Escola Superior de Agricultura “Luiz de Queiroz” – ESALQ/USP
Third Lemann Dialogue
Agricultural and Environmental Issues in Brazil
November 7-8, 2013
University of Illinois
Márcia Azanha Ferraz Dias de Moraes
Professor at the Department of Economics, Business and Sociology
ESALQ - University of Sao Paulo
Sugarcane-bioethanol workforce in Brazil:
employment, education, social inclusion
1. Social indicators in sugarcane, sugar and
ethanol production
2. Brazilian Ethanol Program: main drivers
3. Can it be replicated in other countries?
4. Sustainability issues
5. Final considerations
Sugarcane-bioethanol workforce in Brazil:
employment, education, social inclusion
1. Social indicators in sugarcane, sugar and
ethanol production
Job creation
large number of people
inclusion of low schooling workers
 Official employment (formal contracts)
 Job penetration: production spread all over the
country
Production Growth
Sugarcane Production: moved up from
100 million tons to 620 million tons
520%
 Ethanol Production: has risen
from 4 to 28 billions liters
600%
Positive impact on jobs
→ creation of jobs for thousands of workers
→Agriculture (sugarcane): poorly educated workers
Number of formal workers by producing
regions and sector 2011
Sugarcane
Sugar
Ethanol
Region
NNE
CS
Total for
Brazil
NNE
CS
Total for
Brazil
NNE
CS
Total for
Brazil
Total for
Brazil
3 sectors
Source: Prepared based on data provided by RAIS, 2011
2011
87,025
278,216
365,241
238,657
336,650
575,307
48,171
165,241
213,412
1,153,960
Sugarcane Production Chain: Main Agents
439,922 employees
Sugar Cane Fields
Industrial Sugar and Ethanol Production
70,000 sugarcane growers
50% harvest
manually
and 50%
mechanically
440 Sugar
Mills/Ethanol
Distilleries
600,000
employees
Sugar cane field
The sector comprises 70k independent
producers , accounting for 25% of national
sugarcane production
75% of sugarcane comes from self supply of
vertically integrated mills
(mills have sugarcane fields plus processing
plants)
Sugarcane processing plants in
Brazil can produce sugar and/or
ethanol
By products:
-Vinasse: used as biofertilizer
- Bagasse: eletrical power generation
-all plants are self sufficient in eletric
power
- most efficient sell the energy
surplus to the market
Source: MAPA – MME – MDIC – 2005
PNAD (2008) , GEMT (2010)
Production and Job Position in 2011
NNE
Jobs in Sugarcane (2011):
439,922
Industrial
Units
160,809 employees
36.6%
78 (20.7%)
298 (79%)
Ethanol
Production
7%
93%
Sugar
Production
13%
87%
36.6%
63.4%
Job
Positions
279,113 employees
63.4%
Operating Sugarcane Mills
Sugarcane Mills under
construction
CS
CS produces about 90% of main
products, with 63.4% of the workforce
This is explained by higher agricultural
productivity in this region:
 better soil and climate conditions
use of mechanized harvesting and
planting
Source: Prepared based on data provided by PNAD 2011
Agricultural workers in Brazil, 2011
2,258,276 agricultural workers in Brazil
(thousand people)
500
450 439.9
400
350
300
349.5
269.9
250
200
150
100
50
Sugarcane employees
accounts for almost 20%
followed by corn (15.5%)
and coffee (12%)
153.2
129.1 116.3
82.6
56.3 49.0
0
Source: Prepared based on data provided by PNAD 2011
Sugarcane:
very impressive
number
inclusion of many low
schooling people
Average Schooling of Crop Workers
Brazil, 2011
Agriculture
4.4
The average
schooling of agriculture
workers is 4.4 years of
study
7
6.2
6
5
5.8
5.3
5.0
4.8
4,1
4
3.9
3.2
3
2
1
0
3.1
Sugarcane:
The workers of
sugarcane sector
have about 4.8
years of study
20% (about 100k
workers ) are illiterate
Source: Prepared based on data provided by PNAD 2011
Sugarcane: Average Schooling
2011
7
6.3
Average Schooling
5
4.8 years of study is
the average, considering
both regions under
survey
5.9
6
4.8
4
NNE region has lower
education level
3.1
3
The state of São Paulo
has the highest level: 6.3
years of school, which
still is very low
2
1
0
Brazil
NNE
CS
Source: Prepared based on data provided by PNAD 2011
SP
THE BANNING OF SUGARCANE BURNING
Rules and Norms
Norms: federal, state and municipal
- Federal Decree # 2.661, July/1998
- SP state
- State Decree # 42.056, 1997
- State Decree # 28.848, 1988
- State Decree # 10.547, 2000:
- State Law # 11.241, 2002 – Deadlines for the end of Sugarcane
Burning
- Mechanized areas (flat): 2021
- Non mechanized areas: 2031
Environmental Protocol
- June, 2007: SP state and UNICA signed a cooperation Protocol
- Although non mandatory, producers’ adhesion was close to 100%
New deadlines for sugarcane burn halt are:
Flat areas:
2014
Non flat areas: 2017
Mechanical versus Manual Harvesting
 Burnt sugarcane (manual harvesting) or green cane (mechanical) ?
green cane: it is more efficient the usage of mechanized harvesting
Prohibition of sugarcane burning: constitutes an advance in environmental
terms
 it demands fewer workers (one harvester substitutes about 80 workers)
it changes the worker’s profile
 it requires training and qualifying programs
Labour Rights - Brazil, 2011
Agriculture
39.0%
The proportion of workers who are
formally employed in the Brazilian
agriculture is very low: 40%
100
90
80
70
81.0
Sugarcane shows the best
indicator:
about 81% of the employees
are formally hired
76.7
69.8
64.1
%
60
50
40
30
These employees have all labor
rights established in the legislation:
33.5
27.6
24.1
20
10
8.5
3.7
0
Source: Prepared based on data provided by PNAD
2011
 enjoy the right to receive
unemployment insurance;
 remunerated annual vacations
Extra month of salary per year
….
Sugarcane: contrasting number of formal
and informal workers.
Brazil, NNE, CS and São Paulo, 2011
Total 439,922
Total 279,113
100.0
90.0
Total 160,809
81.0
Total 142,185
91.9
88.5
80.0
67.9
70.0
60.0
50.0
40.0
32.1
30.0
20.0
The
proportion of
formally hired
workers in NNE
region is lower
19.1
11.6
10.0
8.1
0.0
Brazil
NNE
Formal
CS
Informal
Source: Prepared based on data provided by PNAD 2011
SP
The state
of SP has a
very
impressive
proportion of
formally
hired
workers:
92%
Sugarcane: Number of employees by
Age Bracket
1981
Age
Bracket
 Sugarcane sector
successfully reduced the
proportion of child labor
2011
Number of
Employees
Total %
Number of
Employees
Total %
10-15
95,576
15.3
2,095
0.5
15-20
128,578
20.6
27,306
6.2
20-30
134,033
21.4
134,962
30.7
30-40
106,516
17.0
111,345
25.3
40-50
84,041
13.4
97,693
22.2
50-60
51,886
8.3
58,287
13.2
> 60
24,396
3.9
8,234
1.9
625,016
100.0
439,922
100.0
Total
Source: Prepared based on data provided by PNAD 20
 from 15.3% in 1981 to less
than 0.5% in 2011
 This is a the results of
multiple efforts:
 Better law observance
 Requirements of the
market itself
 Government social
programs: Bolsa
Familia, Bolsa Escola
 Increased the proportion of
adult workers
Labor Market Regulations
 There is an extensive legal and regulatory apparatus governing the
Brazilian labor market, covering all sectors of the economic activity,
including workers in the sugarcane, sugar and ethanol sectors
 The main regulations for the labor market in Brazil are:
(i) The Federal Constitution;
(ii) Consolidation of Labor Laws (CLT),
(iii) Rural Workers’ Law (5889/73;
(iv) Law No. 10.192/2001 that establishes the wage policy.
 The organization of workers’ unions is covered in article 5 of
the Federal Constitution.
– There are annual negotiations (Collective Agreements) between
workers’ unions and the sector’s syndicate (in compliance with the
legislation)
Wages: sugarcane and other crops
The wages of soya sector are
the higest ones
Earning Equation estimated
showed that:
After the control of other
variables that influence
wages:
Schooling
Age
region,
color,
gender, etc
450
400
350
US$
300
250
200
150
100
Rice
Cassava
Coffee
Corn
Sugarcane
Soya
2007
2006
2005
2004
2003
2002
2001
1999
1998
1997
1996
1995
1993
1992
50
The average montly wage of
other crops workers in
comparisson with sugarcane
wages are:
Coffee: 9,9% lower;
Cassava: 23,2% lower;
Corn: 30,1,% lower;
Rice: 30,1% lower;
Soya: 0,2% lower
Brazilian Experience: Could it be replicated
in other countries?
 Brazilian soil and climatic conditions are also found in
many underdeveloped and developing countries with
a large poorly-educated population excluded from the
labor market
 With appropriate public policies that aim both:
 to reduce greenhouse gases emissions
 also to include thousands of workers to the labor market
Brazilian experience could be replicated, generating jobs,
income, and contributing to mitigate CO2 emissions in the
world
Biofuels production: which are the drivers?
Brazil (1975): macroeconomics
problems due the oil shocks
1973 and 1979 oil shocks: bad
impacts on national inflation and on
balance of payments
1975 - Proalcool: to stimulate the
production of anhydrous ethanol
Second oil crisis had a devastating
impact on Brazil’s trade balance,
inflation
-Brazilian MILITARY government
sought to reformulate Proálcool:
production of hydrous ethanol
Nowadays: international marketing
is emerging
- Oil importers: reduction of oil
dependence
- Environmental issues: to develop
strategies towards a low carbon
economy
- There are regulatory policies
encouraging the use of biofuels in
at least 46 countries at the national
level and 26 states and provinces
by early 2012(REN, 2012).
(production subsidies, transport
fuel-tax exemptions, share in total
transport fuel obligations, blending
mandates)
There is a global demand for
biofuels
Biofuels production: where to produce?
África
- Natural conditions for developing sugarcane based industry as good as or even
better than Brazil
- There is available land
Host countries perspective: what are the positive aspects?
- To improve economic and social development
- To reduce dependency on fossil energy (many countries will suffer with
increased oil prices and climate change)
- To modernize its agricultural sector through sugarcane industry
- the investments in rural infrastructure (water, electricity, roads, school,
training programs), distribution channels, housing, banking, health programs),
can have a positive impact in the agricultural sector as a whole
- To avoid ecological destruction
- Sugarcane (bagass) and ethanol: there are sinergies with other energy needs (fuel
for cooking)
must be produced in a sustainable way
Biofuels production: where to produce?
Africa
Host countries perspective: what are the priorities?
- Food security (physical and economic access)
- Modernize the agricultural sector
- Improve (create) infrastructure
- Creation of employment and income
- Improve rural and urban development
Could biofuels
contribute?
Challenges
- Food versus fuel debate: must be overcome
- Land tenure: land for foreigners is a very controversy issue
- Large versus small scale: inclusion of small producers
- Coordination and rent distribution along the supply chains
- To ensure equitable distribution of income along the production chain
(sugarcane suppliers, workers)
- To accomplish with the existing sustainability criteria
Sustainable Business models
Labor Market
(i) Workers’ profile (manual or mechanical agricultural activities);
(ii) Workers’ availability;
(iii) Institutional framework (existence of workers’ unions and of
legislation and rules regulating the labor market, minimum
wage policies)
(iv) Local habits
Production modes:
(i) Size, structure, and distribution of land and property
(patriarchal and matriarchal systems of inheritance, community
organization);
(ii) Small versus large scale;
(iii) Transaction costs and coordination issues (agricultural
producers’ cooperatives)
Sustainability Criteria
There are several patterns
o Bonsucro (Better Sugarcane Initiative)
o ISCC (International Sustainability & Carbon
Certification)
o 2009/28/CE European Union Diretive
o Roundtable On Sustainable Biofuels (RSB)
o Greenergy
o Protocolo Agroambiental (Brasil)
o GBEP
Do all the requirements make sense?
How will the new producers deal with them?
Several social and environmental principles
Economic Viability of Hydrous Ethanol
 Viability of the hydrous ethanol is dependent on the federal fuel pricing
policy, which currently aims to control inflation by maintaining prices of
gasoline at the refinery, regardless of fluctuations in production costs
and oil prices on the international market
 this police reduces hydrous ethanol competitiveness with gasoline,
in terms of the relative pump prices
 The government must set a nationwide energy policy and establish an
energy matrix, making it clear to society what is the role of each fuel
from a long-term perspective.
 the energy mix would allow planning ethanol production, which
becomes particularly important when one considers that ethanol is
made from agricultural raw materials, making its production subject
to adverse weather conditions as well as to the seasonal nature of
sugarcane cultivation
 The lesson to be learned from the Brazilian experience is that, in a free
market environment, without clear rules, the sugarcane ethanol industry
cannot garner the level of investment needed in order to meet the
potential demand for biofuels
FINAL CONSIDERATIONS
Socioeconomic aspects of the Brazilian production
 Solid institutional apparatus that regulates the labor market
Large number of jobs created in the three sectors (sugarcane crops, sugar and
ethanol): surpass one million formal jobs
 Positive impacts on development of rural areas , spillover effects
 There have been an improvement of the indicators of the sugarcane:
 Better observance to labor and environmental legislation
 Better working conditions
 Greater number of formal jobs in sugarcane sector
 Reduction in underaged workers
 Investment in training and qualification
 Social and environmental certification programs adopted by companies
 Lessons from the Brazilian experience can be useful for new producers
Production of Ethanol from Sugarcane in Brazil:
from State Intervention to a Free Market
Book co-authored with Prof David Zlberman
(UC Berkeley)
- Origin of Proalcool, the role of the military
government, and the deep state
intervention existing on the sugarcane,
sugar and ethanol sectors at that time
- The process of deregulation occurred
from the late 90s, and the challenges and
changes faced by the stakeholders in a
free market environment
- The new rules and changes since 2000,
the international interest in alternatives to
oil, the new environmental and social
agendas, the financial constraints, and
ultimately how we see the future of
biofuels in Brazil.
Marcia Moraes
and David Zilberman
LABOR MARKET RESEARCH
AND EXTENSION GROUP
http:www.esalq.usp.br/gemt
Thanks for your attention
Feel free to contact
madfmora@usp.br
Food versus Fuel
Several authors (Adami et al. 2012, CGEE 2012, Goldemberg 2008, Goldemberg
et al. 2008, Nassar and Moreira 2013, Neves et al, 2011) have presented
evidence that the food versus fuel debate in Brazil is not an issue, given the large
availability of raw materials and agricultural land in the country;
The expansion of biofuel production in Brazil is regulated by several standards
These include the Agro-ecological Zoning standard, which considers maps of
soil, climate and rainfall, topography, environmental regulation, and the desire to
respect areas that should be preserved. It also aims to reduce competition in
areas dedicated to food production (MAPA 2009).
According to Rosillo-Calle (2012), biofuel production and food security needs to
be complementary.
It is important to assess food security impacts from biofuel production, and it is
equally important to assess the benefits that these alternative fuels generate if
they meet their most important objective, which is the reduction of GHG
emissions.
Under appropriate conditions, biofuels can even be an important factor for
improving the food security in some African countries (Lynd and Woods 2011).