There is a scenario for positive margins,
after a critical period. This is the conclu-
sion drawn by studies on the profitability
of the sugar-energy sector by the Contin-
ued Educational Program in Economy and
Agribusiness Management (Pecege), of the
Luiz de Queiroz College of Agriculture (Es-
alq), linked to the University of São Paulo
(USP), jointly with the Brazilian Confeder-
ation of Agriculture and Livestock (CNA).
The mills suffer from debt burdens, but
the present production cycle is showing
signs that better days lie ahead.
Technical and economic indicators de-
tected and analyzed in nine crop years, from
the 2007/08 growing season to 2015/16, in
the Central-South Region, which accounts
for upwards of 90% of the production vol-
ume of the sector in the Country, reveal neg-
ative profitability rates for the agro-indus-
tries in most growing seasons over the said
period. Only the 2010/11 and 2011/12 crop
years showed positive results. The problem
was reason enough for shutting down 67
companies in this producing area.
Over the period in question, agricultural
productivity dropped by 1.42%, “due to the
convergence of adverse climate conditions,
soil compaction and a low rate of sugarcane
field renewal.” Total Recoverable Sugar (TRS)
accumulated a reduction of 1.21% a year, a
qualitative reduction that deteriorated the
profitability margins of the sugarcane pro-
ducers and, at agroindustry level, along with
the lower productivity rates, it pushed up the
production costs, according to analyses.
The industrial processing costs, as as-
certained in São Paulo and Paraná, suffered
an average increase of 3.28% over the ana-
lyzed period, with raw material weighing
the most. On the other hand, prices fetched
by the industrial products (sugar and etha-
nol), according to a survey by Pecege, did
not evolve in the same proportion, which,
in turn, exerted pressure over the econom-
ic margins of the mills and sugarcane sup-
pliers. White sugar showed negative mar-
gins in four growing seasons and ethanol
registered negative margins in almost all the
growing seasons, except in 2010/11. Every-
thing contributed towards jeopardizing any
expansion or investment initiatives.
For the 2016/17 growing season, the
evaluation by the study points to possible
changes in the picture, with price recovery,
especially sugar prices, besides an improve-
ment to the quality of the raw material. The
concerns with the cash strapped mills, their
debts, national economic problems and ris-
ing production costs, bigger than in the past
seasons, still persist. However, “soaring pric-
es are generating optimistic projections for
the crop, which comes as an opportunity for
recovering and generating dividends for the
sector, with chances for improving the pro-
ductive efficiency and reducing costs”.
F inally, a sigh of relief
After several growing seasons with shrinking profits in the sugar-energy
area, the expectation is for a reversal of the picture in the present season
Sílvio Ávila
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