Bug-breeding helps Brazil rule organic sugar trade

RIBERAO PRETO, Brazil (Reuters) -- Brazil's Sao Francisco cane mill, already the world's largest organic sugar producer, says its anti-chemicals philosophy puts it well ahead of more traditional growers and should secure it an even bigger share of the global organic trade.

Unusually for Brazil, the mill chooses not to burn its cane fields -- standard practice throughout the country -- and breeds millions of predatory bugs to use instead of pesticide.

After five years of financial hardship and millions of dollars in investments, it is finally turning healthy profits with its "Native" organic brands and produces around half the organic sugar grown in the world.

No cane is burned at Sao Francisco or its nearby sister mill Santo Antonio and farmers at both locations near Brazil's "cane capital" of Riberao Preto abandoned the dangerous work of manual cutting long ago to concentrate on "green cane" -- the product in its natural mature state, without burning.

"The first five years were hard and cash flow was down. Now we've reached a very efficient status, but most mills in Brazil are just worried about processing and cutting green cane," said Leontino Balbo, Sao Francisco's agricultural director.

"We haven't burned cane since 1995 and we use byproducts of the refining process as fertilizers," organic products director Fernando Alonso de Oliveira said. "And we have developed a machine which cuts the top and bottom of the cane and leaves the part just above the ground intact, to protect the soil."

The Riberao Preto area in Sao Paulo state is home to around 45 mills, many of which double as alcohol distillers. It produces some 24 percent of sugar consumed in Brazil.

Working from special research labs, scientists breed millions of insects to be released over the cane fields as an environmentally friendly method of pest control -- avoiding chemicals by enlisting the pests' natural enemy.

Earthworms, termites, cane borers and leaf hopper insects are seen as the worst field pests, but most of these can now be kept at reasonable levels, Balbo said. Scientists cultivate a special fungus to minimize the numbers of leaf hoppers and have already managed to eradicate the worst of the termites.

"We started to study all the pests that affect our crop and, instead of applying poisons, we looked at the pest's whole cycle and its vulnerable point," he said. The labs turn out some eight million insects of differing types every month.

Success of the bug-breeding programme has caused infestation levels of the notorious cane borer to fall drastically from 11 to 1.5 percent in the past few years. The labs breed borers -- carefully keeping them contained -- as food to propagate tiny wasps. When mature, a million wasps are released every day over the cane fields of both Sao Francisco and Santo Antonio.

When the wasps come across a borer, they will bite it as a natural enemy and insert an egg, which eventually destroys the borer from within as the egg grows and hatches. Cane borers can reduce productivity by up to 10 percent.

The Balbo family own the two mills and founded their first crushing plant in the area in 1946. They decided to embark on organic farming at Sao Francisco in 1986.

The first major change was to stop field-burning, which softens up the hard "green cane" and at the same time rids the fields of snakes, biting insects and other dangerous animals for workers who usually cut the cane by hand with machetes.

All cutting is mechanized at Sao Francisco and all the cane is "green" -- which does, however, attract up to a dozen more unwanted insects than if the fields were burned. Organic compost is scattered on the soil, providing a natural fungal fertilizer and ensuring that the topsoil is kept damp.

Sao Francisco has been turning out ever-increasing amounts of organic sugar since 1,600 tons first came off the conveyor belts back in 1997. The next year, production rose to 4,000 tons and then rocketed to 23,000 tons in 1999.

Around half of Sao Francisco's organic sugar production was exported last year, with 12,000 tons shipped to some 21 countries in the European Union, United States and Japan. Small amounts also went to Mexico, Canada, New Zealand and Tunisia.

Balbo said Sao Francisco hoped sales would now rise yearly as demand for certified organic products increased among consumers in major markets such as the European Union.

"This year we hope to export between 20,000 and 24,000 tons, we should almost double our exports. There's a real boom in organic sugar, especially in the United States, Canada and Europe, so we're planning to take a share from conventional sugar," he said.

"But the market for organic sugar is still very small. If two more mills opened up, supply would rise and we'd be looking at getting prices below our production costs."

Latin America, one of the world's most productive sugar regions, still has very few factories dedicated to turning out an organic product. Brazil has another organic mill in the southern state of Parana, while Argentina and Colombia have one small mill each and Paraguay has five, Balbo said.

But organic sugar is making slow headway in the Brazilian market, mainly due to its extra cost reflected on the supermarket shelf -- roughly four times more than the equivalent crystal sugar normally bought by housewives.

"In Brazil, our sugar is more expensive but the battle is with the supermarkets. The cost of producing organic is roughly double that of producing conventional," Balbo said.

"But there are people who are prepared to pay a little more for organic products. Today we are in 120 different products," he said, naming foreign-produced brands of organic ketchup, cookies, cereals and chocolate, all using Sao Francisco sugar.

The two mills have a combined area of some 45,000 acres (18,000 ha) planted in cane, of which just under 33,000 (13,000) has been certified as organic. The goal is to have all its land certified by 2007, Balbo said.

The productivity of Sao Francisco's organic plantations already exceeds that in the traditional growing regions of Sao Paulo state, he added.

Sao Francisco, which uses 100 percent organic cane while its sister mill uses half organic and half conventional, has won two international organic certifications -- Farm Verified Organic Inc. and the European Ecocert agency.

FVO is a well-known organic certification agency accredited by the United States Department of Agriculture to satisfy requirements for import into the European Union.

"Fifteen years ago our soil had an organic content of 1.1 percent, while the average for Sao Paulo (state) is around 1.3 percent," Balbo said. "Now it's 3.5 percent and should reach 5 percent in 10 years. That's very high for arable soil."

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