flying high…
Brazil is already a global leader in renewable energy, with over 90% of its electrical grid powered by renewables (hydro, wind, solar, biomass), and 85% of its automobile fleet operating on either pure or blended ethanol. New legislation introduced last week will increase the compulsory ethanol blend in fossil fuel even higher to a max 35% (from 27.5%), and attract up to $50 billion over the next 10 years for the development of second-generation biofuel including renewable aviation fuel, to help reduce CO2 emissions by 705 million tons by 2037.
jungle fever…
Brazil’s Amazon reforestation plan aims to restore 7.3 million hectares of deforested public areas in coming years, with carbon credits a key driver of the initiative. The government, alongside the national development bank, BNDES, is working on structuring concessions as part of a larger strategy to combat global warming, with the expectation that it will also curb new deforestation and promote the sustainable use of the Amazon's natural resources.
room for Improvement…
Brazil relies heavily on non-renewable fertilizers, particularly imported nitrogen, phosphorus, and potassium, which make up 85% of the total. Only a small percentage, below 5%, comes from renewable sources like biofertilizers and compost. Despite ongoing efforts to increase the use of renewable fertilizers, scaling them to meet agricultural demands remains a big challenge. The recently launched National Fertilizer Plan aims to reduce Brazil's dependency on imports to 45% by 2050, but like all government plans, details on how exactly this will be achieved, remain sketchy.
fire in the hole…
Recent wildfires in Brazil have unexpectedly led to an increase in sugarcane ethanol production, as the fires resulted in lower-quality crops better suited for ethanol than the higher-priced sugar alternative. This shift could help Brazil meet this year's decarbonization goals (CBIO), with ethanol production projected to reach 26 billion liters for the 2024/25 season. In related news, a local going by the name Carlinhos Boi, or Carlos Bull, was arrested and fined $10 million by Brazil's environmental agency (Ibama) for causing a massive wildfire in the Pantanal region during recent festivities. The fire destroyed over 6,550 hectares and spread into Bolivia, affecting a further 30,000 hectares. Due to extremely hot and dry conditions this year, Brazil has registered a 150% increase in wildfires compared to the same period last year, with over 22 million hectares affected from Jan to Sept, and over 10m of this in Sept alone.
biting the bullet…
The fallout from the recent spate of Chapter 11s and defaults in the grain sector is not expected to ease anytime soon. While there may be a few winners in these new leaner times, the sector as a whole will suffer as soybean prices are expected to remain low over the coming year and Brazil's soybean area (which has grown over 30% in the past 5 years) still needs to be financed at a time when the local capital markets have cooled on the rural credit opportunity. Expect things to get worse before they get better, with large players like Lavoro, controlled by the Patria PE fund, reported to be raising capital to get through the current rough patch.
Sao Paulo takes the lead…
Speaking of winners, São Paulo state has taken advantage of the current dip in grain prices to overtake Mato Grosso as Brazil's largest agricultural exporting state. Sao Paulo’s agribusiness exports grew by 9.2% between January and September 2024, reaching USD 22.69 billion, or 18% of Brazil’s total. The performance was driven by products such as sugar and orange juice, in which São Paulo is a national leader, and coffee and beef, where prices have been above normal. Meanwhile, Mato Grosso, which is the main grains exporter has suffered due to low soybean and corn prices, but still made up 17.3% of Brazil’s agricultural exports during the first nine months of the year.
Startup news...
Krilltech, a Brazil biotech startup founded in 2015 at the University of Brasilia, announced that it has expanded into the European market through a partnership with Spanish company Biorizon Biotech. At Spain's 2024 Fruit Attraction trade show last week, Krilltech announced the launch of its flagship product, Arbolina, a technology that enhances plant productivity and sustainability.
Belgo Arames, one of Brazil's largest wire fencing companies, is hedging disruption risk with an investment in "digital wire" through local startup Instabov, using AI-powered collars to monitor cattle behavior. According to a press release, the system tracks cattle location, health, and behavior in real-time, providing valuable insights to prevent theft and detect health issues like diseases or cows in labor.
PhageLab, a Chilean biotech company with operations in Brazil, won a €100,000 prize at The Yield Lab's Global Dairy Sustainability Challenge in Europe last week, beating off competition from over 100 startups worldwide. The challenge, backed by Nestlé and others, aimed to find innovative technologies to tackle issues like GHG emissions and water quality in the dairy sector. PhageLab specializes in bacteriophages to eliminate bacterial pathogens in livestock, with the use of AI technology.
thanks for reading…
KfG
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