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Reduced investments are serious obstacles to increased capacity

The financial crisis in 2008 also affected the sugar/energy sector and since then, funds have been dedicated to acquisitions and mergers, leaving little room for investments in renewal or expansion of sugarcane fields. The absence of any of these investments was pointed out by two specialists as the main problem causing the reduction in Brazilian harvests. According to Adriano Pires, director of CBIE (Brazilian Infrastructure Center), up to the year 2008, sugarcane milling underwent a 10% increase, but this year the number was only 3.5%.

“To recover the rhythm, we need to invest heavily in sugarcane planting, or we will have problems over the next few years,” he stated. Mr. Pires believes that the recovery of the harvest will occur slowly and gradually over the long term. “In my opinion, 2012 will be as complicated as 2011 is, since the harvest will continue to be insufficient for market needs. Even if there is an increase in investments, the results will only be visible three or four years from now,” he noted. Professor for the College of Agricultural Engineering at Unicamp (State of São Paulo University at Campinas), Luis Augusto Cortez, shares the same view as his colleague.

“Unfortunately, in my opinion, recovery of the Brazilian sugarcane harvest will undergo a slow recovery,” he said. The absence of financing and the lack of available government credit lines were singled out by both experts as reasons why the planted area of sugarcane has stagnated. “The government shows no incentive and that does not lend security to investors,” stated Mr. Pires. Mr. Cortez believes that there is a lack of incentives and support on the part of the government. “The federal government needs to invest heavily to increase the supply of raw materials. If they invested only 20% of what is being spent on the pre-salt oil fields, the problem would be solved. Sector leaders need to sit down with government officials and discuss the issue of support and credit before the problem worsens,” he added.

Read more on BIO&Sugar Magazine 7

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