Introduction
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). Ethanol was first used in the 1920s but was promoted in a major way as a light-vehicle fuel through the Federal Government Proalcool programme in the 1970s in response to the explosion of petroleum prices. With declining oils prices in the 1980s and rising world sugar prices consumer confidence was broken as producers shifted from ethanol to sugar for export.
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. Access to this market is via auctions organized by the ANP. In addition, participation in these auctions depends on the acquisition of a Social Seal provided by the Ministry for Agrarian Development to those firms which demonstrate that a given percentage of their raw material or crude oil has been contracted with family farms in agreement with the rural trade unions. 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 or bioma. Differently from ethanol, therefore, which is exclusively produced from sugarcane in Brazil (although manioc was initially experimented), biodiesel is designed to be produced from a variety of raw materials (including also animal fat, and used cooking oils) in multi-purpose bio-refineries. Ideally it is hoped that the family farming sector will advance to the production of crude oil as a key value-adding activity, although as we will see this is far from evident in practice. Initially biodiesel is directed to the domestic market although investments are underway premised on the consolidation of exports.
The Biodiesel programme is still in its infancy and very different futures are possible. To a certain extent it can be seen as a compensatory policy given that ethanol is unashamedly recognised as the domain of large-scale farming and large-scale, increasingly transnational, capital. On the other hand, it is not impossible that novel features of the biodiesel programme, such as the stipulation that a (regionally varying)percentage of raw material should come from family farmers, be seen as policies viable also for the sugarcane sector. In practice, however, there are strong indications that the biodiesel programme itself may become absorbed within the logic of the dominant agribusiness sector. Soy-oil is already the principal feedstock nationally and very large-scale oil palm plantations dominate in the Northern region.
Our 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 our 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. Both of these approaches impose clear criteria for the biodiesel programme which go beyond the degree to which it accomplishes its supply goals.
The State of Ceará has a high density of family farmers in the semi-arid region for whom the biodiesel programme in principal offers an important opportunity for improved income and employment conditions. More important, however, has been the degree of institutional mobilization to promote the biodiesel programme. Ceará has seen important investments in refining by both Petrobras and the leading private biodiesel firm Brasil Ecodiesel. In addition, the programme has received very strong backing from the State Government. Decisive for our choice of the State of Ceará was the level of mobilization and coordination of the different, relevant actors for the success of the programme.
In the Northern region, the State of Pará was chosen because this State has become the focus of palm oil production which globally is the principal component of the biodiesel programme and has been defined as the initial privileged raw material for this region.
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.
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