106
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
(Biondi et al. 2009). By employing primarily seasonal migrants, the sector exacerbates household disintegration, too.
16 The current transition towards mechanized
harvesting has improved on these social impacts, but at the cost of consolidating the
sugarcane sector’s socially exclusive structure. Although many manual cutters have
sometimes been trained for more skilled jobs (Jank 2011), it is clear that only a small
minority is being absorbed. The larger unskilled and illiterate mass is simply being
excluded from the sector.
Brazil has tried to fill these social gaps through its biodiesel policy by allocating
additional economic benefits to industries that integrate smallholders. Engaging with
smallholders incur further burdens and risks such as the provision of technical assistance, the need to source in smaller amounts from a larger number of suppliers,
and dealing with partners who may not be used to business contracts. These were
burdens the private sector seemed unwilling to take, triggering the creation of Petrobras Biofuels and its insertion in this market to save the government’s agenda. Smallholder integration then quadrupled between 2008 and 2010 to more than 100.000
households (Gomes et al. 2010c).
Although this inclusion of smallholders would later erode due to Brazil’s governmental changes, it is useful to analyze the experience and lessons therein. It was
clear that, notwithstanding some poverty reduction benefits, allocation of control
and of roles in those contracts remained skewed in favor of the industry. First, most
arrangements have been made under monopsony conditions, i.e., with many potential
sellers but only one buyer available, giving the latter disproportional leverage over
price and negotiation terms. The disadvantageous terms smallholders initially got
were crucial for the 2009 policy change requiring contract validation by a representative social movement. Second, while the industry benefits from value-added and
can choose among different downstream markets (e.g., castor oil sold by Petrobras
to the more profitable oleochemical market rather than for fuel), smallholders are
limited to the condition of mere raw-material suppliers.
17 As a Brazilian professor
describes the arrangement: “If everything works out, the farmer will live his whole
life receiving a minimum salary for the crop he supplies, while Petrobras pockets the
big money” (Personal interview). Finally, there has usually been an imposition of
“improved” seeds that dismisses local varieties, even though the former’s superiority
has been questioned (Kilham et al. 2010; see also Altieri and Toledo 2011). Usually,
those seeds come as a package together with fertilizer and pesticide inputs, to the
dissatisfaction of many smallholders as it can easily create a form of dependence and
undermine traditional knowledge, resources and local approaches sometimes based
on organic agriculture (Wagenaar 2009; Kilham et al. 2010).
16 Such seasonal migrants normally stay away for the largest part of the year. In Brazil, the wives
left behind become known as “widows of living husbands” (Biondi et al. 2009). See also Hall et al.
(2009) and Gomes et al. (2010a).
17 In the particular case of Petrobras, it benefits twice from biodiesel production, not only from
this market in itself, but also from reducing diesel imports. It has been estimated that the Brazil’s
5% biodiesel blending saves Petrobras USD 1.4 billion per year in foreign exchange (Gomes et al.
2010c).
5 Brazil Between Bioeconomy Barons and Grassroots Agroecology
(Biondi et al. 2009). By employing primarily seasonal migrants, the sector exacerbates household disintegration, too.
16 The current transition towards mechanized
harvesting has improved on these social impacts, but at the cost of consolidating the
sugarcane sector’s socially exclusive structure. Although many manual cutters have
sometimes been trained for more skilled jobs (Jank 2011), it is clear that only a small
minority is being absorbed. The larger unskilled and illiterate mass is simply being
excluded from the sector.
Brazil has tried to fill these social gaps through its biodiesel policy by allocating
additional economic benefits to industries that integrate smallholders. Engaging with
smallholders incur further burdens and risks such as the provision of technical assistance, the need to source in smaller amounts from a larger number of suppliers,
and dealing with partners who may not be used to business contracts. These were
burdens the private sector seemed unwilling to take, triggering the creation of Petrobras Biofuels and its insertion in this market to save the government’s agenda. Smallholder integration then quadrupled between 2008 and 2010 to more than 100.000
households (Gomes et al. 2010c).
Although this inclusion of smallholders would later erode due to Brazil’s governmental changes, it is useful to analyze the experience and lessons therein. It was
clear that, notwithstanding some poverty reduction benefits, allocation of control
and of roles in those contracts remained skewed in favor of the industry. First, most
arrangements have been made under monopsony conditions, i.e., with many potential
sellers but only one buyer available, giving the latter disproportional leverage over
price and negotiation terms. The disadvantageous terms smallholders initially got
were crucial for the 2009 policy change requiring contract validation by a representative social movement. Second, while the industry benefits from value-added and
can choose among different downstream markets (e.g., castor oil sold by Petrobras
to the more profitable oleochemical market rather than for fuel), smallholders are
limited to the condition of mere raw-material suppliers.
17 As a Brazilian professor
describes the arrangement: “If everything works out, the farmer will live his whole
life receiving a minimum salary for the crop he supplies, while Petrobras pockets the
big money” (Personal interview). Finally, there has usually been an imposition of
“improved” seeds that dismisses local varieties, even though the former’s superiority
has been questioned (Kilham et al. 2010; see also Altieri and Toledo 2011). Usually,
those seeds come as a package together with fertilizer and pesticide inputs, to the
dissatisfaction of many smallholders as it can easily create a form of dependence and
undermine traditional knowledge, resources and local approaches sometimes based
on organic agriculture (Wagenaar 2009; Kilham et al. 2010).
16 Such seasonal migrants normally stay away for the largest part of the year. In Brazil, the wives
left behind become known as “widows of living husbands” (Biondi et al. 2009). See also Hall et al.
(2009) and Gomes et al. (2010a).
17 In the particular case of Petrobras, it benefits twice from biodiesel production, not only from
this market in itself, but also from reducing diesel imports. It has been estimated that the Brazil’s
5% biodiesel blending saves Petrobras USD 1.4 billion per year in foreign exchange (Gomes et al.
2010c).