Brazil Sugar, Ethanol to Need $36 Billion investment

Brazil’s sugar and ethanol industries will need $36 billion in investment by 2020, said Andy Duff, a food and agribusiness researcher at Rabobank.

The sugar industry in the world’s largest producer requires higher spending after prices for the sweetener gained this year, Duff said today at the International Sugar Organization conference in London. Raw sugar on Nov. 11 reached 33.39 cents a pound, the highest level since January 1981, in New York.

The largest Brazilian companies in the industry will have the most success in obtaining loans and credit to fund growth and engage in joint ventures with multinational partners, Duff said in an interview with Bloomberg News. Medium-sized and smaller companies are unlikely to play a role because of “rather limited” access to credit, he said.

“Big players have access to diverse sources of capital in order to help them grow,” Duff said in a speech at the conference. “We are still in a period in Brazil where especially long-term loans for investment are quite hard to come by” for smaller companies.

As an example, Duff pointed to last month’s $300 million sale of perpetual bonds by Barra Bonita, Brazil-based Cosan SA Industria & Comercio, the world’s largest sugar-cane processor.

source: bloomberg