Is Ethanol the Solution or the Problem?

By Isabella Kenfield, International Relations Center. Posted March 12, 2007.

On Jan. 22 the Lula administration announced it will increase federal funding for Brazil's sugar-based ethanol industry by almost US$6 billion over the next four years. One day later, U.S. President George W. Bush declared in the State of the Union address his goal to reduce U.S. use of gasoline 20 percent by the year 2017.

The general response in Brazil to Bush's announcement was overwhelmingly positive. Luis Fernando Furlan, Minister of Industry, Development, and Commerce, was quoted in the Gazeta Mercantil as saying he received Bush's announcement "with applause."

"It is a fantastic business opportunity," Luis Carlos Correa Carvalho, an industry consultant, told Reuters. "We have never had such a great opportunity for the substitution of petroleum."

The United States is currently the largest importer of Brazilian ethanol. Last year it imported 1.74 billion liters, or 58 percent of the total three billion liters that Brazil exported. For the United States to reach Bush's target reduction of gasoline use, the country will need an additional 135 billion liters of ethanol annually. Because it will not be able to produce the entire amount, no doubt a large portion will come from Brazil.

Brazil is the global leader in ethanol exports. In 2006, the country exported about 19 percent of the total 16 billion liters it produced, providing 70 percent of the world's supply.

This amount will soon increase. A partnership between the Ministry of Science and Technology and the University of Campinas in São Paulo is currently conducting a study to plan Brazil's ethanol exports as a substitute for 10 percent of the global use of gasoline in 20 years.

If this plan is successful, the country's ethanol exports will total 200 billion liters by 2025 -- an increase of almost 67 percent. The geographic area planted with sugarcane will increase from 6 million to 30 million hectares.

Is Ethanol the Solution or the Problem?

Many citizen organizations in Brazil are concerned that what appears to be an economic panacea may be a social and ecological disaster. They claim that as the industry expands and more hectares are planted mono-cropping sugarcane, existing problems in rural areas of landlessness, hunger, unemployment, environmental degradation, and agrarian conflicts will be exacerbated.

A recent declaration from the Forum of Resistance to Agribusinesses, a consortium of non-governmental organizations (NGOs) throughout South America states, "The implementation of the model of production and export of biofuels represents a grave threat to our region, our natural resources, and the sovereignty of our people."

There is concern that while expansion of the ethanol industry may boost Brazil's GDP and some Brazilians will become very wealthy in the process, the majority of the population will not benefit from the ethanol export boom. Given U.S. plans to increase imports of Brazilian ethanol and the alliance slated to be forged during Bush's South America visit in March, it is likely the livelihoods of many Brazilians, especially the rural poor, will be subordinated to maintain U.S. consumption.

"The era of biofuels will reproduce and legitimize the logic of the occupation of rural areas by multinational agribusiness, and perpetuate the colonial project to subvert ecosystems and people to the service of the production and maintenance of a lifestyle in other societies," states the Forum. The group alleges that Brazil's effort to supply the Global North with ethanol is simply a repeat of the same model of economic growth via agro-export that has been practiced since Portuguese colonization.

Agricultural production for export in Brazil has traditionally been a model imposed on the country by more powerful nations in the North, alongside a small group of Brazilian landowners. Agro-export generates vast amounts of wealth for a few Brazilians, and exploitation and poverty for many others. Brazil's high rate of income inequality is inseparable from the fact that it also has one of the most unequal rates of land distribution. The sugar industry is a classic example of Brazil's land and income inequality.

A Bittersweet Future

Brazilian ethanol is produced from sugarcane, which has always been a primary agricultural commodity for the country. Because ethanol relies on sugarcane as its primary material, the industry is linked to the social and economic dynamics in rural areas that have developed from sugarcane production since the colonial era, most importantly labor exploitation and land concentration.

According to Marluce Melo of the Pastoral Land Commission (CPT) in the northern Brazilian city of Recife, Pernambuco, "Rural poverty has always been intrinsically related to the economy of sugarcane. Even in the 1970s, when Pernambuco was the largest national producer of sugarcane, the levels of poverty were amongst the highest in the world."

In many ways, things have changed little on the sugarcane plantations since colonial times.

"The problems with [sugarcane's] production today are very similar to the problems it generated hundreds of years ago," says Maisa Mendonça, Director of the São Paulo-based NGO Rede Social. Sugarcane fieldworkers endure some of the hardest labor in the world. According to Mendonça, Brazil has the lowest cost of production in the world because of the industry's dependence on labor exploitation, including massive slave labor, and its refusal to implement environmental regulations. In São Paulo the cost of production is US$165 per ton; in Europe it is US$700 per ton. I n São Paulo the median monthly salary for a field laborer on a sugar cane plantation is US$195; in Pernambuco it is US$167.

See more stories tagged with: environment, poverty, ethanol, u.s., brazil

Isabella Kenfield is a freelance journalist based in Brazil and a contributor to the IRC Americas Program.

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