8th December 2020
As the world’s highest sugarcane producer, Brazil is a key country for Bonsucro. It is the market with the highest volumes of certified sustainable sugarcane, and also accounts for the greatest number of certified mills.
Continually updating our value proposition to remain relevant for Brazilian stakeholders is crucial to our success.
To understand the potential and the impact of Bonsucro in Brazil, we commissioned a comprehensive business case study on the costs and benefits of Bonsucro certification for mills and farms.
This adds to a first study conducted in 2014 and incorporates a comparison with RenovaBio, the Brazilian biofuel policy. By aligning with the Brazilian Government, we can create opportunities to streamline work and help to ensure that more producers adopt sustainability standards.
Bonsucro collected data with key sources:
- Bonsucro certification bodies and certified producers through interviews and online surveys.
- Data collected from certified mills using the Bonsucro calculator
Data was then analysed in light of discounted cash flow logic. All financial flows related to the initial certification and the subsequent years of maintenance were considered. A seven-year certification period was used as the baseline for the cost-benefit analysis.
All of Bonsucro’s licensed certification bodies and 36% of Brazilian certified producers participated in the study, with most representation coming from the Centre-South region.
What are the costs of Bonsucro certification?
The study showed it costs on average 0.75 USD/4.00 BRL per ton of certified sugarcane to implement Bonsucro certification in a production facility in Brazil. Costs to comply with Bonsucro specific requirements account for an average of 67%, followed by internal costs (hours of staff) with 20%, Bonsucro annual fee (8%) and audit costs (5%).
While they’re not considered as costs of Bonsucro certification, costs for compliance with relevant national legislations were also collected; an average 0.89 USD/4.7 BRL per ton of certified cane.
What are the benefits of Bonsucro certification?
- Accident rate: Bonsucro certified producers have an 80% lower accident rate than the overall Brazilian sugarcane sector. Since becoming certified, mills saw accident costs reduced by 70%.
- Diesel use: Bonsucro certified producers reduced diesel consumption by a quarter, and diesel costs by 14%.
- Sales: About 30% of Bonsucro certified volumes are sold as such in Brazil, either via the Mass Balance or Credits supply chain models. Credits sales from Brazilian certified producers have also increased over the past seven years.
Reduction of fines
- We saw an average 88% decrease in fines related to health and safety, and environmental fines were down by half.
- Greenhouse gas emissions: The positive impact on GHG emissions is the strongest after four years of certification – a reduction of 31% at farm level and 20% at mill levels.
- Water use: An intangible benefit of certification was a 20% reduction in cost of water use.
Compliance with RenovaBio
For Bonsucro certified mills, achieving RenovaBio certification costs 0.03 USD/0.16 BRL per ton of cane. This can be achieved at a lower rate by saving costs on using the same satellite images for both schemes, data optimisation for reporting on both schemes, staff expertise and audit cost.
Most of these items were already invested on in the past when mills first achieved Bonsucro certification, so the cost to achieve RenovaBio certification now is potentially much lower.
The positive cost-benefit ratio shows Bonsucro certification in Brazil pays off. This ratio should be further improved by the growth of the sales of certified volumes.
The ratio is even more advantageous when Bonsucro certified mills obtain RenovaBio certification (low cost and high return margin), which demonstrates that having the same area of scope for both can bring even more benefits.
Bonsucro is seeking continuous improvement in the cost-benefit ratio, for instance through integration with other certifications, recognition by financial institutions and influence over market demand.
Other benefits of Bonsucro certification (risk management, image and reputation) that were not included in this study may have increased cost-effectiveness.
Next steps for Bonsucro
Bonsucro is currently using the results of this business case study to feed into the revision of our Strategy 2021-2026, with the specific aim of improving the value proposition of certification in Brazil. The results have provided a clear picture of challenges and opportunities and will support the regional engagement with the Brazilian community.
Download the report
To learn more about the benefits of Bonsucro certification in Brazil:
- Download the presentation – in English or in Portuguese.
- Watch this webinar by Livia Ignácio, Country Manager for Brazil.
If you are interested in accessing the full report, please do reach out at email@example.com.