After 100 plants of sugarcane in Brazil have closed down or filed for debt protection in the last five years, another 100 are at serious risk of being closed in the short term. The statement is from Dario Gaeta, CEO of sugarcane plants Ruette, controlled by Proterra.
Gaeta made the statement at the event FO Licht Sugar & Ethanol Brazil, in São Paulo, and made a point of informing the participants that these projections are personal and do not reflect the opinion of Proterra, controlled by Black River, which has among its shareholders the American company Cargill.
Reasons for risk of closing for the 100 plants, according to Dario Gaeta:
1 – Many of the plants in operation in the country operate in an old model, which is inefficient
2 – There are plants that have poor performance because the sugarcane allows only five cuts
3 – The surplus of cogeneration is an opportunity, but plants need to sell this surplus with [existing equipment] equipment from the 1800’s
4 – In the state of São Paulo, most [of the 220 existing plants] is dead and does not know it yet
5-All the 100 mills need to change their management model. They need to restructure. They will only survive if they change the business model.
6 – They need to have modern management, proper debt. Banks are not lending and when they do, its for three years , when the cane needs seven years to be viable
7 – The risk analysis is neglected by the plants. The boss is the cash flow: when they need cash, they sell no matter the price to be received for the sale of ethanol