Biofuels Watch: biofuelwatch - Brazil: who gets the cake? Trade-off between green oil and agricultural reform

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from Le Monde diplomatique - April 2009 (English Addition)

Trade-off between green oil and agricultural reform

Brazil: who gets the cake?

Thousands of women agricultural workers occupied Brazil's agriculture ministry, sugar refineries and cellulose industry facilities last month, demanding agricultural reform. But President Lula da Silva supports intensive biofuel production

by Philippe Revelli

Situated a few kilometres outside Andradina in the western part of São Paulo state, the Tres Irmaoes factory is part of the Cosan group, Brazil's largest sugarcane processor. Some 1,500 men wield machetes on the plantations that supply the facility. They work for five days, then get one day's rest. The hours are long. The pay is performance-based (less than one euro per tonne of cane). "In the 1980s," recalls Aparecido Bispo, secretary of the Federation of Rural Laborers of the State of São Paulo (Feraesp), "workers used to cut about four tonnes of cane a day. Today they average more than 10 tonnes and some are cutting as much as 20-25 tonnes in a day." Keeping up this kind of pace is a huge strain on the body: according to a study by the Methodist University of Piracicaba, it is the equivalent of running a marathon every day.

Most sugarcane cutters experience muscle and joint problems and upper or lower back pain, and many will suffer long-term consequences. Labour organisations claim that 15 of them have died of exhaustion in the last few years. One aggravating factor is that 80% of these workers are temporary employees, hired for the eight months of the harvest season.

Most come from states in the Nordeste (northeast) and Amazonian regions, the poorest in Brazil. Their housing conditions are precarious and they are under pressure from recruiters, landlords and bus bosses, who are all, to some extent, in league with the employers. "Under the agreements they sign with the factories, the transport companies are responsible for carrying workers between their lodgings and their place of work," says Bispo. "In practice, the bus bosses often act as foremen and secretly appropriate a percentage of the cane cut by the workers under their supervision." Ever harsher working conditions and frequent infringements of labour legislation provoke sporadic strike action. But the workforce is little unionised, and the bosses can not only threaten to mechanise the harvest but can also count on vigorous support from the authorities.

"In July 2008," Bispo says, "there was a strike on the plantations that supply the Tres Irmaoes factory which gained massive support. The management immediately fired 300 workers and said they would not be replaced. The police harassed the strikers, forcing their way into their lodgings and ordering them to go back to work." To no avail. A group of men from the Nordeste region, boarding a bus that was to take them back home before the end of the harvest, were heard to shout: "We're not animals!" In the last week of August, more than 500 workers walked out in the Riberao Preto area: "There have never been mass walkouts on such a scale," says Zacheo Aguilar, head of the local branch of Feraesp. He blames intransigence on the part of employers: "Businesses with foreign investors, where shareholders eclipse flesh-and-blood bosses, are particularly hostile to any form of negotiation."

At about the same time (on 22 and 23 August), industrialists, sugarcane producers and government officials came together for the Canasul 2008 congress. A banner at the entrance to the conference centre in Campo Grande, capital of the state of Mato Grosso do Sul, set the tone: "New perspectives, new technologies and new opportunities in the sugar and alcohol sectors". The mood was one of high optimism. Over the last decade, Brazil's share of the world's raw sugar exports has grown from 7% to 62%. The country's ethanol (1) output has soared, reaching 22.3bn litres in 2008 (nearly a third of global production) and its sugarcane plantations cover some 7.8m hectares. As far as Marcos Jank, a star speaker at the conference and president of Unica (the Brazilian sugarcane industry association) is concerned, all that remains is for Brazilian producers to assume their rightful place in the international biofuel market.

While most of Brazil's sugar output is exported, 85% of its ethanol production is absorbed by the domestic market. Far from prompting the rich nations to rethink their approach to development, high oil prices and the threat of global warming have led them to talk of biofuels as a solution to the energy crisis that they have, somewhat over-hastily, labelled "green" (2). The European Union, the US and Canada have all drawn up a series of bills that require the road transport and haulage industries to use a certain percentage of plant-derived fuels (3). Brasilia and Tokyo are about to sign a partnership agreement, worth $8bn, under which Brazil will supply ethanol to Japan for the next 15 years. And the formation of a Washington-Brasilia axis for the production and commercialisation of biofuels was the main subject of talks on 31 March 2007 at Camp David between Presidents George W Bush and Luis Inácio Lula da Silva, whose two countries between them produce 70% of the world's ethanol (4).

Ash rains down on the workers

Working on the assumption of long-term growth in global demand for biofuels, Jank predicts that by 2020 Brazil's cane plantations will cover 14m hectares and that 75% will be dedicated to ethanol production, as against around 50% today. Yet, at a time when Brazil is playing the green energy card and its government is drawing up standards for an eco-label to be applied to ethanol, the tonnes of ash that rain down on the heads of those living in cane-growing areas and the photos of cane cutters being treated like convicts don't create a good image.

At nightfall, from the tops of the tallest buildings in Sertaozinho, a little town in São Paulo state, you can see fires here and there in the cane fields. The practice of burning away the leaves of the sugarcane to leave only the stalk was first used in Brazil in the 1960s and quickly became general there. It makes the cane easier to harvest by hand and boosts its sucrose content. But of course it also releases great quantities of greenhouse gases and other pollutants.

According to José Eduardo Cançado, a researcher at the University of São Paulo, 285 tonnes of toxic particles and 3,342 tonnes of carbon monoxide are released into the atmosphere every day in São Paulo state alone. During the harvest season, the hospital at Piracicaba, a town in the heart of the cane-growing region, sees a 10% rise in the number of admissions for respiratory conditions. The state of São Paulo, where 60% of all Brazil's sugarcane plantations are concentrated, has adopted a Green Protocol, which sets 2014 as the deadline for the total eradication of cane field burning, whereas federal law aims to achieve this only by 2021. According to São Paulo state secretary for the environment, Xico Graziano, 148 agro-industrial enterprises and more than 10,000 sugarcane producers have already complied with this protocol.

This probably means that harvesting will ultimately have to move from manual to mechanised. The changeover is being driven more by technological progress and economic considerations than by environmental concerns on the part of the producers: a machine can do the work of a hundred men, which means that a tonne of cane costs less. Moreover, as the sociologist Maria Aparecida de Moraes Silva points out: "Many factories went over to mechanised harvesting after the great strikes of 1984-5."
Whatever the case, existing technology does not allow machines to operate on slopes greater than 12%. In 2008 more than 50% of Brazil's sugarcane was still harvested manually and, this year, more than 300,000 boias frias (5) will once again be taking part in the harvest in São Paulo state.

The ethanol industry is the new goose with the golden eggs: it attracts more foreign investment to Brazil than to any other ethanol-producing country (6). Some of the investors are giants of the agri-food industry. Cargill is strengthening its ties with the Crystalsev conglomerate and in 2006 acquired a 63% stake in the Cevesa ethanol mill. Monsanto has formed partnerships with the Cosan and Tototrantim groups and says its Roundup Ready (7) genetically modified sugarcane varieties will be ready for release this year. Bajaj Hindusthan, India's largest sugar producer, has invested $500m in establishing a Brazilian subsidiary.

Several million dollars have also been put into overseas stock markets with the specific aim of investing in Brazilian ethanol. Investors include the financier George Soros, Goldman Sachs, former World Bank president James Wolfensohn, and Société Générale (through the Bioenergy Development Fund, based in the Cayman Islands).

Other French enterprises involved are Tereos (the owners of Beghin-Say), whose Brazilian subsidiary Guarani is the third-largest sugarcane processor in the country, Société Française Sucres et Denrées (Sucden) and, above all, the agri-food giant Louis Dreyfus, which became Brazil's second-largest processor after acquiring four factories in 2007.

Brazil's President Lula, for his part, does not hesitate to play the agro-industry card. Like his ministers, he uses every overseas trip to promote ethanol and negotiate deals. The state-owned oil company Petrobrás is actively developing export infrastructure. Its latest project is the construction of a 1,300km pipeline connecting the Brazilian interior with the refinery at Paulinia, from which the ethanol will be taken to the port of São Sebastião.

The agro-industry card
State support for sugar and alcohol producers dates back to the end of the 19th century and has never wavered. The Sugar and Alcohol Institute, established in 1933, buys up surplus sugar, guaranteeing an outlet and stable prices for producers. The Proalcool programme, launched in 1975 shortly after the first oil crisis, played a decisive role in the success of alcohol-powered vehicles (8), and allowed the sugar sector to obtain generous loans. According to Pedro Ramos, a researcher at the State University of Campinas (Unicamp): "The total value of direct and indirect subsidies paid to the sugarcane industry between 1975 and 1989 was $500m a yearŠ It is public knowledge that some of this funding was diverted to other endsŠ At the beginning of the 1990s, the sugar sector owed the government some $2.4bn; this debt has only been partially repaid."

Nevertheless, Lula has followed in the footsteps of his predecessors. In August 2008 the environment minister Carlos Minc announced that 7m hectares of additional land would be made available for sugarcane growing, and that incentives would be offered to producers.

A number of powerful Brazilian families known as the "sugar barons" (9) took advantage of the windfall effect of foreign investment and government subsidies to consolidate their domination of the sector. Between 2000 and 2005, the sector saw 37 mergers and acquisitions. The Cosan group has just acquired Esso's Brazilian network, gaining direct access to ethanol distribution channels.

Leftwing militants, academics, ecologists and farmers' organisations all warn of the environmental and socio-economic consequences of this kind of development. Jank uses a well-tried argument to counter their criticisms (10): the new sugarcane plantations merely replace existing plantations, so that their creation does not, in fact, involve clearing more land. He adds that, contrary to the "obscurantist stance" of those who are opposed to the proliferation of genetically modified organisms, genetically modified varieties of cane will make it possible to boost production volume without increasing the area of land under plantation (11).

Sugarcane, adds the head of Unica, is a source of green energy: it produces far less carbon dioxide than maize, which is used to make ethanol in the United States. Moreover, the recycling of sugarcane residue (an area in which Brazil possesses cutting-edge technology) means that factories will from now on produce more energy than they consume, thus helping to meet Brazil's energy needs (12). Finally, says Jank, since all the land given over to sugarcane growing accounts for less than 3% of Brazil's arable land area (13), it is ridiculous to suggest that ethanol production could be in competition with food production.

A domino effect
Ariosvaldo Umbelino, a geographer at the University of São Paulo, disputes these assertions. As a member of the team charged by the Lula government with the task of drawing up a second National Plan for Agrarian Reform, he continues to monitor the distribution of arable land. "The main areas where sugarcane planting is expanding," he explains, "are around São Paulo state, in the states of Mato Grosso do Sul, Goias, Minas Gerais and Parana. A number of proposed plantations involve land that is still covered by the cerrado, a savannah-type ecosystem whose biodiversity would be irreparably damaged by the plantations. Other projects border on the Amazonia region, notably in the state of Para and in the Nordeste region."

In the Nordeste, government plans to divert the River San Francisco have met with fierce opposition from the local population. "The main aim," says Umbelino, "is to irrigate land intended for the growing of sugarcane, among other crops." He adds: "When sugarcane replaces other export crops or is planted on land previously used to raise livestock, there is a domino effect. The soy beans, the maize and the cattle don't simply vanish, they move on to new territory - to Amazonia or to the Pantanal, for instance." According to figures published on 28 November 2008 by the National Institute for Space Research,
11,968 sq km of Amazonian forest were destroyed between August 2007 and July 2008, 3.8% more than in the previous 12 months.

Can sugarcane growing at least be considered an environmentally friendly form of agriculture? Setting aside the question of cane-field burning, the growing of sugarcane, like any monoculture, requires enormous quantities of chemicals - especially nitrogen fertilisers, which are particularly bad for the ozone layer. And the millions of litres of vinasse (the residue from the ethanol distillation process) may be a "natural" fertiliser, but they still find their way into the soil, threatening the Guarani aquifer, one of the world's largest water reserves.

In answer to the question of whether the spread of sugarcane growing is impacting on food production, Umbelino quotes official figures published by the Brazilian Institute of Geography and Statistics: "Between 1990 and 2006, in São Paulo state, the area of land under cane grew by more than 2.7m hectares. Over the same period, the areas of land given over to the growing of beans and rice decreased by 261,000 and 340,000 hectares, respectively, which is the equivalent of a production shortfall of 400,000 tonnes of beans and a million tonnes of rice (or 12% and 9% of national output, respectively)."

In the neighbouring state of Goias, where sugarcane growing is spreading rapidly, the federation of arable and livestock farmers reports that land prices have risen across the board (by an average of 15%). Prices can be up to three times higher near a cane-processing plant. This price surge has made it even more difficult for the small and medium-sized farmers who produce most of Brazil's food to gain access to land, and has exacerbated the concentration of land in the hands of a few.

Back in Andradina, cane cutters, trade unionists, small producers and landless agricultural workers have come together for a weekend of discussions. The cane cutters have no illusions - they know their jobs are under threat and feel there is no future for them in this industry. What will happen to them when they are replaced by machines? Job prospects in rural areas are not particularly bright. The small producers (those who actually do have a little parcel of land) deplore the lack of state support. One sums up the situation: "Agribusiness gets the cake, the food producers get the crumbs."

The landless workers face ever more difficult conditions. "Nowadays, when we ask for a compulsory purchase order on a fazenda (large estate) that is lying idle, they tell us there are plans to grow sugarcane on it." Agricultural reform (one of Lula's key election promises) seems to have been forgotten. "The only reason there hasn't been an explosion," says a representative of the landless workers, "is that the foundations of our movement have been undermined by the Zero Hunger and Family Grant programmes."

These aid programmes aimed at the poorest families, which give them barely enough to survive on, have allowed the government to forestall strike action and buy the popular vote. Sugarcane and ethanol or agricultural reform? Bispo, one of the organisers of the conference, thinks it's a choice between two different social models.

translated by Charles Goulden

Philippe Revelli is a journalist

(1) Alcohol made from cereals such as maize or wheat, materials containing cellulose such as forest biomass, or sugarcane.

(2) See the Oxfam report, "Another Inconvenient Truth: How biofuel policies are deepening poverty and accelerating climate change", June 2008.

(3) In the US, the Energy Policy Act (2005) and the Energy Independence and Security Act (2007) will require the use of 138bn litres of "renewable" fuels (principally ethanol) per year by 2022. In Canada, a bill has been tabled that will require all gasoline to contain 5% ethanol by 2010, and the European Commission proposes that 10% of all fuel used by the road transport and haulage industries should be plant-based by 2020.

(4) Presidents Lula and Obama discussed agrofuels and a partnership on energy at their first meeting on 17 March 2009.

(5) Workers (literally "cold grub"), a reference to the lunch pail that agricultural labourers take to work.

(6) See "The sugar-cane-ethanol nexus", GRAIN.

(7) Roundup is a non-selective herbicide developed by Monsanto, whose active ingredient is glyphosate. It can be incorporated into genetically modified organisms.

(8) Ninety per cent of cars sold in Brazil are "flex" models, able to run on gasoline, ethanol or a mixture of the two.

(9) Among the most powerful are the Ometto family, certain branches of which control the Cosan group, and the Biaggi family, which dominates the Crystalsev conglomerate.

(10) Canasul 2008 congress.

(11) The 31 January 2008 edition of the Jornal da Cidade notes that between 2005 and 2006, productivity rose by 2.3%, while planted area increased by 12.7%.

(12) Sugarcane currently supplies 3% of Brazil's energy needs but is expected to supply 15% by 2015.

(13) But 9% of all land actually under cultivation.