1 Sustainable biofuels, rural development and private sector engagement: What can we learn from Brazil? Daniele Cesano Sustainability Science Fellow 2007/08 15 th of April 2008 Center for International Development Kennedy School of Government Harvard University [email protected]Acknowledgments • Sustainability Science program – Prof William Clark and Dr Nancy Dickson • Italian Ministry of the Environment • Supervisors – Prof Henry Lee – Prof John Holdren – Prof Calestous Juma • SSP Fellows – Prof Marcel Bursztyn • Luciano Rodriguez (UNICA) • Marcelo Leal (COOPERBIO) • Werner Fuchs and Valtair Fernandes Júnior (COOPERBIO Brasil) • Marcos Falcao Gonçalves, Airton Saboya Valente Junior and José Sydrião de Alencar Júnior (Banco do Nordeste do Brasil) • Jose’ Roberto Moreira (CENBIO) • Denis Delavi and Jose’ Limana (Limana Poliserviços).
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DC pres 15April08 - belfercenter.org · de Alencar Júnior (Banco do Nordeste do Brasil) ... 25% 30% 35% 40% 10 50 250 500 1000 2000 4000 8000 16000 32000 64000 Hectares 97% 1000
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Sustainable biofuels, rural developmentand private sector engagement: What can we learn from Brazil?
• Is it possible to havea model that is trulysustainable? – Are smaller units more
sustainable?– How smaller?
Economic
Social Environmental
COOPERBIO, Palmeira dasMissões, Rio Grande Do Sul
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Socio-economic context
• Small farmers– 95.1% of farmers own less than 50 hectares of land
• Poverty– 90% of the families in the region live with less than
400 $/month– The region concentrates 36% of the poorest families
in RGS• One of the largest soy-producers of Brazil
– 4.9% of landowners have 43.9% of the land
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Why small scale ethanol?
• Transgenic soy– Highly risky for small
farmers– Concentration of
income• Climate change• High ethanol price
– 2% produced in RGS
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Baseline: soybean yield
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Yiel
d (K
g/H
a)
Brasil
Paraná
Santa Catarina
Rio Grande do Sul
Palmeira dasMissões - RS
Objectives of COOPERBIO
• Cooperative of small farmers– 23,000 small farmers in the region
• Pilot project– Diversify farmer’s production through small-scale
ethanol unit;– Create a new logistical and distribution system for
ethanol;– Integrate food and biofuel production.
• Project sponsor– Petrobras and Electrosul (about 2 M $)
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Project outline
• 9 micro-distilleries– Quality standards (?)
• 1 rectification units– Reach ANP standards– Produce ethanol
(1,200 l/day)
Micro-distilleries
Eucalyptus
Animal feed
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Feedstock production• Negotiated with Bank of Brazil specific credit
conditions for farmers (PRONAF)– 500 $/Ha
• 2% interest rate, 12 years• Seeds or seedlings
– Semi-perennial trees (jatropha, tungue): vegetable oil– Native species: reforestation especially along water course– Energy crops: sugarcane and eucalyptus– Fruits: oranges and apple
– Maximum of 2 Ha per family of sugarcane• Avoid monocultures• Product diversification• Share benefits among families• Borderline effect
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Feasibility analysis: assumptions
Fully operational already from year 1Fully operational already in year 1
All sugarcane (26,638) is planted during the first year
All sugarcane (29.5 hectares) is planted during the first year
Hydrous ethanol is sold to a distributorHydrous ethanol is sold to the final consumers
All production costs keep constant with time, 12 years
All production costs keep constant with time, 12 years
Distillery rents 70% of the land and purchases 30% of the feedstock at market price
Farmers sell sugarcane to the distillery at production cost
The hydrous ethanol will reach the ANP standards
The hydrous ethanol will reach the ANP standards
Some mechanization in harvesting.Manual harvesting
7.00Feedstock cost, average 5 years (R$/ton)470470Sugarcane production cost, year 2-5 (R$/Ha)
1,9201,920Sugarcane production cost, year 1 (R$/Ha)2020Depreciation (years)70100Debt (%)125Loan period (years)122Interest rate (%)-10,766Investment per farmer (R$)
240015Total number of farmers or workers105248Unit investment (R$/l)