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The Role of Sugar Cane in Brazil's History and Economy Iowa State University Capstones, Theses and Retrospective Theses and Dissertations Dissertations 1983 The oler of sugar cane in Brazil's history and economy Plinio Mario Nastari Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/rtd Part of the Agricultural and Resource Economics Commons, and the Agricultural Economics Commons Recommended Citation Nastari, Plinio Mario, "The or le of sugar cane in Brazil's history and economy " (1983). Retrospective Theses and Dissertations. 8948. https://lib.dr.iastate.edu/rtd/8948 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Retrospective Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. 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Ann Arbor, Ml 48106-1346 USA 313/761-4700 800/521-0600 8407112 Nastari, Plinio Mario THE ROLE OF SUGAR CANE IN BRAZIL'S HISTORY AND ECONOMY Iowa State University PH.D. 1983 University Microfilms Internstionsl 300 N. zeeb Road, Ann Arbor, Ml 48106 PLEASE NOTE; In all cases this material has been filmed in the best possible way from the available copy. Problems encountered with this document have been identified here with a check mark V . 1. Glossy photographs or pages 2. Colored illustrations, paper or print 3. Photographs with dark background 4. Illustrations are poor copy 5. Pages with black marks, not original copy 6. Print shows through as there is text on both sides of page 7. Indistinct, broken or small print on several pages 8. Print exceeds margin requirements 9. Tightly bound copy with print lost in spine 10. Computer printout pages with indistinct print 11. Page(s) lacking when material received, and not available from school or author. 12. Page(s) seem to be missing in numbering only as text follows. 13. Two pages numbered . Text follows. 14. Curling and wrinkled pages 15. Other University Microfilms International The role of sugar csne in Brazil's history and economy ty Plinio Mario Nastari A Dissertation SuDmitted to the Graduate Faculty in Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY Department: Economics Major; Agricultural Economics Approved: Signature was redacted for privacy. In Charge of Major Wo Signature was redacted for privacy. For the Major Department Signature was redacted for privacy. For ^h^G-3/muate College Iowa State University Ames, Iowa 1983 ii TABLE 0? CONTENTS PREFACE viii CHAPTER I. INTRODUCTION 1 Antecedents 1 Nat-ure of the Protlem 6 Objectives 8 PART I. THE EVOLUTION OF THE SUGAR CANE CULTURE FROM 1500 TO MODERN TIMES 10 II. A BRIEF HISTORY OF THE SUGAR CANE .... 11 Introduction 11 Origin 12 Dissemination 17 Semantics 23 Current Sugar Cane Production ..... 26 iii CHAPTER III. THE HISTORY OP SUGAR CANE IN BRAZIL PROM 1500 TO 1630 33 Motivation 33 The Colonization System ...... 36 Slavery as a Soiorce of Labor 42 The Interbreeding of Races 46 Reasons for the Success of the Sugar Cane Culture in Brazil 49 IV. CAUSES AND CONSEQUENCES OP THE DUTCH OCCUPATION OF BRAZIL (1630 TO 1654) .... 52 Antecedents 53 The Dutch Occupation 55 Maurice of Nassau 57 Consequences of the Expulsion 62 V. THE EVOLUTION OF BRAZIL'S SUGAR CANE CULTURE PROM COLONIAL TO MODERN TIMES ... 66 The Prominence of Sugar in Brazil's Exports During the Colonial Period ... 66 iv CHAPTER Composition of Brazil's Exports During the Nineteenth Century 68 Technical Progress in the Production of Sugar . 70 The Expanding Production of Sugar .... 76 VI. THE PRODUCTION OP ETHAITOL PROM SUGAR CAITE IN BRAZIL 84 Alcohol as Fuel in Transportation .... 86 The National Alcohol Program . 92 VII. A BRIEF HISTORY OF THE CREATION OF BRAZIL'S NATIONAL ALCOHOL PROGRAM 99 Legislation 112 Administration of the National Alcohol Program (Proalcool) 116 PART II. AN ECONOMETRIC MODEL OP BRAZIL'S SUGAR AND ETHANOL INDUSTRIES . 119 VIII. REVIEW OP THE LITERATURE 120 V CHAPTER Modelling Efforts 121 Summary 12 4 IX. THE PROPOSED MODEL . 126 Hypothesized Specification of Equations . 126 Explanation of the Proposed Model .... 139 X. MODEL ESTIMATION I48 Data Used 14.8 Estimation of the Parameters in the Model 148 Simulation Results I64 The Final Estimated Model I72 A Few Words About Elasticities I86 PART III. POLICY ANALYSIS . I89 XI. PROÂLCOOL'S OBJECTIVE FOR I985 190 The 1985 Target for the Domestic Consumption of Anhydrous Ethanol .... 194 The 1985 Target for the Production of Hydrous Ethanol 197 vi CHAPTER The Supply of Sugar Gane 202 The Consumption of Sugar « 205 A Note of Caution 206 XII. THE ESTIMATION OP NET INCOME ACCRUED BY PRODUCERS AtfD THE GOVERNMENT 20? Producers of Hydrous and Anhydrous Ethanol 207 Producers of Sugar 214 The Government 220 XIII. PINAL REMARKS 23O Sugar Cane and the Energy Problem ... 2 31 The National Alcohol Program 2 32 Measures of Net Income . 237 Proalcool's Objectives for I985 .... 241 Conclusion 242 APPENDIX A. ADDITIONAL RELATED TOPICS 244 The World's Reserves of Petroleum . 244 vii The Use of Ethanol in the Chemicals Industry ..... 244 Environmental Impacts 246 APPENDIX B. THE DATA AND THEIR SOURCJiS .... 251 Indexes 251 Sugar Cane . 255 Sugar 258 Hydrous and Anhydrous Ethanol 262 G-asohol 269 Rl, R2, R3, R4, and R5 272 Interest Rates 274 Vehicles 277 Credits 277 Some Exogenous Variables 279 APPENDIX 0. SIMULATION RESULTS 285 SELECTED BIBLIOGRAPHY 3O3 viii phepace For a long time now, I have intended to bring together in one single study a host of information dealing with the influence of the cultivation of sugar cane in the history and economic development of Brazil. The appropriate time appeared to have come when I chose to develop an econometric model of the sugar and ethanol industries of Brazil to fulfill one of the requirements for the completion of my graduate studies. To develop this econometric model, I had to collect a considerable amount of data, bringing me in contact with the literature related to the production of sugar cane, sugar, and ethanol in Brazil. The opportunity to le am all about the evolution of the sugar cane culture was unveiled to me. 1 enjoyed very much the endless process of digging out information, and checking for its accuracy and internal consistency. It is my wish to share with ix other individuals interested in the sugar cane industry what I have learned during this process of research. This study is divided into three parts. Part 1 is concerned with the role of sugar cane in Brazil's history. It includes the Chapters II to VII. It starts with a "background on the origin and dissemination of sugar cane throughout the world (Chapter II), and focuses on the evolution of the sugar cane culture in Brazil from 1500 to modern times. While Chapters III, IV and V deal with the evolution of sugar* cane used for the production of sugar. Chapter VI deals with the production of ethanol from sugar cane. Although ethanol has "been used as a fuel in Brazil since 1931» its importance in the energy matrix of Brazil has increased notahly after the creation of the National Alcohol Program (Proalcool). Chapter VII presents a history of the creation of the Proalcool, providing insights on who participated in the decision process, and how these decisions were made. Part II presents an econometric model of Brazil's sugar and ethanol industries. Chapter VIII presents a X review of the modelling literature, and Chapter IX introduces the proposed theoretical model. Estimation of the model is presented in Chapter X, If the reader is only interested in the modelling part of this study, I suggest that he (she) skips Part I, with exception to Chapter VI which provides some "background information about the production of ethanol in Brazil. In Part III, the model estimated in Part II is utilized to carry on some policy analyses. Chapter XI reveals what should be the levels of a few government- controlled variables which would be in consistency with the established goals of ethanol production and consumption in Brazil, Chapter XII is concerned with the estimation of some income measures accrued by producers of sugar, producers of ethanol, and the government since the creation of the Proâlcool.
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