Sugarcane sector needs more innovation in addition to favorable taxation – 02/27/2023 – Shuttle

“The sugarcane mill owners, who ten years ago were considered as if they were the agribusiness bandits in this country, are becoming national and world heroes, because everyone is watching alcohol.”

The statement was made by Lula in March 2007 and, according to the then president, this was because there was a serious policy for the sector. In the year following the statement, the country exported a record 4.1 million tons of ethanol.

The government’s decision to charge higher rates for gasoline than for ethanol in the refund of federal taxes on fuels pleased mill owners.

According to them, the sector was losing share in the fuel market and put a brake on investments that would come in the medium and long term.

Regardless of Lula 3’s understanding of this segment, the sugar-energy sector depends on clear government policies, but cannot be at the mercy of tax regulation alone.

To grow again, you have to opt for more technology and innovation. Explore further the energy, biogas and biomethane sectors. One of the main objectives has to be to increase productivity.

While some groups already adopt these policies, others are far behind. One of the proofs is the low average production of sugarcane, which persists at 80 tons per hectare.

This productivity was already at 89 tons, but the decrease shows how much old sugarcane varieties are exposed to climatic crises, such as those that affected crops in recent years.

The CTC (Center for Sugarcane Technology) already has varieties with a potential of over 100 tons per hectare. As a result, the average should move upwards, as long as producers adopt these new varieties.

The way out at the moment is the search for a more vertical and less horizontal production.

The increase in productivity per area will reduce production costs and make sugarcane more competitive in relation to other crops that advance in its space, such as soybeans.

Ethanol prices also depend on oil prices, which, when low, further test the sector’s profitability.

This government decision takes place in a period between harvests of sugarcane ethanol production, but with an evolution of corn alcohol, which should reach 4.4 billion liters in this harvest.

The cereal’s ethanol supply, which already represents 13.7% of the country’s total production, reaches 200 million liters per fortnight in this period, which gives room for transition stocks for the next harvest, the 2023/24, which starts in April. Some plants anticipate production.

The loss of competitiveness of ethanol takes most of the cane harvested for sugar production. Exports of this commodity are favorable with India’s smaller participation in the foreign market.

Ethanol exemption also displeased sugarcane producers, who had losses in the formation of the value of ATR (Total Recoverable Sugar), remuneration basis.

In the case of corn, price formation depends less on the mills, since the cereal has other important factors in the price composition. Both the internal demand, coming from the production of proteins, and the external one interfere.

The participation of corn alcohol in the production of this fuel in the country is at 13.7% and should grow year by year. There are already 18 plants, 8 of them producing ethanol only from corn.

Another 20 projects are already at some stage of authorized release. Investments, if implemented, should total R$ 15 billion by 2030.

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