Sugar and ethanol production as a rural development strategy in Brazil: Evidence from the state of São Paulo

Sugar and ethanol production are key components of Brazil’s rural development and energy strategies, yet in recent years sugar production has been widely criticized for its environmental and labor practices. This study examines the relationship between rural development and sugarcane, ethanol, and cattle production in the state of São Paulo. Our results suggest that the value added components of sugarcane production, which include sugar refining and ethanol production, may have a strong positive affect on local human development in comparison to primary agricultural production activities and other land uses. These results imply that sugar production, when accompanied by a local processing industry can stimulate rural development. However, this paper also highlights the significant environmental and social harms generated by the sugar industry at large, which may undermine its development benefits if not addressed.

Research highlights
► The São Paulo State municipalities with sugar cane mills had a better economic development.
► Municipalities with cattle and with a non rural activity had the worst economic development.
► The test remains: can agribusiness go hand in hand with improving environmental and labor conditions?