94
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
Smallholder incorporation experienced a major initial crisis between 2006 and
2008 due to companies’ inadequate technical assistance, low castor yields, and
contract prices below market prices (Gomes et al. 2010b). Although castor was
regarded as a “smallholder-friendly” crop capable of growing satisfactorily on poor
soils and without water, fertilizer, or pesticide inputs, yields revealed to be small and
mostly uneconomical under these conditions. As a result, companies broke many
contracts and abandoned the smallholders, some of whom were later “rescued” by
Petrobras Biofuels, a new state-controlled subsidiary. Petrobras started new agreements with the smallholders offering better seeds, improved technical assistance,
and higher purchase prices adjustable to market conditions (Zapata et al. 2010).
Rather than having farmers switch completely to feedstock cultivation (which proved
harmful to local food security), Petrobras also started promoting mixed food-andfeedstock cropping, adding to the existing farming practices. Yet, despite purchasing
castor beans for vegetable oil extraction, Petrobras did not use it to make biodiesel
but instead sourced (cheaper) soybean oil for this purpose while selling castor oil
more profitably to the oleochemical industry (Zapata et al. 2010; Bastos Lima
2012). Although later Brazilian administrations opted for a leaner state and largely
dismantled Petrobras’s biofuel operations, for some time it showed how different
arrangements were possible—while also raising questions about who kept control
of value-added.
Down the chain, all biodiesel manufacturers have to comply with rules from the
National Agency of Petroleum, Natural Gas and Biofuels (ANP), which organizes
auctions where fuel blenders and distributors purchase biodiesel. On average, about
25% of all biodiesel purchasing is done by Petrobras’s distributor branch (down from
40% in the early 2010s), followed by Raízen (18%), and several other, smaller private
distributors (ANP 2013, 2020). Distributors will then retail conventional diesel with
a mandatory percentage of biodiesel mixed in it (12% in 2020, rising one-percent
annually until 15% in 2023). All production is consumed domestically, primarily
for heavy-duty vehicles or stationary engines in remote parts of the country (see
Fig. 5.2).
Fig. 5.2 Biodiesel production and consumption chain in Brazil
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
Smallholder incorporation experienced a major initial crisis between 2006 and
2008 due to companies’ inadequate technical assistance, low castor yields, and
contract prices below market prices (Gomes et al. 2010b). Although castor was
regarded as a “smallholder-friendly” crop capable of growing satisfactorily on poor
soils and without water, fertilizer, or pesticide inputs, yields revealed to be small and
mostly uneconomical under these conditions. As a result, companies broke many
contracts and abandoned the smallholders, some of whom were later “rescued” by
Petrobras Biofuels, a new state-controlled subsidiary. Petrobras started new agreements with the smallholders offering better seeds, improved technical assistance,
and higher purchase prices adjustable to market conditions (Zapata et al. 2010).
Rather than having farmers switch completely to feedstock cultivation (which proved
harmful to local food security), Petrobras also started promoting mixed food-andfeedstock cropping, adding to the existing farming practices. Yet, despite purchasing
castor beans for vegetable oil extraction, Petrobras did not use it to make biodiesel
but instead sourced (cheaper) soybean oil for this purpose while selling castor oil
more profitably to the oleochemical industry (Zapata et al. 2010; Bastos Lima
2012). Although later Brazilian administrations opted for a leaner state and largely
dismantled Petrobras’s biofuel operations, for some time it showed how different
arrangements were possible—while also raising questions about who kept control
of value-added.
Down the chain, all biodiesel manufacturers have to comply with rules from the
National Agency of Petroleum, Natural Gas and Biofuels (ANP), which organizes
auctions where fuel blenders and distributors purchase biodiesel. On average, about
25% of all biodiesel purchasing is done by Petrobras’s distributor branch (down from
40% in the early 2010s), followed by Raízen (18%), and several other, smaller private
distributors (ANP 2013, 2020). Distributors will then retail conventional diesel with
a mandatory percentage of biodiesel mixed in it (12% in 2020, rising one-percent
annually until 15% in 2023). All production is consumed domestically, primarily
for heavy-duty vehicles or stationary engines in remote parts of the country (see
Fig. 5.2).
Fig. 5.2 Biodiesel production and consumption chain in Brazil