THE BIODIESEL PROGRAM IN BRAZIL: OPPORTUNITIES AND CHALLENGES FOR FAMILY AGRICULTURE

Case Study: Pole of Biodiesel Serra da Capivara, Piauí

The Biodiesel program in Brazil Biofuel development in Brazil

→ History of bio-ethanol Large extension of mono-crops Bad labor conditions (slave labor)

Policy response→ The National Program for the Production and Use of Biodiesel (PNPB) Social objective: inclusion of family farmers Environmental objective: avoiding large

extension of mono-crops

The Biodiesel program in Brazil Inter-ministerial Executive

Commission (CEIB)→ MDA family agriculture Creation of biodiesel market

Normative increase in blending (2% in 2008 to 5% in 2013)

Auctions: ANP buys biodiesel in anticipation

Biofuel companies must hold Social Fuel Seal (SFS) to participate in auctions

Social Fuel Seal (SFS) SFS granted to biofuel companies by the

MDA -provided that Biodiesel companies have contracts with family farmers

Contracts negotiated by labor unions and biofuel companies

Contracts should stipulate price, location of buying and technical assistance

Tax exemptions to Biodiesel companies holding SFS

Problem Statement Research has been conducted on why the

PNPB has failed in its social objective (regional approach) Selection of crops, low price, breach of contract

In recognition of the difficulties faced, the Project Poles of Biodiesel of the Northeast was launched

Creation of Petrobras Biocombustíveis → Potential of these new efforts: unsettled

and up for debate

Research objective To present a comprehensive description

of the circumstances of family farmers in the Territory Serra da Capivara in the State of Piauí

To assess the potential and challenges of the production of oleaginous based in family agriculture

To contribute to the debate of the social inclusion of the PNPB

Research questions

1. What have been the main challenges encountered by family farmers in joining the biodiesel chain in the Pole of Biodiesel Serra da Capivara?

2. What is the potential to include family agriculture in the biodiesel sector?

Methodology

Unit of analysis : micro-region of São Raimundo Nonato, Territory Serra da Capivara, Piauí

Case study: interviews with local actors and family farmers

Snowball sampling system Support of EMATER-PI (technical

assistance provider)

Background

Northeast region: targeted within the PNPB for regional development (largest concentration of family agriculture)

Major challenges were encountered in this region

Poles of Biodiesel of the Northeast

Micro-region São Raimundo Nonato

Territory in the southeast region of Piauí

18 municipalities Castor seed

production pole during the 70’s and 80’s

Prefeituras Municipais

Fetag-PI

Sindicatos Rurais

Implementation 2004 Partnership

between several institutions

Large implementation

Micro-reion São Raimundo Nonato targeted

Implementation 2004

The bank faced a 90% default and little castor seed was commercialized

Year # Municipalitie

s

# Farmers Area (ha)

Implementation 2004/2005

14 1813 3626

Implementation 2005/2006

23 4485 9818

Implementation 2006/2007 (not executed)

42 7735 26842

What happened? Massive provision of credit (PRONAF) Credit delayed (lack of operational

capacity) Seed provision delayed after rainy

season Distribution of grain instead of certified

seed Eight technicians for 4000 farmers

Low productivity → credit default

What happened?

People who were not farmers accessed the loan

Farmers who were interested in the credit but not in the cultivation of castor seed

Few farmers for commercialization

Consequences

Lack of trust in biodiesel company Relating contracts to debt Loan default “Certified seed it is not appropiate for

our region.” “Castor seed production is not

economically viable.”

Implementation 2008 Problems were identified with Project

Production Poles of Biodiesel through working group

Brasil Ecodiesel left, Petrobras entered Petrobras contracted EMATER-PI to

accompany family farmers from mobilization until commercialization

Includes 14 of the 18 municipalities in the territory

Process of inclusion of family farmers

oGoal: relating contracts to debt, without credit not interestedoContracted: interest in access to credit or other incentivesoPlanted: no access to capital, irregular rainfall oCommercialization: low productivity, selling earlier

Goal Contracted Planted Commercialized

Total 750 417 262 162

Inclusion of family farmers

o Farmers switching from BED to Petrobras

Harvest year 2008/2009 2009/2010 # of new farmers

Total 447 667 220

Potential Adaptability of the crop to the agro-

climatic conditions of the semi-arid region Opportune harvest period: source of

income in the driest period of the year Favoured by culture of 80’s and 90’s

→ But: family farmers’ food security The better-off farmer is the one with a

diversified farm Only viable as part of a diversified system

Challenges Agro-ecological conditions

Irregular rainfall Characteristics of the soil (pH value, texture)

Socio-economic conditions Transportation and storage infrastructure Lack of supporting services: credit, machinery,

technology, technical assistance, extension Land ownership Research on the area

Challenges Family agriculture system characteristics

Farm animals: toxity of castor seed Labor availability: priority staple crops Low productivity: low return on labor (soil) Intercropping system: varieties of castor seed

and bean, other preferences for intercropping Other channesl of commercialization:

middlemen Meaning of contract: independence, trust,

literacy

Challenges of implementation Scattered distribution of farmers in the territory

Nucleus of production: farmers do not identify with this

Weakness of local organizations: low number of farmers, inactive producers’ associations

DAP: making sure farmers are family farmers Banco do Brasil, Petrobras, Emater

Agro-ecological zoning Obtaining seeds

Ensure quality and quantity

The PNPB and social inclusion 18,000 farmers in the region: 667 included

in 2010 How can it be more inclusive?

More incentives: machinery, re-open credit line But: 2004 great number of incentives, not

positive results Orientation to quantity rather than quality

Farmers need time and experimentation for decision making

→ Ceará: 30,000 farmers included, aiming at improving productivity

Role of Petrobras

Structuring the productive base of castor seed in the Northeast

Increase in productivity, change of structure of costs

Castor seed oil more expensive than processed biodiesel

Investing in family agriculture today will pay off in the future

Conclusions Potential: drought tolerance, harvest time

Only as part of a diversified system Challenges related to the structure of the

program: Incentives Contracts Compatible with family agriculture

Challenges related to implementation Large-scale implementation

Challenges that the program is not meant to solve Infrastructure, additional stressors

Conclusions Inclusion of family farmers in the value

chain of biodiesel? Better understanding of family agriculture

systems Highly dependant on political agendas Orientation to quantity rather than quality:

position of farmers in the value chain Political participation: role of labor unions

is marginal

Recommendations Structure: other modalities of inclusion,

acurracy of incentives Implementation: process small-medium,

pilot projects Not only quantity of inclusion buy quality of

inclusion: oil production Diminish the dependence of family farmers

on the company Costs of incentives weighed against its

benefits