A closer look at the Brazilian Social Fuel Seal: uptake, operation and dysfunctions

ABSTRACT

Due to the increasing concerns about the social effects of biodiesel production in developing countries, the Brazilian government created the Social Fuel Seal (SFS) within the framework of the National Program of Production and Use of Biodiesel (PNPB) launched in 2004. The SFS is a certification scheme awarded by the MDA/MDSA (Ministry of Agricultural Development/Ministry of Social and Agrarian Development), aimed at upgrading small farmers in the biodiesel value chain. In this article we discuss the institutional settings and explore the uptake, achievements and shortcomings of this political instrument in the light of the official data and the academic literature. Specific aspects of the practical implementation of SFS are examined upon the base of interviews conducted with different stakeholders in the state of São Paulo. Important dysfunctions in the overall operation of the SFS put into question the accomplishment of the social inclusion objective and awaken concerns about the sustainability of the role of family farmers in it.

KEYWORDS:

• Brazil
• Social Fuel Seal
• family farmers
• biodiesel value chain

Acknowledgements

The fieldwork conducted to complete this research was made possible thanks to the financial support from Capes Foundation (CAPES) – Ministry of Education of Brazil (grant BEX 9604/13-8), and the kind attention of both farmers and technicians of the cooperative and the biodiesel industry in São Paulo. We also express thanks for the valuable comments made by Dionisio Ortiz-Miranda on a draft version of this paper. Statements of fact and opinions are our sole responsibility.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. As enacted by the recent Law no. 13.033/2016.

2. The MDA was abolished in May 2016 by the interim President Michel Temer, and its work was transferred to the Ministry of Social and Agrarian Development (MDSA, in Portuguese). For this reason, hereinafter it will be referred to as MDA/MDSA.

3. Babassu has 66% oil content; palm 30–45%, sunflower 35–52%, peanut 44–56%, and jatropha 38% [18].

4. Babassu fruits are obtained from indigenous forests, and peasant families retain an important share of the income they generate [18], but this crop does not receive any tax reduction. In the case of peanuts, the production is concentrated in the industrialized state of São Paulo.

5. ‘The biodiesel producer will ensure technical and training assistance permanently throughout the year for all other crops and activities produced in family farms contracted to deliver [biodiesel] feedstock’. Art. 15 of the Ordinance 337/2015 of the MDA, that regulates the criteria and procedures for the granting, maintenance and use of the SFS.

6. At the time of writing this article, the giant state-run oil company Petrobras is expected to undergo a process of privatisation.

7. Such as the National Food Supply Agency (CONAB) or the Brazilian Institute of Geography and Statistics (IBGE).

8. According to the contract the transport costs are financed by the industry, but only up to a limit of 2% of the total value of the acquired feedstock.

9. According to the strict contract terms, the power plant could have charged a penalty to the cooperative because the stipulated amount of raw material was not reached. Our informants reported that it was not charged, but the parties decided not to renew the contract, by mutual agreement.

Additional information

Funding

This work was supported by CAPES Foundation – Ministry of Education (Brazil) [grant number BEX 9604/13-8].