São Paulo – Brazil may further expand its importance as a global supplier of food and of renewable energy sources, but businessmen and specialists say that state investment is lacking for this to happen. Criticism to the government was a significant part of the 11th Agribusiness Congress, promoted on Monday (06), in São Paulo, by the Brazilian Agribusiness Association (Abag).
“Our logistics is out. We have discarded all opportunities we had for credit. We have a greater volume [of project demand] and less credit. For the mission the world reserves for Brazil, we need much more than that (the available credit),” said the Abag president, Luiz Carlos Corrêa Carvalho, at the congress. To him, bottlenecks also include the high tax burden and the lack of agribusiness projects.
In the second debate of the day, “Brazil offering energy – what is essential”, Marcos Lutz, the president of Cosan, one of the main producers and distributors of ethanol in the country, stated that the sugar and alcohol sector is living a credit crisis, as costs are high and the government does not have a specific model for calculation of the price of petrol. He also called for investment in technological training.
“It is fundamental to establish a clear law for petrol pricing. Lack of regulation is the main impediment to greater investment [in the sector],” said Lutz. Petrol costs more than ethanol. However, it has greater autonomy. Therefore, it is necessary for ethanol to have a competitive price as against petrol for machinery and vehicles to be refuelled with the product. Lutz believes that if the government does not have a clear rule for the calculation of the price of petrol, ethanol producers cannot make great investment in ethanol and know whether it will or will not be competitive.
The president of the Energy Research Enterprise (EPE), Maurício Tolmasquin, stated, on the other hand, that ethanol has a lower tax burden than petrol in Brazil and that the sector is living a conjectural crisis that should not affect its performance in the future.
Tolmasquin believed that sector companies are finding it hard to obtain financing from the Brazilian Development Bank (BNDES) for their projects as they do not always comply with all the demands to obtain credit. “The BNDES finds it hard to loan money as companies are significantly indebted or need to present environmental licences that have not yet been granted. The BNDES needs to take care with the loans as the funds belong to all,” he said.
The BNDES president, Luciano Coutinho, presented a talk about the main opportunities for producers of food and energy in Brazil in coming years. He said that the domestic demand should grow, as should the global consumption of grain and protein and the use of biofuels. Prices of basic products should also rise. To supply the demand, said Coutinho, Brazil must increase productivity. “The challenge is now to have greater productivity gains,” he said. He also estimates that ethanol production must double by 2030 to supply the demand.
Coutinho stated that companies will have to make an effort so that they may make use of the opportunities that the greater global demand for food and energy should generate. “Brazil is already a leader in several sectors of agribusiness. Maintaining leadership requires a joint effort persisting over time. The first and most important is the technological innovation effort to improve the quality of seeds, improvement in the animal herds for husbandry and greater productivity. Secondly: improvement of agro-industrial operation. Third: development of a brand and more processed products. All of this requires a strengthening of the industrial structure,” he said.
The president at the BNDES recognized, however, that it is not just companies that need to make an effort and added that the federal government should announce a project to improve the logistics infrastructure in the country. “Apart from that, the government must do its part and an important activity for agribusiness will be the engagement with levering and accelerating investment in logistics, to be announced in future, and that we hope may integrate a cycle of great scale and investment in the logistics sector in Brazil, largely in favour of agribusiness.”
*Translated by Mark Ament
