Doing More (and Better) with Less: 2016 Global Agribusiness Forum Shows the Ways to Provide Food and Bioenergy, with Sustainability, for an Increasing Population

July 26, 2016

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by Lais Thomaz* and Dan Quadros** (Advanced Biofuels USA) With diverse and dynamic programming involving agribusiness, food safety, nutrition, sustainability and bioenergy, the 2016 GAF achieved its mission to gather producers, companies and academia to discuss the importance of agribusiness supply chains in the world.

Dan Quadros and Lais Thomaz cover the Global Agribusiness Forum in Brazil for Advanced Biofuels USA

GAF is held every two years. In its third edition, in Sao Paulo, Brazil, 1400 participants, 700 companies, 120 associations and representatives of about 40 countries and international organizations such as FAO and World Organization for Animal Health (OIE) attended the event. In addition, several universities participated through real time transmission. The event was broadcast on two TV channels and online. It was consolidated to become one of the most relevant agribusiness events in the world and likely will become even more global, moving GAF outside Brazil

The Big Players in Agribusiness: Brazil and United States Lay the Cards on the Table

Complementing the significant participation of actors from other countries, Brazil's leading role in this area was highlighted in several exhibitions and presentations. In addition, the conference had strong support from Brazilian politicians. On the occasion were present: The interim President of Brazil Michel Temer; Congress Agribusiness Parliamentary Front; Ministers of Agriculture, Mines and Energy and Foreign Affairs and Governors of the states of Mato Grosso and Sao Paulo.

Intermim President of Brazil Michel Temer the addresses Global Agribusiness Forum.

In this time of uncertainty about the outcome of President Dilma Rousseff’s impeachment process, which should be decided after the Olympics, Brazil’s interim President Michel Temer received a confidence manifesto signed by 46 Brazilian entities. The economic and political crisis in the country has worsened since 2014, but agribusiness remains a solid and prosperous sector, representing 25% of jobs, 20% of GDP and 46% of Brazilian exports.

Facing the global growth of population, it was evident by many presenters that Brazil and the USA will have a crucial role in food production and international trade to feed the world.

From Brazil’s perspective, attracting more investment is essential to this role. For this reason, the president of APEX-Brazil, Roberto Jaguaribe and the Minister of Foreign Affairs, José Serra, emphasized new strategies for Brazilian trade promotion with emerging markets like Africa and Asia. Serra argued that Brazil, with the fundamental performance of APEX-Brazil, should seek to discover new opportunities and, at the same time, must concentrate its efforts to suspend sanctions on Brazilian products.

Roberto Jaguaribe, President of APEX Brazil

According to the Minister of Agriculture Blairo Maggi, Asia - not only China - is the main target market, but Brazil cannot ignore the US and EU to achieve 10% of the world’s agricultural trade.

In order to overcome Brazil’s weaknesses, Marcos Jank, Vice-President of BR Foods, one of the biggest food companies in the world, presented an agenda that should be pursued by the sector, which includes five international challenges that Brazil needs to improve: (i) market access, with strong advocacy work; (ii) trade promotion in order to added value to its products; (iii) competitiveness, reducing the infrastructure costs and generating more productivity; (iv) creating a better imagine of the country, highlighting its sustainability efforts; and (v) becoming part of a global value chain with the internationalization of companies and associations.

Presentation by former Brazilian Minister of Agriculture, Alysson Paolinelli with Pamela-Johnson-farmer-and-Past-President-of-National-Corn

The presence of US officials during the debates was remarkable. Ambassador Darci Veter, Chief Agricultural Negotiator for the US Trade Representative, and Warren Preston, Deputy Chief Economist of the US Department of Agriculture, stressed the importance of fostering cooperation to improve negotiations and agricultural trade.

Ambassador Veter noted the necessity of seeking international institutions to reduce tariffs and creating international standards through World Trade Organisation trade facilitation and Organisation for Economic Co-operation and Development trade mechanisms. Besides that, governments should focus on stability for farmers. "Our governments need to work together to achieve the goal of producing more with less resources,” emphasized Veter.

President Temer declared that Brazil owes much to agribusiness and that "many foreign investors are waiting a bit to see what happens in a month, a month and a half, to then invest very strongly in Brazil." He emphasized the importance of ethanol for export and he is looking forward to traveling to other countries in order to incentivize them to invest in Brazil, if he continues as President after August.

Temer declared that he is doing everything to get the train on track again. "Let’s bring back the international investments to Brazil," he said. Following legal protocol of impeachment, the congress will decide if he continues as President next month.

Feeding and Fueling a Growing World Population: Summary of GAF Presentations

"Preparing to feed 9 billion people in 2050, a large part of them coming from poverty and reaching middle class in developing countries (consequently increasing demand for food and energy), on a sustainable basis presents a big challenge," said Pamela Johnson, farmer and former President of National Corn Growers Association (NCGA), USA. That is why people who increasingly live in cities should worry about how things are going in fields. Because resources are limited and anthropogenic impacts are diminishing them even more, affecting all of us.

In the agricultural production expansion process, USDA, European Union and Brazil evaluations expect 40% will take place in Brazil. According Geraldo Martha Junior of EMBRAPA (Brazilian Agricultural Research Corporation), Brazil still has 65% of land conserved in Amazon forest, national parks and farms, following one of the strictest environmental regulations in the world. Declined pastures (around 40 to 60 million hectares) are the main focus to be converted into sustainable agriculture, using practices such as crop-livestock integration, no-till farming, and others.

Another important point in sustainability is the carbon budget of each activity. One comprehensive way to compare different systems is life cycle assessment (LCA). Many countries committed to reducing carbon emissions and have had positive results. Unfortunately, progress in mitigating greenhouse gases emissions has been too little and too slow considering the fragility of our environment and the expectation of climate changes according to different models.

In the agricultural context, there is a technological revolution going on, and things are being done with more precision. However, what is coming soon is a digital agriculture revolution, using smartphones, robotics and models of predictions, as was shown by Rodrigo Santos, Monsanto Latin America.

“Food security and safety are priorities. Thus, reducing food waste and facilitating access to affordable food must be considered”, highlighted Jean-Pierre Lehmann, Evian Group, Switzerland.

Biofuels Production and Utilization: Current Models and Future Expectations

In this section, the current models of biofuels production in Brazil and the US will be discussed, illustrating opportunities for the future. Both are giants in ethanol production, however producing it using different feedstocks.

First of all, ethanol is very important to reduce the environmental impact of the transportation sector, a big villain with regard to GHG emissions. The carbon intensity index, a rating scale for emitted carbon by GDP unit, has been decreasing at a 3% per year rate, but the ideal situation would be 6.3%. According to Luis Roberto Pogetti, Coopersucar Brazil, based on LCA studies, ethanol has 89% lower carbon emissions than gasoline. So, biofuels utilization should be stimulated more and more. Nowadays, around 60% of nations already have biofuel policies and regulations.

Brazil, the second largest producer of ethanol in the world, relies on sugarcane to produce sugar and ethanol. Normally, 94% of all ethanol produced goes to the internal Brazilian market where the blend in gasoline reaches 27%.

This year, the price of sugar has increased dramatically due to low world stocks, attracting most of the sugarcane produced. Therefore, a national ethanol shortage of 6 to 7% is expected along with even higher prices. Just in the first months of 2016, consumption of ethanol in Brazil decreased 13%, compared to the same period of 2015, alerted Plinio Nastari, DATAGRO Brazil.

Sugarcane bagasse (a residue from the sugar refining process), burned for power generation, makes biomass the second most important source of electricity in Brazil, just behind hydropower. This increases the value of the sugarcane chain.

Sugarcane is not grown in rainforest areas as many people in the world believe because Amazon region soils are not suitable for sugarcane. It is primarily grown in the southern part of the country, far from the Amazon.

The US, the world’s largest ethanol producer, makes predominantly corn based ethanol, even though cellulosic ethanol has been projected to be the greater bet for the future. One way to improve US national consumption even more is increasing the flex fuel vehicle fleet. (Frankly, this was the main cause of high consumption of ethanol in Brazil.) Doing that, gives choices to consumers at pumps in gas stations that offer options. They will evaluate price, mileage and other factors such as carbon footprint and octane. Another option is to increase the ethanol proportion in gasoline, currently at 10%.

Looking back, where are the people from swine and poultry industry that blamed ethanol for increasing corn prices (reflecting in food prices)? Still complaining, even though today, corn prices are low and the ethanol market is a great way to keep the growers in business.

Almost reaching Renewable Fuel Standards (RFS) goals for corn ethanol (15 billion gallons), it is time to invest in exportation and review of those numbers stated Monte Shaw, Iowa Renewable Fuels, USA. Cellulosic ethanol technology has not reach the maturity necessary to compete on price in the market considering feedstocks logistics and conversion process costs.

Exclusive interviews

Listen to exclusive interviews conducted by Dan Quadros and Lais Thomaz.

Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, gave an animated interview. He talks about the Renewable Fuel Standard, ethanol blends, octane, engine development, oil prices, oil industry, customers behavior, concerns about carbon emission, toxic aromatics in gasoline and much more.

1 – How do current oil prices impact profitability of ethanol plants in the US? Is there any possibility of a shortage?