Tarcilo tips to increase the production of ethanol

Tarcilo Rodrigues breathes the market purchase and sale of sugar and ethanol as anyone. Director of Bioagência, he works directly with the market, but how the company operates products associated units, it also lives daily with the management of these companies.

In the following interview, Tarcilo gives his recipe for how the sector can attend part of the extra gasoline demand estimated by the government at 26 billion liters within the next eight years.

JornalCana ​​- Ethanol is an alternative to help attend the need for 26 billion extra of gasoline from 2023, as provided by the Minister of Mines and Energy, Eduardo Braga?

Tarcilo Rodrigues – The 26 billion liters of gasoline are a huge number. It’s a challenge. We are talking about [this volume] to here eight years. It is 2,6 million cubic meters more. We are sure that the government doesn’t have the capacity to produce gasoline anymore. What’s capacity is already sold out. Who will fill it? So looking on the bright side, it’s a sensational opportunity for ethanol. Because the industry is able to attend a part [this demand] with ethanol.

How much would be that part?

We don’t know if we will have enough time to make a new plan. So in these eight years we need to be prepared and re-invest. You must first set the part of the debts of mills. How to solve this equation?

How can the government help?

If the government starts to create rules and set the gasoline market and make room for ethanol, you can create an offer. But the size [of 26 billion forecast] is so great that you will need to continue importing gasoline. Besides, for the sugarcane industry we must remember that the sugar market will continue demanding.

So, it will be difficult?

We need measures for ethanol that should have been taken yesterday. We are super-late. To the extent that the government does not take any decision, and delays, it will only be worst.

You mentioned the issue of the financial debt of the units. It’s time to have a Proer for the sugarcane industry?

It’s time to think, but in a different way than Proer banks. The industry crisis is different. There are external debt and other agents that do not fit in Proer model. A Proer is one of the solutions. But it’s not the only one.

What is your suggestion?

The industry needs to regain investment capacity. And take credit. For this, the financial players need to believe [in the industry]. Therefore, the government needs to define what is the rule of the game from now. How much ethanol will participate in the fuel market? Without it we will not get anywhere.

What about the ethanol producer?

If you create an atmosphere, change the rules of the game, it will attract investments.

If the fiscal adjustment proposed by the government is implemented, it will help to attract foreign capital to invest in sugarcane industry?

Imagine that Levy [Minister Joaquim Levy] has success. The capital will come to what is already defined, but not to invest in greenfields. No one will come without government set rules. And there’s more way  to Petrobras do as usually did, to explore all the problems, for example, pay more for gasoline it sold. Petrobras now has a huge problem to solve. So Petrobras will never pay 100 for gasoline to sell it for 80.

Explain about this game rule that the government need to do

For example, set for the next ten years how ethanol will be in the Brazilian energy matrix. If it is 40%, if will have a price rule, a productivity rule. Otherwise, if the price of sugar pays more, more sugar will be produced.

There is a risk of that happening now, that the price of sugar on the international market begins to rise in 2016?

The price of sugar is bad. The recent hikes are far from [reinvigorate prices]. Today the industry is producing more ethanol. If it continuous, in two years there will be a reaction in the sugar market. Its price will rise and the unit will change its ethanol production to sugar.

Tell me more about how to compose this rule and attract industry

It’s not necessary to determine, as ever existed before in the country. But it takes a minimum of organization, because we have two competing models. One is state, Petrobras, and the other is the market. So if not organize with differentiated tax, with the Cide, no one knows what will happen ahead. It may be that the oil price rise. Or that fall. How to attract investment in ethanol without a rule?

Who should take this proposal to the government?

The Sugar-Energy Sector Forum, Unica. The government, after a long time, admits that there is a problem [reported by the Minister of Mines and Energy at the public hearing in the Senate].

Despite the loss of time, still can?

The 16/17 season has already passed. You cannot do not anymore.

This change of rules provides, for instance, agility in the processes?                                                  

Yes, get an environmental license in the State of São Paulo has delay. And if it will open new frontiers in the country to expand cane fields, there is the competition with other crops, such as soybeans.

In your opinion, Petrobras will invest in sugarcane industry [state, for example, is a partner at Guarani]?

She comes out the need to focus on what is the core of it. It needs to produce more [oil], invest more, increasing production. It makes little sense it produces ethanol. Produce, will have the same common problem to mills: if not profitable does not produce. No one will have to produce ethanol injury.

Import US corn ethanol, as Brazil already does, is a competition for Brazilian ethanol?

No. Why now corn ethanol in the US is cheaper than the Brazilian? [Because of subsidies, responds to the report]. But how long this will last? And another: Brazil does not have to stock logistics.

What if the economic crisis the country is over?

If the country returns to growth in 2016, as required by the Finance Minister, demand for fuels will also grow.

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