9
0,4
5,0
66,4
1,4
3,7 100,0
Alagoas
-
-
-
-
46,6
-
53,4 100,0
Pernambuco
-
-
-
-
32,0
-
68,0 100,0
Paraíba
-
-
-
-
45,6
-
54,4 100,0
Rio Grande do Norte
-
-
-
-
33,5
46.3
20,2 100,0
Bahia
-
-
-
-
78,8
-
21,2 100,0
Maranhão
-
-
-
-
10,5
34.8
54,7 100,0
Piauí
-
-
-
-
-
100,0
- 100,0
CENTER-SOUTH
Sergipe
-
-
-
-
100,0
-
- 100.0
Ceará
-
-
-
-
-
-
-
0,0
Amazonas
-
-
-
-
-
-
-
0,0
Tocantins
-
-
-
-
-
-
100,0 100,0
NORTH-NORTHEAST
0,0
0,0
0,0
0,0
37,3
18,4
44,3 100,0
BRAZIL
4,9
16,9
0,4
4,7
64,7
2,4
6,0 100,0
Source: Conab (2008).
Sugarcane in São Paulo
It was seen that in 2006/07, in the State of São Paulo, the area occupied by sugarcane plantations increased by 362,000 hectares, while planted forest areas increased
by 17,000 hectares. Soybean plantations, however, declined by 118,000 hectares.
For 2008, Conab estimated a small variation for soybeans in the State – it could go
either way, positive or negative. In any case, the State’s soy production no longer
has the same importance in the total Brazilian production.
93
The Agricultural Economy Institute (IEA) and the Integral Technical Assistance
Coordination (Cati), the São Paulo State Secretariat for Agriculture and Development, published the numbers for 2006/07, in September of 2007. The following
crops were analyzed: cotton, peanuts (both “da seca” or planted in dry weather, e.g.
winter; and “das águas” or that planted at the beginning of the rainy season), rice,
sugarcane, “winter” black beans, “rainy season” black beans, oranges, summer corn,
interim-harvest (safrinha) of corn and soybeans.3
The survey shows that, apart from sugarcane, only orange plantations, among
those analyzed, showed an increase in acreage planted (of only +2%, or approximately 12,000 hectares). The scenario is the following, regarding other crops:
• Corn plantation areas declined by 11.3% (-86,000 hectares), to 678,000
hectares, corresponding to a 10% reduction in production or 3.4 million tons,
over the previous year.
• Soybean plantations declined 28%, from 666,000 hectares, in 2005/06, to
478,000 in 2006/07 (Conab estimates show 538,000 hectares). Production
fell 17%, reaching 1.2 million tons (1.4 million according to Conab).
• Black bean crops planted in the winter (das secas) and in the rainy season
(das águas) also declined. The former showed a decrease of 13%, with 45,000
hectares and a production of 65,000 tons; and total area of rainy season
crops was 70,000 hectares or 4% less, with production remaining stable at
124,000 tons.
• Both winter and early rainy season peanut crop areas and production, declined. The area occupied by the winter peanut crop was 11,000 hectares or
22% less than formerly, with a production of 20,000 tons (25% reduction).
Early rainy season peanut plantations covered 60,000 hectares (a reduction
of 8.5% in comparison with the previous year), with a production of 148,000
tons or a decrease of 18%.
• Cotton plantation areas declined by 41%, occupying 32,000 hectares and
produced 67,000 tons of seed.
• Coffee decreased by 2% relatively to the previous year, with 229.7 thousand
hectares. Since this is a twice yearly harvest crop, the total decline was 29%,
with 201,000 tons.
• Rice, according to Conab harvest surveys suffered a reduction of 15% in crop
area in São Paulo or approximately 5,300 hectares. For sorghum, the reduction
3
94
Agricultura paulista diminui a área plantada mas aumenta produtividade. Agência Imprensa Oficial do
Estado de São Paulo, 13/09/07.
was 30%, equivalent to 31,400 hectares. Wheat showed a decrease of 13%,
or 9,300 hectares. (Conab, 2007)
Calculating the positive variations, almost all due to sugarcane, the crop
area in São Paulo increased by 391,000 hectares. This expansion resulted from
the inclusion of the above mentioned crop reductions of about 280,000 hectares.
The recent Conab survey (2008) on the sugarcane and ethanol sector profile shows
a reduction of 242,000 hectares of pastureland. It is therefore supposed that the
difference of 131,000 hectares was being prepared for production in that period.
According to Paulo Cavasin, an agronomist from the Araraquara Regional
Agricultural Development Office, “Where cows used to graze there is today a sea of
sugarcane and this also is the case with other crops. The State lost large segments of
dairy farming areas to sugarcane. The cattle farmers migrated from São Paulo to
other States, such as Goiás and Paraná. The consumers were the ones who lost out.
In São Carlos there were large producers, and today few are left. In [the region of]
Dourado, during the 1960´s, over 60,000 liters per day of milk were produced.
With the introduction of sugarcane, this volume declined and today, a one thousand liter per day production is a lot. All the large dairy farms, without exception,
with approximately 10,000 liters per day, are now occupied with sugarcane plantations. The substitution greatly profited the sugar and ethanol production because
the plantations occupied large, flat pasture lands, logistically well located. Ten thousand liters of milk cannot be produced in hollows. The pastures were the best land
areas of the ranch.”4
The last Survey on the Municipal Cattle Production published by the IBGE in
December of 2006, referred to 2005. The numbers show that, while, overall, Brazilian
cattle herds increased 1.3% relatively to 2004, those in many Southeastern States
decreased: São Paulo, Minas Gerais, Paraná and Rio Grande do Sul.
This information is also confirmed by the data on exports of beef from São Paulo
State. Up to 2005, São Paulo was responsible for 61% of beef exports. According to
Carlos Cogo Consultoria Agroeconômica, this participation was reduced to 49.9%,
between January and August 2007.
Other States
In States where there has been an increase in sugarcane production and planted
forest areas, there was a corresponding reduction of various other crop areas between
2005/06 and 2006/07 harvest periods. Even considering the fact that in some cases,
such as soybeans, this reduction was due to lower prices in the previous year, the
4
Fernanda Manécolo. Área de plantação de cana duplicou nos últimos sete anos. Tribuna Impressa de
Araraquara, 16/07/07.
95
information on various other products indicates that other food crops are, in fact,
being substituted, especially by sugarcane. This decline in food products resulted in
drastically increased prices, especially in the first semester of 2008.
It should also be mentioned that this substitution is taking place mainly in the
South, and Southeast regions, as was shown for São Paulo. In the State of Paraná,
where there was a large increase in sugarcane plantations, and where most of the
Brazilian wheat is produced, the acreage of wheat plantations was reduced by almost
one third (-31%). In the State of Rio Grande do Sul, this reduction was 18%; in Minas
Gerais and Espirito Santo, the areas of black bean plantations were reduced by 14.4%
and 11.5%, respectively, in 2007.
In the Midwest, North and Northeast, there is less evidence than in the above
mentioned regions. This is explained by the greater availability of land, contrary to
the situation in the South and Southeast States, such as Rio Grande do Sul, Paraná,
São Paulo and Minas Gerais. Here, the available land is more expensive, which makes
other crop cultivations unprofitable.
The Director of Conab´s Business Logistics and Management, Sílvio Porto, in
the tenth grain and bean harvest survey of 2006/07, of July of 2007, admitted that
the loss of corn and soybean plantation areas to sugarcane in the States of Paraná,
Mato Grosso do Sul, São Paulo and Minas Gerais, is a matter of grave concern.5
The issue of cattle-raising
According to the National Agriculture Confederation, Brazil’s herds were approximately 207 million heads of cattle in 2007. It was estimated that these herds occupied 220 million hectares, an area equivalent to four and a half times the total area
with grain plantations in the country, in 2007 (47.87 million hectares).
The government and the associations of rural producers constantly state that
agriculture in general, and sugarcane in particular, will expand into pastures and
degraded land areas. However, Brazilian cattle herds continue to increase, making
Brazil, today, the largest beef exporter in the world.
The shifting of beef producing centers for export, mentioned above, is only
the reflection of another large migratory movement, which is the search by cattle
raisers for productive areas that will not be occupied by grain or sugarcane plantations, as well associated with the spread of cold-storage plants. Cattle ranchers
are moving to regions where land is cheaper and sugarcane and grain are not yet
cultivated, since these are more profitable than cattle raising.6
5
Daniel Lima. Avanço do cultivo da cana-de-açúcar preocupa, admite diretor da Conab.
Agência Brasil, 03/07/07.
6
SP perde participação na exportação para regiões CO e NO. www.carloscogo.br. Accessed on 25/11/07.
96
TABLE 2
Brazil: cattle herds by region – 1995 and 2005
heads
1995
2005
% Variation
Brazil
161,227,938
207,156,696
28.5
North
19.183,092
41,489,002
116.3
Midwest
55,061,299
71,984,504
30.7
Southeast
37,168,199
38,943,898
4.8
South
26,641,412
27,770,006
4.2
Northeast
23,173,936
26,969,286
3.4
Source: IBGE
Environmental impacts
The expansion of monoculture plantations associated with agrifuels, as well as that
of cattle raising activities is causing the destruction of ecological biodiversity in many
regions, especially the Amazon Forest, Pantanal and the Cerrado. The degradation
of present agricultural and animal raising also causes concern, considering that the
expansion of these activities as a whole, instigates occupation of additional areas.
In the chapter dedicated to sugarcane, we mentioned the federal government’s
initiative to draw up a study for promoting an ecological and economic zoning map
that will define areas where sugarcane expansion will be restricted. However, there
is no information on this in the case of soybeans and artificially planted forests.
Official declarations do not make it clear if the planned zoning will include all agricultural and animal raising activities or only sugarcane, which is at present, the
center of attention.
In July of 2007, the project for the “Evaluation of environmental, economic
and social impacts of beef cattle activities in the Cerrado, Amazon and Pantanal”
was started, coordinated by Embrapa Cerrados. This Project was launched mainly
as a result of increasing environmental control demands on the part of beef importers due to the problems caused by cattle raising activities in Brazil that may
bring problems for exports of this product.
The expansion of crops for fuel production – even into areas presently occupied
by pasture or which are degraded – cannot be considered a neutral issue. Water and
soil contamination, for example, are some of the harmful additional effects which
must be considered. For sugarcane, for example, the issue is more serious than
for other crops: though this crop occupies approximately ten percent of the total
cultivated land in Brazil, according to the National Union of the Pesticide Industry
97
(Sindag), it was responsible, in 2006, for 12.6% of the industry’s total invoicing.7
According to José Roberto da Ros, Sindag Vice President, the consumption of
pesticides by sugarcane was US$ 351 million, in 2006, compared with US$ 731.4
million for soybeans. At this time, sugarcane plantations occupied 6 million hectares
and soya, 20 million.8
Regarding Amazonia, it is possible that increased international prices may
result in a more rapid expansion of soy and cattle raising activities over the next
few years, reversing the falling rate of deforestation of previous years. Between
August 2007 and April 2008, DETER, a federal government agency, detected
5,850 km 2 of deforested areas. Between August 2006 and July 2007, the same
system showed 4,974 km 2. 9
Impacts on jobs and small farms
The three energy crops analyzed herein are already impacting on small farmers, rural
worker salaries and jobs. These facts are not characteristically exclusive to energy
crop plantations, but the reasons for these impacts are inseparable from monoculture and integrated production systems on which they are based.
In São Paulo, where sugarcane expansion was greatest in the last few years,
and agriculture and cattle raising already occupy almost all the available land, rural
jobs are continually declining. In a recent study, José Marangoni Camargo, of the
Unicamp Economics Institute, showed that 700,000 work positions were eliminated in agriculture between 1970 and 2000 – equivalent to 40% existing jobs –,
and this process is still happening. According to the author, the greatest effects have
occurred after 1990.
According to the study, the main changes took place in the sugar and ethanol
sector. Over the last 15 years, mechanization, especially of harvesting activities,
increased. A harvester does the job of 100 workers. “It should be mentioned that,
today, sugarcane plantations occupy half the arable land in the State. In other words,
any change in the production process of this segment, will lead to important
impacts in overall agriculture indicators, says the author.10
7
According to Sindag, soybean palntations are the principal pesticide consumer in Brazil, responsible
for 38.5% of total Sales, in 2006. Second in importance is sugarcane with 12.6%, followed by cotton
(10.3%), corn (7.5%), coffee (4.9%) and citrus (4.2%); these six crops only, being responsible for 78.0%
of sales in that year. If sales for the treatment of soy, cotton and corn seeds is considered, these crops
are responsible for 81.7% of total sales.
8
Indústria de defensivos aposta na cana. Valor Econômico, 19/09/2007.
9
Afra Bazalina e Fábio Amato. Desmatamento aumenta e já supera o registrado em 2007.
Folha de São Paulo, 03/06/08.
10 Manuel Alves Filho. Mecanização ceifa 700 mil empregos na agricultura nos últimos trinta anos em SP.
Jornal da Unicamp, 10 a 16/09/08.
98
The study also points to a decline in resident manpower on the properties.
Today, approximately 60% of the labor force working in São Paulo agriculture do not
live at their job sites. And, though all regions in the State showed a reduction in
rural jobs, some were more affected than others. “In predominantly monoculture or
cattle raising areas, unemployment was greater than in regions with diversified crops”,
states the author.
This study also shows that land prices, especially in regions of sugarcane
expansion, has been continually rising. These new price levels have forced small
farmers to either sell out or lease their land, and try to find new jobs in the country
or in towns. The lack of jobs, in proportion to the number of displaced workers,
contributes to increased unemployment in the region. Higher prices also make it
difficult for the Federal Government to purchase land reserved for agrarian reform.
As for the National Program for Production and Use of Biodiesel, its potential
for generating rural jobs and income will only be feasible should the plans of the
Ministry for Agrarian Development, for the production of diversified vegetable sources
by small farm owners, prevail.
The results of the analysis made by this Ministry, show that a 6% participation
of family farmers in the production of biodiesel, would generate 269,691 rural jobs
at an average (family) cost per job of R$ 4,906.00, and income from this activity
would double. In the case of the impacts on jobs resulting from a total appropriation of the biodiesel market by soy agribusinesses, the study concludes that
only 46,375 jobs would be generated, at an average cost almost 16 times greater:
R$ 80,000.00 per job.
Some conclusions
In September of 2007, in the opening session of the U.N. General Assembly, in New
York, President Luiz Inácio Lula da Silva declared that “the Brazilian experience over
thirty years shows that the production of biofuels does not affect food production.
The problem of hunger in the world is not due to lack of food, but a lack of income
which afflicts almost one billion men, women and children. It is very possible to
integrate biofuels, environmental preservation and food production.”11
The available global food resources will certainly be sufficient to feed everybody in the world. However, an analysis of recent facts related to the increase of
cultivation of agrifuel sources shows that these, together with other factors (high
petroleum prices, climate changes, increased consumption of meat, speculation),
contribute to compromising food security of various population segments. We live a
new paradigm, where agriculture is no longer entirely dedicated to food production.
The following negative impacts may be foreseen at this time:
11 Marília Martins. Lula anuncia plano ambiental. O Globo, 26/09/07.
99
• The generalized global food price increases are mainly due to the use of corn,
wheat, vegetable oils and other agricultural crops, for the production of fuels.
If it is true, as President Lula declares, that hunger is related to income, the
increase in food prices is fatal to a great majority of humanity who live on less
than US$ 2.00 per day and cannot wait for these prices to go back to their
historic levels.
• It is possible that, in the medium term, food prices will return to previous
levels, because the historic tendency is for prices of primary foodstuffs to
decline relatively to other prices within the economic structure. However, the
growing use of agricultural products as fuels is a new fact. Add to this the
impacts on agricultural production deriving from climate changes, and the
result is uncertainty regarding food prices in the future. For the first time,
there appears to be a direct correlation between petroleum and food prices.
• The expansion of monocultures for the production of agrifuels also reduces
the food security for family farmers due to land valorization. With this, the
farmer finds it increasingly difficult to grow his own food crops. Food security is also adversely affected in regions that are isolated or far from the
large food production centers, which makes the products more expensive
due to transportation costs, deterioration resulting from distances travelled
and precariousness.
• Monoculture, as a general rule, reduces the volume of available water, causing
springs to dry up, and contaminating the remaining water with pesticides.
The impacts on traditional food sources are not, therefore, limited to the new
monoculture areas, but also affect neighboring land.
• Apart from unemployment, these crops change the pattern of local income
turnover, because they use supplies, raw materials and equipment produced
in distant centers. The local and regional economies are, thus, doubly impoverished. For this reason, some States and municipalities are beginning to implement measures to restrict the expansion of sugarcane plantations in order to
avoid unemployment and high food prices.
• The expansion of monoculture for production of agrifuels is also causing the
indirect destruction of Brazil’s biodiversity. Specifically, the displacement of
cattle raising activities to new agricultural and animal husbandry frontier areas
is the main cause for the destruction of the biodiversity in the Amazon, the
Cerrado and Pantanal regions.
100
Agrifuels, global warming, pastures
and degraded areas
It is, without a doubt, necessary to find new sources of energy to substitute
petroleum based fuels. But the prevailing form of substitution of gasoline by
ethanol and diesel oil by biodiesel may cause more economic, social and environmental problems than benefits. Even in the case of global warming, the most recent
studies show that monoculture based agrifuels may, in fact, aggravate the problem
even if not at the expense of deforestation.
According to research carried out by Paul J. Crutzen, Nobel Prize of Chemistry, the canola oil produced in Europe would be responsible for 70% more greenhouse effect gas emissions than diesel oil. Ethanol from sugarcane produces “only”
between 50 and 90% of the gas emissions responsible for the greenhouse effect,
than gasoline.12
The majority of these gas emissions results precisely from the fact that the
agrifuel is produced from monoculture activities, which require massive use of
chemical fertilizers, pesticides and other toxic chemical products. This gives rise to
the release of nitrogen dioxide (NO2), which is 300 times more damaging than CO2,
to global warming. For these reasons, the study points out that the production of
these new fuels now prevailing has a highly negative result. It suggests the search
for plants that do not require such intense use of pesticides, as well as changes to
the present cultivation methods.
Thus, the expansion of monoculture agrifuel plantations into degraded areas
or existing pastureland also does not appear to be a harmless or appropriate solution to combat global warming. Besides contaminating, this system contributes to
worsen social problems, as described in above.
Who wins?
The productive models based on monoculture and integrated production benefit
only a few large landowners sustained by a concentration of land and official financing, large national and transnational food and energy companies, as well as foreign
production and speculative capital that is starting to invest in agrifuels. In this model,
such as the production and distribution of petroleum, income is mostly concentrated in the hands of a few beneficiaries.
In the short term, the governmental balance of payments may show positive
results, such as those accruing from increased fuel exports. In the longer term,
however, everything seems to indicate that Brazil will be unable to continue to pay
12 Emma Graham-Harrison. Muitos biocombustíveis seriam mais nocivos que petróleo. Reuters/Brasil
Online, 27/09/07.
101
for ever more sophisticated goods which today figure heavily on the list of its
imports, with revenues from primary products: analyses of Brazilian exports show
that these products have an increasingly important participation. According to Edgard
Pereira, chief economist of Iedi (Industrial Enterprise Development Institute), half
of the aggregate value (income generated) by industry today depends on sectors
based on natural resources.13 This means that even maintaining payments of Brazilian
exports will become difficult.
What should be done?
The production of agrifuels by family farmers, through a system whereby farmers
may go beyond mere planting, participating in the production process, seems to be
the best alternative for vegetable oil production, both for social and environmental
reasons. It must be considered, however, that the volume of fuels necessary to substitute all petroleum derivatives presently consumed would still have strong impacts
on national resources, such as water and soil.
It is to be hoped that technology, through increased productivity and innovative procedures that include the use of new sources of energy, may find solutions to
reduce the existing pressures on natural resources. On the other hand, while these
solutions are still in the offing, it is necessary to introduce new patterns of consumption. This debate finds few adepts since it contradicts existing economic logic,
which says that unlimited production and consumption growth is imperative, independent of the benefits or damages caused, or to the capacity of our Earth to
endure such levels of consumption.
13 Fernando Canzian. Economistas alertam para desindustrialização. Folha de São Paulo, 19/09/07.
102
Bibliography
CONAB. Perfil do Setor do Açúcar e do Álcool no Brasil, Situação Observada em Novembro
de 2007. Brasília. Conab, 2008.
FOOD & WATER WATCH AND NETWORK FOR NEW ENERGY CHOICES. The rush to ethanol:
not all biofuels are created equal. Analysis and Recommendations for U.S. Biofuels
Policy. 2007.
IEDI. Importações, câmbio e indústria: a marcha da desindustrialização no Brasil. Iedi,
March 2007.
MINISTÉRIO DO DESENVOLVIMENTO AGRÁRIO. Relatório final do grupo de trabalho
interministerial encarregado de apresentar estudos sobre a viabilidade de utilização
de óleo vegetal – biodiesel como fonte alternativa de energia, anexo III. Brasília,
December 2003.
OECD-FAO. Agricultural Outlook 2007-2016. OECD-FAO, 2007.
2008-2017. OECD-FAO, 2008.
103
ACRONYMS
AIA – Environmental Impact Evaluation
ANP – National Petroleum Agency
BEN – National Energy Balance
BNDES – National Bank for Economic and Social Development
CBI – Caribbean Basin Initiative
CNA – Brazilian Confederation of Agriculture and Livestock
CNAA – National Company of Sugar and Alcohol
CONAB – National Supply Company
CONTAG – National Confederation of Agricultural Workers
DIEESE – Inter Trade Union Department of Statistics and Socio-Economic Studies
EDR – Regional Development Office
EPE – Energetic Research Company
EU – European Union
FAO – Food and Agriculture Organization of the United Nations
IBGE – Brazilian Institute for Geography and Statistics
IEA – Institute of Agricultural Economics
IPEA – Institute of Research in Applied Economics
LDC – Louis Dreyfus Commodities Bioenergy
MDIC – Ministry of Development, Industry and Trade
NIPE – Interdisciplinary Nucleus of Strategic Planning
ORPLANA – Organization of Cane Producers in the Center-South Region of Brazil
PNAD – National Research by Homestead Sampling
RFA – Renewable Fuels Association
SECEX – Foreign Trade Secretariat
UNESP – São Paulo State University
UNICAMP – State University of Campinas
WTO – World Trade Organization
ZEE – Ecological and Economic Zoning Map
104
SERGIO SCHLESINGER
SUPPORT
Rua Morais e Vale, 111
5º andar – Centro
20021-260
Rio de Janeiro – RJ
Brazil
Phone: +55 21 2189 4600
Fax: +55 21 2189 4612
www.actionaid.org.br
COVER PHOTO: CESAR GUILLOTEL / CG TEXTURES
ActionAid Brasil
PUBLISHED BY
SERGIO SCHLESINGER

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