100
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
former Minister of Agrarian Development—and its direct engagement with smallholders contracting in the country’s most deprived areas where the private sector had
given up (Gomes et al. 2010b). Petrobras then adopted as its policy the provision of
improved seeds from the—also state-controlled—Brazilian Agricultural Research
Corporation (EMBRAPA). It started promoting mixed food-and-feedstock cultivation to avoid food insecurity problems that smallholders experienced when converting
exclusively to feedstock cultivation. Finally, Petrobras began to experiment with
alternative feedstocks to castor, such as sunflower oil.
Those changes successfully reversed the earlier problems with smallholder integration. Yet, in time the only family farmers to effectively contribute to biodiesel
making would be soy producers from the more well-off South of the country. Castor
and other oils appeared too valuable (and expensive) to become biodiesel feedstocks—they played a more sensible role in other bioeconomy chains, such as in the
oleochemical industry, to which Petrobras Biofuels started supplying. That notwithstanding, Brazil’s neoliberal administrations since 2016 have all but dismantled the
state-controlled subsidiary. Poor performance, insufficient investments, and later lack
of buyers led the castor bean planted area to shrink from 219,300 ha in the 2010/2011
harvest to only 28,000 ha in 2016/2017 (growing back to 45,600 in 2019/2020, but
still far below its apex) (CONAB 2020).
The biodiesel sector would become effectively sustained by feedstocks from
large agro-industrial complexes (soy and beef), thus mainly losing its original social
purpose of addressing rural poverty through biofuel value chains. In 2019, a new ordinance would then eliminate the need for an organization to ratify supply contracts.
Moreover, it made not only family-agriculture cooperatives but any cooperative that
includes family farmers eligible for the Social Fuel Seal and its benefits.
12 In practice, this has allowed commercial soy-farmer organizations to occupy a niche originally envisaged for poor smallholders—without formally dismantling but making a
travesty of the sector’s original social orientation.
By the start of 2020, the biodiesel industry met a 12% biodiesel blending mandate
using mainly soybean oil and beef tallow. These are by-products in abundant supply
in Brazil, and therefore a growing mandate has been steadily implemented. With
the COVID-19 pandemic, however, for the first time, the government reduced the
obligatory blending rate temporarily to 10%.
13 Much to the chagrin of biodiesel
industries, that had to do with abundant soy supplies sold in bulk—primarily to
China—leaving little to be domestically processed. A devalued Brazilian currency
has made raw soy exports attractive to growers, but it reduced biodiesel feedstock
supplies and increased the cost of (soy) cooking oil to Brazilian households.
While it remains to be seen what will prevail in terms of using Brazil’s growing
soy supplies, from 2023 a 15% blending rate is to be in place, at which stage technical
limitations of current engines might stall further increases. The official forecast is that
this rate will remain fixed throughout the 2020s, although representing ever-larger
absolute amounts as total diesel consumption is expected to increase (EPE 2020).
12 Ordinance N.144, of 22nd July 2019.
13 See Resolution N. 824, of 13th August 2020.
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
former Minister of Agrarian Development—and its direct engagement with smallholders contracting in the country’s most deprived areas where the private sector had
given up (Gomes et al. 2010b). Petrobras then adopted as its policy the provision of
improved seeds from the—also state-controlled—Brazilian Agricultural Research
Corporation (EMBRAPA). It started promoting mixed food-and-feedstock cultivation to avoid food insecurity problems that smallholders experienced when converting
exclusively to feedstock cultivation. Finally, Petrobras began to experiment with
alternative feedstocks to castor, such as sunflower oil.
Those changes successfully reversed the earlier problems with smallholder integration. Yet, in time the only family farmers to effectively contribute to biodiesel
making would be soy producers from the more well-off South of the country. Castor
and other oils appeared too valuable (and expensive) to become biodiesel feedstocks—they played a more sensible role in other bioeconomy chains, such as in the
oleochemical industry, to which Petrobras Biofuels started supplying. That notwithstanding, Brazil’s neoliberal administrations since 2016 have all but dismantled the
state-controlled subsidiary. Poor performance, insufficient investments, and later lack
of buyers led the castor bean planted area to shrink from 219,300 ha in the 2010/2011
harvest to only 28,000 ha in 2016/2017 (growing back to 45,600 in 2019/2020, but
still far below its apex) (CONAB 2020).
The biodiesel sector would become effectively sustained by feedstocks from
large agro-industrial complexes (soy and beef), thus mainly losing its original social
purpose of addressing rural poverty through biofuel value chains. In 2019, a new ordinance would then eliminate the need for an organization to ratify supply contracts.
Moreover, it made not only family-agriculture cooperatives but any cooperative that
includes family farmers eligible for the Social Fuel Seal and its benefits.
12 In practice, this has allowed commercial soy-farmer organizations to occupy a niche originally envisaged for poor smallholders—without formally dismantling but making a
travesty of the sector’s original social orientation.
By the start of 2020, the biodiesel industry met a 12% biodiesel blending mandate
using mainly soybean oil and beef tallow. These are by-products in abundant supply
in Brazil, and therefore a growing mandate has been steadily implemented. With
the COVID-19 pandemic, however, for the first time, the government reduced the
obligatory blending rate temporarily to 10%.
13 Much to the chagrin of biodiesel
industries, that had to do with abundant soy supplies sold in bulk—primarily to
China—leaving little to be domestically processed. A devalued Brazilian currency
has made raw soy exports attractive to growers, but it reduced biodiesel feedstock
supplies and increased the cost of (soy) cooking oil to Brazilian households.
While it remains to be seen what will prevail in terms of using Brazil’s growing
soy supplies, from 2023 a 15% blending rate is to be in place, at which stage technical
limitations of current engines might stall further increases. The official forecast is that
this rate will remain fixed throughout the 2020s, although representing ever-larger
absolute amounts as total diesel consumption is expected to increase (EPE 2020).
12 Ordinance N.144, of 22nd July 2019.
13 See Resolution N. 824, of 13th August 2020.