92
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
5.1.2 Biofuel Production and Consumption Chains
5.1.2.1 Ethanol
Although Brazil has a nascent corn-ethanol industry, the bulk of the country’s
commercial ethanol production is based on sugarcane. The processing industry itself
owns approximately half of the sugarcane cropland, showing some degree of vertical
integration (Goldemberg et al. 2008; MAPA 2013). Historically it has also been characterized by the utilization of a large number of workers in manual cutting, a process
associated with the burning of sugarcane fields before harvesting to reduce accidents.
2 However, concerns about air pollution and poor work conditions—leading
to mounting health issues, cases of bonded labor,
3 and manual cutters’ deaths due to
overwork (Novaes 2007; Gomes et al. 2010a)—have led to the legal phase-out of crop
burning. These issues have caused larger growers to seek mechanized harvesting, now
widely used. While undoubtedly beneficial to the environment and human health, this
has created a barrier to smaller producers who cannot afford expensive machinery.
Processing mills utilize sugarcane both from their cultivation and from suppliers.
Prices are usually set based on the total recoverable sugar rate, i.e., the sugar content
per ton of sugarcane. Most sugarcane mills in Brazil can choose how much sugar
and ethanol to produce based on price signals, which gives them leverage but creates
inevitable volatility in the ethanol and sugar markets. They can also strike a balance
between the two types of fuel-ethanol commercialized in Brazil: anhydrous (to
be mixed in gasoline at a fluctuating mandated rate, set since 2015 at 27%) and
hydrated ethanol (to be used in “pure” form). In either case, mills must sell the
ethanol to a distributor that then performs the fuel blending and sales. The main final
consumers are automobile—and increasingly motorbike—drivers, which count on
flex-fuel engine vehicles that can run on any combination of (hydrated) ethanol or
gasoline. These engines allow drivers to choose between fuels based on price or other
criteria (see Fig. 5.1).
The growing market for Brazil’s sugarcane agroindustry and its high efficiency
have attracted multinationals from the oil and agricultural technology sectors. This
attractiveness has increased the number of acquisitions, mergers, and the industry’s
horizontal consolidation significantly, especially after the 2008/2009 financial crisis.
For instance, British Petroleum, Bunge, and Louis Dreyfus Commodities acquired
much of the Brazilian sugarcane-ethanol sector between 2008 and 2011. The
country’s largest sugarcane company, COSAN, became a joint venture with Shell
called Raízen. Monsanto, now owned by Bayer, acquired some of the leading sugarcane research and development centers—with biotechnology that public funds had
helped develop, to the chagrin of many Brazilian researchers and public complaints
2 This refers to poisonous animals in the field, risks of workers cutting each other, and to the sugarcane
leaves themselves, which can easily cut the skin (Ripoli et al. 2000).
3 In 2009 more than 2000 rural workers were released by government inspection groups from bonded
labor conditions, considered analogous to slavery, in the Brazilian sugarcane sector (Gomes et al.
2010a).
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
5.1.2 Biofuel Production and Consumption Chains
5.1.2.1 Ethanol
Although Brazil has a nascent corn-ethanol industry, the bulk of the country’s
commercial ethanol production is based on sugarcane. The processing industry itself
owns approximately half of the sugarcane cropland, showing some degree of vertical
integration (Goldemberg et al. 2008; MAPA 2013). Historically it has also been characterized by the utilization of a large number of workers in manual cutting, a process
associated with the burning of sugarcane fields before harvesting to reduce accidents.
2 However, concerns about air pollution and poor work conditions—leading
to mounting health issues, cases of bonded labor,
3 and manual cutters’ deaths due to
overwork (Novaes 2007; Gomes et al. 2010a)—have led to the legal phase-out of crop
burning. These issues have caused larger growers to seek mechanized harvesting, now
widely used. While undoubtedly beneficial to the environment and human health, this
has created a barrier to smaller producers who cannot afford expensive machinery.
Processing mills utilize sugarcane both from their cultivation and from suppliers.
Prices are usually set based on the total recoverable sugar rate, i.e., the sugar content
per ton of sugarcane. Most sugarcane mills in Brazil can choose how much sugar
and ethanol to produce based on price signals, which gives them leverage but creates
inevitable volatility in the ethanol and sugar markets. They can also strike a balance
between the two types of fuel-ethanol commercialized in Brazil: anhydrous (to
be mixed in gasoline at a fluctuating mandated rate, set since 2015 at 27%) and
hydrated ethanol (to be used in “pure” form). In either case, mills must sell the
ethanol to a distributor that then performs the fuel blending and sales. The main final
consumers are automobile—and increasingly motorbike—drivers, which count on
flex-fuel engine vehicles that can run on any combination of (hydrated) ethanol or
gasoline. These engines allow drivers to choose between fuels based on price or other
criteria (see Fig. 5.1).
The growing market for Brazil’s sugarcane agroindustry and its high efficiency
have attracted multinationals from the oil and agricultural technology sectors. This
attractiveness has increased the number of acquisitions, mergers, and the industry’s
horizontal consolidation significantly, especially after the 2008/2009 financial crisis.
For instance, British Petroleum, Bunge, and Louis Dreyfus Commodities acquired
much of the Brazilian sugarcane-ethanol sector between 2008 and 2011. The
country’s largest sugarcane company, COSAN, became a joint venture with Shell
called Raízen. Monsanto, now owned by Bayer, acquired some of the leading sugarcane research and development centers—with biotechnology that public funds had
helped develop, to the chagrin of many Brazilian researchers and public complaints
2 This refers to poisonous animals in the field, risks of workers cutting each other, and to the sugarcane
leaves themselves, which can easily cut the skin (Ripoli et al. 2000).
3 In 2009 more than 2000 rural workers were released by government inspection groups from bonded
labor conditions, considered analogous to slavery, in the Brazilian sugarcane sector (Gomes et al.
2010a).