Agrofuels in Brazil - What is the outlook for its farming sector?

Nov 2008

This study of Brazilian agrofuels deals separately with ethanol and biodiesel. In spite of overlaps which will be discussed in the text and which are likely to increase with time ethanol and biodiesel are governed by very different dynamics. The former is derived from large sugarcane plantations still heavily dependent on, often casual, harvest wage-labourers. Some two-thirds of sugar cane production is concentrated in the State of São Paulo (SP).
The emerging biodiesel market, on the other hand, is a government created and regulated market which was launched as recently as 2004. As we will describe in the main body of the text, it is a highly elaborated and original case of “market construction”. Legally enforced regulation on the mixture of biodiesel (a subordinate feature also, it should be added, of the ethanol market) will ensure a progressively expanding market providing a predictable long-term framework for investments.
In stark contrast with ethanol, the Biodiesel Programme is explicitly designed as an initiative giving priority to social inclusion. It is seen as an opportunity for income and employment creation within the family-farming sector as a whole. It is also designed as an instrument for regional development with the aim of using raw materials traditional to each region.
This report will be divided into three sections: the first two dealing respectively with ethanol and biodiesel and the final section with a series of three regional case studies. The first two sections involve a detailed analysis of each sector’s dynamic with a specific focus on social, gender, food security and environmental implications. In addition to a review of secondary data, journalistic information, technical reports, public policy and academic publications, we conducted extensive interviews with a wide range of relevant actors.
Through the case-studies this report examines the development of the biodiesel programme in the Northeast (Ceará) and the North (Pará) with a view to evaluating the programme’s potential for consolidating the participation of the family farming sector and establishing the basis for local and regional development. While biodiesel has been conceived from its initial formulation as a programme geared to the family farm, it has been widely accepted that scale economies preclude such an approach in the case of ethanol from sugarcane.
The choice of the State of Rio Grande do Sul for our third case-study is based on the number of projects challenging this logic and promoting ethanol from sugarcane in integrated energy and food family production systems.

By: J. Wilkinson, S. Herrera (UFRRJ)

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