Determinants of the income of workers in sugar cane plantations and in the sugar and ethanol industries in the North- Northeast and Center- South regions of Brazil
Introduction In November 1975, President Ernesto Geisel created ProAlcool, a program designed to stimulate the production of ethanol as a way to face the petroleum crisis – which threatened world economies that were importers of the product. This program significantly altered the profile of sugar and ethanol production in Brazil, apart from stimulating a major expansion in the area planted with sugar cane and, consequently, a rise in the demand for workers. Since ProAlcool was created, in 1975, Brazil’s ethanol production grew from approximately 555 million liters to 22.5 billion liters in 2007. The annual average growth was 12.2 percent. This increase was more pronounced in the Center-South region,1 especially in the state of São Paulo, who became Brazil’s main producer. The growth of ethanol production led to an increase in sugar cane production and also to an expansion to areas that were not traditional producing regions. Between 1975 and 2008, Brazil’s sugar cane production increased from 88.9 million tons to 559 million tons, a growth of 528 percent, while the planted area grew by 273 percent, from 1.9 million ha to 7.1 million ha. In the early stages of the ProAlcool program, sugar cane productivity was 46.8 tons of sugar cane per hectare, and in 2008 had risen to 79.1 tons per hectare. Productivity gains were also observed in the industrial area: according to Goldemberg et al. (2005), agro-industrial productivity gains grew, on average, by 3.77 percent a year between 1975 and 2005: at the beginning of this period, per hectare production was about 2,024 liters of hydrated ethanol equivalent and 30 years later output per hectare reached 5,931 liters. In the industrial area investments were mainly made in developing new grinding systems, highercapacity fermentation and energy autonomy (Macedo 2007). The agricultural and industrial productivity gains resulted in major reductions in production costs over time, and Brazil is the country with the lowest production costs in the world. The growth of the sugar cane, sugar and ethanol industry since ProAlcool was created had a positive impact on jobs in the three sectors.