Biofuel, dairy production and beef in Brazil: competing claims on land use in São Paulo state

Abstract

This paper examines the competing claims on land use resulting from the expansion of biofuel production. Sugarcane for biofuel drives agrarian change in São Paulo state, which has become the major ethanol-producing region in Brazil. We analyse how the expansion of sugarcane-based ethanol in São Paulo state has impacted dairy and beef production. Historical changes in land use, production technologies, and product and land prices are described, as well as how these are linked to changing policies in Brazil. We argue that sugarcane/biofuel expansion should be understood in the context of the dynamics of other agricultural sectors and the long-term national political economy rather than as solely due to recent global demand for biofuel. This argument is based on a meticulous analysis of changes in three important sectors – sugarcane, dairy farming, and beef production – and the mutual interactions between these sectors.

Keywords:

• biofuels
• competing claims
• Brazil
• agrarian modernisation
• social-technical change

Notes

¹Flex-fuel technology involves car motors running on gasoline, ethanol, or mixtures. It was considered a breakthrough since it allowed for purchasing the cheapest type of fuel available (Brandão 2008).

²Alcohol is the popular word for ethanol, which can be produced in different dilutions for several purposes, for example, anhydrous ethanol (to be used mixed with gasoline) and hydrated ethanol for direct use in flex fuel engines.

³At least five strategies were used by the sugarcane industry to address the crisis: deep specialisation in sugar and ethanol production, product differentiation, productive diversification, mergers and acquisitions, and the formation of commercialisation groups.

⁴The CONSECANA (Council of the Sugarcane Sector) is a voluntary payment system created in 1999 by the sugarcane producers union and the mills organisation. The aim is to control the supply and demand of sugar and ethanol and to stabilise prices. Sugarcane prices are calculated taking into account the sugar content of the stems, the domestic price level, and their variation during the crop season (Brandão 2008).

⁵In 2007, the sum of anhydrous ethanol (blended with gasoline) and hydrated ethanol (pure) represented more than 51 percent of the total consumption of fuel in the country.

⁶If Brazil became an exporter of dairy products it would not mean that all Brazilians received an adequate intake of dairy products. The milk availability per inhabitant, on average only 134 litres per inhabitant per year, is much less than the 210 litres per capita recommended by the FAO (Faria and Martins 2008).

⁷At that time, leaders of dairy producer organisations demanded liberalisation, arguing that existing regulation did not bring any benefits to consumers either in quality of milk or in prices and at the same time restricted the modernisation of the dairy activity.

⁸During the 1960s and 1970s the introduction of capital-intensive technologies from developed regions, such as the USA and Europe, brought the Brazilian farms highly specialised breeds, artificial insemination, confined systems (Stall based, no grazing), use of corn silage as the main fodder, milking machines, and hay and fodder chopper machinery, among other things. This foreign technology was used largely without adaptation to the local situation.

⁹The high power of negotiation of dairy industries has been credited to the oligopolistic nature of the sector, non-differentiation of the raw product, the low cost of substitution of suppliers, and the perishable nature of the product.

¹⁰In Brazil, 80 percent of fluid milk, condensed milk, and cream are sold in supermarkets. In São Paulo state the retail sector is even more important, reaching 85 percent of these products' sales.

¹¹The shelf-life of pasteurised milk at home can be as low as one to three days due to the low quality of the raw material and problems in the distribution chain.

¹²The seasonal nature of the agricultural labour demand, particularly for the harvesting process, makes the analysis more complex. Temporary workers for the manual harvesting procedure were 43.4 percent of the total employees of the sugar and ethanol sectors in the whole country in 2005 (Moraes 2007).

¹³‘Arroba’ is the common measure for beef cattle prices in Brazil; it is equivalent to 15kg of beef carcass. At the farm level, however, it means 30kg of live weight, which is related to the dressing percentage (in average 50 percent for Brazilian traditional beef cattle breeds).

¹⁴A highly contagious viral disease (Aphtae epizooticae), typical of cloven-hoofed mammals. The last cases in Brazil caused losses close to US$2 billion in the whole meat chain in 2004.

Additional information

Notes on contributors

Ken Giller

The authors would like to thank Vidal Pedroso de Faria and Artur Chinelato de Camargo as well as the reviewers of this journal for comments on this paper. This study has also been inspired by the lively debates in the biofuel discussion group at Wageningen University.