SÃO PAULO, Brazil — Brazil is responsible for running one of the largest sugarcane industries in the world. It makes up roughly 1.6 percent of the Brazilian economy and contributed 36 billion dollars to the nation’s gross domestic product in 2012. Sugarcane industry revenues totaled 86 billion. Brazil’s sugarcane accounts for 20 percent of world supply and 60 percent of global trade.
One of the biggest uses of sugarcane is ethanol. Up to 96 percent of cars in Brazil are flex-fuel; they run on gasoline or a biofuel
with as much as 85 percent ethanol. In 2012, Brazil produced 23.2 billion liters of sugarcane ethanol.
The benefits of the sugarcane industry for Brazilians are tangible but offset by human costs. For 300,000 seasonal workers, living and working conditions are reputedly “deplorable.” In 2007, 1,000 workers were rescued from slave-like conditions at a major plantation. The Brazilian government subsequently intensified efforts in anti-slavery cases and later freed 6,000 more workers.
The São Paulo region produces about two-thirds of Brazil’s sugarcane. The final third is located largely is northeast Brazil, which suffers from the greatest poverty and malnutrition rates.
The country is unique in setting aside so much land for sugarcane production. Because of this, food production is not injured by the dominance of sugarcane. Deforestation is kept to a minimum; no sugarcane is grown in the Amazon rain forest. The most marked effect sugarcane has had on the environment is increasing carbon sequestration and creating carbon sinks.
The cost of sugarcane depends on costs of labor and costs of pesticides and it increases with inflation. The government-run Petrobras secured a fuel-resource for Brazilians and discounted the price of its imported gasoline. Since 2008, it has cost the company, and the government, 20 billion dollars. It greatly lessened the demand for ethanol and consequently sugarcane. In 2008, 50 percent of fuel sold in Brazil was ethanol. Now, ethanol accounts for about 30 percent.
Still, the industry is strong. In 2011, 1.1 million people were employed in the sugarcane industry. Despite instances of poor conditions for workers, it is one of the highest paying agricultural sectors in Brazil, second only to the soybean industry. Average monthly salaries are about 472 dollars, 53 dollars above the national average.
Sugarcane production faces a number of problems. Inadequate storage systems prevent farms from keeping the crop until prices rise. This year, the harvest was early and plentiful, raising concerns about supply later in the summer. The competition with oil is a greater challenge then ever.
The government is relatively unsupportive of mills as it does not offer substantial subsidies. When the sugarcane industry began to struggle when the U.S. tapped into fracking and Brazil found its own oil deposits, the government cut back taxes on oil. Ethanol was still a cleaner alternative to gasoline, but it was no longer cheaper.
The future of sugarcane and ethanol may instead rest in the hands of researchers. Only one third of the energy in sugarcane can be converted into ethanol. The rest is locked into the cane fibers. The past few years have seen a heightened interest in cellulosic ethanol, which would make use of much of the energy left over. In the meantime, the industry may have a slow road to recovery.
– Olivia Kostreva