BRAZILIAN ETHANOL INDUSTRY

By: Marcelo Dodson

The Actual scenario

of the

marcelododson@gmail.com

Brazilian Ethanol Chronological Facts

In 1532,Martim Afonso de Sousa arrived in Brazil brining sugarcane stems.

1530

Brazil was discovered in April 22,1500

For more than 200 years, the sugarcane production focused on three majors products

1. Sugar2. Animal Feedstock3. Cachaça brandy

Brazilian Ethanol Chronological Facts

• 5% (E5) blend of ethanol and

gasoline was added

• During the 2nd World War, the Northeast

Region used a 40% (E40) blend.

1931 - 19451530

• National Alcohol Program is launched in 1975 (PROALCOOL)

• The 1973 oil crisis

Brazilian Ethanol Chronological Facts

1973-1975 1931 - 19451530

%

90

01986 1990s

Percentage of cars manufactured with Ethanol Engineering

Source: Adapted from Hofstrand (2009)

Brazilian Ethanol Chronological Facts

1986 1990s 1973-1975 1931 - 19451530

2003 2009-2010 1986 1990s 1973-1975 1931 - 1945

%

90

02003 2010

Source: Adapted from Seelke & Yacobucci (2007)

Percentage of sales of FLEX FUEL vehicles

Brazilian Ethanol Chronological Facts

1530

Brazilian’s Sugar Cane Production System

Productive Structure

Brazil enjoys the fact that it has two distinct harvest periods

1. North-Northeast region From November to April

2. Center-SouthFrom May to November

Source: Di Ciero (2010)

Productive Structure

This regulation considers environmental, economic, and social aspects to

guide both sustainable expansion of sugarcane production and investments in the

biofuel sector

ZAE Cana excludes areas with slope bigger than 12%, forest (i.e. Amazon

forest and Pantanal Swamp), and other areas.

Brazil has approximately 63.48 million hectares (151 million acres) for the

expansion of the sugarcane (Brazil/ Presidencia da Republica, 2009).

Sugarcane Agro-ecological zoning (ZAE Cana)

(ZAE Cana)

Facilities - TypesSugar mills

Mills with distillery plants

Independent distilleries15

248

157

Source: MAPA (2010)

Distribution per region

Facilities – Geographic Distribution

Productivity of 80 tons/ha(336.276,100 tons)

Productivity – 2010/2011

46,2%53,8%

27.67 billion Liters 38,675,500 Tons

Productivity – Sub products

Productivity – Sub products

Brazilian Ethanol IndustryIn numbers

Production & Demand

Ethanol (Billion of liters)

Export

Production

Consumption

Internal Demand

FFV sales represent roughly 90% of new vehicle sales by end of year.

First flex fuel Motorcycle, models in the 150 cc Sold 183 thousand units for the year, a total that is 70% higher than sales for conventional units in the

same category (UNICA, 2010).

By the year 2013 more than half of the Brazilian fleet will be FFV

At the pump, he end-user can decide between gasoline or Ethanol by multiply the gasoline price by 0.7.

Gasoline has 22-25% of ethanol

2010 GDP: 7.5% 2010 unemployment: 5.3%

Storage

Infrastructure

Logistic

And other problems

In the last 20 years, the Brazilian government

did not invest enough resources on the

national infrastructure. As a result of this

short term vision, the country suff ers to

transport its goods.

Infrastructure & Logistic

The predominant mode of ethanol transport is road system because its

competitiveness on short routes and low load conditions. In general, the plants are

located, in agricultural areas away from major transportation routes and, individually,

have no scales of production that enable the use and investment in other modes of

transport.

http://caminhoesracing.blogspot.com/2009/09/treminhao.html

Road system

In 2008, the Center South region concentrated 68.3% of the national ethanol railroad system and seven from 10 main railroads terminals are destined to receive the fuel. The average railway distance in the region were 900 km (between 500 and 2,300 km), and the annual volume transported is approximately 1.6 million cubic meters (moving between 50 thousand and 400 thousand cubic meters in the main section)

Infrastructure & Logistic

Railroad system

http://www.ocoruja.com/index.php/2009/o-brasil-esta-embarcando-nos-trens/

Infrastructure & LogisticPipeline system

Brazil has approximately 5,700 miles of pipelines for combustive transport

Investment: U.S. $ 1.2 billion

Expected costs reduction: 10%

Volume: 12 million m3 of ethanol(Transpetro, 2010)

Infrastructure & Logistic - Pipelines

PlayersPrincipal

Source: UDOP (2010)

In Brazil, the ethanol marketing is become more concentrated. Seven major groups already dominate 67% of the ethanol sales in Brazil.

Foreign control of Brazilian ethanol and sugar companies is now up to 22 percent

Principal Players

Mills

Ethanol(billion liters)

9

3

Sugar (million tons )

the largest Brazilian sugar, ethanol and bioenergy

company

39

3.9

5.2

the largest global sugarcane-bagasse-

based electric energy generator,

23

2.2

4

13

1.5

2.3

Labor System The sugarcane industry is the biggest jobs generator of the Brazilian agriculture sector.

• Employees 629 thousand people

• The industry will generate others 170 thousand jobs in the following years

http://www1.folha.uol.com.br/folha/galeria/imagemdodia/p_20070421_08.shtml

The result of these actions reduced the child labor in the sugarcane industry in 86% (from 14.7% to 3.3%) of temporary workers and almost to 100% of permanent workers, from 1992 and 2005 (Balsadi, 2007).

Laws and Agreements

• National commitment for the improvement of labor conditions in sugarcane production

• The Brazilian labor ministry published the regulation 31• The Brazilian labor law

BRAZIL U.S.A

Vs

BRAZIL U.S.A

Description Mills Ethanol Jobs GDP Fleet

Brazil 453 7.5 Billion Gallons 630,000 26 billion 61 million

vehicles

The US 204 13 Billion Gallons 400,000 53.3 Billion 246

million

BRAZIL U.S.A

(Hofstrand, 2009)

marcelododson@gmail.com

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