Relations of the regional Brazilian cane agro-industry with the national economy: analysis applied to the Centre-South and North-Northeast

Abstract

Cane, sugar and ethanol production in Brazil has been divided between two major production regions, the Centre-South (CS) and the North-Northeast (NNE), which present very different productivity, and henceforth production costs. The CS average productivity is more than 72 tonnes of cane per hectare, while average productivity in the NNE is 49 tonnes per hectare. The objective of the study was to establish interrelations between the cane agro-industry and other regional sectors and with the overall Brazilian economy. This framework was used to compare a demand impact upon regional cane production upon the regional and the overall Brazilian economy. An interregional input–output matrix was used to characterize how regional demand impacts on both regional and overall Brazilian economies. Rasmussen–Hirschman indexes, together with a pure linkage index were used for the analysis. In addition, production multipliers, with and without considering endogenous family consumption were estimated. The results showed that a positive demand impact upon the cane agro-industry produces a greater impact upon the NNE compared to the CS, considering income effects, indicating that cane production is more important for the NNE than for the CS. These results can be useful to establish priorities for development policies for the country.