Pedro Valentim Marques

Evolution of Production Costs in Brazilian Sugar-Energy Sector

In a context of low carbon economy emergence and growing demand for alternative and renewable energy sources, Brazil appears in the technological and productive vanguard of biofuels. The sugar-energy sector has a great relevance in Brazilian agribusiness; however, it has been suffering severe deterioration of its financial situation. This article presents a methodology to calculate production costs for sugarcane, sugar, and ethanol in Brazil. Besides methodological development, this paper was based on technical and economical survey for the mills and sugarcane producers. This way, the results are presented in a segmented manner for both groups. The goal is to analyze the progress of production costs in Brazilian sugar-energy sector, in 2007/2008 and 2014/2015 crop seasons, with emphasis on technical and economic indicators about raw materials, sugar, and ethanol production. There was a systematic increase in production costs over the last nine crops and decreasing trading prices of products (sugar and ethanol), implying negative economic margin. In addition to these facts, it has been identified a decrease in agricultural productivity indicators, low levels of renovation, and aging of the sugarcane plantation.