Measurement of Sugar Cane Chain in Brazil

Despite the historical importance of the sugarcane business in Brazil, which is as old in the country as its colonization, it has never been "photographed in widescreen". This research on the mapping and quantification of business generated in the sugarcane chain in 2008 for the first time gives the scale of the entire sugarcane productive chain in Brazil. The sector now shows the numbers that indicate the industry's role in building the country's GDP, as well as in job creation, tax generation, and the distribution (capillary) of economic activities. By applying the method Strategic Management of Agro-Systems (GESIS), developed by the first author, Professor Marcos Fava Neves, coordinator of the Marketing & Strategic Projects and Research Center, USP (MARKESTRAT), it was found that the sugarcane sector GDP is around $28.1 billion USD, equivalent to almost 2% of the Brazilian GDP or almost all of the income generated in a year in a country like Uruguay. The majority of the industry's inputs are local, explaining its favorable trade balance situation. A series of new products has become increasingly more important and a major transformation is going on in this sector that has one of the oldest and, at the same time, most modern plants with regard to clean energy on the planet.chain mapping, chain quantification, agro-industry system, sugar cane sector, ethanol, sugar, Crop Production/Industries, Industrial Organization,

Lignocellulosic Ethanol: The Path to Market

The cost effective production of transport fuels from biomass is essential if the EU aspiration to substitute 10% of transport fuels with sustainable alternatives by 2020 is to be met. The hope, voiced by the Parliament’s Industry and Energy Committee, is that at least 40% of the 2020 target will come from second-generation biofuels, and therein lies the challenge: second-generation conversion technologies are not yet commercial. Multiple pathways are being investigated around the globe, but dominant pathways have yet to emerge and business models have yet to be proven. Nevertheless, expectations are running high and there has been significant investment in R&D in the US, Europe and Asia. The production of ethanol from lignocellulosic biomass is commercially and environmentally one of the most promising options, and in 2007 the US Department of Energy (DOE) provided more than US$1 billion toward lignocellulosic ethanol (LE) projects. Their goal was to make the fuel cost competitive at$1.33 per gallon, when deployed at scale, by 2012. The majority of studies also suggest that LE will result in superior greenhouse gas savings compared to ethanol produced from starch. Despite favourable predictions for cost and environmental performance, market deployment requires practical and plausible development paths that are able to support progress from existing small-scale demonstration plant to large industrial installations. Moreover, these development paths must be sufficiently attractive to persuade developers and investors that lignocellulosic ethanol remains an opportunity worth pursuing

Opportunities for Dutch Biorefineries

Deze Roadmap Bioraffinage beschrijft een aantal mogelijke routes naar de ontwikkeling en implementatie van een bioraffinage-gerelateerde Bio-based Economy in Nederland. De Roadmap combineert korte- en middellange termijn mogelijkheden (commerciële implementatie, demonstratie plants, pilot plants en gerelateerd toegepast onderzoek) met strategisch onderzoek voor de langere termijn. Tevens zijn vier z.g. Moonshots uitgewerkt, als voorziene bioraffinagestrategieën met een grote potentie voor de Nederlandse economi

NETWORKING FOR SUCCESS: STRATEGIC ALLIANCES IN THE NEW AGRICULTURE

Agribusiness,

Determining the Future for Louisiana Sugar Cane Products, Inc.: A Case Study Analyzing Vertical Coordination Options

Deciding how to coordinate activities can be a challenge posed in any marketing chain. This case involves an agricultural cooperative that has focused entirely on marketing raw sugar cane for additional refinement. Recent dramatic shifts in the sector have caused the members of the cooperative to consider building a facility that will process the raw sugar cane. In so doing, the cooperative can consider using the spot market, using contracts, vertically coordinating, or vertically integrating. This case study of Louisiana Sugar Cane Products, Inc. is a unique, real-life case that can be widely used in marketing and cooperatives courses.Agribusiness, Crop Production/Industries,

Dynamics of Evolution in the Global Fuel-Ethanol Industry

We employ a value chain analysis approach to examine the forces shaping the industry structure, entry and inter-firm governance modes. Forty largest global and regional companies in the ethanol manufacturing stage have been classified according to their pre-entry industry of origin. Firms with pre-entry history in feedstock supply have shown higher resilient to market shock especially compared to de novo firms. In addition, we observe a trend of dual-directional vertical integration. Firms backward integrate to secure feedstock supply; firms forward integrate to gain access to the retail market. Security of feedstock has been identified as a critical success factor of the manufacturer in this resource intensive industry. Another critical success factor is gaining control over the end user market via forward integration. We propose that critical success factor is the important determinants of inter-firm governance mode

The Economic Effects of Significant U.S. Import Restraints

[Excerpt] This is the seventh update of The Economic Effects of Significant U.S. Import Restraints. Since the first of these studies was published nearly 20 years ago, U.S. tariff rates have fallen, nontariff measures on imports have been removed, and trade has expanded markedly. This period has also seen increasing U.S. integration into global supply chains, the subject of a special topic in this report. The United States is one of the world’s most open economies. In 2010, the average U.S. tariff on all goods remained near its historic low of 1.3 percent, on an import-weighted basis, essentially unchanged from the previous update in 2009. Nonetheless, significant restraints on trade remain in certain sectors. The U.S. International Trade Commission (Commission) estimates that U.S. economic welfare, as defined by total public and private consumption, would increase by about $2.6 billion annually by 2015 if the United States unilaterally ended (“liberalized”) all significant restraints quantified in this report. Exports would expand by$9.0 billion and imports by $11.5 billion. These changes would result from removing import barriers in the following sectors: sugar, ethanol, canned tuna, dairy products, tobacco, textiles and apparel, and other high-tariff manufacturing sectors. As in previous updates, the simulations presented in this report measure the effects of unilateral liberalization of U.S. import restraints (i.e., the simulations assume that U.S. trading partners do not engage in any reciprocal liberalization). However, the effects on the U.S. economy can differ significantly when both the United States and its trading partners engage in reciprocal liberalization

Interdependencies between fossil fuel and renewable energy markets: the German biodiesel market

With this paper, we provide the first quantitative investigation of vertical price transmission in the biodiesel supply chain in Germany with the focus on the developments during the food crisis and the impact of subsidized US biodiesel exports. With the strong promotion of the production and use of biodiesel during the first half of the past decade, the German biodiesel market became the largest national biodiesel market worldwide. This analysis utilizes prices of rapeseed oil, soya oil, biodiesel and crude oil over a sample period covering the rapid growth of the German demand in 2002 until its decline in 2009. The effects of both the market development and different policies on price transmission are analyzed in detail. Due to the numerous changes in the market, a regime-dependent Markov-switching vector error correction model is applied. The results indicate that regimes with differing error-correction behavior govern the transmission process among the various prices. Evidence was found for a strong impact of crude oil price on biodiesel prices, and of biodiesel prices on rapeseed oil prices. However, in both cases, the price adjustment behavior is found to be regime dependent, and the regime occurrence in both market segments shows similar patterns. In relation to crude oil a weak adjustment of biodiesel prices is found to be dominating in the phase of market expansion. This changed from 2007 on when stronger error-correction is found, reflected by a stronger role of the crude oil price developments. In the relationship of biodiesel to the vegetable oils, most of the growth period was dominated by a regime characterized by weak price adjustments. From 2007 on, past own price changes and past changes in soya oil prices had a strong impact particularly on rapeseed oil prices. The biodiesel price development was less important. Reasons for this are substantial changes in the market structure. The biodiesel market developed as an insulated market; biodiesel was mainly produced from rapeseed oil until 2006. Thereafter, biodiesel was increasingly used for blends and sales decreased during the food crisis when agricultural commodity prices rose sharply. At the same time, strong import competition arose from subsidized US B99. The superiority of rapeseed oil for biodiesel production diminished. The uncertainty prevailing in the market from 2007 onwards is reflected by frequent regime changes. --biodiesel,cointegration,nonlinear vector error correction model,regimedependent model,Markov-switching

Responsiveness and value chain in sugar-ethanol production

Brazil is the world’s major sugarcane producer. In 2018/19, the country will have produced about 47.34 million tons of sugar and 58.8 billion liters of ethanol. Sugar and ethanol are produced in the same production process and the definition of both quantities is pre-established to sugarcane agro-industry. The purpose of this paper is to identify how managers define the production mix of sugar-ethanol in an agro-industry and how this decision adds value to its operations. The results showed that the searched mill adds value to its production through responsiveness and flexibility while orienting the production to sugar and/or ethanol according to the most profitable market during the moment of the decision making

Examining the relationship between vertical coordination strategies and technical efficiency: Evidence from the Brazilian ethanol industry

The sugarcane industry in Brazil, one of the world's leading producers of ethanol and sugar, is undergoing significant changes driven by geographic expansion and technological innovations. These changes are forcing sugarcane producers and processors, to re-evaluate their vertical coordination and growth strategies. This paper presents an empirical analysis of the relationship between the vertical coordination strategies at the production-processing interface of the Brazilian ethanol supply chain and the technical efficiency of the mills. It utilizes data envelopment analysis and a Tobit censored model in combination with unique data on 204 mills that account for around half of Brazil's sugar and ethanol production. Results indicate that vertical integration and the location of the mill have a statistically significant impact on efficiency. The findings show that the technical efficiency is not the main driver of vertical integration implying that such decisions are primarily motivated by strategic considerations. The mills are likely to forgo gains in technical efficiency in exchange for improving their strategic position through vertical integration. These findings shed light on the underlying motivation for the observed level of vertical integration that accompanies the expansion of the Brazilian sugarcane industry. [EconLit citations: L22, Q12, Q16]