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Diversification of feedstock production in sugarcane landscapes:
the case of AFOCAPI – Piracicaba – SP - Brazil
Prof. Weber A. Neves do Amaral, PhDESALQ – USP - LCF
• The case of diversification of feedstock production in sugarcane landscapes: using a
• Introduction
Road map of the presentation
2
• Discussion
• The SWOT Analysis
production in sugarcane landscapes: using a biodiesel plant as a driver
Gasoline/Diesel
Querosene
GHGs
Nuclear
Oil reserves
Hydro
Global awareness
Environmental
Climatechange
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Food versus fuel - understanding key drivers of energy supply and demand
Project context
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Roles and functions
of government,private sector
and NGOs
Food
Ethanol& biodiesel
Jobs
WindEnergydemand
r
Economic growth
+-Hydrogen
Trends inconsumption
altaxes & policies
Energysupply Land use
patternsNative
vegetation and
forests
Quality of jobs
Diversification
Biodiversity
Food safety
Quality of lifeand
livelihoods
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The brazilian energy matrix
Sugar Cane
14.6%
Other Renewables 3.0%
Hydroelectricity14,8%
Other Biomass12,4%
4
Petroleum and Derivatives
37.9%Natural Gas9,6%
Coal6,0%
Uranium1,6%
Brazilian main crops (MM Ha)
3,02,52,8 2,4
RiceWheat
CAGR 2001-2006
-1,5%6,7%
176185
196205 207 209
6,7%
Cattle (MM)Cattle
6,7%
Cattle 3,5%
5Source: MAPA; CONAB
14,0 16,3 18,5 21,4 23,3 22,7
13,012,3
13,212,8
12,2 13,05,05,2
5,45,6
5,8 6,6
3,94,3
4,44,3 3,9 4,2
3,23,2
3,23,7
3,9 3,0
1,72,1
2,52,5
2,8 2,4
2001 2002 2003 2004 2005 2006
Soybean
Corn
Sugarcane
Bean
Rice
10,2%
0,0%
5,8%
1,7%
-1,5%176
PA1-0.6
Equator
Location of mills and sugarcane production
MA3-2
6Source: AGRIANUAL / IDEA
Traditional
Frontier
New frontier
1-0.6
Capricornia
3-2
TO1-0,2
MT12-13
NE41-56
BA5-6
SP189-266
GO23-19
MS21-12
PR31-35
RJ11-7
MG37-32 ES
6-4
RS2-1
Nr mills – M ton
• Purpose: to diversify the production of crops in homogenous sugarcane landscapes, creating demand by installing a biodiesel pilot´s plant
Title: Diversification of feedstock production in sugarcane landscapes and adding value to commodity products in Piracicaba, SP, Brazil
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• Period: 2006 onwards
•Budget: 1,5 M dollars of investment in a new biodiesel plant, plus 500 k yearly to support farmer´s crop diversification
• Objectives: to reduce the vulnerability of farmer´s income due to single-crop dominance
installing a biodiesel pilot´s plant
• Piracicaba region• State of São Paulo, Brazil
Why?Why?
AFOCAPI
Project description and baseline prior to implementation
Whom? Where?Where?
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• Not an issue until project implementation
Livelihood conditionsLivelihood conditions
• Land tenure: very well defined• Land use history: over 50 years of experience on
“traditional” sugarcane prodution• Average property size: 28 ha• Over 3.000 producers.
• Need to diversify the production of crops• Reduce the vulnerability of farmer´s income• Need to comply with new environmental legislation
Bioenergy Production: baselineBioenergy Production: baseline
• Traditional sugarcane production• Minimum area of crop rotation• Single crop systems
Multi-functionality baselineMulti-functionality baseline
Source: Amaral et al. 2007
Biodiesel Pilot Plant´s Project
Sugarcane Supplier´s Association of Piracicaba
AFOCAPIMission and objetivesMission and objetives
• To support independent sugarcane producers´s interests• To provide technical assistance to its members
PrósPrósAFOCAPI
Sugarcane Supplier´s Association of Piracicaba RegionSugarcane Supplier´s Association of Piracicaba Region
The main stakeholder structure and set up
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• COPLACANA – farmer´s cooperative• Farmer´s Credit Bureau• Rural Labor Union
Main characteristicsMain characteristics
• Created in August 9, 1947• 4.604 independent producers• 2007/08 – 9,6 M tons of sugarcane was produced• Supply sugarcane to ca. 17 mills in the region
• Long history of farmer´s engagement with sugarcane production
• Guarantee of resources due to annul fee contribution
Cons.Cons.
• Resistance to change and to adopt new technologies• Management structure and weak governance
Farmer´s Credit
Bureau
Structure – 3 supporting pilarsStructure – 3 supporting pilars
COPLACANARural LaborUnion
Source; Amaral, et ali. 2007
Project context and
opportunities
• New biodiesel law• Need to comply with environmental legislation
Farmer´s income and
supply
• Strongly dependent on sugarcane prices• No option of supply sugarcane besides existing sugar Mills
• Ca. 100.000 ha of sugarcane in the region
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Current land use
• Ca. 100.000 ha of sugarcane in the region• Diversification of crops – less than 5% of the area• Other dominant land use – ca. 30% - pasture lands with low productivity
• Some challenges… • How to induce crop diversification in traditional sugarcane´s dominant
landscapes?• Can a biodiesel pilot plant, as a driver, stimulate the demand for other
crops?
Project context, assumptions and potential of replication
Context• Global demand and awareness on biofuels potential and impacts raising• New biodiesel national law, creating a mandatory blending mandate of 2% and 5%
(2008 and 2012 respectively)• Locally: need to diversify farmer´s portfolio and to comply with environmental
legislation
Assumption• The main project assumption was that crop diversification should be driven by
creating a demand, which locally did not exist due to sugarcane strong historical baseline
• Demand could be stimulating by a new driver – a biodiesel plant, implemented and managed by farmers
• Biodiesel produced could be used by farmer´s operations• Mill´s by-products used as feedstock for animal nutrition
Potential of replication elsewhere• High, but capital and biodiesel policies dependent • The main risk – increase commodity prices, affecting the supply of crops to the
biodiesel plant – competition with large commodity traders
Sustainability:Economic, energy and climatic policies integrated Sustainability:
countries without clear targets - GHG
Market: higher growth rate with strong pressureon the resources
Higher oil prices
Market: higher growth rates
Diversification of the energy matrix
M
14Produção LQCE_draft_v1.ppt
Sustainability: social awareness and targets
Sustainability: A fragmented agenda; green investments not viable
Business as usual scenario
Market: effective policies, but not sufficient
Fiscal policies still not business friendlyMarket: same growth rate:, market regulations driven by government
Failure of a common international agenda:
S
SWOT Analysis: Where the organization set and project deployment merges …
• Farmer´s resistance to change –affecting the supply side
• Weak governance structure• Biodiesel conversion technologies not optimized
• Lack of experience o
• Long history of mobilization• Capacity to mobilize farmers• Access to capital• Strong adhesion to the project• Large number of farmers as potential biodiesel consumers
Strenghts Weaknesses
• Commodity prices• Biodiesel policiy still being implemented
• Not tax policies yet developed for trading biodiesel for self-consumption
• Increased national and glogaldemand for biofuels
• Global biofuels standards, requiring significant GHGs reduction
• New biodiesel national law
ThreatsOpportunities
...
Evolution of productivity of Brazilian ethanol: continuous investment in R&D – mainly in the public domain – How´s the future look likely with new investments from large groups?
IP rights – an issue of concern
1616
Productivity potential in the future versus current production technologies
• Market size• Levels of investment in applied research in sugarcane• Access to small farmers…
• Level of genetic improvement and the role of biotechnologiesEx: application of synthetic biology for novel crops and traitsca. 10 years for full deployment
The role of productivity and farmer´s access to technologies and resistance to change
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An issue of concern:How to leverage existing crop productivity?Sugar cane – 88 ton/ha – (45 - 120 ton/ha)Eucalyptus – 44 m3/ha/year – (27 – 110 m3/ha/year)
How?Precision farming and optimization of resourcesNew tools for monitoring productivity: nutrient efficiency and water
What about improving existing management regimes? And diversification ofcrops in rotation with sugar cane?
7 M ha
72 thousand growers
400 mills & distilleries
(Operation & projects)Harvest
400 M tons
ETHANOL22 billion liters
SUGAR30 million tons
BAGASSE
Sugar cane value chain: where are the opportunities for small holders?
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Carbon Carbon
creditscredits
22 billion liters 30 million tonsBAGASSE
BioplasticBioplastic
Ethanol
Food
PharmacyLysine
Derived
The main resolutions and suitable areas for planting sugarcane are shown below:
• Protect the areas with original native vegetation and the prohibition of the planting in the Amazonia,Pantanal e Bacia do Alto Paraguai biomes;
Sugarcane zoning and revision of the Forestry Code (1965)
Pantanal e Bacia do Alto Paraguai biomes;
• Sugarcane planting in areas where the use of water is minimum as possible (rain feed primarily);
• A draft law project to recommend the growth of the planting based in the food safety without harming food production;
• Look for new places to produce sugarcane, usingpasture areas or those occupied by cattle raising.
Source: EMBRAPA 1
Subtitles:-Suitable areas- Amazonia, Pantanal and Bacia do Alto Paraguai biomas
One of the main targets of this protocol is related with the anticipation of sugar cane burning regime from 2017 to 2014 in flat areas, and from 2031 to 2017 in slope areas*
Mecanized areas Non-mecanized areas
% o
f h
arv
es
ted
su
ga
rca
ne
wit
ho
ut
bu
rn
Environmentally friendly protocol of the sugarcane industry : the Green Protocol of the Secretary of Environment – São Paulo State - 1/2
* Are considered sloping areas, when the inclinaiton is more than 12%Source: Única 2
% o
f h
arv
es
ted
su
ga
rca
ne
wit
ho
ut
bu
rn
Environmental servicesEcological tax (ICMS ecologico and Pro-ambiente)REDD and market instrumentsAlianca Brasileira para Mudancas Climaticas – several stakeholders
Pasture
Degraded Area of Permanent
Preservation (APP)
Eucalypt
Restored APP
250
140
160SojaPR-BR $
...
Indice100=dez/04
K-TonPoint of
inflection -
corn impact
Market context and indirect impacts of the US ethanol program on commodity prices
23-
50
100
150
200
mar/01 mar/02 mar/03 mar/04 mar/05 mar/06 mar/07 mar/08
-
20
40
60
80
100
120
140CanaBR
MilhoEUA $
EtanolUSA
PetroleoWTI $
Est. MilhoEUA
Est. MilhoMundo
8% do milho
21% do milho
Nota: A produção de cana teve seus valores ajustados para médias de 12 meses para reduzir impacto da sazonalidade; Preço em US$.Fonte: EIA; Abiove; FNP; Oxy Fuel; DTN; USDA; Unica; análise VPB
Crop options for rotation
• Focus on oil crops in rotation
•Peanuts and soybeans are the ones being produced
•Other options for ethanol production still under deployed
•Eucalytus plantations are being stimulated for multiple purpose – energy and
fiber, but not yet for ethanol second generation
2
fiber, but not yet for ethanol second generation
Market driven environmentally friendly products and
landscape management
Eucalytus plantationsNative forests
Food Production
Systems
BioenergyProduction
Systems
ForestrySystems
Food systems
Energy systems
How to integrate these systems at landscape level?
Remaining challenges and discussions
27
• Managing landscapes sustainably
• Multiple products with value added and environmental services
• Increase farmer´s income
• Improve GHGs balances of current ethanol´s benchmark
• Reduce the dependence on ethanol´s market price and supply options
Thanks to:
FAO – Olivier Dubois
AFOCAPI team
28
My students at my Lab.
Contact info:
Weber A. Neves do Amaral, PhD
University of São Paulo – ESALQ
Email: [email protected]