February 5, 2015
La Prensa
Sao Paulo, Feb 5 (EFE).- Governors of six leading Brazilian sugarcane producing states have formed a group to confront the crisis in the sugarcane industry, exacerbated by a drought in several parts of the country which has put 70 ethanol producing factories on alert.
The drought that affects south-eastern Brazil - the world's largest sugarcane producing region - the increased idleness of the factories and the country's policy of controlling the price of the fuel below the international market rate has pushed the sector into a deep crisis.
The group, led by Goias state governor Marconi Perillo and which had its first meeting on Wednesday, brings together the governors and sugarcane industry representatives from the states of Alagoas, Goias, Mato Grosso do Sol, Parana, Minas Gerais and Sao Paulo.
The initiative is a part of a broader project called "Corporate Governance of the Production Chain of Sugar and Ethanol" which brought out close to 20,000 businessmen and workers from the sector into the streets of the city of Sertaozinho in Sao Paulo state on Jan. 27.
The demonstrators demanded that the federal government take action to halt the closure of ethanol plants.
In recent years, 83 factories have shut down due to environmental reasons or lack of incentives, and another 70 are in the process of filing for bankruptcy.
According to a study by the University of São Paulo, the sugarcane industry has laid off 300,000 people in the last six months alone.
Brazil is the world's largest producer of sugarcane with an average annual production of 38 million tons, 67 percent of which is exported, and also leads in the production of ethanol, a biofuel derived from sugarcane.
The president of the Brazilian Agribusiness Associations, ABAG, Luiz Carlos Correa Carvalho, has said that the next three harvests will be weak before a true recovery of the sector begins to take place.
ABAG was one of the bodies that spearheaded a petition in Sao Paulo to simplify and reduce the tax on sugarcane production, a request that was accepted by Governor Geraldo Alckmin.
With the tax cut, the largest sugarcane producing region of the world hopes to develop projects to boost generation of electricity using sugarcane husks which could allay fears of possible electricity rationing in Brazil's most populated state.
The Brazilian government has agreed to increase ethanol production by 2 percent over and above the production of conventional gasoline.
The measure, which has yet to be formally approved by President Dilma Rousseff, will come into effect on Feb. 15 when the gasoline produced by the country will contain 27 percent ethanol (up from the existing 25 percent) according to the agreement signed between the president and representatives from the automobile industry on Monday.
This increase would translate as an additional 1 billion liters of the biofuel annually, according to the Brazilian Sugarcane Industry Association.
The crisis in the sugarcane industry has also affected the manufacture of machines and equipment used in the production of alcohol fuel, a sector which could go bankrupt in the coming months, sector leaders warn.
Reference: http://www.laprensasa.com/309_america-in-english/2938053_brazilian-gover...