escola superior de agricultura “luiz de queiroz” – esalq/usp third lemann dialogue...
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Escola Superior de Agricultura “Luiz de Queiroz” – ESALQ/USP
Third Lemann DialogueAgricultural and Environmental Issues in Brazil
November 7-8, 2013University of Illinois
Márcia Azanha Ferraz Dias de Moraes Professor at the Department of Economics, Business and Sociology
ESALQ - University of Sao Paulo
1. Social indicators in sugarcane, sugar and ethanol production
2. Brazilian Ethanol Program: main drivers
3. Can it be replicated in other countries?
4. Sustainability issues
5. Final considerations
Sugarcane-bioethanol workforce in Brazil: employment, education, social inclusion
1. Social indicators in sugarcane, sugar and ethanol production
Job creation
large number of people
inclusion of low schooling workers
Official employment (formal contracts)
Job penetration: production spread all over the country
Sugarcane-bioethanol workforce in Brazil: employment, education, social inclusion
Production Growth
Ethanol Production: has risen from 4 to 28 billions liters
Sugarcane Production: moved up from 100 million tons to 620 million tons
Positive impact on jobs→ creation of jobs for thousands of workers→Agriculture (sugarcane): poorly educated workers
520% 600%
Number of formal workers by producing
regions and sector 2011
Source: Prepared based on data provided by RAIS, 2011
Sugarcane Production Chain: Main AgentsIndustrial Sugar and Ethanol ProductionSugar Cane Fields
70,000 sugarcane growers
440 SugarMills/Ethanol Distilleries
Source: MAPA – MME – MDIC – 2005PNAD (2008) , GEMT (2010)
439,922 employees
600,000 employees
Sugar cane field The sector comprises 70k independent
producers , accounting for 25% of national sugarcane production
75% of sugarcane comes from self supply of vertically integrated mills
(mills have sugarcane fields plus processing plants)
50% harvest manually and 50%
mechanically
Sugarcane processing plants in Brazil can produce sugar and/or ethanolBy products:- Vinasse: used as biofertilizer- Bagasse: eletrical power
generation- all plants are self sufficient in eletric
power- most efficient sell the energy
surplus to the market
Production and Job Position in 2011
Operating Sugarcane MillsSugarcane Mills under construction
Jobs in Sugarcane (2011):439,922
NNE CS
Industrial Units
78 (20.7%) 298 (79%)
Ethanol Production
7% 93%
Sugar Production
13% 87%
Job Positions
36.6% 63.4%
Source: Prepared based on data provided by PNAD 2011
160,809 employees
36.6%
279,113 employees
63.4%
CS produces about 90% of main products, with 63.4% of the workforce
This is explained by higher agricultural productivity in this region: better soil and climate conditionsuse of mechanized harvesting and
planting
2,258,276 agricultural workers in Brazil
Agricultural workers in Brazil, 2011
Sugarcane employees accounts for almost 20%
followed by corn (15.5%)and coffee (12%)
Sugarcane:very impressive number
inclusion of many low schooling people
Source: Prepared based on data provided by PNAD 2011
Sugarcane
Corn
Coffee
Cassava
Citros
SoyaRic
e
Banana
Gra
pes0
50
100
150
200
250
300
350
400
450
500439.9
349.5
269.9
153.2129.1116.3
82.656.3 49.0
(thousand people)
Agriculture 4.4
Average Schooling of Crop Workers Brazil, 2011
The average schooling of agriculture workers is 4.4 years of study
Sugarcane: The workers of
sugarcane sector have about 4.8 years of study
20% (about 100k workers ) are illiterate
Source: Prepared based on data provided by PNAD 2011
Gra
pesSoya
Citros
Rice
Sugarcane
Coffee
Banana
CassavaCorn
0
1
2
3
4
5
6
76.2
5.85.3
5.0 4.8
4,1 3.9
3.2 3.1
Sugarcane: Average Schooling
2011
Source: Prepared based on data provided by PNAD 2011
Brazil NNE CS SP0
1
2
3
4
5
6
7
4.8
3.1
5.96.3
Av
era
ge
Sc
ho
olin
g
4.8 years of study is the average, considering both regions under survey
NNE region has lower education level
The state of São Paulo has the highest level: 6.3 years of school, which still is very low
Rules and NormsNorms: federal, state and municipal- Federal Decree # 2.661, July/1998- SP state
- State Decree # 42.056, 1997- State Decree # 28.848, 1988- State Decree # 10.547, 2000:- State Law # 11.241, 2002 – Deadlines for the end of Sugarcane Burning
- Mechanized areas (flat): 2021- Non mechanized areas: 2031 Environmental Protocol- June, 2007: SP state and UNICA signed a cooperation Protocol- Although non mandatory, producers’ adhesion was close to 100% New deadlines for sugarcane burn halt are:
Flat areas: 2014 Non flat areas: 2017
THE BANNING OF SUGARCANE BURNING
Mechanical versus Manual Harvesting
Burnt sugarcane (manual harvesting) or green cane (mechanical) ?green cane: it is more efficient the usage of mechanized harvesting
Prohibition of sugarcane burning: constitutes an advance in environmental terms it demands fewer workers (one harvester substitutes about 80 workers) it changes the worker’s profile
it requires training and qualifying programs
Agriculture 39.0%
Labour Rights - Brazil, 2011
The proportion of workers who are formally employed in the Brazilian agriculture is very low: 40%
Sugarcane shows the best indicator: about 81% of the employees are
formally hired
These employees have all labor rights established in the legislation:
enjoy the right to receive unemployment insurance;
remunerated annual vacations
Extra month of salary per year
….Source: Prepared based on data provided by PNAD 2011
Sugarcane
Gra
pes
Citros
Soya
Coffee
BananaRic
eCorn
Cassava0
10
20
30
40
50
60
70
80
90
100
81.076.7
69.864.1
33.527.6
24.1
8.53.7
%
Sugarcane: contrasting number of formal and informal workers.
Brazil, NNE, CS and São Paulo, 2011
Source: Prepared based on data provided by PNAD 2011
Brazil NNE CS SP0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
81.0
67.9
88.591.9
19.1
32.1
11.68.1
Formal Informal
Total 439,922 Total 142,185
Total 160,809
Total 279,113
The state of SP has a very impressive proportion of formally hired workers: 92%
The proportion of formally hired workers in NNE region is lower
Sugarcane: Number of employees by Age Bracket
Source: Prepared based on data provided by PNAD 20
10-15 95,576 15.3 2,095 0.5
15-20 128,578 20.6 27,306 6.2
20-30 134,033 21.4 134,962 30.7
30-40 106,516 17.0 111,345 25.3
40-50 84,041 13.4 97,693 22.2
50-60 51,886 8.3 58,287 13.2
> 60 24,396 3.9 8,234 1.9
Total 625,016 100.0 439,922 100.0
Age Bracket
1981 2011
Number of Employees
Number of Employees
Total % Total %
Sugarcane sector successfully reduced the proportion of child labor
from 15.3% in 1981 to less than 0.5% in 2011
This is a the results of multiple efforts:
Better law observance
Requirements of the market itself
Government social programs: Bolsa Familia, Bolsa Escola
Increased the proportion of adult workers
There is an extensive legal and regulatory apparatus governing the Brazilian labor market, covering all sectors of the economic activity, including workers in the sugarcane, sugar and ethanol sectors
The main regulations for the labor market in Brazil are:
(i) The Federal Constitution;
(ii) Consolidation of Labor Laws (CLT),
(iii) Rural Workers’ Law (5889/73;
(iv) Law No. 10.192/2001 that establishes the wage policy.
The organization of workers’ unions is covered in article 5 of the Federal Constitution. – There are annual negotiations (Collective Agreements) between
workers’ unions and the sector’s syndicate (in compliance with the legislation)
Labor Market Regulations
Wages: sugarcane and other crops19
92
1993
1995
1996
1997
1998
1999
2001
2002
2003
2004
2005
2006
2007
50
100
150
200
250
300
350
400
450
Rice Coffee Sugarcane Cassava CornSoya
US
$
The wages of soya sector are the higest ones
Earning Equation estimated showed that: After the control of other
variables that influence wages:
Schooling Age region, color, gender, etc
The average montly wage of other crops workers in comparisson with sugarcane wages are: Coffee: 9,9% lower; Cassava: 23,2% lower;Corn: 30,1,% lower; Rice: 30,1% lower;Soya: 0,2% lower
Brazilian soil and climatic conditions are also found in many underdeveloped and developing countries with a large poorly-educated population excluded from the labor market
With appropriate public policies that aim both: to reduce greenhouse gases emissionsalso to include thousands of workers to the labor market
Brazilian experience could be replicated, generating jobs, income, and contributing to mitigate CO2 emissions in the
world
Brazilian Experience: Could it be replicated in other countries?
Biofuels production: which are the drivers?
Brazil (1975): macroeconomics problems due the oil shocks
1973 and 1979 oil shocks: bad impacts on national inflation and on balance of payments
1975 - Proalcool: to stimulate the production of anhydrous ethanol
Second oil crisis had a devastating impact on Brazil’s trade balance, inflation
- Brazilian MILITARY government sought to reformulate Proálcool: production of hydrous ethanol
Nowadays: international marketing is emerging
- Oil importers: reduction of oil dependence - Environmental issues: to develop strategies towards a low carbon economy
- There are regulatory policies encouraging the use of biofuels in at least 46 countries at the national level and 26 states and provinces by early 2012(REN, 2012).
(production subsidies, transport fuel-tax exemptions, share in total transport fuel obligations, blending mandates)
There is a global demand for biofuels
Biofuels production: where to produce?África- Natural conditions for developing sugarcane based industry as good as or even better than Brazil- There is available land
Host countries perspective: what are the positive aspects?- To improve economic and social development- To reduce dependency on fossil energy (many countries will suffer with increased oil prices and climate change)- To modernize its agricultural sector through sugarcane industry
- the investments in rural infrastructure (water, electricity, roads, school, training programs), distribution channels, housing, banking, health programs), can have a positive impact in the agricultural sector as a whole
- To avoid ecological destruction - Sugarcane (bagass) and ethanol: there are sinergies with other energy needs (fuel for cooking)
must be produced in a sustainable way
Biofuels production: where to produce?Africa
Host countries perspective: what are the priorities?- Food security (physical and economic access) - Modernize the agricultural sector- Improve (create) infrastructure - Creation of employment and income- Improve rural and urban development
Could biofuels contribute?
Challenges
- Food versus fuel debate: must be overcome- Land tenure: land for foreigners is a very controversy issue- Large versus small scale: inclusion of small producers - Coordination and rent distribution along the supply chains- To ensure equitable distribution of income along the production chain
(sugarcane suppliers, workers)- To accomplish with the existing sustainability criteria
Sustainable Business models
Labor Market(i) Workers’ profile (manual or mechanical agricultural activities);(ii) Workers’ availability;(iii) Institutional framework (existence of workers’ unions and of
legislation and rules regulating the labor market, minimum wage policies)
(iv) Local habits
Production modes: (v) Size, structure, and distribution of land and property
(patriarchal and matriarchal systems of inheritance, community organization);
(vi) Small versus large scale; (vii) Transaction costs and coordination issues (agricultural
producers’ cooperatives)
There are several patternso Bonsucro (Better Sugarcane Initiative) o ISCC (International Sustainability & Carbon
Certification)o 2009/28/CE European Union Diretiveo Roundtable On Sustainable Biofuels (RSB)o Greenergyo Protocolo Agroambiental (Brasil)o GBEP
Do all the requirements make sense?
How will the new producers deal with them?
Several social and environmental principles
Sustainability Criteria
Economic Viability of Hydrous Ethanol
Viability of the hydrous ethanol is dependent on the federal fuel pricing policy, which currently aims to control inflation by maintaining prices of gasoline at the refinery, regardless of fluctuations in production costs and oil prices on the international market this police reduces hydrous ethanol competitiveness with gasoline,
in terms of the relative pump prices The government must set a nationwide energy policy and establish an
energy matrix, making it clear to society what is the role of each fuel from a long-term perspective. the energy mix would allow planning ethanol production, which
becomes particularly important when one considers that ethanol is made from agricultural raw materials, making its production subject to adverse weather conditions as well as to the seasonal nature of sugarcane cultivation
The lesson to be learned from the Brazilian experience is that, in a free market environment, without clear rules, the sugarcane ethanol industry cannot garner the level of investment needed in order to meet the potential demand for biofuels
Socioeconomic aspects of the Brazilian production
Solid institutional apparatus that regulates the labor market
Large number of jobs created in the three sectors (sugarcane crops, sugar and
ethanol): surpass one million formal jobs
Positive impacts on development of rural areas , spillover effects
There have been an improvement of the indicators of the sugarcane:
Better observance to labor and environmental legislation
Better working conditions
Greater number of formal jobs in sugarcane sector
Reduction in underaged workers
Investment in training and qualification
Social and environmental certification programs adopted by companies
Lessons from the Brazilian experience can be useful for new producers
FINAL CONSIDERATIONS
Production of Ethanol from Sugarcane in Brazil: from State Intervention to a Free Market
Book co-authored with Prof David Zlberman (UC Berkeley) - Origin of Proalcool, the role of the military
government, and the deep state intervention existing on the sugarcane, sugar and ethanol sectors at that time
- The process of deregulation occurred from the late 90s, and the challenges and changes faced by the stakeholders in a free market environment
- The new rules and changes since 2000, the international interest in alternatives to oil, the new environmental and social agendas, the financial constraints, and ultimately how we see the future of biofuels in Brazil.
Marcia Moraes and David Zilberman
http:www.esalq.usp.br/gemt
LABOR MARKET RESEARCH AND EXTENSION GROUP
Thanks for your attention
Feel free to contact
Food versus Fuel
Several authors (Adami et al. 2012, CGEE 2012, Goldemberg 2008, Goldemberg et al. 2008, Nassar and Moreira 2013, Neves et al, 2011) have presented evidence that the food versus fuel debate in Brazil is not an issue, given the large availability of raw materials and agricultural land in the country;
The expansion of biofuel production in Brazil is regulated by several standards These include the Agro-ecological Zoning standard, which considers maps of soil, climate and rainfall, topography, environmental regulation, and the desire to respect areas that should be preserved. It also aims to reduce competition in areas dedicated to food production (MAPA 2009).
According to Rosillo-Calle (2012), biofuel production and food security needs to be complementary. It is important to assess food security impacts from biofuel production, and it is equally important to assess the benefits that these alternative fuels generate if they meet their most important objective, which is the reduction of GHG emissions. Under appropriate conditions, biofuels can even be an important factor for improving the food security in some African countries (Lynd and Woods 2011).