The agribusiness includes the production of energy from biomass, an area in which Brazil is a world leader, the leadership is due to the country’s competitiveness in sugar production, an area in which it has the lowest production cost in the world – according to the Association of Sugar and Alcohol Industries of the State of São Paulo (AIAA) -, and the results achieved by Proálcool , as shown in the graphs of Alcohol Production and Sugar Production. The sector had revenues of US $ 8.9 billion in 1995 and generated 1 million jobs.
The sugar and alcohol complex is undergoing a restructuring due to problems with the supply of alcohol in the late 1980s, which led to a breach of consumer confidence in this type of fuel. Throughout the 1990s, the share of alcohol-based car sales in total sales has been falling, reaching an insignificant 0.08% in 1998. As a result, the recent period was marked by the reduction of alcohol consumption and the expansion of production of sugar for export, as can be seen in the graph on Production and export of sugar in Brazil. One of the most serious points of this reduction is the idleness of a wide fuel alcohol distribution network, with 26 thousand service stations across the country, caused by the greater participation of anhydrous alcohol (for mixing with gasoline) in relation to hydrated alcohol, which is marketed by this system.
In the 90s, sugar and alcohol stopped being produced in a complementary way and started to compete for resources, both agricultural and industrial. The redefinition of this segment of the agribusiness will depend on two factors: the productivity gains of the producer (estimated at 3% per year for the past ten years, which is quite significant) and the policy of using anhydrous alcohol in the mixture with gasoline. This use is technically considered to be the most appropriate to reduce alarming levels of environmental pollution caused by cars. The lack of definition of current policies results in the formation of an enormous stock of transit. From 1998 to 1999, the sector carried stocks of 2 billion liters of alcohol, most of which were concentrated in São Paulo.
An important point in favor of the industry is its capacity to produce surplus bagasse for cogeneration of electricity. It is estimated that in periods of drought it is possible to generate something between 6 thousand and 20 thousand Mwh at costs compatible with those of hydroelectricity. As for the importance of the sector in the generation of jobs, this tends to decrease with the increase of mechanization. Estimates from the Agricultural Economics Institute of the São Paulo Secretariat of Agriculture indicate between 17% and 19% the area of mechanized cane in the state in relation to the potentially mechanized area. This percentage has remained stable in the 1990s, indicating that the sector continues to be important in the generation of rural jobs, estimated at 1.1 million, between temporary and permanent jobs.
