Reflecting on the scenario of the sugar-energy system for the next 5 years leads us to some conceptual changes. First, the industry sucroenergético , now gives way to the bioenergy sector, due to its production characteristics and products that started to be produced.

Biofactories replace power plants and focus on the production of renewable carbon, competitive for the planet regardless of the product manufactured. These are some new concepts for our old sugarcane and our century-old sector.

Exploring the environment in which our sector is inserted and the factors and variables that can impact operations will define our scenario. And, for the next few years, there are hundreds, if not thousands of possibilities. But let's see the main variables that should guide the sector.

If we list the main opportunities or even threats, we will certainly talk about subjects such as: green hydrogen, electric cars, climate change, change in the energy matrix, tax reform, exchange rate, fuel price parity in the international market, biofuel policy in India, sugar exports in Southeast Asia and so on. These are not new issues. They are, yes, essential items that we have to work hard and be eternally vigilant to observe the impacts and how we can surf on it.

However, in this article, I will focus on the points that are in our hands, in the private sector, on the possibility of direct and rapid change, already for the next 5 years, by sugarcane producers and the industry.

Yes, sugarcane producers, not sugarcane suppliers, and the strong and lasting partnership in a win-win movement to rescue and develop our system in offering quality products and strengthening the chain. We can cite some guidelines with an impact on supply and demand, such as:

A: Need to encourage sugarcane production:
There are those who say that the problem in recent years with regard to sugarcane availability lies in the low productivity of sugarcane fields, or in undesirable weather events, but not only that.

Let's remember that productivity, on average over 5 years, remains low, 75 tons per hectare per year, lower than 10 years ago, reaching 8.3 million hectares compared to 9.2 million. What to do to increase sugarcane availability? One of them is the amount of investment in fertilizers, varieties, methods, management, that is, increased investments and incentives for production.

Low productivity and area reduction is a consequence and not a cause. It is known that the productive maximum is different from the economical, profitable maximum. For the sugarcane producer, productivity may not be synonymous with margin. I explain. Producing 100 tons per hectare under commercial conditions is possible, but is it profitable in my model? In recent years, production costs have increased significantly, reducing this proportion, and revenues have not grown in the same proportion. One indicator is the attractiveness of sugarcane as a business and it has lost in remuneration to several other cultures, including leasing.

If this does not happen, the mills themselves will have to face greater investment in the sugarcane area, increase machinery and equipment, lease more areas and still spend a lot of time and operations.

For plants and biofactories, having specialized partners to develop and manage agricultural areas, in addition to improving the supply of raw materials, reduces the effect of immobilizing resources and generating diseconomies of scale for industries. This is clearly due to the care that producers have in their cane fields, attention and management. For this relationship to have balance, rescue the sugarcane producer through review and update of Consecana the best way out will be with increases in pricing for raw material products: remunerating bagasse, remunerating carbon credits, for example, will increase the availability of sugarcane. Except if we want to become a concentrated sector, with few agents and small distribution of income and a continuous problem of raw material supply.

B: Search for new sugarcane production models and better management of sugarcane fields:
This item has a direct impact on the supply of sugarcane, but also on the profitability and conduct of the activity. Nobody yet knows for sure the impacts that climate change can have with an increase of 1.5ºC on our planet, but in recent years the climate has not followed standards, despite important and impactful extreme events in agriculture.

As for sugarcane, events such as: frost, intense droughts and even irregular rains have been frequent. So, better understanding these impacts and finding ways and strategies to produce will be a high priority, including a different type of management, new varieties and new forms of production. In recent years, some forecasts have been “less bad”, but still with little management options for the sugarcane producer. We don't even have a world sugarcane germplasm bank in Brazil, it only exists in the United States and India. Our research on motor mechanization is still diffuse and poorly implemented. It is urgent that we work if we want to continue being leaders in the segment.

C: Restricting the use of agrochemicals and synthetic fertilizers and encouraging the use of bio-inputs:
Not only in the quest to reduce the cost of production, but mainly by reducing synthetic and chemical products. Society has accelerated this process through safeguards in some countries with products produced with chemical waste.

Several countries are already working to encourage products of biological origin to combat pests and diseases through tax differentials and rapid release of bioinputs. The sugarcane activity has already been one of the pioneers in the use of filter cake, vinasse and the use of fungi as natural enemies for decades. There are many possibilities to increase this use of bioinputs. Soil remineralizers, solubilizers and pests as natural enemies are examples of the need to reduce the amount of chemical inputs to improve the biological balance of the production system, thus being an opportunity for input companies to intensify their actions in sugarcane, biofactories and transition from chemical and biological products. Naturally, management will change, also impacting item B, mentioned above.

D: Brazil as a diffuser and reference for tropical technology in the production of ethanol and biofuels:
Brazil has an enormous opportunity with the energy transition that is taking place in the world. It can become the leading producer of renewable energy, being a diffuser and reference in biofuels, with the most competitive costs in the world. Similar to what Saudi Arabia means for oil, Brazil could mean for renewable fuels. And that could be a big bet on green hydrogen. The sector can be a protagonist in the world, with the internationalization of renewable energy, through green hydrogen, biogas, second generation ethanol, diesel from sugarcane participating in global chains due to the knowledge of the process, generating value through production stages of the customers (not least because no customer will want to depend completely on a single country).

By disseminating technology, Brazil and the bioenergy sector will be able to share the experiences of different countries in the use and development of green energy, and become the first large country to be Net-zero, equalizing its equivalent carbon dioxide emissions.

Obviously, macroeconomic factors, as well as the impacts of technological development, public policies, sustainability and global geopolitics will influence the above suggestions, or even any imaginable scenario. It is important to highlight that we have a private agenda, which we can carry out and make happen, and a public agenda with government support, in which even political and partisan differences do not negatively impact the sector and that there are always clear rules.