Brazil ethanol expansion: Amazon, sugar cane worker conditions, pipeline, export markets are issues

In Brazil, questions have emerged about the scalability of the Brazilian ethanol “miracle” owing to the low wages, long hours, health problems and squalid conditions associated with sugar cane field workers. Brazil, the world’s leading exporter of ethanol (900 million gallons per year, depends on sugar cane cutters who earn $430 per month at the top end, for cutting 10-12 tons of cane per day.

The Brazilian sugar ethanol industry continues to expand. Recently, agricultural officials and biofuel industry representatives explained the proposed expansion of the ethanol industry to portions of the Amazon, saying that already cleared fields would be used for sugarcane production.

Plus, Petrobras, the state oil company, has established Suape, a deepwater port in the northeastern state of Pernambuco near Recife, as its base for ethanol exports to Europe. The company has so far signed agreements for export of 2 million gallons of ethanol to Europe.

Petrobras, the state oil company and Cosan, the largest ethanol group, are currently odds over a Petrobras plan to build a state-owned pipeline to transport ethanol. “If Petrobras has the logistics, it will have control of the sector and this we don’t want,” said Rubens Ometto Silveira Mello, Cosan’s controlling shareholder and chief executive officer, told Agencia Estado. The proposed ethanol pipeline will run from Goias state to Sao Paulo. Private industry has been studying construction of its own pipeline, which is expect to cost $1.6 billion.

The state pipeline will be financed by the Japan Bank of International Cooperation, and the Inter-American Development Bank. Petrobras’ has planned a second pipeline from Goias to Paranagua, a major commodities port.

Brazilian President Luis Ignacio Lula da Silva has been promoting biofuel technology transfers and ethanol exports in Africa and Europe in extensive tours over the past two months.

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