Commodities Shuttle: Biodiesel shows that the government has a speech abroad and another in here

When it comes to sustainability and carbon emission reduction, the government has a speech to show the foreign market, but it acts exactly the opposite internally.

The assessment is made by Francisco Turra, chairman of the board of directors of Aprobio (Association of Biofuel Producers in Brazil), when analyzing the new measures of the National Energy Policy Council for the sector.

The blend of biodiesel, which has already been reduced by the government this year and now stands at 10%, should rise to 13% and, in March, to 14%. The government, however, will keep it at 10% during 2022.

Brazil promises to decarbonize and reduce the emission of greenhouse gases at COP26, but adopts exactly the opposite practices in the country, says the executive.

For Juan Diego Ferrés, president of Ubrabio (Brazilian Union of Biodiesel and Biokerosene), the measure is “grotesquely deconstructive”.

“This government cannot be understood,” he says.

In addition to the effects on the climate, the reduction occurs exactly at a time of a world super harvest of soy, the main raw material for the production of biodiesel.

The United States has just placed a record volume of 120 million tons of soy on the market. Brazil should reap 144 million, and Argentina, close to 50 million.

In other words, the three main world producers will harvest more than 300 million tons. China, the world’s main importer, and which had been growing with a growing volume of purchases, should stop at 100 million imports next year.

The government’s alleged reasons for reducing the mix are unjustified, according to Turra. The much-heralded pressure of the price of biodiesel on diesel does not exist.

In January, the share of biodiesel in the price of diesel was 13.6%. Last month, it was at 13.7%. “We are not the cause of the diesel increases. There is a lack of information from the government,” he says.

Ferrés, from Ubrabio, claims that the economic disaster will be great. Companies invested a lot to reach the programmed level of biodiesel in the country, and now they will have a large idle capacity, calculated at 46%.

He calculates that the sector will stop moving R$ 15 billion next year, due to the reduction of the mixture to 10%, instead of the 14% foreseen by law. This sector irrigates most of the regional economies, maintaining jobs and generating added value to products in 14 units of the federation.

12.5 million tons of soy will not be processed, which would generate 9 million tons of bran. This reduction will affect feed prices, raising the cost of proteins and increasing inflationary pressure.

Investments made to expand the supply of biodiesel will now be costs for companies, which must pay financing fees without taking advantage of this increased installed capacity.

Government action slows down job creation and could lead to even more unemployment in a country in recession, says Ferrés.

Brazil has all the potential to increase production, but it is no longer reliable. Battered and scalded, companies will no longer invest again, adds the Ubrabio executive.

As for future measures, Turra says the sector will appeal to the government’s common sense. There is also the alternative of seeking a legal annulment of this act, as it contravenes the Renovabio law.

Entities producing biodiesel, agribusiness and the Mixed Parliamentary Front for Biodiesel met this Tuesday (30) to define a joint action.

Challenges in the flesh By becoming one of the world leaders in meat exports, Brazil will have challenges in the coming years. Maintaining the health status quo, although indispensable, is not enough.

barriers The assessment is by Taís Cristina Menezes, researcher at Cepea (Center for Advanced Studies in Applied Economics). According to her, sanitary barriers can have several interpretations. That’s where political negotiations come in.

joint work The leaders negotiating trade agreements will have to work ever closer to the health authorities, in order to guarantee that Brazilian products reach not only the traditional markets, but also the most demanding ones, he says.

Fertilizers Domestic sales are expected to reach a record 44.6 million tons this year, with an evolution of 10% compared to 2020. Next year, the volume should reach 46.4 million tons, an increase of 4%.

Imports The forecasts are from the consultancy MacroSector Consultores, which also forecasts imports of 38 million tons this year, with an increase of 15%, and of 40 million in 2022, with an increase of 5%.

Insertion into production A project by the Mosaic Institute, with farmers of up to five hectares in the city of Barreiras (BA), is allowing for a diversification of crops and profitability that, until then, they did not have.

Commercialization Called Village, the program, which is supported by The Mosaic Company Foundation, provides technical assistance and seeks marketing channels for the products of these farmers. There are currently 17 families.

Actions In the institute’s assessment, the soil needs care and nutrients for an increase in productivity. As a result, it is necessary to strengthen community education, provide access to water and adapt irrigation systems.

more income The annual contribution of resources is R$ 1.5 million and allowed the 17 families to increase their income by 230%. Food production is sustainable and conscientious, according to the Mosaic institute.