Bloomberg News

Brazil Sugar-Cane Growers to Invest $3.4 Billion to Renew Crops

March 09, 2012

Brazilian sugar-cane companies will spend as much as 6 billion reais ($3.4 billion) this year to renew aging plantations as the nation seeks to boost supply of ethanol.

Cane companies may replant as many as 1.5 million hectares (3.7 million acres), or 15 percent of their fields, the optimum amount to restore productivity to the industry, Antonio de Padua Rodrigues, technical director for the sugar-cane trade group Unica, said today in a telephone interview. Last year the nation renewed 1 million hectares.

Brazil is seeking to boost production after a shortage of ethanol drove up prices last year and prompted the government to cut the amount of the renewable fuel that must be blended into gasoline. Mills will probably operate at 80 percent of capacity this year after cutting investments in new fields, which typically are renewed every five years to maintain yields, he said.

“This quantity of renewals needs to happen each year,” to guarantee ethanol supplies, Rodrigues said.

Cane-growers are currently using their own funds and will probably begin to access a special government credit line offered to promote plantation renewals.

Yields will increase this year because mills planted 40 percent more crops in 2011 from the prior year. Companies are expected to renew 20 percent more plantations between January and April from the same period last year, he said.

If current investment trends continue, the nation’s mills will be functioning at full capacity by 2015, he said.

Credit Line

Banco Nacional de Desenvolvimento Economico e Social, Brazil’s national development bank, will loan mills 4 billion reais to renew 1 million hectares of fields and develop new ones, the lender said Jan. 11.

“Most of this line will be utilized,” Rodrigues said. “Many big groups are preparing documentation and procuring environmental licenses” to start tapping the credit.

Mills and growers in the Center South region will harvest between 518 million metric tons and 540 million tons of sugar cane in the next crop, up from 494.3 million tons in the current crop, Padua said March 2. Mills in the region harvest and process most of the crop between April and December.

Mills can typically process about 700 million tons of cane a year, he said.

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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