Woodrow Wilson International Center for Scholars Brazil Institute. Sugarcane Ethanol and Land Use in Brazil. Andre M. Nassar

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Woodrow Wilson International Center for Scholars Brazil Institute Sugarcane Ethanol and Land Use in Brazil Andre M. Nassar President, Brazilian Institute for International Trade Negotiations Washington 28 April 2008

Why the Issue of Land Use Has Land is a scarce resource Become Important? In the short run: United States, Europe, China and India; In the long run: Brazil and African Countries with Savannah Landscapes. Competition between food and fuel Short run problem due to the excess of demand on corn (U.S. ethanol) and oil crops (EU biodiesel); Countries with land available will respond to the high prices; Agricultural supply will be reallocated and productivity will be improved; Increasing importance of trade. Implications for avoided GHG emissions Direct effect: energy crops displacing natural landscapes; Unbalanced discussion: countries with natural landscapes are worst-off than countries with no natural landscapes. Indirect effect Production expansion (excess of demand) of energy crops in one region estimulates the incorporation of natural landscapes into agricultural production in other regions. It is not a problem of GHG emissions. It is a problem of land availability and avoiding deforestation.

ICONE s Strategy on Agriculture Land Use 1 st Step: estimation of Land Availability for Agriculture in Brazil Current agriculture land use: data; Classification according to suitability (declivity, soil, rainfall and temperature): GIS; Exclusion of land not available: conservation units, indigenous reserves, legal reserve, rivers, permanent preservation: GIS; The World Bank: Brazilian Low Carbon Study. 2 nd Step: projections on expansion Modeling Brazilian production and planted area (crops and pasture) expansion as a response to prices/costs changes, evolution of demand (world and domestic) and competition among suppliers; Brazilian model will be integrated in a world model; Partnership: CARD/FAPRI. 3 rd Step: spatial reallocation Distribution of crop area and pasture area in the Brazilian territory; Competition and substitution among crops/cattle and land availability; The World Bank: Brazilian Low Carbon Study. General support: ICONE s sponsors (private sector) and Inter-american Development Bank.

Brazilian Biomes and States AP AP AM AC RO MT PA TO MA PI BA CE PE AL SE RN PB GO MG MS ES PR SP RJ SC RS

Brazilian Biomes and Legal Reserve (preservation rate) PI BA CE PE AL SE RN PB GO MG MS PR SP RJ ES Legal reserve 20% SC RS

Brazilian Biomes and Legal Reserve (preservation rate) Legal reserve 35% MA TO MT

Brazilian Biomes and Legal Reserve (preservation rate) Legal reserve 80% AP AP AM MA PA AC RO MT

Corn Geografical Distribution of Agricultural Production in Brazil Cotton Cattle Chicken Rice Soybeans Sugar cane Pork Source: PAM/ IBGE

Brazil Grains and Oilseeds: production and area Source: IBGE (2007) *2007: preliminar results Crops: rice, soybean, corn and beans Brazil Sugarcane: production and area Production (million ton) Harvested area (million há) Source: Ministry of Agriculture, 2007.

BRAZIL: HARVESTED AREA FOR MAJOR CROPS Soybeans Corn Sugarcane Rice Beans Source: IBGE (2007) * 2007: Preliminar results

Figure 10. Brazil: Productivity Index (1990/91=100) Source: CONAB; IBGE; UNICA. Elaboration: ICONE

Brazil and U.S.: Evolution of Planted Area (million hectares, growth rate in parenthesis) BRAZIL U.S. Rice (-1.8% p.a.) Cotton (-4.7% p.a.) Wheat(-0.1% p.a.) Rice (-1.7% p.a.) Cotton (4.4% p.a.) Corn 1 st crop (0% p.a.) Corn 2 nd crop (7.1% pa) Soybean (-0.7% p.a.) Soybean: (6.6% p.a. Sugarcane (5% p.a.) Source: IBGE; CONAB; USDA. Elaboration: ICONE. Note: information in parenthesis is the annual growth rate from 2000 to 2008.

Brazil and EU-27: Evolution of Planted Area (million hectares, growth rate in parenthesis) BRAZIL EU-27 Rye (-5.8% p.a.) Sunflower seed (-0.8% p.a.) Rapeseed (3.8% p.a.) Rice (-1.7% p.a.) Cotton (4.4% p.a.) Corn 1 st crop (0% p.a.) Corn 2 nd crop (7.1% pa) Corn (-1.1% p.a.) Barley (-0.7% p.a.) Soybean: (6.6% p.a. Sugarcane (5% p.a.) Wheat (-0.4% p.a.) Source: IBGE; CONAB; USDA. Elaboration: ICONE. Note: information in parenthesis is the annual growth rate from 2000 to 2008.

Planted Area of Selected Crops: Absolute Variation from 2000-02 to 2006-08 (million hectares) BRAZIL U.S. EU-27 Source: IBGE; CONAB; USDA. Elaboration: ICONE.

Land Availability in Selected Regions of Brazil: Preliminary Results (1,000 hectares, 2006) Sugarcane Planted Area Grains Total Crops Pasture Area Total Land Used for Agriculture Agricultural Land Available(e) Potential Land(p) Legal Reserve Sao Paulo 3,285 1,522 6,611 8,780 15,391 15,391 negligible 20% Parana 433 5,515 9,247 5,560 14,807 14,807 negligible 20% Minas Gerais (Cerrado) 431 2,446 4,725 10,161 14,886 22,455 7,570 20% Goias 238 3,151 4,077 19,050 23,127 24,684 1,557 20% Mato Grosso do Sul (Cerrado) 153 2,084 3,010 11,713 14,723 16,424 1,701 20% Mato Grosso (Cerrado) 202 6,647 6,884 6,442 13,327 20,727 7,401 35% Tocantins (Cerrado) 4 528 604 11,390 11,994 14,033 2,040 35% Piaui (Cerrado) 10 688 1,169 negligible 1,169 6,079 4,910 20% Maranhao (Cerrado) 39 1,264 1,645 1,049 2,694 7,264 4,570 35% Bahia 106 1,931 3,398 909 4,307 10,538 6,232 20% Total 4,901 25,776 41,371 75,053 116,424 152,404 35,980 n.a. Brazil Total 6,179 36,032 62,353 172,333 217,456 n.a. n.a. n.a. Source: IBGE; MMA; CONAB; EMBRAPA. Elaboration: ICONE. Notes: 1. Conservation parks, indigenous reserves and legal reserve provisions have been excluded from the agricultural land available. 2. N.a. (not applicable). (e) estimation.

Sugarcane Expansion: Pasture and Crops Substitution from 2002 to 2006 Planted Area (1,000 ha) Substitution 2006 2002 (1,000 ha) 2002 2006 Abs. Var. Pasture (p) Crops (p) Total(p) Cane (p) Sao Paulo 2,662 3,285 623 558 66 624 1 Minas Gerais 278 431 153 148 16 165 11 Parana 359 433 74 92 3 95 21 Mato Grosso Sul 112 153 41 42 10 52 11 Goias 204 238 34 50 8 59 25 Mato Grosso 177 202 25 26 10 35 10 Tocantins 3 4 1 1 0 1 0 Bahia 80 106 26 n.a. n.a. n.a. n.a. Maranhao 23 39 16 n.a. n.a. n.a. n.a. Piaui 8 10 3 n.a. n.a. n.a. n.a. Source: IBGE; ICONE. Elaboration: ICONE. Notes: 1.Calculated in a micro-regional level (295 groups of municipalities). 2.Sugarcane area absolute variation was compared to the absolute variation of pasture and crops areas. 3.Crops: temporary crops area without including sugarcane area. 4.N.a. (data not available). (p) preliminary.

Fonte: Land Clearing and the Biofuel Carbon Debt. Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, Peter Hawthorne.

Direct Effect and Carbon Cycle: Situation of Cerrados by 2002 (1,000 ha) Cerrado in the State (%) Remaining Natural Vegetation Anthropic Vegetation Forest Vegetation Savannah Vegetation Grassland Remaining Natural Vegetation (%) Sao Paulo 33% 1,079 6,934 833 210 35 13% Parana 2% 119 256 21 14 84 32% Mato Grosso Sul 61% 6,935 14,723 2,867 3,600 468 32% Goias 97% 14,707 18,190 2,929 11,090 688 45% Minas Gerais 57% 17,795 15,419 3,280 11,322 3,193 54% Mato Grosso 40% 23,740 12,148 7,717 15,868 155 66% Bahia 27% 11,210 3,963 3,334 7,358 518 74% Tocantins 92% 20,252 4,838 4,640 13,363 2,249 81% Maranhao 65% 18,754 2,318 12,338 6,033 383 89% Piaui 37% 8,591 758 2,319 6,210 61 92% Total 123,181 79,548 40,278 75,068 7,834 61% Source: Embrapa; Probio; MMA.

Indirect Effect: Expansion of Sugarcane, Pasture and Crops Compared (2002 to 2006) 2006 2002 Absolute Variation of Planted Area (1,000 ha) Sugarcane Pasture Crops Sao Paulo 623,061 1,392,954 97,731 Minas Gerais 153,361 793,512 400,607 Parana 73,941 616,296 575,485 Mato Grosso Sul 40,647 131,694 867,413 Goias 33,862 376,822 546,349 Mato Grosso 25,432 902,913 2,350,852 Tocantins 971 51,966 240,842 Bahia 26,023 n.a. 317,762 Maranhao 16,192 n.a. 296,919 Piaui 2,513 n.a. 200,012 Source: IBGE; ICONE. Elaboration: ICONE. Notes: 1.Calculated in State level. 2.Crops: temporary crops area without including sugarcane area. 3.N.a.: data not available.