ECONOMIC FEASIBILITY OF ALCOHOL PRODUCTION IN BAHIA - STATE - BRAZI

The 1973 oil embargo and subsequent oil price increases created the economic and political environment within Brazil to foster development of a major program to reduce dependence on imported oil. A central feature of this program has been the development of a pioneer alcohol industry to produce liquid fuel from renewable resources (biomass).;Initially, efforts have concentrated on sugarcane as an energy feedstock. Sugarcane technology and the necessary infrastructure in sugarcane production regions are already well established. Cassava is considered an important alternative crop for later stages of the alcohol program. It is adaptable to a wide variety of soil and climate conditions which will allow a more even distribution of alcohol production throughout the country.;Studies simulating alcohol production from energy crops in Brazil have been undertaken recently. Most, however, have studied the southern part of Brazil. Here, the area studied is the state of Bahia which is located in the northeast of Brazil. Bahia is mainly a traditional agricultural region with abundant land and labor resources.;The general objective of this study was to investigate the competitiveness of producing alcohol in Bahia using cassava, sugarcane and sweet sorghum as alternative energy feedstocks. Specifically our objective was to develop a regional linear programming model representing agricultural production, product transportation, alcohol processing and alcohol distribution activities.;Four models were developed all assuming three energy prices and six levels of crop land availability. In the base case, cultivated land was fixed at current levels. Additional crop land was then made available in successive increments of 5% of pasture land allowing up to the maximum of twenty five percent of pasture land to switch to crop use. Nine alcohol consumption centers in Bahia plus three outside the state (Brazil, Belo Horizonte and exports) were considered. For each consumption center except exports, two alcohol demand levels were studied. They were 50 and 100 percent of 1979 gasoline consumption.;The results indicate that at low energy prices with existing levels of cultivated land alcohol from energy crops is not competitive with traditional crop activities. However, as more cultivated land is made available, alcohol from cassave becomes competitive at this low energy price level. On the other hand, at medium and high energy prices with cultivated land constrained to present levels, alcohol from sugarcane is competitive. As the cultivated land level is increased under medium and high energy prices cassave replaces sugarcane as the most profitable energy crop.;Results from the analysis of sub-regional alcohol production and distribution flow indicate that under present levels of cultivated land the central part of Bahia is the most competitive sub-region, supplying most consumption centers in the state. Under these constrained land availability levels no alcohol is shipped to Brazilia and Belo Horizonte. As more land becomes available, alcohol production shifts toward the eastern and southern parts of Bahia to fully supply Salvador and Belo Horizonte as well as the consumption centers located within these sub-regions. The western part of the state has a location advantage to supply Brazilia. In most situations, the extreme north produces alcohol only to supply its own sub-regional market.;Sweet sorghum is not produced commercially in Brazil. Simulations including sweet sorghum as an alternative energy feedstock indicate that this crop is potentially the most competitive energy crop, partially because sorghum grains in addition to alcohol is considered as an output.