Texto original da matéria do Financial Times: Práticas ruins mancham indústria brasileira do etanol

Poor practices taint Brazil’s ethanol exports

By John Rumsey and Jonathan Wheatley in São Paulo
Published: May 20 2008 22:27 | Last updated: May 20 2008 22:27

Luís Oliveira and his gang get up at dawn to take a rickety bus to Fazenda Agua Doce, a sugarcane farm in central São Paulo state where the heat regularly tops 40 degrees.

They cut the cane by hand with a machete-like tool, the podão, the design of which has not moved on much since its invention. Water breaks are short and food meagre and unappetising.

Such conditions have prompted a barrage of criticism from the European Union that Brazil, the world’s largest ethanol exporter, is a nest of poor labour and environmental practices.

The criticism, and the €0.19 ($0.29, £0.15) per litre tariffs which the EU imposes on Brazilian ethanol, is damaging for an industry which Brazil hopes to promote as a green alternative to fossil fuels.

Stavros Dimas, EU environmental commissioner, said recently that planned EU biofuel quotas should be subservient to “environmental and social concerns”, prompting threats from the Brazilian foreign ministry to appeal on the issue to the World Trade Organisation.

Use of ‘smart’ biofuel reaches a tipping point

Brazil’s long-standing biofuel programme, which dates back to the 1970s, is increasingly eyed with admiration and a dose of suspicion by the developed world.

The Latin giant is the global leader in the area, with biofuels widely used in transport. The sales of popular flex-fuel vehicles, which can switch between petrol and ethanol, leapt to 72 per cent of total vehicle sales last year compared to a trifling 3 per cent in 2002.

Brazil’s sugarcane-based ethanol is cheaper and more energy efficient than the corn-based version common in the US, where starch has to be converted to sugar before being distilled. The complexity of the process means corn-based ethanol produces only 10-20 per cent less carbon emissions than petrol. Sugarcane ethanol cuts emissions by 87-96 per cent.

Brazil’s programme has reduced dependence on petrol and cut emissions of CO2 significantly, according to Celso Amorim, theforeign minister.

Brazil has one of the lowest rates of CO2 emissions per head in the world at 1.76 tonnes a year versus the average of 4.18 tonnes, he says.

Nathaniel Jackson, senior investment officer at the Inter-American Development Bank in Washington, says the bank is supportive of the development of “smart” biofuels, such as Brazilian sugarcane ethanol. “I wouldn’t call corn-based ethanol a ‘dumb’ biofuel, but reports show the conversion of corn into ethanol is having an effect on food prices,” he says.

He has seen a sea-change in support during the past year and points out that corporations such as Wal-Mart are embracing new initiatives. “We’ve reached a tipping point,” he says.

A Brazilian foreign ministry official also warned earlier this month that the government would consider WTO action if the US enacts a farm bill continuing tariffs of $0.54 (€0.34, £0.27) a gallon on ethanol imports and keeping tax credits to US ethanol blenders at a slightly reduced rate of $0.45 a gallon. That bill is now almost certain to become law after passing both houses of Congress with overwhelming majorities.

Brazilians say criticisms of the country’s farming practices are often a poorly disguised attempt to protect domestic industries.

“What social and environmental standards does the EU impose on current energy suppliers such as Nigeria, Venezuela, Iran and Iraq?” asks Ingo Plöger, ex-chairman of the regional Mercosur-EU forum.

But the government has signalled a willingness to negotiate with the EU, and partly in response to the criticism that São Paulo state – which accounts for close to 80 per cent of national production – is legislating to improve conditions and eliminate manual cutting over the next four years.

Mechanisation, however, is not welcomed by most of the 300,000 cane-field workers, for whom it spells limited negotiating power for salary rises now and the prospect of unemployment soon.

Elio Neves, president of the Federation of Rural Employees of São Paulo in Araraquara, close to Fazenda Agua Doce in the heart of cane-growing territory, says salaries for labourers have stagnated in recent years and workers receive just 2.8 reais (75p, $1.46, 94 cents) per square metre of cane cut, earning typically less than 30 reais per day in this middle-income country.

Higher production targets have transformed the labour force. Twenty years ago, there was a balance between men and women and young and old. These days, most workers are not fit to continue past the age of 35 and women have all but disappeared.

Workers at Fazenda Agua Doce – the oldest at 51 is exceptional – went on strike several times last year with complaints that Mr Neves says are typical. Salaries are miserable, they say, and they are convinced they are being cheated come weighing time.

“We aren’t allowed to see what we cut being weighed. Why not? Because the owners cheat us,” complains Mr Oliveira.

Even so, most workers at Agua Doce lack the education to take on other work, with alternatives such as masonry and odd jobs few and far between. The losses will be particularly damaging for the economies of poorer northern states such as Maranhão and Piauí, which are heavily dependent on remittances from the internal emigrants sent to the south to work the five-month cane-field seasons.

Minimising environmental damage – another key source of criticism from overseas – is also mired in controversy. Marcelo Furtado, campaign director for Greenpeace Brasil, argues that expansion of areas planted with sugarcane will push other crops into environmentally sensitive areas.

The government says it is tackling these concerns through measures such as a decree prohibiting planting in areas of the Amazon and the swamplands of the Pantanal.

A survey by Conab, a government agency that collects farm data, shows that about 653,000 hectares of land were turned over to sugarcane last year, of which close to 90 per cent came from former pasture, soya and maize land.

There remains plenty of room for expansion: Brazil has about 7m hectares of land under sugarcane, of which about 3m hectares is used for ethanol, compared to 200m hectares of pasture, about 21m hectares of soya and 14m hectares of maize.

But David Cleary, conservation programmes director for South America at The Nature Conservancy, an international environmental group, says the jury is still out on how successful the government’s efforts will be.

Though sugarcane expansion has hitherto had little impact on Brazil’s environmentally sensitive areas, widespread failures of governance could change that position, he says: “While there is no proper monitoring in place it’s hard to argue that [expansion of biofuels] will happen with no impact on the environment.”