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17/02/2014 - 18:05hs

Brazil launches cane crop innovation program

The Brazilian Development Bank and the Studies and Projects Funding Body will provide US$ 618 million to innovative business plans for the industry. The goal is to boost productivity.

São Paulo – This Monday (17th), the Brazilian Development Bank (BNDES, in the Portuguese acronym) and the Studies and Projects Funding Body (Finep), an agency linked to Brazil’s Ministry of Science and Technology, have launched PAISS Agrícola, a program designed to select business plans focusing on technological innovation of the sugar-energy industry. The two organizations will provide a combined R$ 1.48 billion (US 618 mn) from 2014 to 2018.

The goal of PAISS Agrícola is to speed up the development of new technologies for increasing agricultural efficiency in the sugar-energy industry, eliciting greater productivity gains in the medium- and long-terms. Presently, Brazilian crops yield 11 to 12 tonnes of cane, which may be processed into sugar or ethanol. The annual productivity growth has been lower than 1%, while formerly it has reached 3%.

The program launch ceremony was attended by BNDES governor Luciano Coutinho and Finep chairman Glauco Arbix, at the headquarters of the Sugarcane Industry Union (Unica), in São Paulo. The Unica chairwoman Elizabeth Farina and the Brazilian minister of Science and Technology Marco Antonio Raupp were also in attendance.

“There is no formally fixed target in the plan,” said Marcos Barros, an analyst at Finep’s Clean Energies and Technologies Department, when inquired as to whether the goal is to return to an annual growth rate of 3%. “Right now, we are seeing gains in industry output, but the actual agricultural part is stagnant. The goal is to keep the planted area the same, and still see much higher yields,” he explains.

Companies in the industry have been calling for increased funding for productivity investment for years now. If cane crop productivity was back to a 3% growth rate today, an additional 12 billion litres of ethanol could be manufactured up until the beginning of the next decade – a 40%-plus increase over the current output.

PAISS Agrícola should sponsor plans in five different categories: production of new varieties of cane, especially ones including transgenic improvements; development of machinery and implements for planting and collecting straw or residue, with an emphasis on disseminating the use of precision agriculture; creation of integrated handling, planning and production control systems; faster, more efficient ways for sowing seedlings, and innovative biotechnology-based planting devices; and projects designed to adapt industrial systems to energy-providing crops compatible with the sugarcane/ethanol agro-industrial system.

Barros explains that the program only applies to Brazilian companies, but places no restrictions on companies which are partly foreign-owned, “so long as they are registered in the country, and do their research and development in Brazil.” Each company will be allowed to submit only one business plan per category.

Of the R$ 1.48 bn (US$ 618 mn) in funding, R$ 1.4 bn (US$ 584 mn) consists of reimbursable financing, and R$ 80 million are non-reimbursable. “The higher the technological risk involved, the more the plan becomes eligible for non-reimbursable funds,” explains Barros regarding the criteria for budget allocation. According to the analyst, partnerships with science-technology institutions on developing plans will be looked upon as a plus.

The analyst notes that PAISS Agrícola is a continuation of former investments in the industry, seeing as PAISS Industrial, launched in 2011, had offered support to sugar-energy companies. “The focus now is on the agricultural bottleneck,” he says. PAISS Industrial covered 57 companies and 35 approved business plans, amounting to a combined R$ 2.5 bn (US$ 1 bn) worth of investment.

According to Barros, PAISS Agrícola should start yielding results in 2018 or 2019. “By then we will see if actual productivity gains were achieved in the crops,” he said.

Interested parties may submit their business plans up until May 16th. The final results will be announced on July 10th, and the funds should start being made available this year. For further detail on PAISS Agrícola refer to http://www.finep.gov.br/paissagricola and www.bndes.gov.br/paissagricola (in Portuguese).

*Translated by Gabriel Pomerancblum

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