Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Production in Brazil
March 2012
MECAS(12)05
ISO
Abstract
Brazil has the worlds largest and most diversified sugarcane processing industry
and is the leading producer of sugar and cane-based ethanol. The country had
the fastest growing sugar industry in the 90s and the first decade of the 2000s.
Indeed, Brazils share in world sugar production and exports increased from 7%
and 6% in 1990 to an impressive 25% and 50% in 2010. Since 2009, the last
time the ISO published a paper on Brazil (MECAS (09)06 on Outlook on Brazils
competitiveness in sugar and ethanol), Brazils frenzied expansion has come to
halt. The country has been grappling with a successive number of production
challenges, including falling agricultural yields, escalating production costs,
environmental obligations to speed up harvest mechanization, a strengthening
national currency and adverse weather, among others. On the industrial side, a
flurry of joint ventures and mergers and acquisitions has continued to reshape
the market shares of the leading players, but the focus has shifted to brownfield
rather than new greenfield mill investments.
This paper is structured into 5 parts. Part 1 presents the background as well as
Brazils sugar/ethanol output relative to world production. Part 2 assesses the
recent developments in Brazils cane sector, the drivers behind cane yield
performance, an assessment of cane production costs versus cane prices, and a
comparison of gross returns per hectare between cane and other major
competing crops like soybeans and maize. Part 3 of the paper presents the
recent developments in industrial cane crushing by group of mills, detailing the
market leaders and the role of foreign direct investment. This part also
elaborates on the economics behind the split of cane into sugar or ethanol. Part
4 of the paper examines the six major drivers impacting Brazils competitiveness
in sugar and ethanol in the world market, from production costs to diversification
into cogeneration and bioplastics. Part 5 of the paper assesses the outlook for
domestic and international demand for Brazils sugar and ethanol and presents a
forecast of supply and export growth to 2020.
The paper concludes that there are enough reasons to believe that the Brazilian
sugar/ethanol sector will continue to expand over the current decade, although
at a significantly lower rate of growth. The ISO projects that cane production
growth in Brazil is expected to average around 3% a year between 2010 and
2020, compared to 10% a year in the previous decade, taking cane output to
around 850 mln tonnes by 2020. This would be sufficient for Brazil to ensure that
around 20% of the projected light vehicle fleet runs on hydrous ethanol whilst at
the same time allowing the country to keep its current share in world sugar
production, resulting in ethanol production of 43.6 bln litres and sugar output of
47.5 mln tonnes in 2020.
MECAS(12)05
Table of Contents
International
Sugar
Organization
One Canada Square
Canary Wharf
London E14 5AA
General Enquiries:
+44 (0) 20 7513 1144
Publications:
+44 (0) 20 7715 9436
E-mail:
economics@isosugar.org
Web:
www.isosugar.org
INTRODUCTION
5
8
10
11
13
13
16
17
19
21
23
PRODUCTION COSTS
INFRASTRUCTURE AND TRADE LOGISTICS
INTERNATIONAL DEMAND FOR BRAZILIAN SUGAR
EXCHANGE RATE COMPETITIVENESS
THE WORLD FUEL ETHANOL MARKET
COGENERATION
BIOCHEMICALS AND OTHER TECHNOLOGIES
23
24
25
28
29
30
31
32
CONCLUSIONS
35
37
ii
MECAS(12)05
Introduction
Brazil has the worlds largest and most diversified sugarcane processing industry
and is the leading producer of sugar and cane-based ethanol. The country had
the fastest growing sugar industry in the 90s and the first decade of the 2000s.
Indeed, Brazils share in world production and exports increased from 7% and
6% in 1990 to an impressive 25% and 50% in 2010.
Since 2009, the last time the ISO published a paper on Brazil (MECAS (09)06 on
Outlook on Brazils competitiveness in sugar and ethanol), Brazils frenzied
expansion has come to halt. The country has been grappling with a successive
number of production challenges, including falling agricultural yields, escalating
production costs, environmental obligations to speed up harvest mechanization,
a strengthening national currency and adverse weather, among others. Whilst
between 2009 and 2010 cane output rose by 2.8%, down from an annual
average growth of 10% in the previous decade, last year cane production
slumped to the lowest level since 2007/08. Sugar production also fell last year by
an estimated 3 mln tonnes to 36 mln tonnes. Since Brazil is a price setter in the
world market, it is no surprise that Brazils wobbly performance is bullish for
world sugar market fundamentals.
This paper has the objective of reviewing the recent developments in Brazils
sugar cane production and processing sector as well as the drivers impacting
Brazils future competitiveness in the world market for sugar and ethanol. This
paper is structured into 5 parts. Part 1 presents the background of the industry
and status quo as well as Brazils sugar/ethanol output relative to world
production. Part 2 assesses the recent developments in Brazils cane sector, the
drivers behind cane yield performance, an assessment of cane production costs
versus cane prices, and a comparison of gross returns per hectare between cane
and other major competing crops like soybeans and maize. Part 3 of the paper
presents the recent developments in industrial cane crushing by group of mills,
detailing the market leaders, the recent restructuring of the industry through
joint ventures and mergers and acquisitions as well as the role of foreign direct
investment, including oil giants. This part also elaborates on the economics
behind the split of cane into sugar or ethanol, presenting the dilemma facing the
domestic ethanol market at the moment and finally the role of government policy
in prompting growth in the domestic market. Part 4 of the paper examines the
six major drivers impacting Brazils competitiveness in sugar and ethanol in the
world market, from production costs to diversification into cogeneration and
bioplastics. Part 5 of the paper assesses the outlook for domestic and
international demand for Brazils sugar and ethanol and presents a forecast for
supply and exports to 2020.
MECAS(12)05
Total
cane
Total reducing
sugars (ATR)
1999/00 310.05
43.91
141.61
46.2%
53.8%
2000/01 255.90
35.19
137.53
48.0%
52.0%
2001/02 290.57
39.86
137.18
50.2%
49.8%
2002/03 322.37
45.64
141.57
52.1%
47.9%
2003/04 358.39
51.82
144.59
50.2%
49.8%
2004/05 386.74
54.74
141.55
51.1%
48.9%
2005/06 386.11
54.59
141.39
49.6%
50.4%
2006/07 426.29
62.10
145.69
50.5%
49.5%
2007/08 491.43
70.73
143.93
45.3%
54.7%
2008/09 572.67
80.33
140.28
41.3%
58.7%
2009/10 602.91
78.75
130.62
43.9%
56.1%
2010/11 619.53
86.64
139.85
45.9%
54.1%
76.96
136.84
48.7%
51.3%
Brazils sugar production and exports rose spectacularly in the two decades to
2010, consolidating the country as a world sugar market leader. As table 2
indicates, Brazils sugar production grew 5 times from 8 mln tonnes in 1990 to 39
mln tonnes in 2010, while sugar exports rose exponentially in the period from 1.6
mln tonnes to 28 mln tonnes, raw value. As a result, Brazils share in world
production and exports increased from 7% and 6% in 1990 to an impressive
25% and 50% in 2010. To put this into international perspective, the second
largest producer, India, has a 15% share in world production while the second
MECAS(12)05
largest exporter, Thailand, has a 12-15% share in world sugar exports. While
Brazils ethanol production from sugarcane also rose significantly between 1990
and 2010, from 12 bln litres to 27 bln litres, the countrys share in world ethanol
output has been declining (from 58% in 1990 to 26% in 2010), but this reflects
exceptionally high growth in corn ethanol production in the US.
During the first half of the past decade, fast rising international demand for high
quality VHP sugar by new destination refineries in the Middle East was the major
driver of Brazils cane supply growth. In the second half of the past decade, a
booming domestic market for ethanol aided by a high penetration of flexifuel
cars (running predominantly on hydrous ethanol), in addition to continuing high
import demand for sugar, boosted production growth further. During the peak of
the industry expansion between 2005 and 2009, 103 new mills, mostly focusing
on ethanol production, came onstream in the country, an average of over 20
new mills a year. Since 2010 the number of new mills has reduced to a trickle. In
2011, Brazils share in both world sugar production and exports declined and no
recovery is anticipated for 2012.
Table 2 - Sugar/Ethanol Production in Brazil as a share of World Output, (Sugar in mln tonnes,
raw value; ethanol in bln litres)
Year
1990
2000
2005
2010
2011(p)
Sugar Production
Brazil
World
8.0
16.5
28.1
39.0
36.0
110.8
130.0
140.7
156.7
170.0
Brazils
Share
7%
13%
20%
25%
21%
Sugar Exports
Brazil
World
1.6
6.5
18.4
28.0
25.6
28.4
36.5
48.0
55.5
53.0
Ethanol Production
Brazil's
Share
6%
18%
38%
50%
48%
Brazil
World
12
11
16
27
23
20
30
46
103
101
Brazil's
Share
58%
35%
35%
26%
23%
http://www.agricultura.gov.br/arq_editor/file/Desenvolvimento_Sustentavel/Agroenergia/Orientacoes_Tecn
icas/Usinas%20e%20Destilarias%20Cadastradas/DADOS_PRODUTORES_27_02_2012.pdf
MECAS(12)05
the league of nationwide production units: So Paulo, with 184 mills, followed by
Minas Gerais, with 44 mills, Gois, with 33 mills and Paran, with 30. Although
still dominant, the share of So Paulo in production has declined over the recent
years while Gois and Minas Gerais (which are in the Cerrado region) have
gained market share. In 2009, So Paulo had 200 mills in operation, compared
with 37 in Minas Gerais, 33 in Paran and 27 in Gois. The next two largest
producing states are the North-Northeastern states of Alagoas and Pernambuco,
with 24 and 20 mills respectively.
While 9 new mills came onstream in 2010 and another 3 last year, many existing
mills are reported to have stopped crushing cane over the past couple of
seasons, largely for financial reasons. Datagro, Brazils largest sugar/ethanol
consultancy, estimates that 26 existing sugar mills will not operate in the
coming 2012/13 season, of which 12 are in So Paulo state, 4 in Minas Gerais, 4
in Rio de Janeiro, 2 in Alagoas, 2 in Gois, 1 in Tocantins and 1 in Cear.
Almost all new production facilities opened in Brazil in the past decade are in the
Centre-South, which has a more suitable topography for cane growing and is
closer to the largest consuming markets. The average crushing capacity of a
Centre-South mill is over 2 mln tonnes, while in the North-Northeast an average
mill crushes just over 1 mln tonnes of cane a year. While the cane harvest in the
Centre-South takes place between April and December, in the North-Northeast
the bulk of the harvest is carried out between September to March, hence
Brazils national crop year running from April to March.
MECAS(12)05
Table 4 shows monthly industrial cane production in Brazil. The bulk of national
production happens between July and September, when monthly output can be
as high as 80 mln tonnes. Between January and March, which are the
interharvest months in the Centre-South, cane production rarely exceeds 10 mln
tonnes.
Table 4 BRAZIL Cane Production, monthly (thousand tonnes)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
2003
2004
2005
2006
2007
2008
2009
2010
2011
9,325
3,830
800
14,261
38,731
45,984
50,593
49,484
49,929
48,610
30,336
11,490
8,307
6,043
4,620
10,778
30,040
44,554
50,338
56,495
56,183
50,897
45,792
23,116
11,791
5,358
1,398
16,299
44,513
49,711
54,199
56,153
49,462
51,770
35,301
14,797
11,383
1,949
573
19,818
50,584
55,869
60,190
58,482
54,304
53,675
42,750
13,965
9,583
4,919
2,150
20,868
53,394
62,666
59,565
69,704
68,883
64,527
48,325
23,913
7,541
7,358
4,681
22,996
56,745
65,743
74,965
70,435
73,068
74,238
67,020
38,099
17,000
7,879
4,486
44,453
67,053
67,414
72,387
71,905
66,900
75,313
66,631
36,383
15,213
16,053
3,208
59,000
75,681
81,349
84,389
83,343
71,364
66,309
53,919
21,171
9,580
7,294
6,133
24,872
76,253
77,118
85,449
81,246
81,930
57,653
38,169
14,118
353,371
387,165
390,750
423,541
488,499
562,889
597,802
630,999
559,815
The majority of cane is planted and harvested by the mills themselves, rather
than by independent growers. Not only do millers themselves own about two
thirds of the total area under cane, but some land is also leased by millers from
growers for cane production, taking the share of sugar mills in total cane
production to around 75%. Brazils largest independent cane growers
association is Orplana, the Organization of Cane Growers of Brazils CentreSouth. Orplana has 34 members representing 17 thousand producers accounting
for 125 mln tonnes of cane, or 25% of cane supply in the region.
MECAS(12)05
81 tonnes/ha in the 2008/09 and 2009/10 harvests.2 Several reasons are linked
to this sudden and large decline in agricultural yields, breaking the long-term
growth pattern. First, bad weather resulting from El Nio and La Nia events
over the past few seasons have played a key role in this yield downgrade.
Second, lower rates of cane replanting and expansion into new areas, partly
attributed to low cash flow and lack of new greenfield plantations, but also due
to fast rising input costs, like fertilizers, have contributed to a dramatic ageing of
the cane fields in the country. According to Datagro, the average age of the cane
fields in the Centre-South today is now estimated at 3.8 years, significantly
higher than the optimal average age of 2.7 years. Third, the cane farming sector
in Brazil has undergone a significant change with the fast incorporation of
harvest mechanization, which presents challenges over the short-term as the
inexperienced work force adapts to a sudden shift in planting and harvesting
techniques.
Table 5 Industrial Cane crop indicators in Brazil
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12(e)
3.5
3.8
4.2
4.3
4.7
5.2
6.0
6.4
6.9
7.1
N/N
0.9
1.0
1.0
0.9
1.0
1.1
1.1
1.1
1.1
1.1
Brazil
4.4
4.8
5.2
5.2
5.6
6.3
7.1
7.5
8.0
8.2
270.4
299.4
328.7
336.9
372.7
431.2
505.0
542.0
556.9
495.0
N/N
52.0
59.0
58.0
49.3
53.6
60.2
67.7
60.9
62.7
67.4
322.4
358.4
386.7
386.1
426.3
491.4
572.7
602.9
619.5
562.4
Brazil
77.1
78.7
78.7
78.4
79.5
82.2
83.5
84.2
80.5
70.2
N/N
56.8
59.8
58.8
53.5
56.0
56.6
63.7
57.1
56.7
61.0
Brazil
72.9
74.8
74.9
74.0
75.5
77.9
80.6
80.4
77.2
68.9
Erratic weather has been affecting Brazils cane production since 2009. 2009 saw
the wettest weather in Brazil in recent history, whilst 2010 and 2011 were
drought years, negatively impacting cane growth see fig. 1. While the severely
wet weather in 2009 did not affect cane volumes, bringing instead lower sugar
content in cane, the dry years of 2010 and 2011 lowered cane output
significantly from initial harvest expectations. In addition, in 2011 frost and
flowering hit the cane crop strongly, affecting cane growth development and the
early heavy rains of November brought an early finish to the harvest.
2
Industrial cane (used to produce sugar/ethanol at modern mills/distilleries) accounts for around
90-95% of total areas under cane in Brazil.
MECAS(12)05
2007
1400
1200
1000
800
600
400
200
0
2008
2009
2010
2011
Ap
r
M
ay
Ju
n
Ju
l
Au
g
Se
p
O
ct
No
v
De
c
Ja
n
mm
Source: CIIAGRO
Data from CANASAT, Brazils satellite system for monitoring cane area growth,
indicates that only 5.8% of the cane areas in the Centre South were used for
replanting in 2010/11, down from 6.4% seen in 2009/10 see table 6. In
2011/12, cane areas idle for replanting are estimated to have risen to 9%. In
previous years the replanting idle area as a share of total areas was also
relatively low, averaging only 7.3% between 2006/07 and 2008/09, but the
share of new expansion areas was high at 14.5%. Therefore, contrary to some
beliefs, the biggest impact on cane ageing has therefore come from the
slowdown in expansion into new areas, where cane yields are highest, and not
from a lower rate of cane replanting. Indeed, the share of new cane areas in
total harvested area has fallen to around 5% in 2011/12 and 2010/11,
significantly down from almost 10% seen in 2009/10 and the average of 14.5%
between 2006/07 and 2008/09.
MECAS(12)05
Table 6 - Share of areas used for crop replanting and new expansion areas in total cane areas by state, Centre-south Brazil
Idle for Cane Replanting
Expansion areas
2009/10
2006/07
to
2008/09
2011/12
2010/11
2009/10
2006/07
to
2008/09
2011/12
2010/11
Esprito Santo
4.7%
4.5%
Gois
5.1%
3.9%
5.2%
5.4%
12.2%
12.7%
24.3%
24.5%
6.7%
12.3%
5.2%
10.4%
6.1%
6.5%
5.1%
10.1%
9.2%
6.8%
8.5%
5.1%
14.5%
6.6%
21.8%
11.6%
Minas Gerais
Mato Grosso
Mato Grosso do Sul
3.8%
3.3%
2.5%
6.8%
13.8%
17.0%
29.3%
20.9%
Paran
6.2%
6.0%
5.3%
4.4%
2.7%
2.5%
5.6%
16.8%
Rio de Janeiro
4.4%
9.6%
na
na
na
na
na
na
So Paulo
10.9%
6.1%
7.0%
8.0%
3.2%
2.8%
6.6%
12.3%
Centre-South
Total
9.0%
5.8%
6.4%
7.3%
5.3%
5.0%
9.8%
14.5%
Source: CANASAT/INPE
CNA is Brazils Confederation of Agriculture and Livestock and PECEGE is the Agribusiness
Economic Research Centre of the University of So Paulo. See Pecege/CNA, Custos de Produo
de Cana-de Acar, Acar e Etanol no Brasil: Acompanhamento da Safra 2011/12, February
2012, ISSN 2177-4358.
MECAS(12)05
Much of the rise in cane production costs in Brazil can be linked to the higher
cost of inputs. The ISO in 2011 conducted a survey on worldwide input costs in
cane and beet farming including Brazil (for more information see MECAS(11)18
on Input Costs in Cane and Beet Farming). The results have showed that, in
Brazil, the cost of seed cane doubled from USD 20/tonne to USD 40/tonne
between 2005 and 2010. The cost of fertilizer rose from USD 309/tonne in 2005
to USD 568/tonne in 2010. Land rent costs rose from USD 212/ha in 2005 to
USD 435/ha in 2010. Crucially, the cost of mechanized harvesting skyrocketed
from USD 210/ha to USD 460/ha see table 7.
2010
435
568
40
460
Source: MECAS(11)18
MECAS(12)05
Another fast rising input cost is fertilizer. Table 8 shows that fertilizer costs for
new plant cane have risen by 55% in USD between 2007/08 and 2010/11, from
USD 434/tonne to an average of USD 674/tonne in 2010/11.
Table 8 - Cost of a tonne of cane fertilizer in Centre South Brazil (BRL and
USD)
2007/08 2008/09 2008/09 2010/11
Fertilizer New Plant Cane(BRL/tonne)
793
1,267
1,103
1,159
Fertilizer Ratoon Cane(BRL/tonne)
740
1,062
1,007
963
BRL/USD Exchange Rate
Fertilizer New Plant Cane(USD/tonne)
Fertlizer Ratoon Cane(USD/tonne)
1.83
2.03
1.84
1.72
434
405
625
524
599
547
674
560
Source: Pecege/CNA/MECAS(11)18
See http://www.anda.org.br/Principais-Indicadores-2011-Detalhados.pdf
See Consecana formula at http://udop.com.br/index.php?item=cana&op=tonelada
10
MECAS(12)05
increased significantly over the past couple of years, this does not seem to have
prompted cane growers to significantly increase supply. Indeed, independent
growers have argued the price adjustment came too little too late as between
2005 and 2010 cane production costs increased sharply as well.
2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012 (p)
Cane price
(USD/tonne)
14.46
12.21
11.02
10.38
12.37
19.73
24.06
19.60
19.84
25.17
33.14
39.00
11
MECAS(12)05
areas over the recent years.9 Gross income per hectare in sugarcane growing
has risen by 137% between the periods 2000-2005 and 2006-2011. This rise is
within roughly the same range as that for soybean and coffee gross earnings
up by a respective 146% and 135% between the two periods. Gross earnings in
maize farming rose by slightly less at 127% while in orange farming revenues
rose by only 61%. In conclusion, in terms of gross revenues, cane has remained
competitive against other crops grown in Centre-South Brazil over the past 6
years.
Table 10 - Production Indicators for a Selection of Major Agricultural Crops in Brazil
Average 2000- 2005
2006
2007
2008
2009
2010
2011
2012*
Sugarcane
5.28
6.36
7.08
8.14
8.51
9.08
8.91
8.75
Coffee
2.34
2.31
2.26
2.22
2.20
2.16
2.11
2.10
Soybeans
17.84
22.05
20.57
21.06
21.75
23.29
24.05
24.66
Maize
12.15
12.61
13.77
14.44
13.66
12.81
13.27
14.90
0.83
0.81
0.82
0.84
0.79
0.84
0.77
0.80
671.39
719.16
634.85
690.84
Oranges
378.16
477.41
549.71
645.30
2.78
2.57
2.25
2.80
2.44
2.87
2.67
2.96
44.25
52.46
57.86
59.24
57.35
68.52
74.83
70.07
Maize
39.24
42.66
52.11
58.93
50.75
56.06
56.10
62.52
Oranges
17.72
18.03
18.68
18.54
17.62
19.11
19.66
18.03
Sugarcane
71.52
75.12
77.63
79.27
78.85
79.20
71.23
78.94
Coffee
1.19
1.11
0.99
1.26
1.11
1.33
1.27
1.41
Soybeans
2.50
2.38
2.81
2.81
2.64
2.94
3.11
2.84
Maize
3.22
3.38
3.79
4.08
3.71
4.37
4.23
4.20
21.52
22.38
22.75
22.64
22.38
22.67
25.50
22.66
Yields (tonne/ha)
Oranges
Prices (USD/tonne)
Sugarcane
12.14
24.06
19.60
19.84
25.17
33.14
39.00
36.00
1,199.84
1,912.70
2,161.50
2,409.28
2,224.34
2,953.26
4,939.66
4,471.05
Soybeans
200.83
216.81
298.96
538.97
485.34
479.44
587.49
558.90
Maize
116.17
137.03
204.81
239.33
176.95
204.59
302.85
284.67
Oranges
175.52
243.92
271.41
245.25
125.94
310.00
371.26
na
Coffee
866.03
1,807.33
1,521.59
1,572.80
1,984.76
2,624.54
2,777.93
2,841.90
1,417.70
2,128.78
2,147.06
3,032.36
2,465.55
3,937.29
6,255.13
6,293.94
500.95
515.93
841.07
1,516.33
1,279.61
1,410.30
1,827.92
1,587.95
370.50
463.47
775.24
976.47
657.35
895.00
1,280.70
1,194.41
3,774.90
5,458.86
6,174.64
5,552.55
2,818.41
7,027.60
9,466.69
na
While the replacement of soybeans areas with sugarcane has occurred in the past, the
substitution of areas used for coffee growing with sugarcane is negligible.
12
MECAS(12)05
13
MECAS(12)05
COSAN
LDC SEV
GUARANI
USAUCAR
ALTO ALEGRE
CARLOS LYRA
BUNGE
SO MARTINHO
ZILOR
NOBLE
RENUKA
T.WANDERLEY
GVO
COLORADO
PEDRA
ETH
USJ
COLOMBO
MORENO
CLEALCO
BAZAN
FARIAS
BERTIN
ARALCO
VALE DO VERDO
TOTAL CRUSH OF TOP 25
TOTAL BRAZIL
SHARE %
Source: Datagro
Petrobras the Brazilian state oil giant and Guaranis minority shareholder- is a
relatively new player in the Brazilian sugar/ethanol industry since it announced in
2009 the acquisition of stakes in Guarani with Tereos but also in Total
Agroindstria in Minas Gerais state. The company also has a minority stake in
grupo So Martinho through the Nova Fronteira joint venture in Boa Vista mill,
which is also envisaging considerable expansion. With supply of ethanol
decreasing sharply in Brazil between 2010/11 and 2011/12, the government is
attempting to devise a strategy to allow the state company to produce as much
as 5 bln litres of ethanol by 2015, compared to around 1.3 bln litres it currently
produces (versus a total Brazilian output of 23 bln litres). This will most certainly
involve the acquisition of additional stakes in other producing groups in the
country for more details on Government Policy, see later section in the paper.
14
MECAS(12)05
Another two Brazilian groups deserve special attention. Grupo So Martinho, with
a cane crush capacity of 14.5 mln tonnes, has three mills and shares in a fourth
one. The groups assets include Brazils largest mill, the So Martinho, with a
cane crushing capacity of over 8 mln tonnes a year. So Martinho Group is likely
to climb further in Brazils rankings over the coming years as its Boa Vista mill
seeks expansion to become another mega crushing facility with cane crushing
capacity of 8 mln tonnes. Brazils probably fastest growing group is ETH
Bioenergia. The company only entered the Brazilian sugar/ethanol industry in
2008. Today the group has 9 operating mills and 2 greenfield projects that are
likely come onstream over the next couple of years. Among the 3 new plants that
have opened in the Centre-South in 2011/12, 2 belong to the ETH group. ETH is
controlled by Odebrecht and its focus is ethanol production rather than sugar.
The target is to produce 3 bln litres of ethanol in 2012 and cogenerate up to
2,700 GW of electricity.
As table 11 indicates, Brazil has several other groups crushing over 10 mln
tonnes of cane, including both national and international companies. For an
outline of the other major national producers, see box 2. For an overview of the
other major international players, see next section on New Joint Ventures
Involving Foreign Groups.
Box 2: Brazil less known Sugar/Ethanol Giants
A few relatively unknown producing groups in Brazil have a cane crushing capacity of 10 mln tonnes
of cane or more. Three groups Usacucar, Alto Alegre and Carlos Lyra, deserve particular attention
as they all have cane crushing capacities exceeding 15 mln tonnes. Usacucar has 9 mills, 2 greenfield
projects and control a significant part of the output in the sugar belt in northwestern Paran, a top
cane producer after northwest So Paulo and southwest Minas Gerais. Group Carlos Lyra has 5 mills,
3 of which in the North-Northeast and 2 in Minas Gerais in the Centre-South, crushing 15.2 mln
tonnes of cane in 2010/11. Alto Alegre has 3 mills in the northwest of Parana and 2 mills in the
adjacent southwestern part of Sao Paulo state.
Group
Number
of Mills
Name of Mills
Terra Rica-Santo Antonio do CaiuaParanacity-Iguatemi-Ivate-Rondon-Cidade
Gaucha-Sao Tome-Tapejara
Usacucar
Altoalegre
Carlos Lyra
Zilor
Tercio Wanderley
Zilor
GVO
Cane Crush
3
4
15
MECAS(12)05
10
Press reports last year announced that Shree Renuka had signed a partnership agreement with
Singapore-listed trading house Olam to seek new acquisitions in the country.
16
MECAS(12)05
17
MECAS(12)05
state, as well as the shares going for hydrous and anhydrous ethanol and
ethanol for industrial purposes. The share of cane allocated to VHP sugar
exports has increased from 23% in 2004/05 to over 30% in 2011/12. Of interest,
the share of cane going to ethanol for exports has collapsed from over 10% on
average between 2006/07 and 2008/09 to less than 5% in the past two seasons.
Furthermore, since 2009 there has been a rapid decline in the share of cane
allocated to hydrous ethanol, which powers flexifuel cars (which can run on
hydrous ethanol, gasohol, which contains anhydrous ethanol, or any combination
of the two). This is despite a big rise in the total number of flexifuel cars
circulating in Brazil, from 10 mln in 2009 to over 15 mln currently.
The falling ethanol output marks a reversal in the previous trend, which showed
ethanol production gaining market share. With a lower cane crop last season,
producers decided to increase sugar allocation as this was more remunerative.
Domestic Sugar
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
15.73
16.32
15.49
14.04
11.68
12.10
11.07
11.15
12.63
10.35
9.60
8.29
7.16
7.37
8.07
8.08
23.11
23.70
27.22
24.33
22.88
26.86
29.02
30.09
35.74
34.05
36.82
32.62
30.04
34.23
37.09
38.17
24.81
22.99
12.97
15.1
14.36
12.82
15.28
17.26
26.28
Sugar Exports
12.88
17.18
20.39
26.35
29.99
31.48
29.40
0.52
0.50
0.60
0.88
0.81
0.76
0.70
0.62
1.56
1.45
1.47
1.77
1.67
1.72
2.03
2.36
39.77
42.12
35.43
44.1
46.83
46.78
47.41
46.52
3.16
2.28
9.00
4.72
6.79
2.39
1.86
1.94
Domestic Ethanol
Anhydrous ethanol exports
Hydrous ethanol exports
Ethanol exports
Total
5.6
5.23
3.46
4.52
4.66
4.51
2.58
1.95
8.76
7.51
12.46
9.24
11.45
6.90
4.44
3.89
100
100
100
100
100
100
100
100
Fig 2 shows that up to late 2008 the domestic price of hydrous ethanol (ex-mill)
in Brazil was on a par level with both the domestic and the international sugar
price. Since then, both the world as well as the domestic sugar price have often
been trading at a significant premium of at least 10 cents/lb or USD 220/tonne to
domestic ethanol prices. The industry has responded to the new price differential
by cutting ethanol output by 4 bln litres last season. This has worried the
18
MECAS(12)05
35
USD cents/lb
30
25
20
15
10
5
Ju
l
O -06
ct
Ja -06
n
Ap -07
rJu 07
l
O -07
ct
Ja -07
n
Ap -08
rJu 08
l
O -08
ct
Ja -08
n
Ap -09
rJu 09
l
O -09
ct
Ja -09
n
Ap -10
rJu 10
l
Oc -10
t- 1
Ja 0
n
Ap -11
rJu 11
l
O -11
ct
Ja -11
n12
Source: Cepea
19
MECAS(12)05
Production
Imports
Exports
Net trade
Fuel
Industrial
Total
Ending
Consumption
Consumption
Consumption
Stocks
2006
17.714
0.000
3.429
3.429
12.699
1.23
13.924
3.644
2007
22.243
0.000
3.533
3.533
16.204
1.30
17.503
4.851
2008
27.095
0.000
5.124
5.124
19.962
1.35
21.312
5.510
2009
25.323
0.004
3.296
3.292
22.523
1.40
23.923
3.617
2010
27.970
0.076
1.953
1.877
21.951
1.55
23.501
6.208
23.000
1.150
1.965
0.815
20.500
1.80
22.300
6.093
2011(p)
Table 14 shows that the hydrous ethanol/gasohol price ratio at the pump has
remained above 70% since December 2010. In other words, hydrous ethanol
prices have over the past couple of years reached a ceiling in the Brazilian
domestic market and demand has turned sluggish.
Table 14 - BRAZIL Hydrous Ethanol/ Gasohol
Retail Pump Price Ratio
2006
2007
2008
2009
2010
2011
2012
Jan
69%
63%
60%
60%
74%
70%
74%
Feb
70%
63%
59%
61%
76%
71%
72%
73%
Mar
76%
63%
59%
60%
71%
78%
Apr
77%
66%
59%
59%
66%
80%
May
69%
66%
59%
58%
63%
71%
Jun
63%
60%
59%
56%
61%
91%
Jul
63%
56%
59%
57%
61%
71%
Aug
64%
55%
59%
58%
62%
71%
Sep
62%
54%
59%
60%
63%
73%
Oct
60%
53%
60%
65%
66%
73%
Nov
59%
56%
60%
67%
68%
74%
Dec
59%
59%
60%
68%
70%
73%
20
MECAS(12)05
2005
2006
2007
2008
2009
2010
2011
Jan
25%
25%
25%
23%
Feb
25%
25%
25%
23%
25%
20%
23%
Mar
25%
25%
20%
23%
Apr
25%
May
25%
25%
20%
23%
25%
20%
23%-25%
Jun
25%
Jul
25%
25%
20%
25%
Aug
25%
25%
20%
25%
Sep
25%
25%
20%
25%
25%
20%
25%
Oct
25%
Nov
25%
25%
20%-23%
25%
Dec
25%
25%
23%
25%
Two figures indicate ratio varied within a range
Source: ISO Ethanol Yearbook
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
20%
20%
20%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
20%
20%
20%
Therefore the government has concluded that the only long-term solution to the
dilemma is to intervene more forcefully in the ethanol market by boosting
ethanol supplies. The policies may include the provision of loans of up to BRL
100 bln to the sector over the next decade. According to UNICA calculations, the
Brazilian sugar industry would need BRL 156 bln to double sugarcane production
from around 600 mln tonnes currently to 1.2 bln tonnes in 2020, based on an
additional 120 new mills.11 The key issue is that, while the government is seeking
to earmark these loans for cane used for ethanol production only and not sugar,
the industry argues that the future lies with the further development of flexible
sugar/ethanol production capacity. During years of surplus/deficit in the world
market, the industry would want to be free to switch production to or away from
sugar responding to price dynamics.
11
see part 5 of the paper for the ISO assessment on Brazils sugar/ethanol demand outlook
21
MECAS(12)05
In practice, the government has been looking to foment most of the loans
through its bank development agency, the BNDES, which has a loan balance
sheet that is allegedly four times larger than the World Bank. In January, BNDES
released a financial stimulus package to boost the renovation of Brazils ageing
cane fields the Prorenova with loan resources of a total of BRL 4 bln for 2012
calendar year at an annual interest rate of around 8%. This measure came prior
to the release of a broader national working plan targeting an increase cane
areas from the current 9 mln hectares to over 14 mln hectares. This is likely to
be part of a programme called the Strategic Plan for the Sucro-energy Sector,
estimated to be completed in April 2012.
On another front, there is a project to finance the stocking of ethanol through
the National Monetary Council, the Conselho Monetrio Nacional (CMN). A longterm policy of financing stocks of ethanol is something that has been envisaged
for several years but has failed to take shape. The programme of ethanol stock
financing may involve up to BRL 4.5 bln at an annual rate of interest of 8.7%,
which is still somewhat lower than the current Central Bank base rate of 9.75%.
From April 2012, Brazil will require that ethanol distributors present advance
contracts of 70% of the total expected sales for the season.
Another front of possible further government policy action is on ethanol taxation.
The industry argues that over the past ten years the government has on balance
provided more tax relief for gasoline than for ethanol. According to UNICA, in
2002, the Cide tax (sales tax) on petrol represented 14% of the pump price
whilst this has reduced gradually to a low of only 2.7% today. Overall taxation on
petrol amounts to 35% today, down from 47% ten years ago, while overall
taxation on ethanol amounts to 31%, practically unchanged from 10 years ago.
The industry argues that this would be the right time to cut ethanol taxation,
particularly the value-added tax or ICMS, which still varies hugely from state to
state. One step forward has been reached with the reduction in the ICMS tax on
ethanol in the state of Minas Gerais from 22% to 19% as from January this year.
In So Paulo, the countrys largest producer, the ICMS tax on ethanol is 12%,
while in Paran it is 18%. These compares to ICMS taxes on gasoline at 27%,
25% and 26% for Minas Gerais, So Paulo and Paran, respectively. In Gois,
the other top 4 producing state, the ICMS taxation on gasoline and ethanol is
currently at a respectively 29% and 22%. Of interest, imported anhydrous
ethanol has been exempt of ICMS since 1st October 2011, as the country has
relied on a record volume of seasonal ethanol imports. Last year, Brazil imported
over 1.1 bln litres of ethanol, mainly from the United States, compared to only 75
mln litres in 2010.
Small direct production subsidies programmes for Brazils sugar/ethanol supply
exist only in the North-Northeast region, where small to medium growers receive
a grant of BRL 5 per tonne of cane up to a maximum of 10 thousand tonnes in
22
MECAS(12)05
order to compensate for the regions higher production costs, arising from a
more unfavourable topography. In 2011, the total subsidies to the sector in the
North-Northeast region amounted to BRL 58 mln. The region has also been
struggling with high debt as a consequence of fast rising production costs.
According to the press, millers in the state of Pernambuco owe around BRL 15
mln of payments to independent cane growers. Over the past 3 years, the
government of Pernambuco has been handing out over 5 thousand tonnes of
fertilizers to small-scale growers, using the sugar/ethanol mills as distribution
points.
Production Costs
Sugar production costs ex-mill have risen sharply over the past few years, in line
with the sharp rise in cane production costs as highlighted earlier in the paper. In
its assessment of Brazils 2011/12 sugar production costs, PECEGE/CNA
estimates sugar production costs in Brazils traditional sugarcane belt to have
risen by as much as 20% to a record 19.56 cents/lb (BRL 776/tonne or USD
431/tonne) for VHP sugar and 21.78 cents/lb (BRL 819/tonne or USD 480/tonne)
for white sugar. Ethanol production costs, on a sugar equivalent basis, are
estimated to have reached 19.79 cents/lb for anhydrous and 18.03 cents/lb for
hydrous. PECEGE/CNA estimates however that the differential between sugar
market prices and production costs was positive for the second year in a row,
while in the three seasons between 2007/08 and 2009/10 production costs
exceeded remuneration (recall that for sugar cane the average market price only
overtook the production cost in the 2011/12 season).12
12
23
MECAS(12)05
13
Todd, Martin, Cost of Production Key to Success, Proceedings of ISO 20th Jubilee Seminar,
November 2011.
24
MECAS(12)05
25
MECAS(12)05
160
THAILAND
140
120
100
80
60
40
20
18
/0
8/
20
11
18
/0
8/
20
10
18
/0
8/
20
09
18
/0
8/
20
08
Similarly, the relative cost of shipping raw sugar in a 40 thousand tonne vessel
has declined over the past few years. As late as mid 2008, the freight for
Brazilian bulk raw sugar to Iran, for example, commanded a premium of USD
60/tonne over raw sugar from Thailand. This freight premium has now fallen to
only USD20/tonne see fig. 4. When expressed as a percentage of the world
raw sugar market price, the freight premium has dropped further from around
20% in mid 2008 to only 4% as of February 2012.
BRAZIL
11
18
/0
8/
20
10
8/
20
18
/0
8/
20
09
THAILAND
18
/0
18
/0
8/
20
08
140
120
100
80
60
40
20
0
26
MECAS(12)05
The fact that it has become cheaper for Brazil to ship sugar to Asia relative to
other countries has diversified the pool of destinations for Brazils sugar exports.
According to ISO statistics, back in the middle of the past decade, only Russia
imported more than 1 mln tonnes from Brazil. In 2010, 8 countries have done so
see table 16. In particular, exports to countries such as Iran, China, the EU and
Indonesia have boomed over recent years. Preliminary data from the Ministry of
Agriculture for 2011 confirm this trend, showing 9 countries importing more than
1 mln tonnes from Brazil, with exports to China alone, Brazils new main export
destination, exceeding 2 mln tonnes.
2004
2005
2006
2007
2008
2009
2010
Raw Sugar
Russian Fed.
3,287,719
3,995,824
4,498,224
4,304,599
4,451,955
2,761,021
3,464,945
India
865,865
1,329,927
7,763
165,212
4,139,854
2,093,123
Iran
80,000
294,574
996,959
1,061,756
467,853
474,661
1,540,384
193,064
50,955
76,690
263,060
1,237,005
Algeria
627,227
579,030
698,865
820,200
738,511
935,356
1,186,024
EU
106,057
151,698
64,923
372,443
552,145
355,325
1,128,709
89,705
122,153
91,818
130,100
585,244
1,092,060
826,504
535,788
969,941
709,566
1,180,541
676,713
1,074,218
Saudi Arabia
603,921
862,240
792,737
1,109,878
598,228
509,822
968,994
11,540
410,384
425,230
529,106
1,284,785
897,871
243,086
386,190
1,155,084
920,845
684,461
782,783
868,230
508
144,607
274,766
355,812
415,187
781,885
Morocco
528,007
516,100
570,688
526,542
550,360
833,894
774,063
Canada
646,984
756,903
778,777
868,493
830,076
890,816
699,884
103,498
70,945
91,859
118,700
579,528
374,278
611,444
Nigeria
548,815
852,880
908,723
843,984
1,022,853
1,003,565
579,857
667,260
884,796
975,626
313,980
1,151,578
468,606
China
Indonesia
Bangladesh
Malaysia
Venezuela
2,379,026
1,400,075
1,046,643
898,426
873,788
967,286
1,460,935
10,846,709
12,501,187
14,336,190
14,373,827
14,101,199
18,405,228
20,928,237
White Sugar
United Arab Emirates
443,362
389,348
383,093
312,999
725,130
1,141,049
288,405
477,227
558,393
264,200
307,300
609,060
639,556
12,194
202,935
107,419
3,986
4,248
83,007
467,022
Ghana
458,981
479,588
295,345
415,564
466,477
289,602
454,565
413,511
364,445
269,789
285,234
176,004
262,320
431,032
Nigeria
739,519
468,456
257,409
341,983
383,368
275,459
430,024
Yemen Republic
Pakistan
Saudi Arabia
Others
706,544
543,272
328,044
3,535,409
3,462,039
3,316,695
4,461,977
3,685,076
3,794,852
3,784,133
5,448,019
5,898,052
5,194,398
6,156,037
6,042,016
6,582,702
7,675,425
16,294,728
18,399,239
19,530,588
20,529,864
20,143,215
24,987,930
28,603,662
27
MECAS(12)05
Table 17 shows a snapshot of the sugar vessel line-up by type of sugar and
category of buyers/sellers leaving Santos port in September 2011. Over 80% of
sugar exports were VHP. Sugar producers are the majority of direct sellers at the
port with traders constituting the majority of buyers.
Table 17 Sugar Vessel line-up from Brazil's Santos Port - September 2011
Quantity
traded
Share
Type of
('000
in
Seller
Buyer
Destination
Sugar
tonnes)
Trade
Sugar
Sugar
Producer
Refinery
United Arab Emirates
VHP
148
7.91%
China, Canada, Black Sea,
Nigeria, Tunisia,
Bangladesh, India, Algeria,
Morocco, Indonesia,
United Arab Emirates,
Saudi Arabia, South Korea,
Spain, Egypt, Venezuela,
Malaysia,
VHP
1,227 65.61%
Sugar
Sugar
Producer
Trader
Ghana, Black Sea, Nigeria, Other
126
6.73%
Ivory Coast, Bangladesh
types
Bulgaria, US, Venezuela,
China
VHP
243 12.99%
Sugar
Sugar
South Africa, South Korea,
Trader
Trader
Ghana, Colombia,
Venezuela, China, Yemen,
Other
Tunisia, Nigeria
types
126
6.75%
Total
1,870
100%
Source: Datagro/ISO
28
MECAS(12)05
USD. As a result, while world sugar prices expressed in USD doubled in the
period, when expressed in BRL they rose by only 50%.
Between 2007 and early 2012, currency movements have mitigated the higher
world sugar market prices for exporters from Thailand, Brazil and Australia,
whose exchange rates have appreciated by between 9% and 21% see Fig. 5.
By contrast, the INR and the ZAR have weakened, giving sugar exporters from
India and South Africa exchange rate competitiveness relative to other major
players. A continued relative strength of the currencies of Brazil, Thailand and
Australia, the worlds top 3 exporters in the recent years, is one of the factors
sustaining the relatively higher world market prices expressed in USD.
Index (1=2007)
1.20
1.10
1.00
0.90
0.80
2012(Jan/Feb)
2011
2010
2009
2008
2007
0.70
India
South Africa
European Union (EUR)
Guatemala
Sugar Weighted exchange rate
Thailand
Brazil
Australia
29
MECAS(12)05
has increased its market share for more details see Ethanol Section in the QMO
- MECAS(12)02. Brazils net exports collapsed to less than 1 bln litres in 2011 and
are unlikely to rise significantly this year. Brazils ethanol export price, which rose
in the past years to partly mirror the sugar price rise, has caused import demand
to slump. This is a major reversal of fortune for Brazil, which until recently was
the worlds largest exporter of ethanol. In 2011 the US took over this role,
although export availability from the US is set to fall this year.
Longer term, global trade is expected to rebound. Global fuel ethanol
consumption could resume growth should declared government biofuel policies
worldwide be implemented in full. With this would come the chance for Brazil to
regain its position as the leading supplier, with ethanol exports potentially
matching the record of 5 bln litres seen in 2008 by the end of the decade.
Cogeneration
Much of the recent upgrade in Brazilian mills competitiveness has been centred
around maximising income streams from sugarcane byproducts. According to the
government energy research company EPE, Brazil is expected to double power
production from bagasse biomass over the next 10 years. Current cogeneration
capacity from sugarcane biomass of 4.5GW would more than double to 9.2GW
by the end of this decade under the plan.
Cogeneration will remain a future key to economic profitability. ETH, Brazils
fastest growing producer, has set up state-of-the-art cogeneration facilities in all
of its operating mills. Much of the produced bioelectricity has been sold to
schemes outside the government-arranged auctions.
30
MECAS(12)05
In August, Brazil's main electric energy auction contracted only six plants
powered by sugarcane bagasse to sell 327MW of energy, as all of the remaining
contracts (861 MW) have been awarded to wind power. Wind power currently
faces fewer obstacles in terms of accessing the national grid. Prices of energy
sold during the August government-organized auction for new power capacity fell
to about BRL100 a megawatt-hour (USD 0.06/KWh), from BRL144 in August
2010. That's about a third less than companies need to build the power plants
that typically run cane mills.
Brazils next nationwide government-held electricity auction has been postponed
to 28th June from an initial scheduled date of 22nd March. According to UNICA,
the per unit price ceiling has been set at too low a level to generate meaningful
interest from the sugarcane industry in the country. The new price ceiling, at BRL
0.112/KWh (USD 0.063/KWh), is 20% lower than last years. The next electricity
auction has the objective to arrange long-term supply contracts for 20 to 30
years starting on 1st January of 2015. 22 projects amounting to 1,042 MW of
cogeneration capacity from sugarcane have registered for the coming auction,
but this represents only 4% of the total, as the bulk of the interest has again
come from the wind power sector, at 51% of the registered interest.
31
MECAS(12)05
venture in Brazil, making Mitsui a 50% equity interest partner in Dows operation
in Santa Vitria, Minas Gerais, Brazil. The initial scope of the joint venture
includes production of sugar cane-derived ethanol to be later used for production
of polyethylene for bioplastics.
Production of bioplastics other than ethylene is also a reality in a few other
sugar/ethanol mills in Brazil. Sugarcane can also be used as a direct feedstock
rather than ethanol. One example is the current production of PHA
(polyhydroxyalkanoates) from sugarcane by Balbo Group in Brazil.
On other biochemicals, BioAmber Incorp. is working with Tereos to study the
feasibility of two possible facilities that would produce crystalline bio-succinic acid
and/or bio-based 1,4 BDO (butanediol) in Brazil. The company expects to provide
bio-succinic acid and bio-based 1,4 BDO proprietary technologies, while Tereos
expects to provide long-term sugar cane biomass feedstock supply, utilities,
available infrastructure and shared services.
32
MECAS(12)05
60
20
18
50
16
14
40
12
30
10
8
20
6
4
10
2
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gasoline Demand
Anhydrous Ethanol Demand
Hydrous Ethanol Demand
Source: ISO
With an additional allowance of 5 bln litres for export markets, which remain
sensitive to world market developments, Brazils total ethanol production is
forecast to reach 43.6 bln litres in 2020, compared to 25 bln litres currently - see
table 18.
33
MECAS(12)05
Table 18- Brazil's estimated total ethanol supply/demand to 2020, bln litres
Consumption
Production
Net exportable
surplus
Source: ISO
2009
23.9
25.3
2015(f)
28.9
30.6
2020(f)
38.6
43.6
1.4
1.7
5.0
Annual Growth
2000-2009
6.8%
9.2%
34
MECAS(12)05
Consumption
Production
Net Exportable surplus
Source: ISO
2009
12.2
34.3
22.1
2015 (f)
13.4
40.3
26.9
2020 (f)
14.6
47.5
32.9
Forecast
growth 20092020
1.6%
3.0%
Annual Growth
2000-2009
2.80%
9.13%
Conclusions
This paper has revealed that there is a growing number of challenges to Brazils
sugar/ethanol production growth for the coming years. The countrys frenzied
sugar sector expansion, with cane output growth of 10% a year, has definitely
come to a halt. Agricultural yields have declined following a significantly lower
share of higher yielding new plant cane in the total crop and a sudden switch
towards harvest mechanization. Adverse weather from La Nia and El Nio
events have also had their toll, prompting cane output to slump by 10% last
season. Production costs have escalated due to skyrocketing input costs and a
much stronger currency. Sugar production costs in Brazil are today estimated at
around 20 cents/lb, up significantly from 14 cents/lb of only three to four
seasons ago. Cane production prices lagged cane production costs for several
seasons following an escalation of input costs, like land rental costs and
fertilizers, with the latter driven largely by higher crude oil prices. Lower ethanol
prices relative to sugar prevent cane prices from fully accompanying the world
sugar market price rise. A stronger BRL has also made it much more costly to
invest in new production units. Moreover, the industry is facing an
unprecedented sugar/ethanol/petrol price dilemma, which is disencouraging
millers to increase ethanol supply, still the backbone of the countrys industry.
Last but not least, the industry problems have been compounded by a temporary
collapse in world import demand for Brazils ethanol.
However, there are reasons to believe that the Brazilian sugar/ethanol sector will
continue to expand over the current decade. First, cane is still a profitable crop
when compared to others grown in Centre-South Brazil, such as soybeans and
maize. Second, Brazil has made important strides in advancing domestic
transport infrastructure logistics as well as diversifying its geographical export
base. Third, diversification into cogeneration and bioplastics from cane are
helping provide additional revenue streams. Fourth, mergers and acquisitions
involving large and financially healthier national and international groups,
35
MECAS(12)05
including oil giants, are modernizing and changing the shape of the industry,
which will eventually reap from much more efficient production and economies of
scale. In many regions, for example, a single milling group controls a cluster of
no less than 3 to 4 adjacent sugar mills, making it easier to manage cane and
sugar logistics from field to the market.
The ISO forecasts cane areas and yields to improve by 2020. Nationwide cane
production is projected to rise from 630 mln tonnes in 2010 to 846 mln tonnes in
2020, or an average annual growth of 3%. Only part of this growth will be met
by new greenfield mills, as there is currently an estimated brownfield spare
capacity of up to 150 mln tonnes. The outlook is for a medium to long-term
recovery in ethanol supply and demand growth. Total fuel ethanol demand in
Brazil is forecast to reach 34.6 bln litres in 2020 split between 16.8 bln of
anhydrous and 17.8 bln litres of hydrous ethanol. With an additional allowance of
4 bln litres for bioplastics/biochemicals production and 5 bln litres for export
markets, Brazils total ethanol production is forecast to reach 43.6 bln litres in
2020, compared to 25 bln litres currently. Once ethanol demand is met, there
would be 328 mln tonnes of cane left for sugar production, the equivalent to a
potential sugar output of 47.5 mln tonnes, raw value, around 8 mln tonnes
higher than the current output. The projected net sugar exportable surplus is
seen rising to 32.9 mln tonnes by 2020. Although no further market share gains
are expected for Brazil, the country will remain a world market price setter, and
developments in Brazil will continue to resonate strongly in the world
sugar/ethanol economy.
36
MECAS(12)05
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
50% USJ
OP
15
16
State
Name of Mill
Company
SP
So Joo da Boa
Vista
Abengoa (Spain) 14
SP
Sao Luiz
Abengoa (Spain)
SP
Santo Antonio de
Posse
Abengoa (Spain)
MS
Anglica
Adecoagro (USA/Arg)17
MG
Monte Alegre
Adecoagro (USA/Arg)
18
MS
Ivinhema
Adecoagro (USA/Arg)
19
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
Cogeneration
Sugar,
tonnes
3.5
145
201,500 MWh
360,000
OP
90
230,000 MWh
285,000
OP
0.3
OP
OP
1.5
G (Operating
in 2013)
6 (2017)
30,000
134
166,001
30
16 MW
37
MECAS(12)05
81,000
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
1.2
(10/11)
108 (2009)
State
Name of Mill
Company
MG
Limeira do Oeste
ADM (USA) 20
100%
OP
GO
Tropical
Bioenergia
BP (UK) 21
100%
OP
2.5
100
250,000 MWh
MG
CNAA Ituiutaba
BP (UK)
22
100%
OP
2.5
100
340,000 MWh
10
GO
CNAA - Itumbiara
BP (UK)
23
100%
OP
2.5
100
340,000 MWh
11
MG
CNAA Campina
Verde
BP (UK)
24
100%
12
MG
Santa Juliana
Bunge (USA) 25
OP
2.7
97
13
MG
Usina Itapagipe
Bunge (USA)26
100% Bunge
OP
1.7
1.1
50
14
TO
Pedro Afonso
80% Bunge
20% Itochu
OP
2.5
1.4
109
Cogeneration
38
175,000
340,000 MWh
102,900 MWh
202,000
63,000
180,000 MWh
20 Source: http://agricultura.ruralbr.com.br/noticia/2009/01/usina-limeira-do-oeste-encerra-safra-com-moagem-recorde-de-cana-2383578.html
21 Tropical Bioenergia website: http://www.tropicalbioenergia.com.br/chamada_noticia.php?id_noticia=312
22 Source: http://campinaverde.net/home/blog/2011/10/24/british-petroleum-confirma-investimentos-em-usina-de-alcool-em-campina-verde/
, http://www.desenvolvimento.mg.gov.br/pt/component/content/285?task=view
23 Source: http://destaque-mg.blogspot.com/2011/03/bp-faz-acordo-para-comprar-cnaa-de.html, http://campinaverde.net/home/blog/2011/10/24/british-petroleum-confirmainvestimentos-em-usina-de-alcool-em-campina-verde/
24 Campina Verde website : http://campinaverde.net/home/blog/2011/10/24/british-petroleum-confirma-investimentos-em-usina-de-alcool-em-campina-verde/
25 Bunge website : http://www.bunge.com.br/empresa/noticias.asp?id=241, http://www.bunge.com.br/empresa/noticias.asp?id=641
26 Source: http://www.fazenda.gov.br/resenhaeletronica/MostraMateria.asp?cod=486160, Cargill Website : http://www.cargill.com.br/pt/produtos-servicos/agricola/acucaretanol/index.jsp, Usina Ouroeste website: http://www.usinaouroeste.com.br/usitapagipe.html
27 Bunge website: http://www.bunge.com.br/empresa/noticias.asp?id=641
Sugar,
tonnes
MECAS(12)05
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
Cogeneration
Sugar,
tonnes
100% Bunge
OP
1.4
0.9
73
41,700MWh
100% Bunge
OP
2.2
1.2
40
22,000MWh
106,000
State
Name of Mill
Company
15
MS
Monteverde
Bunge (USA)
16
SP
Usina Ouroeste
Bunge (USA)
17
SP
Usina Guariroba
Bunge (USA)
29
100% Bunge
OP
2.2
1.3
54
18
MG
Usina Frutal
Bunge (USA)
30
100% Bunge
OP
2.5
1.7
77
27,800MWh
102,000
19
SP
Cardoso
Bunge (USA)
31
20
MG
Usina Moema
Bunge (USA)
100% Bunge
OP
4.8
3.6
156
39,870MWh
234,000
21
GO
Sao Francisco
OP
4.5
170
350,000 MWh
22
SP
Cevasa
Cargill
63%
OP
75
65,000 MWh
200,000
23
GO
Cachoeira
Dourada
G (Operating
in 2013)
2.5
170
200,000 MWh
420,000
28
29
30
31
32
33
34
28
32
34
94,000
Source: http://exame.abril.com.br/negocios/empresas/noticias/bunge-adquire-5-usinas-grupo-moema-us-1-5-bi-522279
Usina Ouroeste website: http://www.usinaouroeste.com.br/usguariroba.html
Usina Ouroeste website: http://www.usinaouroeste.com.br/usguariroba.html
Source: http://www.brasilagro.com.br/index.php?noticias/visualizar_impressao/12/27007
Source: http://www.scalcool.com.br/portugues/lista_usina.asp?codigo=125&uf=mg, Moema website : http://www.usmoema.com.br/usitapagipe.html
SJC Bioenergia website: http://www.sjcbioenergia.com.br/,
Cevasa website: http://www.cevasa.com.br/produtos.php, Source: http://www.paginarural.com.br/noticia/98763/cargill-investira-r-190-milhoes-para-produzir-acucar-na-cevasa
39
MECAS(12)05
24
State
Name of Mill
Company
SP
Rio Vermelho
Glencore 35
25
SP
Cruz Alta
Guarani
26
SP
Cia Energtica
So Jos
Guarani
36
27
SP
Mandu
Guarani
37
28
SP
Andrade
Guarani
38
29
SP
Vertente
Guarani/ CLEEL
30
SP
Guarani Tanabi
Guarani
39
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
Cane
Crush,
mln
tonnes
100%
OP
1.3
Tereos
International
68.6%
/Petrobras
31.4%
OP
4.5
79
459,000
Tereos International
68.6% /Petrobras
31.4%
OP
4.2
248
226,000
68.6 %Tereos
International
31.4%Petrobras
OP
3.5
175
12 MW
200,000
68.6 %Tereos
International
31.4%Petrobras
OP
3.3
274
135,000 MWh
236,000
68.6 %Tereos
International
31.4%Petrobras
OP
1.6
74
Tereos International
68.6% /Petrobras
31.4%
OP
1.2
102
Ethanol
Output, mln
litres
Cogeneration
114,000
40
Sugar,
tonnes
MECAS(12)05
Cane
Crushing
Capacity,
mln tonnes
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
Cogeneration
90
414,383 MWh
5.6
245
12 MW
372,000
4.5
160
90 MW
340,000
OP
2.9
2.6
146
OP
2.4
1.8
96
26.45 MW
130,000
70,000 MWh
(export)
175,000
Share holding
Start of
Operations
Tereos International
68.6% /Petrobras
31.4%
OP
50% Unialco
25%Manuelita
25%Pantaleon
OP
State
Name of Mill
Company
31
SP
Severinia
Guarani
32
SP
Vale do Parana
(Suzanopolis)
Invs Manuelita,
Pantalen Sugar 40
33
SP
Santelisa 41
LDC SEV
34
MS
Rio Brilhante
LDC SEV
42
OP
35
SP
MB
LDC SEV
43
36
SP
Cresciumal
LDC SEV
44
1.7
OP
37
MG
Lagoa da Prata
LDC SEV
45
OP
2.4
90
38
SP
So Carlos
LDC SEV
46
OP
94
OP
1.8
OP
1.5
39
RN
Estivas
LDC SEV
47
40
MS
Maracaju
LDC SEV
48
Sugar,
tonnes
115,000
117,000
40Source: http://www.ifc.org/ifcext/agribusiness.nsf/Content/SelectedPR?OpenDocument&UNID=81B46EB0676F19998525729E0055A8B0
41 Unica: http://unica.com.br/downloads/estatisticas/ranking0809.xls, Source: http://www.leonardoconcon.com.br/economia/controlada-da-acucar-guarani-adquire-usina-mandu-porr-345-milhoes/
42 Odebrecht website: http://www.odebrechtonline.com.br/materias/01401-01500/1488/,
43 Unica: http://unica.com.br/downloads/estatisticas/ranking0809.xls
44 Source: http://www.revolucaomkt.com.br/noticias/ldc-amplia-usina-em-sp/, Unica : http://unica.com.br/downloads/estatisticas/ranking0809.xls
45 Wkimapia: http://wikimapia.org/18060719/pt/LDC-SEV-Bioenergia-Usina-Lagoa-da-Prata
46 Unica: http://unica.com.br/downloads/estatisticas/ranking0809.xls
47 Source: http://www.portogente.com.br/texto.php?cod=7191
48 Maracaju Government website: http://www.maracaju.ms.gov.br/secretaria-de-desenvolvimento/76-louis-dreyfus-promoveu-audiencia-publica-em-maracaju.html
41
MECAS(12)05
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
1
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
Sugar,
tonnes
State
Name of Mill
Company
41
PB
Giasa
LDC SEV
49
OP
42
SP
Continental
LDC SEV
50
OP
2.3
109
43
SP
Vale do Rosario
LDC SEV
51
OP
5.9
245
44
SP
Jardest
LDC SEV
OP
1.2
48
86,000
45
MS
Passa Tempo
LDC SEV 52
OP
3.6
2.6
125
160,600
46
SP
Potirendaba
100%
OP
3.8
196
300,000 MWh
198,000
47
SP
Catanduva
Noble BP
100%
OP
4.6
219
300,000 MWh
216,000
48
SP
Meridiano
55
100%
OP
49
SP
Noroeste Paulista
56
100%
OP
54
Cogeneration
151,000
45 MW
400,000
1.8
115
49,000
49 Source : http://www.sindicape.com.br/inicio/index.php?option=com_content&task=view&id=391&Itemid=1
50 Unica: http://unica.com.br/downloads/estatisticas/ranking0809.xls
51 LDC-SEV website: http://www.ldcsev.com/unidades.php?id=3, Source: : http://cdm.unfccc.int/filestorage/F/S/_/FS_510456720/PDD%20NM-0001.pdf?t=WDZ8bTE2bmdnfDABeHZC5vJlNRwaBU93kvN, Unica: http://unica.com.br/downloads/estatisticas/ranking0809.xls
52 Canal de Cana: http://www.canaldacana.com.br/novo/view/mercado_trabalho/?act=listar&pag=3¬icia_id=1954
53 Source: http://economia.estadao.com.br/noticias/neg%C3%B3cios,noble-paga-us-950-mi-por-2-usinas-do-grupo-cerradinho,48268,0.htm
54 Source: http://economia.estadao.com.br/noticias/neg%C3%B3cios,noble-paga-us-950-mi-por-2-usinas-do-grupo-cerradinho,48268,0.htm
55 Source: http://economia.estadao.com.br/noticias/neg%C3%B3cios,noble-paga-us-950-mi-por-2-usinas-do-grupo-cerradinho,48268,0.htm
56 Source: http://www.investe.sp.gov.br/noticias/lenoticia.php?id=1051&c=6&lang=1, Unica : http://unica.com.br/downloads/estatisticas/ranking0809.xls
42
375,000
MECAS(12)05
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
Cogeneration
Sugar,
tonnes
50%Cosan
50%Shell
OP
62
53
(10/11)
2,200
900 MW
4.3 mln
100%
OP
6.5
347
138 MW
290,000
170
157 MW
100,000
State
Name of Mill
Company
50
SP
Razen (Shell/Cosan)57
51
SP
Equipav
Shree Renuka 58
52
SP
Revati
Shree Renuka
59
100%
OP
53
PR
Vale do Ivai II
(Sao Pedro do
Ivai)
Shree Renuka
60
100%
OP
2.2
54
PR
Vale do Ivai I
(Cambui)
Shree Renuka
61
100%
OP
0.8
57
58
59
60
61
43
MECAS(12)05
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
Cogeneration
Sugar,
tonnes
67%ETH
33%Sojitz
OP
2.5
(10/11)
360
130 MW
132,000
67%ETH
33%Sojitz
OP
3.8
67%ETH
33%Sojitz
OP
3.8
360
35 MW
67%ETH
33%Sojitz
OP
3.8
360
380,000 MWh
State
Name of Mill
Company
55
MS
Eldorado
62
56
MS
Costa Rica
57
GO
Morro Vermelho
58
GO
Agua Emendada
Sojitz Co (Japan)-ETH
59
GO
Rio Claro
67%ETH
33%Sojitz
OP
190
130 MW
60
MS
Santa Luzia
67%ETH
33%Sojitz
OP
180
380,000 MWh
61
SP
Conquista do
Pontal
67%ETH
33%Sojitz
OP
2.7
140
63
65
68
300,000 MWh
44
MECAS(12)05
Share holding
Start of
Operations
Cane
Crushing
Capacity,
mln tonnes
67%ETH
33%Sojitz
OP
2.1
67%ETH
33%Sojitz
OP
1.6
State
Name of Mill
Company
62
MT
Alto Taquari
Sojitz Co (Japan)-ETH
63
SP
Alcdia
64
SP
Euclides da Cunha
Sojitz Co (Japan) 71
67%ETH
33%Sojitz
G (Projected
without date)
2.7
65
SP
Presidente
Epitcio
Sojitz Co (Japan) 72
67%ETH
33%Sojitz
G (Projected
without date)
2.7
66
SP
Dest.
Paranapanema
UMOE (Norway) 73
OP
2.7
69
70
Cane
Crush,
mln
tonnes
Ethanol
Output, mln
litres
Cogeneration
190
69 Udop: http://www.udop.com.br/index.php?cod=1077588&item=noticias
70 Sojitz: http://www.sojitz.com/en/news/2010/20100219.html
71 Odebrecht: http://www.odebrechtonline.com.br/materias/01401-01500/1488/
72 Source: http://economia.terra.com.br/noticias/noticia.aspx?idNoticia=200803141919_RTR_1205522393nN14422113 ; http://www.odebrechtonline.com.br/materias/0140101500/1488/
73 Udop: http://www.udop.com.br/index.php?cod=1081566&item=noticias
45
MECAS(12)05
Sugar,
tonnes
Seminars Proceedings:
2011: Competitive Edge in Sugar - the Road to 2020
Online
350
325
225
210
205
Hardback, 400 pages, 150 Country Tables with full details of production,
consumption, trade and stocks (7-8 yrs series)
180
230
Web: www.isosugar.org