Jul 16, 2010
Brazilian Sugarcane Producers Increase Investments in 2010/11
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
For the last two years, sugarcane producers in southern Brazil have cut back on the amount of money they were willing to invest in their sugarcane crop due to the low prices processors were willing to pay for the raw sugarcane. With sugarcane prices improving, it looks like 2010 will be a recovery year for sugarcane producers and as a result; they are now more willing to make the necessary investments in the crop. According to the Organization of Sugarcane Growers in the Central South, sugarcane producers in southern Brazil are poised to invest R$ 5 billion in production upgrades.
Most of the investments will be targeted for renovation of existing sugarcane fields. Sugarcane fields can be maintained for up to five years after planting, but yields start to decline in the later years. In order to renovate the field, the existing cane needs to be plowed up and new cane planted. This is an expensive and time consuming process and many growers put it off for the last two years due to the low returns.
During the 2009/10 growing season, producers received on average R$ 46.35 for each ton of sugarcane produced. The average cost of producing the sugarcane last year was R$53.43 per ton. One of the reasons why costs were high last year is the fact that heaver than normal rainfall in late 2009 adversely affected the sugarcane yields and it lowered the sucrose content of the sugarcane that was harvested. As a result, production was low and costs were high.
It's estimated that 1.4 million hectares of sugarcane (out of a total of 7 million hectares grown in the region) will be renovated this year, which represents 18 to 20% of the total sugarcane acreage in the south central region. Agronomists feel that this is the correct amount of sugarcane that should be renovated each year.
Sugarcane must be grown and harvested near to where it is processed. Some sugarcane processors have indicated that there is a shortage of sugarcane in their areas due to the reduced level of renovation that has occurred over the last two years. As processing capacity increased, production capacity did not keep pace and shortages of cane have developed