MercoPress. South Atlantic News Agency

Brazilian sugar and ethanol coop plans to triple production

Brazil's largest sugar and ethanol cooperative Copersucar said on Wednesday it had become a company and plans to triple its production in the next ten years. Founded in 1959 Copersucar expanded operations and became one of the world's biggest private exporters of sugar and ethanol.

Currently it has about 5% of the world sugar trade and, with its new legal status, will displace Cosan as the largest sugar and ethanol producing company in Brazil. "The sugar and ethanol industry is expanding fast so it's important to grow to keep the relevance we always had" Copersucar CEO Luis Roberto Pogetti was quoted by Reuters. Brazil's booming sugar and ethanol industry has been going through an aggressive consolidation in recent years with cane output expected to double in ten years but no more than 30 big groups will be in control of production, compared with around 200 currently. The co-op was composed of 33 mills in Sao Paulo, Parana and Minas Gerais states, which now become the shareholders of Copersucar's newly created holding company, Produpar. Produpar intends to increase sugar cane crushing capacity to 200 million tons by 2018, up from 70 million tons this season, and increase its local sugar and ethanol market share to 30% in 10 years from 14% currently. It also intends to buy sugar and ethanol from independent producers to be sold on the domestic and international markets. Turnover from this business, which will reach 200 million US dollars this season, is expected to double in 2009/10. Pogetti said Copersucar's strategy of having long term supply contracts with foreign sugar and ethanol buyers will likely be strengthened in the future. The company has commercial contracts with some of the world's biggest sugar refineries and also with final ethanol consumers. "In a market of increasing volatility... it's part of our strategy to invest in long term relations," he said. About 70% of Copersucar's ethanol exports are to final destinations. In sugar, 80% of its sales are to refineries, most of them in the North of Africa, Middle East and Asia. In the current crop Copersucar expects to sell a total of 4.3 million tons of sugar, up 22% from the previous season, and 3.8 billion liters of ethanol, up 18%. The company's exports should reach 3 million tons of sugar, up 25% over the previous crop and 1 billion liters of ethanol, nearly 50% more than last season. Total sales are forecast to reach 2.9 billion US dollars.