Investment opportunities in cotton production in the s o francisco and parna ba valleys
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INTEGRATED PROJECT OF SUSTAINABLE BUSINESS. INVESTMENT OPPORTUNITIES IN COTTON PRODUCTION IN THE SÃO FRANCISCO AND PARNAÍBA VALLEYS. Equipe do Projeto. PRESIDENT NATIONAL INTEGRATION MINISTRY

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Investment opportunities in cotton production in the s o francisco and parna ba valleys l.jpg

INTEGRATED PROJECT OF SUSTAINABLE BUSINESS

INVESTMENT OPPORTUNITIES IN COTTON PRODUCTION IN THE SÃO FRANCISCO AND PARNAÍBA VALLEYS


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Equipe do Projeto

PRESIDENT NATIONAL INTEGRATION MINISTRY

Luiz Inácio Lula da Silva Geddel Vieira Lima

CODEVASF DIRECTORS

President

Orlando Cezar da Costa Castro

Integrated Development and Infrastruture Director

Clementino Souza Coelho

Irrigation Project Management Director

Raimundo Deusdará Filho

Hydrographic Basins Revitalization Director

Ricardo Luiz Ferreira dos Santos


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Presentation Structure

1. Introduction;

2. Cotton Market;

3. Biodiesel Market;

4. The Viability of Producing biodiesel from cotton seed in the Brazilian semi-arid;

5. Export logistic;



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Introdução

The PINS Project?

The project is a governmental initiative, aiming to attract investments to the São Francisco Valley (webpage: http://www.fundace.org.br/pins).

PENSA

Agribusiness Intelligence Center. PENSA researchers are responsible for the business models proposition, economic and marketing analysis and for interacting with potential investors tailoring the analysis to their particular needs (web page: http://www.pensa.org.br).

CODEVASF

São Francisco and Parnaíba Development Company, which the mission is to develop economically and socially the Valley of the São Francisco and Parnaiba Rivers (web page : http://www.codevasf.gov.br).


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2. The Cotton Market


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Cotton Brazilian Production

Crop 2007/08

Source: Conab


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Cotton Market

  • The main demand driver for cotton is the textile industry.

    • Growth of 3,8% in 2007 and 0,7% in the first half /semester of 2008.

      (MDIC, 2008)

    • Cotton supplies approximately 60% of internal industry demand for fibers and filaments.(only natural fibers and filaments, its share grows to 97%).

      (ABRAFAS, 2008)

    • In thefiber world market , cottonrepresents 40%.

    • Driven by growth in emerging markets, the world demand for cotton grews 7% annually between 2005 and 2007

    • Global demand should fall 2% in 2008 and 1% in 2009.

      (Rabobank apud Algodão Brasileiro, 2008)


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Balance ofSupplyand Demand

Fiber Cotton (thous. ton)

374%

-80%

29%

89%


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Prices Index

Source: CONAB


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“Turbulence Time”: Low Prices and High Costs

  • 65% da safra 2007/2008 recebeu o Prepo.

  • Média de setembro do índice Esalq (R$ 1,2166/lp) foi a mais baixa desde julho/96.

* 04-30-10 (70%) e sulfato de amônia (30%)

Source: Conab

  • High costs and decrease of credit to imputs purchase.

  • Planted are should decline 10% in the U.S. and between 10 and 20% in Brazil.

Source: Cepea and Conab.



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Direct Sale is not permitted

Biodiesel Agro Industrial System

By-product

Market

Alcohol

Fertilizer Production

Animal Feed

Glycerin

Torta

Agricultural Chain

Consumers

biodiesel

B3

B3

Oil

Grain

B100

Resellers

Distributors

Biodiesel

Producers

Pressing

Plantation

B100

Refinaria

B100

Processing and Distribution Chain

(regulated by ANP)

Consumers

Source: ANP


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Biodiesel Agro Industrial System: B – 3

PETROBRÁS REFAP

INPUTS

DISTRIBUTORS

AGRICULTURE

INDUSTRY

Blending and

Distribution

Seeds

Pesticides

Machinery

Fertilizers

SOYBEAN

COTTON

CASTOR OIL

PALM

JATROPHA

SUNFLOWER

Auctions Acquisition

Biodiesel

Production

Processing

INSTITUTIONAL ENVIRONMENT(laws, norms, costums)


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Public Auctions

The auctions are conducted by the NPA (National Petroleum Agency) in order to ensure the supply and the compulsory demand

  • Provides:

    - Participation criteria of producers: authorized by NPA to produce; registered in SICAF; “Social Fuel” certificate.

    - Price - fixed rate(reverse auction, lots are sold with lower prices).

    - Percentage of purchases by buyers (diesel fuel producers and importers) according to their market share.

    - Deadlines and delivery conditions.


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Public Auctions

Source: ANP


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EuropeDiesel Consumption : 354 bil./l Biodiesel DemandB2: 7,08 bil./lB5: 17,7 bil./lB10: 35,4 bil./l

JapanDiesel Consumption : 70 bil./lBiodiesel DemandB2: 1,4 bil./lB5: 3,5 bil./lB10: 7 bil./l

USADiesel Consumption: 219 bil./lBiodiesel DemandB2: 4,38 bil./lB5: 10,95 bil./lB10: 21,9 bil./l

BrazilDiesel Consumption: 39 bil./lBiodiesel DemandaB2: 0,78 bil./lB3: 1,17 bil/lB5: 1,95 bil./lB10: 3,9 bil./l

ChinaDiesel Consumption: 91 bil./lBiodiesel DemandB2: 1,82 bil./lB5: 4,55 bil./lB10: 9,1 bil./l

IndiaDiesel Consumption : 46 bil./lBiodiesel Demand B2: 0,92 bil/lB5: 2,3 bil./lB10: 4,6 bil./l

Diesel Demand vs Biodiesel Production


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Raw Materials

Production

Harvest

Production

Energy

Type

Grains (Kg/ha)

% of oil

Oil (Kg/ha)

Start

Months

Time

Balance

Perenial

2º ano

12

30 / 50 years

5 a 12 thous

38

1,9 a 4,56 thous

-

Jatropha

Perenial

3º ano

12

30 years

10 a 20 thous

23

2,3 a 4,6 thous

9

Palm

Annual

1º ano

3

2 years

750 a 1,5 thous

48

370 a 735

-

Mamona

Annual

1º ano

3

1 year

2,2 a 2,8 thous

18

400 a 500

3

Soybean

Cotton

Annual

1º ano

3

1 year

1,8 thous

15

270

-

seed

Annual

1º ano

3

1 year

1,85 thous

40 a 48

740 a 890

2,5

Rape-seed

Source: Embrapa 2007


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15,2% OIL

Cotton pit

Extraction Plant

Biodiesel Plant

Biodiesel Commercialization

Fuel Distributors

46,7%

BIOMASS

Cake/ cotton

Biomass for the Boiler

Organic Fertilizer

Industry rações/fertilizers

Biodiesel from Cotton Pit

“Biodiesel is most viable when it is made from cotton seed”Pólo Nacional de Biocombustíveis da USP

  • Cost of $ 0.81 against the U.S. $ 0.90 for soybeans (07/2007). Easy access and made from a sub product.

  • Embrapa works to increase the oil inside the pit.


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4. The viability of Producing Biodiesel From cotton seed in the Semi-Arid Brazil


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Business Model

Futures Contracts, Public Auctions or Spot Market

(oil or biodiesel sales)

Producer A

Cooperative

Producer B

Supplying Contract

(Cotton pit)

Extration + Biodiesel Industry

(“SPE-2”)

Producer n

Partnership Contract Cotton Ginning and Pit Originating

Emtrepeneurs

Associatedor

individuals

Tradings/

Central Cooperatives

Funds

Cotton Producer

“SPE-1”

Financing Contracts

Financing

Lint

Wool

Supplying

Contract

(Lint, Fibers)


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PINS PROJECT – BIOENERGY Agroindustrial System VIABILITY ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

Calculation

Premises

Operating Results

Final Results

Agricultural

Agricultural

Incomeflow

Cotton

Revenues and costs

Extraction

Industrial

Plant

Financial Planning

Operating and Financial Flows

Sensibility Analysis


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Investments ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

  • Drip irrigation:

    • R$ 6.800/ha

    • R$ 13,6 millons / 2 thous. ha

  • Cotton tree 30 bales/hour:

    • R$ 5,3 millions

  • Extraction/Partner 100 ton/day

    • R$ 6,7 millions

  • Biodiesel Plant 10 ton/day:

    • R$ 2,6 millions


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Agricultural Premises – Opening Areas ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

Source: adapted from Conab

Source: elaborated by the author based on Seagri, Conab, interviews with producers from west Bahia.


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Agricultural Premises ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

Source: Agrianual, Netafim


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Agricultural Premises - Cotton ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

Source: Elaborated by the author based on interviews with producers from West Bahia region; Netafim

** @ = 15 kgs


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Industrial Premises ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED


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Results ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED


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5. Export Logistic ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED


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Ports ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

  • Juazeiro – Salvador (Aratu Port)

    • Modality: railroad

    • Centro-Atlântica Railroad (FCA).

    • Distance: 573 Km.

    • Petrolina – Recife (Suape Port)

    • Modalidade: rodovia

    • BR-128; BR-122; BR-428; BR-316; PE-360; BR-110; BR-232.

    • Distance: 715 Km.


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Cost of Road Transport - Simulation ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

  • Petrolina – Recife (Porto de Suape)

  • Modality: road

  • BR-128; BR-122; BR-428; BR-316; PE-360; BR-110; BR-232.

  • Distance: 715 Km.

Source: Interview with fuel and distributors CVRD.


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Cost of ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEEDthe Rail Transport - Simulation

  • Juazeiro – Salvador (Aratu Port)

    • Modality: railroad

    • Centro-Atlântica Railroad (FCA).

    • Distance: 573 Km.


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TEAM ANALYSIS OF PRODUCING BIODIESEL FROM THE COTTON SEED

CODEVASF

Integrated Development and Infrastructure Director

Clementino de Souza Coelho

Integrated Development and Infrastructure Directory Assistant

Alvane Ribeiro Soares

Irrigation Project Management Production Unit Chief

Nair Emi Iwakiri

PINS

Coordinator : Prof. Dr. Marcos Fava Neves

Project Executive Manager : Luciano Thomé e Castro

Project Executive Manager : Ricardo Messias Rossi

Project Executive Assistant: : Marina Darahem Mafud

Researcher Responsible : Marco Antônio Conejero

Researcher Assistant : Mairun Junqueira Alves Pinto

Colaborators

César Augusto Mendonça Zambrano


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http://www.codevasf.gov.br/principal/estudos-e-pesquisas/pinshttp://www.codevasf.gov.br/principal/estudos-e-pesquisas/pins


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PROJETO INTEGRADO DE NEGÓCIOS SUSTENTÁVEIShttp://www.codevasf.gov.br/principal/estudos-e-pesquisas/pins

Details contact:

E-mail address: [email protected]

http://www.fundace.org.br/pins/

Av. Pres. Vargas, 2001- Conj. 143/144, Jardim AméricaRibeirão Preto - SP - CEP: 14.020-260Tel.: +55 (16) 3456-5555 


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