INCLUSION OF SMALL SCALE FARMERS IN THEBRAZILIAN BIODIESEL PRODUCTION CHAIN
Aziz Galvão da Silva Júnior[1], Marco Antônio Vianna Leite[2], Ronaldo Perez[3]
Contract farming is a key element for the Brazilian National Program for the Production and Use of Biodiesel (PNPB). Launched in 2004, the PNPB has established an obligatory and increasing mixture of biodiesel to diesel in the country, which reachedin 2010 the 5% blend (B5). The B5 represents a captive market of about 2.6 billion litersof biodiesel per year. Besideseconomic goals, the social inclusion of small scale farmers is an explicit objective of the program. Through the “Social Fuel Seal”, biodiesel producers can profit from tax incentives and are allowed to participate in specific auctions organised by the Brazilian Petroleum, Natural Gas and Biofuel Agency (ANP).
The Social Fuel Seal is a certificate granted by the Ministry of Agrarian Development to biodiesel producers who havepurchased, depending on theregion and oilseed, from 15 to 30% of its feedstock from small scale farmers through legally binding agreement. The contract negotiation has to be monitored by aformal small scale organization and has to set a bonus above the regional oilseed market price, specific provisions to safeguard the rural income, training as well astechnical assistance to the farmers. Considering the agreement parties, two types of contract are being used in Brazilian biodiesel chain, namely, individual and collective contracts.
An example of individual contract occurs between 4.800 farmers in the stateof Goias, in the central regionBrazil, and three large biodiesel plants, JBS, Granol and Caramuru, which togetherproduce about 600 thousand m3per year. Although having very similar clauses, each farmer and company signed an individual contract. The individual contract demands a better management and technology level fromfarmers and itis typical for the“cerrado”(savannah) region of Brazil.
A collective contract is signed between a biodiesel producer and an agricultural co-operative. The agreement between the 150 thousand m3/year biodiesel plant belonging to Petrobras, Candeias, city in the state of Bahia, and the co-operative COOPAF is a typical example of a collective contract.COOPAF encompasses 6.800 small scale farmers and itis located in the semi-arid region of Brazil, where the socio-economic indicators are very unfavorable. ThePetrobras biodiesel plant purchases the required amount of castorseed from small scale farmers, but itdepends on soybean oil from other regions.The collective contract is regarded as the best, for some researchers the only way to include small scale farmers in the PNPB. Thistype of contract has proved to be very effective in thesouth of Brazil, where the co-operative culture is developed and the soybean farmers applymodern technology.
The main challenge of the PNPB is to increase the number of small scale farmers, especially in the semi-arid and North regionsof Brazil. The coordination of the production chain, including also the by-products, is a key factor. Beyond the social fuel seal requirements, contracting farming will continueto be an indispensable and demanding tool for biodiesel producers and small scale farmers organizations
[1] Associate Professor, Department of Rural Economics, Federal University of Viçosa, Brazil
[2] Coordinator of Bioenergy, Ministry of Agrarian Development, Brazil
[3] Associate Professor, Department of Food Technology, Federal University of Viçosa, Brazil