Brazil to invest $5 billion into the 'bioeconomy'

Brazil is rapidly becoming one of the most creative countries, forging a new kind of paradigm on how modern societies can become sustainable and what their role can be in a resource-constrained world. Famed for its environmentally friendly, compact urbanism (with the city of Curitiba being labelled "the world's most liveable metropole"), its finetuned social policies aimed at creating a just and equitable society that overcomes the inequalities of the past, its efforts at uniting the Global South to form an alliance that offers a counterweight to unfair trade regimes, and its innovative energy landscape, with bioenergy and biofuels making the country virtually energy independent.

'Bioeconomy'
Brazil is committed to sustain this vision and has announced plans to invest 10 billion reais (€3.7/US$4.7 billion) into a green and sustainable post-petroleum 'bioeconomy' over the next decade to fuel growth in bioenergy, agriculture, biodiversity based 'rainforest' pharmaceuticals and renewable bioproducts.

Brazilian President Luiz Inacio Lula da Silva signed a decree today creating the program to invest 1 billion reais annually for 10 years. The government will contribute 60 percent of the investment, including funds from the Brazilian Development Bank (BNDES), while the private sector will provide the rest, Development Minister Luiz Furlan said.

Furlan said cash will be used to fund research and development of new strains of sugarcane that are resistant to droughts, new bioprocessing technologies to create biofuels from biomass, vaccines and pharmaceuticals from rainforest resources, and biodegradable plastics, polymers, fibers and plant-based green chemicals.

By stepping up biotechnology funding, Brazil, the world's biggest grower of sugarcane, oranges and coffee and home to 20 percent of the planet's living species, aims to meet rising demand for its crops and reduce its dependence on foreign pharmaceutical makers such as Pfizer Inc or petrochemical companies such as Dow Chemicals Inc.

"Brazil has strengths that put us in a position to stand out in these new technologies. This policy will help Brazil realize this potential," said Lula during a ceremony today at the presidential palace in Brasilia.

Biotechnology has already fueled growth among Brazil's ethanol makers. Developments of more-productive cane strains over the past three decades have helped the South American country make the biofuel at a lower cost than gasoline (earlier post). Ethanol cost Brazilian distributors about 37 percent less on average than gasoline last week, the National Petroleum Agency said. The trend towards higher efficiency and lower costs is set to continue, with analysts projecting a doubling of ethanol productivity within 15 years (earlier post).

Cheaper biofuels
In the U.S., where ethanol is made from corn, the biofuel has cost an average of 99 cents per gallon more than gasoline for the past nine years, according to data compiled by Bloomberg. Unlike Brazilian ethanol, the production of corn ethanol is also highly inefficient (earlier post and here).

By developing new cane varieties, Brazil could expand crops into areas that don't receive as much rain as the center-south region of the country, where 85 percent of Brazil's sugar and ethanol are produced. The government will research new species that can better withstand droughts that are frequent in the northeast, where cane productivity is 30 percent lower than in the center-south, the Agriculture Ministry said:
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The government may fall short of its investment goals in coming years because spending controls and bureaucracy in the Latin American country slow the allocation of earmarked funds, said Anderson Galvao, director at Celeres, a Uberlandia, Brazil- based crop forecaster and researcher.

"Brazil needs to speed up the process of actually sending funds that have been approved for research," Galvao said in a telephone interview with Bloomberg from Cuiaba, Brazil. "Often, approved funds never reach the researchers."

Approval Delays
Delays to get innovations approved by the biotech regulator may also thwart Brazil's efforts, Galvao said. The lower house has passed a bill that aims to speed up the process by allowing approvals through a simple majority at the regulator's board instead of the current two-third majority. Senators haven't voted on the bill yet.

Brazil is home to a 10th of the world's genetically modified crops. Planting in Brazil of biotech crops, including herbicide-tolerant soybeans, jumped 22 percent last year to 11.5 million hectares, the non-profit International Service for the Acquisition of Agri-biotech Applications, or ISAAA, said last month.

Brazil, where about 40 percent of the population lives on less than $2 a day, is also seeking to boost domestic production of generic drugs that cost less than medicines made by major pharmaceutical makers such as Pfizer, the world's largest.

Copy-Cat Drugs
Pfizer is among drug companies losing revenue to copy-cat versions of its medicines worldwide. The New York-based company last month said it would eliminate 10 percent of its workforce because of competition from cheaper generic drugs.

Lula also created a group to help the 1,700 existing biotech research organizations communicate more easily, Trade Minister Luiz Fernando Furlan said.

"Brazil has the full potential to attract all the resources needed in this area," Furlan said at a news conference in Brasilia yesterday. "What we lack is the connection of good projects with the funds."

More information:
Reuters: Brazil to invest $5 billion in biotech research - Feb. 8, 2007.
Bloomberg: Brazil to Invest 10 Billion Reais in Biotechnology - Feb. 8, 2007.
CheckBiotech: Brazil to invest $5 billion in biotech research - Feb. 8, 2007.