To recover from deficits in the renovation of sugarcane, Brazilian producers bet on peanuts

By Agribusiness Portal January 2, 2012


Within the sugar cane harvest year, which runs until may, prices of ethanol in the fuel pumps may continue losing competitiveness compared to gasoline. On average, the liter of ethanol from sugar cane is worth 72.2% of the value of gasoline in the State of Sao Paulo.

The bottleneck is in production, because of lack of renovation of sugar cane plantations, with deficit so far of more than 35%. Ideally, the plantations should have between five and six harvesting cycles, and then renewed. However, some of them already completed 11 years without being replanted. The estimation of Datagro is that the rate of renewal of cane in Center-South region was less than the average for the preceding 20 years, around 16.3%.

"This year we had lower levels of renovation mainly due to weather problems", says the Datagro's Director of Strategic Planning, Guilherme Nastari. In 2006 and 2007, there was strong investment in expansion of the sugarcane area. The result came in 2008, when during the global financial crisis the mills had no money to stock products. Ethanol entered the market, dropped prices and increased consumption.

From there on producers had no money to renovate their sugar cane plantations. The time now is to recover lost time. Crop rotation is a great ally in this process mainly to avoid loss of productivity. However, according to the President of the Organization of Cane Growers of the Center-South Region of Brazil (Orplana), Ismael Perina Junior, despite market pressure the producers cannot accelerate the renewal of plantations without use of technology.

"What everyone want is that these reforms be made with the 'year-and-half' cane stock, using these areas to plant legumes, peanuts, and soybean to increase productivity effectively", says Perina Junior.

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