Brazilian Biofuels Programmes from the WEL Nexus Perspective

Brazil’s biofuel programmes viewed from the WEL-nexus perspectivepreparation. This is medium- and high-productivity land, machine-workable, flat, andwith deep, well-drained soil.2 Second-class cropland: though potentially suitable for annual and perennial crops, it hasmuch more serious limitations than first-class cropland. It may present mechanisationproblems due to steep slopes. However, the soil is deep, well drained, with good fertility,though sometimes with a need for some soil correction.3 Pastureland: unsuitable for farm crops in the short term, it is potentially suitable forpasture and forestry. It is low-fertility land, flat or uneven, with simple to moderaterequirements regarding preservation and management practices to produce biofuelcrops.4 Rough land (‘Terra de Campo’): land with natural vegetation, whether or not primary,and with limited possibilities for use for pasture or forestry; the best use is for shelteringflora and fauna.Ideally, sugar cane production requires first-class cropland, but second-class land can also beused, using non-mechanised harvesting and improving the soil. One might therefore expectthat the pressure on land prices placed by sugar cane production, among other factors, wouldbe greater on these two land categories. However, a strong correlation was observed (Figure4.3) among the prices of all four categories. This is, therefore, a Ricardian rent differential,whereby the price of more productive land is given by the marginal land price (Sandroni,1999), in this case second-class land, pasture and rough land. This dynamic results from theincrease both in the price of sugar in the international market and in the demand for ethanol inthe domestic market, which makes it possible to include less fertile lands for growing sugarcane. 6In addition, the acceleration in the price of preferential land for the production of sugar cane inSP is significant, especially after the inclusion of flex-fuel vehicles in the national car fleet.Taking the most productive land (first-class land) as an example, the price per hectare risesfrom R$4,600 in 2002 to R$14,600 in 2010 (Figure 4.3). Finally, it should be pointed out that56% of arable land in the state of SP is leased, and that 72% of such areas are owned by largeeconomic groups, thus reducing the supply of rural areas in the state and contributing to theincrease in land prices (Olivette et al., 2011).In fact, the increasing sugar cane production in SP led to a sharp rise in land prices. Accordingto Marques (2009), in the case of sugar cane production both by rural producers and by sugarfactories, leasing prevails to the detriment of farmers cultivating their own land. For example,in 2008, approximately 60% of the total area allocated to sugar cane production in SP wasleased.6 In fact, although the best soils for sugar cane are deep, well structured, fertile soils with a good retention capacity,due to its hardiness sugar cane develops even in less fertile soils, such as pasture and rough land soils, provided thesoil is improved (EMBRAPA, 2011a).22