the impacts of the new eu sugar regime in third countries: a brazilian view ministry of agriculture,...
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THE IMPACTS OF THE NEW EU SUGAR REGIME IN THIRD COUNTRIES:
A BRAZILIAN VIEW
Ministry of Agriculture, Livestock and Food Supply
ALEXANDRE STRAPASSON
General Coordinator for Ethanol and Sugar Affairs
ISO WORKSHOP - ISTANBUL - May 23, 2006
INDEX
1. OVERVIEW ABOUT THE SUGAR CANE PERFORMANCES
2. FORECAST FOR THE SUGAR CANE EXPANSION
3. ALTERNATIVES TO BE MORE COMPETITIVE REGARDING THE NEW EU SUGAR REGIME:
- ETHANOL
- BEST USES FOR THE WASTES
Source: UNICA – April 2006
Mill
NORTH/NORTHEAST REGION
15% of national sugar cane production
CENTER-SOUTH REGION
85% of national sugar cane production
SUGAR CANE IN BRAZIL
Evolution of Sugar Production in Brazil - 1964/65 to 2004/05
0
5
10
15
20
25
30
64
/65
66
/67
68
/69
70
/71
72
/73
74
/75
76
/77
78
/79
80
/81
82
/83
84
/85
86
/87
88
/89
90
/91
92
/93
94
/95
96
/97
98
/99
00
/01
02
/03
04
/05
Mill
ion
ton
s
Source: Ministry of Agriculture - Brazil
CROP-YEAR
SUGAR IN BRAZIL: PRODUCTION X CONSUMPTION
Source: Ministry of Agriculture - Brazil
0
5.000.000
10.000.000
15.000.000
20.000.000
25.000.000
30.000.00019
84
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
ton
ne
s
Consumption Exports
SUGAR IN BRAZIL: RAW X WHITE SUGAR
Source: Ministry of Agriculture - Brazil
0%
25%
50%
75%
100%
2003/2004 2004/2005 2005/2006
White Raw
VHPVHP and Demerara and Demerara
CrystalCrystal and and Refined sugarRefined sugar
SUGAR CANE DESTINED TO SUGAR AND ETHANOL
PRODUCTION IN BRAZIL
SUGAR CANE PERFOMANCES IN BRAZIL
CROP YEAR 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07*
SUGAR CANE PRODUCTION FOR ALL PURPOSES (million tons) (1)
344,3 363,7 389,9 416,6 421,8 443,4PLANTED AREA (million of
hectares) (1) 5,02 5,10 5,50 5,69 5,87 6,00
SUGAR CANE DESTINED TO SUGAR AND ETHANOL
PRODUCTION (million tons) (2)292,3 316,1 357,3 381,4 383,7 415,0
SUGAR CANE DESTINED TO SUGAR PRODUCTION (million tons)
(2) 144,4 162,4 179,0 193,7 188,8 208,8SUGAR PRODUCTION
(million tons) (2) 18,99 22,38 24,96 26,63 26,43 28,75SUGAR PRODUCTION PER TON OF
SUGAR CANE (kilos) 131,5 137,8 139,4 137,5 140,0 137,7SUGAR PRODUCTION PER
HECTARE (tons) 9,02 9,83 9,89 10,07 10,05 10,18Source:
(1) Brazilian Institute of Geographical Statistics - IBGE -
(2) Ministry of Agriculture, Livestock and Foodsupply
* Source:Datagro
BRAZIL: RAW X WHITE SUGAR
YEARS MILLION US$ F.O.B. MILLION TONS AVERAGE PRICE US$
1997 1.771 6,4 277,99
1998 1.943 8,4 232,16
1999 1.911 12,1 157,91
2000 1.199 6,5 184,41
2001 2.278 11,2 203,92
2002 2.090 13,3 156,65
2003 2.140 12,9 165,71
2004 2.640 15,8 167,49
2005 3.919 18,1 215,95Source: Secex (Alice System)Source: MDIC (Alice System)
FORECAST FOR THE NEW MILLS IN BRAZIL
STATE Restarting activities
(old mills)
Mills under construction
Approved projects
Projects under anlyses
(intention)
TOTAL
NORTH / NORTHEAST REGION 2 0 8 0 10
CENTER / SOUTH REGION 9 28 38 4 79
BRAZIL - TOTAL 11 28 46 4 89
Source: UNICA – April 2006
Sugar cane conservative foresight for 2013:
- More 3 million ha (to produce sugar and ethanol)- More 13 million tons of sugar to the international market
Situation in May 2006:
Current installed capacity: 344 Mills
HOW TO EXPAND SUGAR CANE WITH SUSTAINABILITY?
SLOPE > 12%
AMAZON REGION
ATLANTIC FOREST
TOTAL AREA WITHOUT ENVIRONMENTAL RESTRICTIONS . . . . . . . . . . . . 437,2 MM hectares
AREA WITH SLOPEABOVE 12% . . . . . . . . . . . . . . 75,6 MM hectares
TOTAL AVAILABLE ANDSUITABLE LAND . . . . . . . . . . 361,6MM hectares
PANTANAL(SWAMPLAND)
SLOPE
> 12%
SLOPE
< 12%
Source: MCT; Unicamp; CTC, 2005
Land classification
Country size: 855 million ha.
Unexplored areas for expanding agriculture with sustainability: 90 million ha (source: Embrapa).
ADEQUATED SOIL AND CLIMATE FOR SUGAR CANE
Without any irrigation system With some irrigation system
Source: MCT; Unicamp; CTC, 2005
Legend:
High
Middle
Low
Improper
SUGGESTIONS FOR THE THIRD COUNTRIES TO BE MORE COMPETITIVE
REGARDING THE NEW EU SUGAR REGIME AND WORLD SCENARIO
- TO PRODUCE ALSO ETHANOL IN THE SAME INDUSTRIAL UNIT THAT PRODUCE
SUGAR (BIOREFINERY CONCEPT), INCREASING THE GLOBAL EFFICIENCY.
- TO TAKE ADVANTAGE FROM THE VINASSES AS A FERTILIZANT.
- TO MAKE ENERGY COGENERATION FROM BAGASSE, EXPORTING ELECTRICITY
TO THE GRID.
ETHANOL: The Brazilian Experience
- Total production: 16 billion liters
- Production per ton of sugar cane: 82 L/t
- Production per hectare: 7000 L/ha
- Production ratio: 160 thousand ha to produce 1 billion liters ethanol
Million US$
F.O.B.
Liters (Billion)
Average US$/m³
Million US$
F.O.B.
Liters (Billion)
Average US$/m³
2003 158,0 0,757 208,56 548,0 2,640 207,48 -0,5%2004 498,0 2,408 206,68 570,0 2,002 284,49 +37,7%2005 766,0 2,592 295,31 1.066,0 2,857 373,01 +26,3%
Source: MDIC (Alice System)
ETHANOL GASOLINE PRICE RELATIONSHIPEthanol x Gas
YEARS
EXPORTATIONS: ETHANOL AND GASOLINE PRICE RELATIONSHIP
WHY ETHANOL?
- Renewable energy;
- Safe and efficcient;
- Easy to produce in large scale;
- Low pollutant;
- Generate new jobs, specially in the rural area;
- Easily to indroduce in the cosumer market (pure or mixed with gasoline);
- Sugar cane has high productivity and minimum environment impacts;
- Relatively low production costs (~ R$ 0,65/L at the mill, without taxes);
- The sugar cane wastes are important products;
- Low consumption of external energy in the production process.
ENERGY EFFICIENCY
Raw material Energy output / Energy input
Wheat1 1.2
Corn1 1.3 – 1.8
Sugar Beet1 1.9
Sugar Cane2 8.3
1 F.O. Licht, 2004.2 Macedo, I et al., 2004 – Under Brazilian production conditions.
THE USES OF VINASSES IN BRAZIL
Good fertilizant: high amount of potassium (K2O)
Vinasses can be applied on the soil by irrigation
A new technology is being developed in Brazil: to dehydrate and transform vinasses into a new commercial product
CO-GENERATION WITH SUGAR CANE BAGASSE IN BRAZIL
CURRENT POWER: ~ 2200 MW
(700 MW are exported to the grid and 1500 MW are consumed in the own mills)
ACTUAL MEASURED POTENTIAL:
3.000 MW – 14.000 MW (extra)
Depending of the technology applied in the generation process.
- Possibility to obtain carbon credits from CDM Projects (Kyoto Protocol)
- Complementary to the hydraulic generation in the Center-South Region
BRAZILIAN CROP-YEAR PERFORMANCES2003/2004 AND 2004/2005
CROP-YEAR 2003/04 CROP-YEAR 2004/05 Quantity %
Total Production 357,3 381,4 24,1 6,7%
Destined to Sugar 179,0 193,8 14,8 8,3%Destined to Ethanol 178,3 187,7 9,4 5,3%
Total Production 24,96 26,63 1,67 6,7%
Domestic Consumption 9,30 9,70 0,4 4,3%Exporting 13,00 16,20 3,2 24,6%Passage Stock 2,77 3,50 0,7 26,4%
Total Production 14,66 15,20 0,5 3,7%
Domestic Consumption 12,20 13,50 1,3 10,7%Exporting 0,65 2,40 1,8 269,2%Passage Stock 1,74 1,04 (0,7) -40,2%
Source: SPAE/MAPA - 2006
Sugar Cane (million tons)
Sugar (million tons)
Ethanol (billion liters)
ProductionVariation between Crops
03/04 and 04/05Production
SUGAR CANESUGAR CANE
BRAZILIAN ETHANOL PRODUCTION
0
5,000
10,000
15,000
20,000
25,000
30,000
64/6
566
/67
68/6
970
/71
72/7
374
/75
76/7
778
/79
80/8
182
/83
84/8
586
/87
88/8
990
/91
92/9
394
/95
96/9
798
/99
00/0
102
/03
04/0
506
/07
08/0
910
/11
12/1
3
Mill
ion
lite
rs
1st Stage: sugar cane destined only for sugar
2nd Stage: hydrous ethanol.
Governmental intervention on the market.
3rd Stage: anhydrous ethanol.
High sugar exports.
Oil prices stabilized
4th Stage: free market.
Flex fuel vehicles.
High international sugar and ethanol demands.
Top oil prices.
GHG emission targets.
Oil crisis
PROÁLCOOL Kyoto Protocol
hydrous
anhydrous
total
HOW TO START A PROGRAMTO MIX ETHANOL WITH GASOLINE?
GENERAL ASPECTS:
- Technology and high level human resources
- Legislation and tributary issues
- Plan for supply guarantee and economic viability
- Loggistic and infrastructure investments
- Marketing plan for the consumers
THERE IS NO FIXED RULE, EACH COUNTRY WILL ESTABLISH THE BEST WAY.
THANK YOU!
OBRIGADO!
MUCHAS GRACIAS!
MERCI!
Alexandre Strapasson
+ 55 61 3218-2945 / 3218-2147
www.agricultura.gov.br