Brazil - Guarani - sugar cane

Financing the sugar cane industry in Brazil

Context

Brazil is the world's largest producer and exporter of sugar cane and dominates the market. Guarani, a Brazilian company under the control of Tereos Internacional, is Brazil's third largest sugar company. Its main activities in volve processing sugar cane in order to produce sugar, ethanol and electricity. Ground sugar cane residues can indeed produce energy.

All the Brazilian production units are to be found in the same region located in the State of São Paulo, where 60% of the country's sugar cane comes from.
The highly competitive environment of Brazil's sugar industry gives players reasons to make sizeable industrial and agricultural investments. These investments have become essential for improving yields.
 
Project objective
PROPARCO's financing aims to support a sector which is both an engine of Brazil's economy - the sugar cane sector - and is working to combat climate change (development of biofuels via ethanol and cogeneration).
This project is also in line with PROPARCO's strategy to support the development of French businesses abroad.
 
Project description
PROPARCO has granted a $50m senior loan to Guarani to finance its agricultural and industrial investment program. These investments aim to improve the agricultural performances of all the company's Brazilian production units. Indeed, Guarani's aim is to improve its crop yields and use sugar cane without any yield losses. 
This increase in yields will be achieved through agricultural intensification, greater productivity and renewing sugar cane fields.
 
Impacts
With some 20 million tons of sugar cane treated - including almost half for ethanol production - Guarani is making a major contribution to mitigating greenhouse gases in Brazil . Ethanol projects that use the sugar cane industry in Brazil have the highest yields, with an 80 to 90% reduction in vehicle emiss ions. 
Guarani has excellent social practices. Indeed, it is part of a Group that employs over 14,000 people and manages to closely comply with the demanding environmental standards in force in the State of São Paulo.