Impact on Brazil’s Economy
The sugarcane industry – including cultivation, processing and refined products – represents an important segment of the Brazilian economy.
- The sugarcane sector contributes to approximately US$40 billion to Brazil’s gross domestic product (GDP) – equivalent to almost 2% of the entire Brazilian economy and higher than the GDP of a European country like Czech Republic (US$ 42.5 billion).
- When you add in the various suppliers and stakeholders who depend on Brazil’s sugarcane industry, the entire sugarcane agro-industrial system generates gross revenues totaling more than US$86 billion annually.
- The sugarcane industry employs 773,000 workers, according to the Ministry of Labor and Employment’s Annual Report of Social Information (RAIS).
- Salaries for sugarcane industry workers are among the highest in Brazil’s agricultural sector, second only to wages in the soybean industry.
- In 2008, sugarcane workers employed in Brazil’s South-Central region (the country’s main cane-producing zone) earned an average monthly income of R$1,062.55, while in the North-Northeast region the average was R$666.20.
- For context, the national average monthly salary amounted to R$942.02 that year, and the minimum was R$ 415.00.
- Between 2005 and 2009, the Brazilian sugarcane industry expanded at a rate of 10% annually. During that period, more than 100 new mills began operation thanks to total investments of US$20 billion.
- However, the sector was severely impacted by the 2008 global financial crisis. As part of the sector’s restructuring, the bulk of investments were from mergers and acquisitions rather than new production facilities.
- Since then, sugarcane production growth has slowed to about 3% per year.
Despite challenges facing the industry, experts predict Brazil’s sugarcane sector will continue to grow. Ethanol and sugar still contribute the largest economic impact, but new products will add to the sector’s income and become increasingly important. Bioelectricity already represents nearly US$400 million of sugarcane’s contribution to Brazilian GDP and is expected to grow exponentially in coming years. Also keep an eye on innovative products like bioplastics, cellulosic ethanol and biohydrocarbons like sugarcane diesel, which represent important new technological frontiers and offer real promise for the years ahead.