Be a leader is only the beginning

SÃO PAULO-after conquering the world leadership in commercialization of ethanol American with the purchase of EcoEnergy, last year, the Brazilian Copersucar announced this month that also reached the top of the rankings, surpassing the American Cargill. The lead, by itself, is not cause for major celebrations, because the sugar-ethanol sector lives one of his worst moments in terms of profitability. However, according to experts in agribusiness, the port gained can be used to make better use of the opportunities that can arise in a medium-term horizon.
"The ' timing ' of Copersucar leadership does not look good, because we live the heyday of sugar and ethanol oversupply," says partner consulting MB Agro, Alexandre Mendonca de Barros. However, he says that the difficulty of industry investment will bring a period of margin recovery in two or three years. This occurs because the expectation is that the offer is stationed, while the demand for sugar will grow year after year and the Government must yield to the pressure to set some encouraging internal consumption of ethanol.
In this scenario, the Copersucar to decide strategy for expansion now, and not when things improve, can show correct, since the assets of the sector tend to be more expensive in periods of calm. The expansion of the company, in fact, occurred after ethanol euphoria. The decision to set foot on the accelerator came after the change of the structure of the business, which is no longer a "pure" to turn a corporation in 2008-the year in which the outbreak of the international financial crisis. Today, 47 power plants are shareholders of Copersucar.
The sugar cane milling capacity of the company, which was 65 million tons in 2007/2008 crop, expected to reach 130 million tons in 2013/2014. In the same period, revenues will nearly quadruple, from r $ 4 billion to $ 15 billion-not to mention the recipe of EcoEnergy, which raises the figure to $ 22 billion.
All this expansion, according to the President of the Council of the Copersucar, Luís Roberto Pogetti, is based on the belief that the sugar-ethanol sector-and especially the ethanol project is viable in the long term. "I think the industry has experienced a period of ' growing pains '. But the potential demand for ethanol in Brazil is huge, because it is a viable alternative to oil, "he says.
Challenges. However, the promise of profitability by a massive use of ethanol will not materialize as a public policy is not set-and no one in the industry expects this to occur by the end of the year. Meanwhile, the sugar market, which would be the salvation of the crop, lives an oversupply. The banks, which were tightened last year, should be even more compressed in 2013. In 2011/2012, the profit was R $ Copersucar 102 million, down more than 70% compared to the previous cycle.
And, at least until the end of the first half, there is no reversal of this forecast frame of the commodity. "The price of sugar is not a big deal because the production was good in all the big barns, as Brazil, Mexico, Thailand and India," explains Fabio Solferini, partner of American agribusiness consulting Intl FC Stone.
While sugar Copersucar is attached to the shuttle world demand and the price of the product on the ethanol issue Chicago coming up in difficulties internally. Companies are unanimous in claiming that the gasoline price freeze promoted by the Government to control inflation not only committed the Petrobras accounts but also undermined the competitiveness of ethanol.
With the artificially cheap gasoline, the incentive for consumers to use the alternative. According to information of the MB, the Agro flex vehicle fleet totaled 10 million vehicles in 2009. That year, were consumed about 15 billion liters of fuel. Last year, the total of bi-fuel vehicles had risen 80% but consumption fell to 11 billion liters of alcohol.
The solution to this imbalance will come only with the creation of a long-term policy of ethanol-something that the Government, according to the President of the Council of the Copersucar, failed to do. Currently, the sector works with the possibility of PIS/Cofins reduction and exemption of payroll for the production chain, in addition to increased blending of anhydrous alcohol to gasoline of 20% to 25%. These benefits, however, would have only a palliative effect, according to Pogetti and other industry sources.
Partnerships. In addition to the macroeconomic challenges, the Ctc's business model-in which the company basically acts as a marketer of its members ' production – also presents challenges. Days after the announcement of world leadership in sugar, it was disclosed that the paulista Clealco, which responded by 7% of the sugar company, had ended the partnership because he was dissatisfied with the sales prices. Copersucar says that part of the loss of volume was offset by the entry of a New distillery in Londrina (PR), which was incorporated by one of its partners, the Group upgrades.
The "capture" of plants is positive in the long run, says President Copersucar, Paulo Roberto de Souza. "We went from 32 power plants in 2007, to 47", says the Executive. The account already considers Clealco output, which will continue to provide to the company outside of exclusivity. Today, 23% of sugarcane crushed by Copersucar come from non-members.
In addition to access to a more structured commercial Department, Souza says Copersucar is the means of small power plants participating in logistics and innovation projects. The company intends to double the capacity of its private terminal at the port of Santos and has 20% stake in etanolduto designed to drain the fuel produced in the State of São Paulo. The company also invests in the second-generation ethanol. A plant that will produce alcohol from sugar cane bagasse will be in the testing phase in 2014.
Despite the investments in productivity, the difficulties in the sugar-alcohol sector halted an ambitious project Copersucar: the IPO at BM & FBovespa, suspended since 2011. Before resuming the contract, says the company's Chairman, the confidence in the world market for sugar and ethanol needs to be retaken. And it depends on Government policies and changes in the world economic scenario that neither global leader manages to rush.