Global Partners: What Brazil and the U.S. Share

 

 Public policies facilitated diversification efforts.

In 1975, in reaction to the 1973 oil crisis, the Brazilian government established the National Alcohol Program (Programa Proálcool). The program attempted to lessen the country's reliance on petroleum-based energies by promoting ethanol, obtained from sugar cane, as a substitute. The program's goals were twofold: (i) to minimize its reliance on petroleum-based fuels, and (ii) to promote the development of ethanol from sugarcane as an alternative.
The Brazilian government was able to achieve its goal of lowering its reliance on oil by implementing several initiatives to influence the demand and supply of ethanol. On the supply side, the government offered financial incentives to its enterprises that produced ethanol for fuel. The program increased the country's sugar production by 20 times in 16 years. On the demand side, it subsidized the price of ethanol gasoline and cut taxes for people who bought it for their vehicles.

Brazil is currently one of the world's largest and most competitive ethanol producers.

 Its ethanol exporters meet the global market demand for biofuel. Sugarcane ethanol is more productive and cost-effective than ethanol from corn or beets.
Sugarcane generates 6,314 liters of ethanol per hectare, whereas corn produces 2,729 liters per hectare (Donke et al., 2017). Furthermore, sugarcane ethanol is 50-60% less expensive to produce than corn ethanol (Manochio et al., 2017).
Several universities and public research institutions in São Paulo were studying 2G technology. These included the University of São Carlos and the Agronomy Institute of Campinas (IAC). The first two start-up companies, CanaVialis and Alleyx, were formed by researchers from these institutions. São Paulo's efficient sugar production and availability to researchers in ethanol technology has attracted global firms to the region. Monsanto, for example, has acquired both CanaVialis and Alleyx. Other big corporations quickly followed, including Syngenta, BASF, and Shell.

Large-scale bioethanol production using 2G ethanol technology is dangerous, even with government backing. Only two of the six large-scale bioethanol plants that were developed worldwide in 2000 exist. They are both from Brazil (de C. L. e Penalva Santos et al., 2023).
The National Alcohol Program assisted many coffee growers and agribusinesses in transitioning to sugarcane cultivation and ethanol production (Parikh, 1979).
São Paulo has multiple universities and state research institutes that focus on agricultural research, including some of the country's most productive publishers (de Castro, 2014). This state, together with Rio de Janeiro, has the biggest number of research campuses for the Brazilian Agricultural Research Organization (EMBRAPA). EMBRAPA is the Brazilian Agriculture Ministry's research arm. These centers perform study on a variety of agricultural areas, including agroclimatology, bioinformatics, pesticide toxicology, tropical horticulture, instrumentation, geospatial informatics, geotechnology, and range management, to mention a few.

Increased private sector participation

In Brazil, the private sector today funds around a third of agricultural innovation, whether undertaken in privately-held R&D institutions or in conjunction with the public.
Institutions (Dalberg, 2021). Local enterprises compete and collaborate with foreign-based multinational companies in the sugar and ethanol markets.
In the instance of creating sugarcane ethanol in Brazil, government assistance was originally required to help strengthen domestic enterprises' ethanol production capacities, followed by the development and implementation of biorefining technology for 2G biofuels. EMBRAPA, universities in the Sao Paulo region, and research institutes focusing on sugarcane, ethanol, and 2G biofuel technologies collaborated closely to transfer their technology to the business sector. At the same time, global multinational corporations and universities collaborated with Brazilian ethanol producers to utilize their innovations for 2G biofuels. Syngenta, Australia's Queensland University, and the Agronomy Institute of Campinas collaborated to create cellulosic ethanol technology from sugarcane bagasse.

Sao Paulo had a plentiful supply of entrepreneurial businessmen due to its long history as a coffee-producing region. 

These businesses, largely coffee farmers, took advantage of the Brazilian government's financial incentives to purchase land and began growing using contemporary technologies and infrastructure (Mueller and Mueller, 2016).
São Paulo boasts a significant number of dynamic local and foreign firms. Local enterprises in Sao Paolo were able to expand their capacities through collaboration and the licensing of international technologies. Furthermore, these enterprises have a large domestic market share, which adds to their competitiveness. Brazilian local enterprises receive a lot of government support (de Silva Medina and Pokorny, 2022). However, they are also affected by the government's interference in sugar and ethanol pricing in the local market.
Along with the concentration of research and university campuses, this region has a critical number of dynamic local and foreign companies specializing in agricultural production and processing, including the world’s highest concentration of expertise in sugarcane and ethanol production. It is also the headquarters for some of the world’s largest agribusinesses.
São Paulo has a thriving scene of agricultural startups. According to reports analyzing startup ecosystems worldwide, São Paulo is known as the largest innovation and entrepreneurship center in Latin America. In addition, it has a relatively mature fintech and banking system. This allows it to provide much needed capital to the startups (BBVA, 2022; Startup Genome, 2023).