Interview:Maurilio Biagi Filho
Maurilio Biagi Filho has been in contact with the agribusiness reality early on. During childhood, he studied in a rural school in the farm where he lived in and, even before graduating in business administration, he began working in the family company, Santa Elisa mill. There, he improved his management knowledge on the sugar cane industry by going through virtually all company’s sectors, to finally hold the Chairman position after his father’s death in 1978. He led the family conglomerate until 2002 and left the company in order to continue his successful business career. He played a major role as a Top Executive at companies such as Refrescos Ipiranga (Coca-Cola), Renk Zanini, Usina MB, Sermatec and CEVASA, and today accumulates duties as President of the Board for ‘Moema Açúcar e Álcool’ Group, Advisor of Frutal Mill and COC Education System, CELEX and as Chairman of the Maubisa Group, Director of Ouroeste plant and Chairman of Brazilian Rural Society Committee of Agroenergy and Biofuels.
Maurilio Biagi Filho also collaborates with Entities such as the Economic and Social Development Council of the Presidency of the Republic (CDES), the ABDIB (Brazilian Association of Infrastructure and Basic Industries), AMCHAM (American Chamber of Commerce), UNICA (Sugar Cane Industry Union) and COSEMA-FIESP (High Council for the Environment). In this interview to AltEnergy, Maurílio Biagi Filho uses his entire experience to analyze and talk about some present and future fundamental issues regarding biofuels.
Altenergy: Following the Pro-Ethanol program, is this really “a second chance” for the sugar cane industry? How to exploit it in the best way?
M.B. I I begin answering the question by proposing a change in terms, because our industry is responsible for more than just sugar and ethanol. Today we are the largest producers of clean and renewable power, in several ways.
Another term that needs review is Pro-ethanol. There are many reasons to leave this program in the past: 1) it had a connotation of having a series of subsidies, although it is not entirely true; 2) Despite of being idealized by businessmen, it was totally “sponsored” by the government, and otherwise it would not exist and 3) the shortage stigma which traumatized the Brazilian consumers.
These two terms need modernization to cover the magnitude of the current moment, as we are currently major producers of energy and have strategic responsibility in the production of these supplies. We are not protected and regulated by the government anymore; in fact, we are partners, so that Brazil will be continue to be the largest producer in the cost-effective, clean and renewable energy.
If this concept is not completely assimilated by us, the producers, the energy sector as a whole could lose competitiveness, or lack in achieving its “adulthood”.
Altenergy: According to you, why has the world taken so long to turn to alternative and renewable fuel sources?
M.B. I We are the “oil-generation.” We learnt to live with oil and coal in our routine, and it seemed too far away the day when this reality would change.
Long before the world understood this sad reality, Brazil began its production of clean and renewable fuels. At that time, the other countries had proved skeptical towards our choice, and we ourselves didn’t have a full comprehension of what we were developing. Thanks to the few who believed - and truly believed – now we are leading the industry of renewable energy.
Even today, despite the great debate worldwide, there is still little knowledge about this subject around the world. As we are the oil generation we could not imagine a vehicle fueled by another type of energy. Brazil changed this mentality.
Altenergy: Do you think ethanol pass by a “bubble” such as some segments already gone through (internet, real estate, etc.), or this phase is here to stay?
M.B. I With no doubt, ethanol is not a momentary fashion. Every aspect of it to date is very consistent, result of years of technological investment. I can say, fearless of making mistakes, that the ethanol is an alternative or an additive, and is here to stay.
Altenergy: We can say that Brazil will be the “Saudi Arabia” of ethanol? Or is it just an exaggeration by the international media?
M.B. I Yes, it is an exaggeration, not only by the international media but also by the domestic. This is not an issue, since we have no intention in this respect. What we really want, and we have been working hard to do this, is to maintain our position as the most important producer country of clean and renewable energy in the world.
Altenergy: Ethanol has already won the first round, which was the internal market (flex-fuel cars). The second – large scale exports - is considered the most critical and a great challenge. How do you see our infrastructure for ethanol export?
M.B. I I understand that there is always a mistaken concept on the role of ethanol. The main objective of the Brazilian ethanol is the internal market as we are, and always will be, proportionally, the largest consumer in the world. Brazil is the only place where cars can run on 100% ethanol fueled. Despite the flex technology, for other countries, the ethanol will always be an additive to gasoline, in a greater or lesser proportion.
In terms of infrastructure, we have not reached the necessary, which means that from now on we can only improve. And, in fact, we already see the first moves towards infrastructure improvements both in general and in ethanol terms. As I said, our main focus is the domestic market, but we still have a lot to grow in Brazil, as 30% of flex-fuel cars run on ethanol-gasoline mix. Today, Brazil has 5 million flex vehicles and intend to double that number in 2010/11 and to triple it in 2014/15. In some years there will be more than 15 million flex vehicles. These data show that ethanol production for the next few years will grow to supply this demand.
Therefore, in the short term, the international market will continue to be served as it is today: sale of the surplus not consumed in Brazil, without long-term contracts.
However, the second phase, the international market, will happen when we have a production exclusively destined for exports. When this happens, we will sign the contracts with the countries and undertake the responsibility to supply a specific quantity. And of course, Brazil will continue fighting and struggling to make ethanol a commodity, a critical factor for the international market.
Altenergy: The sugar cane industry boom has not been justified yet regarding the financial result. Nowadays what are the expectations for the industry?
M.B. I The renewable energy industry has gone through a boom followed by a crisis, and the trend for 2008 is the same - euphoria at first semester, complaints in the second. As long as we do not have a unified strategy we will live through ups and downs. Currently, we are reaching a promising phase, but still very far from ideal.
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