January 26, 2010 Sweet Success

Volume 13 | Issue 1

Nobody ever dreamed it would be possible, let alone profitable, to plant sugar cane in the heart of Brazil’s semi-arid interior.

Not everyone can wring proverbial water from a stone, but Agrovale, Brazil’s first – and, to date, only – manufacturer of 100-percent irrigated sugar, has achieved the seemingly impossible feat of cultivating sugar cane in the Sertão, an inhospitable, arid, and traditionally poor region of Brazil’s northeastern interior whose saving grace (and life source) is the presence of the vast Rio São Francisco. In fact, the unharnessed potential of Brazil’s longest national river – which runs 1,758 miles from its source in Minas Gerais throughout the Northeast until it flows into the Atlantic – was the reason that Agrovale first came into being in 1972.

“THE CALIFORNIA OF BRAZIL”
Company Director Carlos Gilberto Farias remembers the moment vividly. At the time, Farias along with Agrovale’s other co-founders, Cid Eduardo Porto and Gustavo Dias, owned a consulting firm called Projetech. Based in the northeastern state of Alagoas, Projetech worked closely with the nation’s important sugar industry. In the early 1970s, the international price of sugar was exploding. In response, the Institute of Sugar and Alcohol, a government body that controlled all sugar production at the time, hired Projetech to look into the development of new sugar manufacturing projects in Brazil.

“We all went to listen to a lecture given by Colonel Santa Cruz, who was then superintendent of the São Francisco Valley,” recalls Farias. “And we were all struck by a phrase he used to describe the region: ‘This is the California of Brazil’.” At the time, very little of the São Francisco’s great potential had been tapped. However, with the Colonel’s words lingering in their ears, Farias, Dias and Porto visited the region of Tourão, near the town of Juazeiro, which was one of a few experimental irrigation projects already in existence. After completing their own studies, they were so impressed by the fertility of the soil – whose high content of argil clay guaranteed high productivity – that they immediately invested in an abandoned sugar plantation.

Although Agrovale’s founders had a plant, the newly formed business was missing a crucial element: water. Ironically, it took years to convince the federal government via Codevas (the Company for the Development of the São Francisco Valley) to liberate the construction of canals that would permit Agrovale to use the river as an irrigation source. “As a result, we couldn’t start planting cane until 1979,” says Farias. “When we finally had our first harvest in 1980, it was a great moment.”

HIGH PRODUCTIVITY
The first harvest was memorable for many reasons. First of all, nobody in Brazil had ever imagined that it would be possible to grow sugar cane in the desert-like Sertão. Imagine the surprise that ensued when Agrovale succeeded in obtaining productivity levels that were twice the levels obtained in major sugar growing regions in other parts of Brazil. According to Farias, cane planted in São Paulo and other northeastern states such as Pernambuco usually only yields between four to five harvests before requiring replanting. However, due to an exceptionally favorable combination of factors such as irrigation, light, and the São Francisco Valley’s unique soil and climactic conditions, Agrovale’s crops yield nine harvests – more than double that of their competitors.

Agrovale currently possesses 39,900 acres – (an expansion later this year will add another 2,470 hectares for irrigation purposes) – that yield a harvest of 1.5 million tons of cane. The company’s goal is to increase production capacity to two million yearly tons by 2015. As it is, Agrovale is able to produce 20,000 50kg bags of sugar along with 5,000 liters of alcohol (90 percent of which is anhydrous alcohol) that the company first began manufacturing in 1981.

In a state that can lay claim to being Brazil’s largest domestic importer of sugar – unlike the lush and humid coastline, most of the Bahian semi-arid interior is unsuitable for agriculture – Agrovale is undisputed market leader, supplying 80 percent of Bahia’s sugar and ethanol. Indeed, sales within Bahia represent 70 percent of the company’s business, while neighboring Pernambuco accounts for the remaining 30 percent.

A SUSTAINABLE FUTURE
Deciding how much focus to give to the production of sugar versus alcohol is a question the company struggles with based on fluctuating market factors that affect the price of both products. “As a commodity, the price of sugar is decided on the international market,” explains Farias. “In the last five years, sugar prices have soared to historic heights, due in part to droughts in India, a traditional exporter, which will actually have to import this year.”

“As a result, this year sugar accounted for 90 percent of our production while alcohol was only 10 percent. Normally, however, we prefer to have a more balanced ratio of 60 (sugar): 40 (alcohol). Our ideal, however, is to have a reversible plant where we can use all facilities to produce 100 percent sugar and then turn around and produce 100 percent alcohol. At the moment, while we have the capacity to do 90 percent sugar, we can only do around 60 to 70 percent in terms of alcohol.”

It’s hardly surprising that Agrovale is looking at ways of ramping up alcohol production. Long a pioneer in the use of sugar cane ethanol as an alternate fuel, today all Brazilian automobiles are flex fuel vehicles that run on a mixture of both gas and alcohol. Due to low prices, rising environmental concerns, and government legislation, the market is quickly growing. As president
of Bahia’s union of sugar and alcohol producers, Farias closely follows both national and global industry trends. “The world is looking for a clean fuel, and non-polluting ethanol, combined with gas instead of lead, has a great future,” he declares. “Ethanol will eventually become a commodity and when it does, Brazil is ideally positioned to supply the worlds’ needs.”

As it is, sugar – or rather sugar’s bi-product, bagasse (the cane’s leftover fibers) – already supplies Agrovale’s needs. From the beginning, the company has used bagasse to generate energy (via the steam created from the clean burning of this biodegradable fuel) at its own 14MW plant. Since it only consumes 6.5MW, the remaining 7.5MW is sold to third parties. Meanwhile, already in the planning stages is the creation of a new plant capable of generating 50MW. Expected to go into operation by 2012, the project marries two traits that have defined Agrovale since the beginning: innovation and environmental sustainability.

Indeed, aside from using bagasse as a source of energy, Agrovale also markets it to farmers as feed for livestock as well as organic fertilizer for crops. Committed to incorporating the industry’s latest technology, the company is also on the cutting edge in terms of the process it uses for refining its sugar. Instead of using sulfur, which is the industry norm, the company has been a pioneer in the use of ozone (which is already naturally in the atmosphere). As a result, Agrovale’s sugar is free of the chemical elements of most industrial sugars. As Farias points out, success is much sweeter when a company can take comfort in the fact that its product has a beneficial impact on the environment as well on the people who consume it.

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