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The role of productivity and efficiency gains in the sugar-ethanol industry to reduce land expansion for sugarcane fields in Brazil

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  • Danelon, André Felipe
  • Spolador, Humberto Francisco Silva
  • Bergtold, Jason Scott

Abstract

During the 2000s, the development of flex-fuel automotive vehicles in Brazil and rising international commodities prices allowed the Brazilian sugar-ethanol sector to grow at higher rates and expand area planted to sugarcane relative to levels verified in the 1990s. However, this land expansion increases the pressure on land-use change and management. This paper seeks to estimate the technical efficiency and decompose the total factor productivity (TFP) in the sugar-ethanol industry using a stochastic frontier framework. Primary data was obtained from an unbalanced panel of 90 sugar and ethanol producers for the harvest years from 2012/2013 to 2016/2017, providing 209 valid observations. Results suggest that mills have a small gap to increase their efficiency under the current technology, and the industry's TFP has been primarily impacted by the efficiency effects, on the other hand, SE mills might improve TFP rising their scale of production. Therefore, the results in this paper suggest that small SE mills may benefit from merging with other mills to explore economies of scale to enhance their TFP and strengthen economic competitiveness, contributing to the Brazilian environmental policy agenda.

Suggested Citation

  • Danelon, André Felipe & Spolador, Humberto Francisco Silva & Bergtold, Jason Scott, 2023. "The role of productivity and efficiency gains in the sugar-ethanol industry to reduce land expansion for sugarcane fields in Brazil," Energy Policy, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:enepol:v:172:y:2023:i:c:s0301421522005468
    DOI: 10.1016/j.enpol.2022.113327
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    1. Etayibtalnam Koudjom & Boris O. K. Lokonon & Aklesso Y. G. Egbendewe, 2024. "Climate Change, Malaria Prevalence and Cereal Yields in Sub-Saharan Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(5), pages 1171-1197, October.

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    More about this item

    Keywords

    Land use; Biofuels; Productivity; Sugarcane;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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