1. a October 18th,2007 Roberto Rodrigues AGROENERGY Brazil’s role in this new agricultural paradigm

2. a October 18th,2007 Roberto Rodrigues AGROENERGY Brazil’s role in this new agricultural paradigm Sceneries of the world agriculture Brazilian ethanol experiences The market of biofuels Conclusion

3. a Sceneries of the world agriculture

4. EnergyEducation WaterDemocracy FoodPopulation EnvironmentDisease PovertyTerrorism and war AGRICULTURE Source: Alan MacDiarmid, em São Carlos, SP, abril de 2005 The ten bigger problems for the humanity in the next 50 years

5. 1.Changes in the demands: flavor, quality, traceability, health, environment, organics 2.Demographic tendencies 199020002025 World population (billion)5,206,208,30 Food demand (billion t)1,972,453,97 Yields2,502,904,50 Source:Bourlaug, N., Agroanalysis, Vol 27, n o 03, Março 2007 1960 to 1990 Reduction of the hunger in 20% Increase of the food production in 1000% Increase of the per capita consumption in 25% (bigger growth in Asia) Main tendencies

6. 3.Income Increase of the world economy for the next 10 years: 3% Developed countries: 2,4% Developing countries: 4,6% 4.Technology Environment: sustentability Biotechnology Nanotechnology Main tendencies

7. 20th Century: Food security was strategic Hunger in Europe PAC 34% of GAP Agriculture answered to the challenge 21th Century: Energy security is strategic in the chapter of fuels. Space for the agroenergy. Contributions of the Agribusiness

8. Current production (2005) Estimated demand (2025) Necessary additional production Increase of the production (%) Cereal 2.219,403.140,40921,0041,5 Oil seeds595,01750,97155,9626,2 Perennials 242,81321,9970,1828,9 Annual 352,20437,9885,7824,4 Meat 1 264,70376,49111,7942,2 Poultry80,00113,7033,7642,2 Hog103,40146,8043,6042,2 Bovine63,5090,4026,3041,4 Coffee7,729,401,6821,8 Fiber28,5036,377,8727,6 Wood3.401,904.148,40746,5021,9 1 All of the consumed meats Source: FAO Elaboration: AGE - MAPA World: Offer and estimated demand for food

9. Source: Nakícenovic, Grübler e MaConald, 1998 Challenge: TO DIVERSIFY ENERGY SOURCES 21th Century: the beginning of a new age

10. Why biofuels? Environmental profits carbon sequestration lower level of emission in the consumption global warming Renewability short cycle of production man-controlled process Economic aspects new component of demand impacts in the trade balance Social aspects jobs creation income deconcentration Political aspects democracy

11. a Brazilian ethanol experiences

12. 1532: Martim Afonso de Sousa introduces sugar cane in Brazil 1925: First ethanol powered vehicle tested in Brazil 1979: First commercial ethanol moved vehicle in Brazil 2003: Flex fuel motors are launched

13. 1973 Crisis of the petroleum and low prices of the sugar 1973 Crisis of the petroleum and low prices of the sugar 1975 PROÁLCOOL Compulsory mix And subsidy 1975 PROÁLCOOL Compulsory mix And subsidy Brazilian ethanol experiences Source: Datagro Low prices of the petroleum. Government interrupts support. High price of the sugar. Reduction in the E100 sales. 1978-1979 PROÁLCOOL Fiscal incentives and exemptions of taxes for the ethanol and vehicles (E100) production. All the gas stations should sell ethanol. Government guarantees price (65% of the gasoline). 1978-1979 PROÁLCOOL Fiscal incentives and exemptions of taxes for the ethanol and vehicles (E100) production. All the gas stations should sell ethanol. Government guarantees price (65% of the gasoline). 2003 FLEX FUEL 2003 FLEX FUEL Ethanol production (billion of liters)

14. Sugar cane: evolution of the productivity Source: MAPA Area harvested (Million ha) Area harvested (Million ha) Production of sugar cane (Million ton) Production of sugar cane (Million ton) Preserved area Million ha Million ton

15. Vehicles production by fuel type Source: ANFAVEA Sales of flex fuel vehicles in Brazil 2003: 48.000 units 2005: 865.000 units 2004: 330.00 units 2006: 1.447.000 units Sales of flex fuel vehicles in Brazil 2003: 48.000 units 2005: 865.000 units 2004: 330.00 units 2006: 1.447.000 units Gasoline: 25% anhydrous ethanol blend

16. Source: MME/BEN (2006) Brazil: share of energy Renewable sources 44,5 % BrazilWorld Renewable No renewable

17. Elaboration: Revista VEJA, edição 03/03/2004 Source: IBGE e CONAB; Adaptação: MAPA Territorial distribution – Estimates (milhões de ha) Amazon Rain Forest345 Breeding Pastures220 Protected areas55 Annual crops47 Permanent Crops15 Cities, towns, lakes20 Cultivated florests5 Sub-total707 Other uses38 Unexploited areas still available for agriculture 106 TOTAL851 Production with sustainability

18. Excluded the Amazon Region, Pantanal and declivity superior to 12% Source: UNICAMP Soil and climate adapted to the sugar cane production without irrigation

19. a The biofuels market

20. Replace the dependence: trust Compulsory mix More countries producing Organization of the market

21. Tonnes oil equivalent Equator Tropic of Capricorn Tropic of Cancer Consumption per capita 2006 Souce: BPStatistical Review of World Energy

22. Self-sufficiency in the agriculture Source: F.O.Licht

23. Replace the dependence: trust Compulsory mix More countries producing Commoditization: parameters and certification Partnerships: knowledge and technology Protectionism Organization of the market

24. * average 2002-2003 Source: OCDE Subsidies in the international market US tax The matters of the agricultural protectionism Analysis

25. Replace the dependence: trust Compulsory mix More countries producing Commoditization: parameters and certification Partnerships : knowledge and technology Protectionism Potential of the market Organization of the market

26. Blend Potential demand ( billion of liters ) USA28,4 5% EU7,4 5% China4,8 10% Australia2,1 10% Japan1,83% Thailand1,5 9% India1,1 10% Philippines 0,4 10% Source: EIA/DOE, Comissão Européia; Copersucar Potential of the ethanol market

27. Replace the dependence: trust Compulsory mix More countries producing Commoditization : parameters and certification Partnerships: knowledge and technology Protectionism Potential of the market Economic viability The construction of the market

28. The economic viability of biofuels Source: Expert interviews; FAPRI, United States; FAO; McKinsey analysis Base case Crude oil price (US$ per barrel) Biofuel’s potential share in total transportation fuels (%) Feedstock availability limits further growth

29. a Conclusion

30. Partnerships: USA, EU, Japan, Africa, Asia and Latin America The contribution of Latin America An opportunity for the poor countries A new civilization

31. gvagro@fgvsp.br (55 11) 3281-3645 October 18 th,2007