Production and use of fuel ethanol in Brazil - BAFF

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A2.8.
When, how and why did the State withdraw from
the sugar-cane agribusiness activities in Brazil?
The State action on the national sugar-cane agribusiness activities, justifiable when
the various movements of our history and the world history itself are considered,
could not be sustained indefinitely. A new, more appropriate management
model was need to conform with the principles of the modern State as a quality
improvement inducer. Most of all, it was necessary to enforce a provision of the
Federal Constitution of 1988 (article 174) according to which the governmental
planning for the private sector, rather than being decisive, must be only indicative
of the way to go 6 .
The IAA was terminated by a Provisional Measure enacted in 1990 7 . As early as
mid 1988, an Executive Law 8 would prohibit funds from the Federal Treasury
from being used in export sugar purchase and sale transactions, effective as of
June 1 st , 1989, while determining that the Executive Power should proceed with
the restructuring of the sugar and ethanol industry, including a reduction of the
sugar-cane agribusiness’ dependence on funds from the Federal Treasury and on
governmental intervention.
The reduction of the state action was indeed fast, starting from the release of the
industry’s products for export in 1989, proceeding with the price release for several
types of sugar and also anhydrous ethanol, and ending with the release of those
prices which were still under official control, i.e. sugar-cane, standard sugar and
hydrous ethanol prices, which took place in early 1999.
A2.9.
What is Brazil’s current regime for the production
and use of sugar-cane, sugar and ethanol?
Today, the production and marketing of sugar-cane, sugar and ethanol is no longer
subject to State control. The prices paid to producers are determined by the
markets. Sugar and ethanol imports and exports are free, at the risk and expense
5 Article 174 of the Federal Constitution provides as follows: “As the ruling and regulating agent of economic
activity, the State shall, as set forth by the Law, perform control, incentive and planning functions, the latter being
binding upon the public sector and a guidance for the private sector”.
6 MP (Provisional Measure) no. 151 of March 15, 1990, converted into Law no. 8,029 on April 12, 1990.
7 Executive Law no. 2,437 of May 24, 1988.
A. Fuel ethanol: Activities in Brazil and the world context