Brazilian Biofuels Programmes from the WEL Nexus Perspective

Brazil’s biofuel programmes viewed from the WEL-nexus perspectiveproductivity, 10 and internal and external demand provided in Nassar et al. (2010). We alsoassumed the current macro and microeconomic equilibrium, 11 as well as continuation of thecurrent breakdown in allocation of soybeans for food purposes 12 for the internal market(mainly for cooking oil) and export market, which at the end of 2008 was 31% and 39%,respectively (CONAB, 2011). Finally, we disregarded expansion of soybean production to areasdedicated to other crops, i.e. competition for land use (Rathmann et al., 2010), andincorporation of marginal lands.Scenario A assumes the maintenance of soybeans in the composition of inputs to produce biodieselat 84% along with the projection of the PNE 2030 for mixture of bio-diesel with diesel(B5 up to 2011, B6 between 2012 and 2019, B7 from 2020 to 2029 and B12 in 2030).Scenario B assumes that as from 2012 all existing bio-diesel production capacity (now partlyidle) will be used, allowing the blend level to reach B8 that year, rising to B10 in 2015, B15 in2020 and B20 in 2030. Finally, Scenario C assumes the same mixture projection as in ScenarioA, but tests the premise that the diversity of oilseed crops in Brazil will ensure that the biodieselproduction chain need not affect food and economic security, by establishing a limit onsoybeans to make bio-diesel of 50% of total inputs.In this last case, according to Goldemberg et al. (2008b), cotton can supply part of the oil nowprovided by soybeans, because its supply is dictated by the market for fibre to make textiles,the main product of economic value made from cotton. Therefore, nearly all the cottonseedcan be processed to produce oil. According to the author, sunflower and rapeseed are alsofast-expanding crops, so they can play a greater role in supplying feedstock oils. For thesereasons, in Scenario C we consider that cottonseed will supply 15% of the demand for oil,rapeseed and sunflower seed will together account for 16% and tallow will account for 19%from 2011.The high current participation of soybean oil to make bio-diesel undermines the premise of theavailability of a wide range of oilseeds, because no other vegetable-oil source yet has reachedthe scale to meet even current industrial demand. Although Brazil produces bumper harvestsof soybeans, the allocation of this crop to produce bio-diesel would be limited to B7 inScenarios A and B (Figure 4.6). Since it is not plausible to jeopardise food security (heredefined as domestic consumption), increasing the blend of bio-diesel in diesel would requirereducing exports and/or expanding production by incorporating new areas either by replacingother crops and/or expanding to marginal areas (Rathmann et al., 2010). In this case, therewould be imbalances of both a macroeconomic nature (loss of foreign exchange) and amicroeconomic one (increased prices of land and other staple food crops, such as maize, beansand rice, among others). Both such outcomes would be undesirable.10 It is estimated that the yield will increase by 38% between 2010 and 2030, with average productivity rising from2.34t. / ha to 3.34t. / ha (CONAB, 2011).11 The macroeconomic equilibrium can be understood by the participation of soybeans in total Brazilian exports(approximately 10% of the total in 2009) (SECEX/MDIC, 2010).12 This includes both for human and animal consumption, in the former case particularly in the form of cooking oil.29