May 26, 2009 Sugar Bounty

Volume 12 | Issue 3

Usina Alta Mogiana’s Luiz Gustavo j. Figueiredo tells Lee Weingast how this Brazilian company has been successfully weaving together sugar,

Brazil has recently earned praise for its efficient production and widespread use of ethanol fuel made from sugarcane. It started when ethanol production was given a boost by way of a government incentive in response to an oil crisis in the 1970s. Large-scale land owners and agriculture groups were invited to participate in the Pro-Alcohol Program, and Usina Alta Mogiana – then called Alto Alegre, which already grew sugarcane, the raw material for the alcohol distillation process – seized the opportunity to receive federal funding to grow its business. Today, with an efficient enmeshing of alcohol, sugar and electricity production, Alta Mogiana is a model of a diversified, self-sufficient business more than ready to prosper in the fuel-conscious future.

The Pro-Alcohol Program was successful but had its ups and downs. When it lost steam in the mid-1980s after a drastic fall in oil prices, Alta Mogiana took the opportunity to begin allotting some of its sugarcane for sugar production. By the end of the 1990s, a full 65 percent of cane grown by the company went into the production of sugar, with the remainder still used for ethanol production. At that time, Brazil was not a major player in the foreign market so the bulk of Alta Mogiana’s sugar was destined for retail sale on the domestic market. Major supermarket chains and large companies like Nestle are among the company’s main clients.

WASTE NOT, WANT NOT
The harmonious integration of the various aspects of Alta Mogiana’s business is a model of efficiency and self-sufficiency. In the year 2000, the company began to invest in the technology for generating electricity from bagasse, the fiber by-product of the extraction of juice from sugarcane, and currently sells electricity to large-scale consumers and energy distributors. Making use of the waste products from sugar and ethanol production to generate electricity allows the company not only to meet its own electricity needs but to generate income. Luiz Gustavo J. Figueiredo, Alta Mogiana’s sales manager, explains, “During the nine-month harvest period none of our plants pays for any electricity. There are only three months of the year when we buy a small amount of electricity, for the office.” He points out, “This is an important aspect of the sugar and ethanol sector in Brazil: we have no electricity needs.” He compares the efficiency of the processes implemented by Alta Mogiana with other methods. “Unlike a plant that uses diesel to produce ethanol from corn, we don’t need to buy electricity and we even sell electricity. It gives us a very competitive edge.”

Alta Mogiana does not miss an opportunity to be highly productive. Sugarcane has a five-year lifecycle and rather than leave the fields fallow or replant sugarcane, which could deplete nutrients in the soil, Alta Mogiana employs a very efficacious method of crop rotation. By planting cover crops like soy beans, the company not only restores the necessary nitrogen and other minerals to the soil, it also generates income through the sale of the beans.

Figueiredo explains: “We came to stand out as a retail brand. We were the second-largest brand of sugar in Brazil. Conquering a substantial part of the market and being ranked in the top three is a big deal for a relatively new company [like Alta Mogiana].” Figueiredo goes on to explain that the company sought a way to differentiate itself from similar companies in Brazil through official recognition of high quality and standards. Alta Mogiana earned the ISO: 9000 certification for quality management and Figueiredo boasts that “Alta Mogiana was the first sugar producer to be certified ISO: 2200, for quality and food safety.”

SWEETS AND FUEL EXPORTS
The year 2000, when Alta Mogiana became a major exporter of sugar and ethanol alcohol, marked an important growth phase in the company’s history. Currently 70 percent of sugar and 40 percent of ethanol produced by Alta Mogiana is sold to clients outside Brazil. Alta Mogiana’s refined sugar is also sold retail within Brazil while crystal sugar is exported to both major industry and retail sellers. VHP, or very high polarization, sugar is a small part of Alto Mogiana’s business and is generally exported to the Middle East and Russia for use in the production of refined sugar. The Middle East, Asia and some African countries account for the bulk of Alta Mogiana’s export sugar sales while the United States and Europe are the biggest buyers of ethanol.

The company’s 3,000 employees use high-pressure, high-tech boilers to process five million tons of sugarcane yearly, which in turn churns out 450,000 tons of sugar and 150 million liters of alcohol annually. As part of a group of four mills that will crush 13.5 million tons of sugar cane in 2009, Alta Mogiana ranks as one of the largest sugar cane groups in Brazil and among the top 10 producers of alcohol and sugar in Brazil, processing around 44 million tons of sugar cane annually.

Sugar for the retail market, as well as crystal sugar for large food industries, is processed at the company’s Alto Alegre Group, leaving Alta Mogiana focused on the export market.

SOCIAL RESPONSIBILITY
As the largest industry and employer in the area, Alta Mogiana is committed to being a positive force in its community and is involved in a number of activities. It works with the local government in sponsoring youth education and sport programs. Youth, many of whom come from needy families in the state of São Paulo, and company employees, can take part in sports events and leagues, including ju jistu, tennis and soccer. Figueiredo underscores the company’s focus on contributing to the physical and emotional development of its community’s youth. He says that Alta Mogiana seeks out such programs that can benefit from materials, funding, and even in terms of manpower through the company’s workforce. The company also works with the organization Educando para o Futuro 2001 to offer computer and accounting classes. And the natural environment benefits from Alta Mogiana’s presence too. Figueiredo boasts, “We produce non-polluting fuel and are concerned with reforestation and the protection of rivers and forests.”

When asked about the vision for Alta Mogiana’s future, Figueiredo explains, “We are always studying possibilities.” As a member of the Centro Tecnico Canaviero in the state of São Paulo, the company is involved in research on new varieties of sugar cane. Alta Mogiana has grown at a rate of around 10 percent annually and Figueiredo says that the company intends to “consolidate all this growth and then study new opportunities for future expansion. Nowadays, the key word is consolidation especially given the current crisis. We will calmly prepare for our next steps. We can expect this very intelligently run company to continue to play an important part in an ever more important sector.”

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