The Sweet Stuff: Sugarcane in Brazil and Beyond

We put it in our coffee, use it when baking a cake, and more than likely, you are trying to control how much of it is in your diet. But for such a ubiquitous product, you may not know a lot about what sugar is and where it comes from. Today’s blog will explore sugarcane, a crop that has molded the social, economic, and agricultural development of Latin America and beyond.

 

A Brief History of Sugarcane

Sugarcane is a plant within the grass family that grows in tropical and subtropical climates, as it requires abundant sunshine and plentiful rainfall. The fibrous stalks of sugarcane are rich in sucrose, the naturally occurring carbohydrate that gives the plant its sweet properties. While today the crop is grown across a number of countries that feature the proper conditions, its roots can be traced to Southeast Asia and India, where it is believed to have first been grown.

 

From its humble origins, sugarcane spread westward as demand for the crop grew. Sugarcane first arrived in the America’s in the 15th century, when Christopher Columbus brought the plant to the Caribbean. From there, Portuguese and Spanish settlers proliferated the crop, setting up plantations within their colonies across North and South America. By the late 16th century, sugar, along with other cash crops such as tobacco and cotton, formed a critical trade axis of the infamous ‘Triangle of Trade’ that linked the New World with the other side of the Atlantic Ocean.

 

As sugar plantations expanded in the Americas, so did the demands for labor. These demands were met through the importation of millions of slaves from Africa – a trade that formed a second of the Triangle’s sides. Not only did these dynamics fundamentally contribute to the demographic makeup of the region, but they left an indelible mark on the emerging societies and economies as well. For example, in Brazil, the destination of an estimated 4.9 million African slaves, this labor formed such a fundamental component of the economy that it was not outlawed until 1888 –  the last country in the Western world to do so.

 

Today sugarcane continues to be big business. According to the FAO, in 2014 sugarcane occupied 27.1 million hectares worldwide, with total global production north of 1.9 billion metric tons. Sugarcane is processed, unsurprisingly, into sugar, which accounts for an estimated 80% of the crop’s use. However, other applications include the production of ethanol, which has been growing in popularity.

 

Latin America is a leading producer of sugarcane, with the region accounting for about half of global production. In fact, eight of the top 20 producing countries are located in Central and South America. But by far, the largest producer is Brazil. According to data published by the FAO, at 736.1 million metric tons, Brazil alone provided 39.1% of the world’s sugarcane production, with its share having grown from 30.9% a decade earlier. Brazil’s production is more than twice that of the next country, India, and more than 26 times that of the United States.

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Cana de Açúcar

In Brazil, the sugarcane industry is big business, calculated to contribute nearly 2% of the economy’s entire GDP. It is a major provider of employment and an important source of economic activity for the many suppliers and service providers associated with the industry. The leading Brazilian sugarcane trade association, UNICA, estimates that the industry grew at over 10% per year during the mid-2000’s thanks to rapidly expanding biofuel demand. However, growth slowed on the heels of the financial crisis, and now the industry is believed to be expanding at a more tempered 3% annually.

 

Given the highly specific growing requirements of sugarcane, the crop is concentrated in the South-Central and Northeast region of the country. Of the two, the South-Central region is clearly dominant, producing 93.1% of Brazil’s sugarcane during the 2016/2017 market year. The state of São Paulo alone produced 366.0 million metric tons of sugarcane that same year – over half of the country’s total.

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The 651.8 million metric tons of sugarcane produced in Brazil during the 2016/2017 season (note that UNICA’s statistics differ from those of the FAO) resulted in the production of 38.7 million tons of sugar and 27.3 million cubic meters of ethanol. Given the prevalence of sugarcane and the critical role it plays with respect to the economy, Brazil has been an aggressive adopter of ethanol as a source of fuel and energy. UNICA estimates over 40% of the country’s gasoline needs have been replaced by ethanol. In addition, 90% to 95% of new consumer cars are ‘flex-fuel’ vehicles that can seamlessly run on either gasoline or ethanol.

 

Brazil’s leadership in the sugarcane industry has not just been limited to domestic production. The nation has come to hold the dominant export position for both sugar and ethanol. During the 2016/2017 marketing year, Brazil exported 1.4 billion liters of ethanol and 28.3 million metric tons of sugar. It is important to note that ethanol exports fell considerably compared to prior year, while sugar exports rose by 14.6%. Asia imports most of Brazil’s sugar, while the majority of ethanol exports stay within the Americas. Interestingly, Brazil imports nominal volumes of ethanol made from other feedstocks for blending purposes.

Sticky Situation

While Brazil’s sugarcane story has been largely positive from an economic perspective, the industry will continue to confront challenges as it continues to grow and evolve. Firstly, the industry maintains a terrible reputation with respect to their treatment of labor. Following the prohibition of slavery, a system of indentured servitude took its place, leading to an influx of immigrants, mostly coming from Asia. While not definitively slaves, the sugarcane industry has been criticized for its treatment of these workers, particularly with respect to working conditions. The industry defends itself by saying that sugarcane workers are among the highest paid agricultural workers in Brazil. But even if this is the case, the sector has a responsibility to ensure that it is not involved in human rights abuse.

 

The industry has also been criticized on environmental grounds, particularly with respect to deforestation of the Amazon for sugarcane plantations. These criticisms are largely misplaced, as the Amazon does not have the proper environmental conditions for growing sugarcane. However, a legitimate concern is that as additional lands in other parts of the country have been converted to sugarcane production, other types of agriculture have been pushed toward the Amazon, resulting in, at best, its mismanagement and at worst, its destruction. While valid, this argument is a slippery slope and difficult to quantify. Instead, the Amazon should be protected through strong institutions that are focused on preserving this natural jewel and all the critical biodiversity it contains.

 

Perhaps not so much a threat as an opportunity, the processing of sugarcane results in leftover bagasse, or the fibrous stalk of the plant. This stalk contains as much as two thirds of the plant’s energy, but little has been done to use this byproduct, other than in the production of some paper products. Recently however, scientists have begun working diligently toward proficiency in production of cellulosic ethanol, a process in which the bagasse could be used as a feedstock. Once this process is perfected, ethanol production will become more efficient since it will be able to capture a larger percentage of the sugarcane’s energy.

 

Conclusion

Through the centuries, sugarcane has been an important agricultural crop that has shifted our world’s trajectory in unexpected ways. Brazil in particular, has come to depend on sugarcane as one of the pillars of its economy. But even though the sector has reached such prominence over the last several decades, significant challenges lie ahead. As with any agricultural sector, the sugarcane industry will have to evolve and adapt to the new demands of the world. If it proves able to do so, this story will certainly have a very sweet ending.