The Free Market: The Profound Changes and the New Agenda

Abstract

The withdrawal of the federal government from its involvement in the sugarcane industry was, as previously discussed, a long and contentious process that required considerable learning by the stakeholders involved, all of whom were accustomed to intense government intervention, which had been de rigueur since the 1930s. When the federal government disengaged itself in the late 1990s, conflicts related to distribution arose. The resolution of those conflicts required that the players in the industry learn to cope with the new rules imposed by the free market environment, in which the efficiency of production and the competitiveness of the product became major issues. Within this scenario, other major changes began to shape the agenda for the sector, domestically and internationally, after the year 2000. Most notable were the introduction of flex-fuel automobiles in Brazilian market (which dramatically reversed a decline in the demand for hydrous ethanol that had been occurring prior to that time, thus stimulating the expansion of ethanol production), efforts made by the Brazilian government and other international bodies to alter protectionist measures in the international sugar and changes to the international environmental agenda, especially those related to global warming concerns. This period was marked no only by the expansion of the domestic production but also by the entry of new players in the sugarcane production chain in Brazil. All those changes and their impacts on the sugarcane industry are addressed and discussed in this chapter.

Chapter 14 was co-authored by Luciano Rodrigues. Mr. Rodrigues is a Ph.D. student in Applied Economics at the Escola Superior de Agricultura Luiz de Queiroz, Universidade de São Paulo (Luiz de Queiroz College of Agriculture, University of São Paulo) and a specialist with extensive experience on the sugarcane industry and ethanol market in Brazil.