BRAZILIAN EUROPEAN UNION DIALOGUES

Transcription

1 Brazilian Vegetable Oil Industry Association BRAZILIAN EUROPEAN UNION DIALOGUES : Production and Sustainability Fabio Trigueirinho Secretary General April,

2 Discussions on sustainability There is a mistaken international perception about: Soy destroying the Amazon forest; Soy biodiesel production will accelerate the Amazon forest destruction; Biofuels increasing food prices. Associação Brasileira das Indústrias de Óleos Vegetais 2

3 Deforestation in the World and the Amazon Forest Intact Forests in the World (areas larger than 500 km 2 ) According According to to Greenpeace, Greenpeace, Brazil Brazil currently currently has has 18.7% 18.7% of of the the world s world s intact intact forests forests Brazil 18.7% Europe 6.4% with 90% in Russia Brazil has the largest area of intact forest in the world Source: Greenpeace (March 2006) Amazon Forest Forest Areas Deforestation Original Forest Million of ha Source: Instituto Nacional de Pesquisas Espaciais INPE 2006 Share % 81% 19% 100% Brazil Brazil has has kept kept 81% 81% of of the the Amazon Amazon Forest Forest 3

4 How can environmental conservation be improved? A New Economic Tools B Add Value to Production The Economic Tools are an efficient alternative to complement environmental legislation Producers in the Red cannot look after the Green Payments for the standing forests They make environmental conservation economically sustainable in Amazon 4

5 How can environmental conservation be improved? Production for exports in natura Current Production Model in the Mid- West? (cost of freight) Sustainability Production for export Integrated Production Model Reduces pressure on new agricultural areas Makes crop rotation possible Creates income for the small and large farmer Reduces monoculture Reduces pest propagation (Asian Rust) Reduces the use of agrichemicals Resources needed for environmental conservation (Legal Reserve) The success of this model depends on the opening up of the international meat market Makes the small producer in the Cerrado feasible 5

6 Source: FEFAC Brazil is one of the big suppliers of vegetable protein 6

7 Evolution of Soy Production in Brazil Production (MMT) Area (MM ha) Source: AGROCONSULT/ ABIOVE In 2020, Brazil should produce about 105 million tons of soybeans, using an additional area of 8 million hectares throughout the country Forecast gains in yield - 1.5% per year By 2020, an estimated 33 million hectares will be released by livestock farming Protein meal (78%), not oil / biodiesel (19%) is soya s growth driver 7

8 Agricultural Area Occupation Sugar Cane Soybeans Cattle Total Sugar Cane Soybeans Cattle Total Area (Million Ha) Production (Million Ton) (1) Cattle Heads (Millions) Cattle Heads per hectare (2) - 1-1,4 - - Sources: UNICA / ABIOVE / IBGE / FAO / United Nations (1) Increase in sugar production to 45 million from 30 million tons and ethanol to 65 billion liters from 18 billion liters, using sugarcane straw. (2) Forecast considering a 1.1% annual growth in production (demographic growth). 8

9 Brazil s Soy Agribusiness Sustainability Actions Soy Moratorium in the Amazon Biome Round Table of Responsible Soy - RTRS ARES - Institute for Responsible Agribusiness National Pact for the Eradication of Slave Labor Green Action Mato Grosso State Environmental Pact Mato Grosso State 9

10 Soy Moratorium in the Amazon Biome Proactive action by the productive sector The Soy Moratorium s objective is establishing clear rules of how to operate in this environmentally sensitive area Soy Production in Brazil in the Amazon Biome Brazil Total Territorial Area (millions of ha) (a) 851 Area with Soya 2005 Crop (millions of ha) (b) 23.4 Share of Soya (millions of ha) (b) / (a) 2.7% Amazon Biome % Source: IBGE based on PAM

11 Monitoring - Moratorium NGO's of the private sector have arrived at the conclusion that there was no planting of soy in: Selected deforested areas 193 polygons with more than 100 hectares Pilot project 89 polygons with less than 100 hectares Visit our website: See an example below: 11

12 Round Table on Responsible Soy - RTRS An International Forum? Participating Members Producers 3 Chambers RTRS Industry, Trade Finance Civil Society 11 members + 40 members + 12 members = 63 Paraguay 1 Argentina 3 Brazil 7 Other Europe 16 The Netherlands 13 US 3 Others Brazil 1 4 Argentina 3 The Netherlands 1 Argentina 3 Paraguay 2 US 3 Others 1 Brazil 2 12

13 Biodiesel in Brazil WORLD - Main Biodiesel Producers Main Driver Objective European Union United States Brazil Environment Energy Safety Social Kyoto Protocol goals Reduce dependency on petroleum imported from the Middle East Promote social inclusion, creating rural jobs and income 1 2 Main Strategies Compulsory mixture Selective taxation Causes / Objectives Price of biodiesel > Price of diesel Induce raw material purchases from homestead farming 13

14 Main Government Strategies 1 Compulsory Mixture Regulatory mark for biodiesel production in Brazil Market Development Market Consolidation Consolidated Market Market Size 0.9 billion liters/year B5 B2 2.4 billion liters/year B5 B % Authorative % 2% / 3% Obligatory No need to increase soy production Brazil will export 27.3 millions tons of soy in 2008 = 5.2 billion Kg of oil / biodiesel The obligatory mixture will increase from 2% to 3% on July 1,

15 Main Government Strategies 2 Selective Taxation Federal taxation on biodiesel production in Brazil * Criteria Situation 1 Situation 2 Situation 3 Situation 4 Region N/NE & semi-arid General N/NE & semi-arid General Raw material Castor or palm General Castor or palm General Type of producer Family agri. Family agri. Commercial agri. General PIS/COFINS - R$/m % of reduction** 100% 68% 31% 0% * Law 11116/05 ** Decree No. 5297/04 General means all possible options, other than those already explained Diesel CIDE/PIS/COFINS - R$/m Tax structure reflects the social focus of the Brazilian program Most of the biodiesel production will be taxed at the same levels as diesel 15

16 Food price increases: 1. Drought in important grain producing countries; 2. Strong growth of food demand in developing countries; 3. Increase in agricultural commodities financial speculation; 4. Rising production costs; 5. More land used for inefficient production of biofuels. 16

17 Inefficient use of natural resources: land 12 Million Hectares million Ha Wasted area by the use of inefficient energetic cultures Brazilian Sugarcane 2 US Corn Sources: USDA, UNICA and IBGE. Elaboration: ABIOVE. Low Medium High 17