Bioethanol demand forces Brazil sugar cane industry upheaval

 Brazilian Sugar Brazil has been producing ethanol since the oil crisis of the 1970sand it is economically competitive with petrol when the oil priceis higher than $40 per barrel. Brazil expects to produce a record24 billion litres of bioethanol this year but is planning almost todouble this to 47 billion litres by 2015. Much of the growth will come from exports to the US and Europe,which have imposed legal requirements to include blended biofuelsin petrol. The EU, for example, has proposed that by 2020, 10 percent of all EU transport fuel will come from biofuels. To prepare for this, a huge network of pipelines is being plannedto transport bioethanol from cane mills in Brazil’s interiorto shipping terminals on the coast, Mr Jank said. The industry, traditionally dominated by family-owned concerns, isconsolidating rapidly and being invigorated by a new kind offoreign investment, including funds linked to Dreyfus and GeorgeSoros. In April BP, the oil giant, announced an investment worth upto $1 billion in Tropical Energia, a joint venture between theBrazilian groups Santelisa Vale and Maeda. Mr Jank claims the industry welcomes both consolidation andoverseas investment but the rapid pace of expansion has promptedconcerns about knock-on impact on deforestation of the Amazon andon the exploitation of vulnerable workers. Nearly eight million hectares of sugar cane are under cultivationbut Unica expects this to increase to 14 million by 2020. Mr Janksays that there is no major area of sugar cane production closerthan 1,000km to the Amazon region. He denies that there could be adisplacement effect that forces agricultural production into theregion. The introduction of cutting machines will happen more quickly inthe south of Brazil than in the north. The hilly landscape of themajor growing area in the northeast, around Pernambuco, inunsuitable for cane-cutting technology, which means that handcutting is likely to persist there until the technology advances.