Sugarcane millers ‘flexing’ their muscle

At a recent workshop at the International Institute of Social Studies, I was invited to write a paper with fellow sugarcane researchers Ben McKay, Sergio Sauer and Roman Herre on the phenomenon of ‘flexing’. The paper looked at this in the context of Brazil, South Africa and Cambodia and is available for free from the Transnational Institute. Here is an excerpt from that paper.

The global production of sugarcane literally outweighs that of any other crop. In 2013 it reached 2.16 billion tonnes, more than double that of maize which was the next largest crop by weight (FAO, 2014). While not necessarily an indication of the crop’s exchange-value, this measurement does reveal the sheer amount of biomass produced via sugarcane agriculture and hint at the potential gains that might be had from making and monetizing other use-values from the plant.

Sugarcane has long been used in multiple ways, providing the basis for sugar, molasses and rum produced from the plant’s liquid sucrose, as well as a source of steam energy by burning the cane stalks (bagasse) leftover after crushing. But recently, attempts to realize this exchange value appear to have entered a new phase as both the variety and volume of raw material produced by the sugarcane industry have increased markedly. These include more complex sucrose derivatives such as ethanol and other chemicals used for liquid fuel and plastics, more intensive use of bagasse as a solid fuel for electricity and gas generation, and the capture of ‘waste’ from the milling process that is turned into fertilizer and animal feed. Even the cane straw – the tops and leaves that were previously burned away from the cane stalk before harvesting – are being targeted for use with the bagasse in electricity production or for transformation into so-called ‘second generation’ cellulosic ethanol.

In short, and in the context of a rising demand for all forms of natural resources (food, fuel, feed, fertilizer, etc.), there has been a renewed effort to create and commercialize ever-more revenue streams, or to “optimise the return on every stick of cane” as the milling group Illovo puts it (Illovo 2014b).

We are also witnessing a greater degree of flexibility over the product mix. It is no longer the case that all other raw materials are mere by-products of sugar. Depending on anticipated returns, many sugarcane mills in Brazil engage in arbitrage and ‘flex’ from one harvest to another, moving between a mix based on 60 per cent sugar and 40 per cent ethanol, to a 40-60 split. For 2013/14, for example, the flex ratio was 48:52. In the production process, sugarcane is first crushed into a sugar-rich juice – this is the most expensive part of the operation. Next, sugar is produced first through crystallizing and centrifuging the juice, with the leftover molasses then fermented and distilled to produce ethanol. Flexing is made possible by extracting less sucrose from the juice and thereby leaving more available in the molasses.

Indeed, such are the opportunities for capital accumulation in non-food markets that the owners of the biggest milling groups now openly declare their intent to “generate value through the vertical integration of the sugar and ethanol business chain” and build whole companies “focused on the infrastructure and energy sectors” (Copersucar 2014a; Cosan 2012).

How should all this be understood theoretically? In their prescient book on the capitalist penetration of agriculture, Goodman et al. (1987) noted how capital seeks to reduce the agricultural product to an industrial input, which then tends to be replaced with non-agricultural components. They called this process ‘substitutionism’ and argued that it would lead to ‘integrated biomass production systems’ freed from the constraints of pre-determined product and marketing channels. This, in turn, would result in a rising proportion of value accounted for by industrial capital and the elimination of the quintessential rural base of agriculture.

What we see unfolding in the sugarcane industry is confirmation of this process, albeit with agro-industrial inputs replacing (or at least supplementing) fossil-fuel based products, rather than the other way round. The accrual of wealth to industrial capital is also hinted at in the recent declaration of Rubens Ometto Silveira Mello, Chairman of Cosan, as the world’s ‘first ethanol billionaire’ in the Forbes magazine rich list. Meanwhile, the increased control and industrialisation of sugarcane production by these same actors, along with the steady strangulation of rural and indigenous communities marginalized by its expansion, indicates the incompatibility of mechanised monocrop flexing with traditional agrarian livelihoods.

Yet as much as such developments might be impelled by the logic of capital accumulation, they are also beholden to politics. In this paper we focused on politicising the commodification and commercialization of sugarcane by bringing in the state.

On the one hand, we identified various forms of industrial policy – consumption mandates, tax breaks, research and development support, trade politics, and, most importantly, credit provision – as ways in which the state has underpinned the transforming of the sugarcane milling industry into a multi-functional raw materials supplier. As in other cases of technological innovation and structural economic transformation, public institutions and funding will continue to be essential to the construction of a ‘green’ or ‘bio-economy’ too.

On the other hand, we located some of the distinctive tensions raised by sugarcane flexing and thereby rejected the blithe assessments of this as a ‘win-win’ strategy. These included questions over consumer prices for fuel, control of distribution infrastructure and conditions and implications of land conversion – areas in which the state has actively intervened, and not always in the interests of industrial capital. In other words, the state remains a vital site for the contestation of, as well as support for, sugarcane flexing.