INSIGHTS SUGARCANE’S ROLE IN FUELING THE ECONOMY

This briefing describes the economic and environmental impacts of sugarcane mill expansion in the Brazilian state of Mato Grosso do Sul between 2005 and 2012. Based on a study by INPUT researchers, the document highlights how the industry has reshaped local municipal economies, shifted land use from pasture to sugarcane, and contributed to a reduction in deforestation.

• The arrival of sugarcane mills significantly boosted the economic performance of local municipalities, particularly in rural areas. Within three years of a mill's arrival, a typical municipality experienced a 30% increase in GDP, driven by growth in agriculture (65%), industry (45%), and services (13%). Additionally, these mills contributed to a 31% increase in tax revenues and a 10% spike in population.
• Sugarcane expansion induced a shift in land use, primarily moving from inefficient pasturelands to sugarcane cultivation. In municipalities with new mills, cattle herds decreased by an average of 27,000 heads, and ranching employment also declined.
• The expansion of the sugarcane industry is associated with a reduction in deforestation, with an average decrease of 6.3 thousand hectares three years after the arrival of the mills. The document suggests this may be due to productivity gains reducing the need for area expansion or increased environmental scrutiny and law enforcement associated with larger companies.
• The sugarcane industry stimulated broader regional growth in labor markets and financial services. Employment increased by 40% and aggregate wages grew by 49%, while the number of businesses per municipality rose by 82% (an average of 186 new businesses). Financial services also deepened, with total private deposits increasing by R$4.8 million (103%) and rural credit rising by R$18.5 million (77%).
• The growth of sugarcane mills provided positive spillover effects for other agricultural crops, specifically increasing productivity in soybean and corn. This is attributed to the growth of support industries that improved the supply of agricultural services, transportation, and storage for all producers.

APA

Assunção, J., Pietracci, B., & Souza, P. (2016). INSIGHTS SUGARCANE’S ROLE IN FUELING THE ECONOMY. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2016/07/Insights_Sugarcanes-Role_in_Fueling_the_Economy.pdf

Chicago

Assunção, Juliano, Breno Pietracci, and Priscila Souza. INSIGHTS SUGARCANE’S ROLE IN FUELING THE ECONOMY. Climate Policy Initiative, 2016. https://www.climatepolicyinitiative.org/wp-content/uploads/2016/07/Insights_Sugarcanes-Role_in_Fueling_the_Economy.pdf.

Wikipedia

{{cite report |last1=Assunção |first1=Juliano |last2=Pietracci |first2=Breno |last3=Souza |first3=Priscila |title=INSIGHTS SUGARCANE’S ROLE IN FUELING THE ECONOMY |publisher=Climate Policy Initiative |date=July 2016 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2016/07/Insights_Sugarcanes-Role_in_Fueling_the_Economy.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{assuno2016insights, author = {Assunção, Juliano and Pietracci, Breno and Souza, Priscila}, title = {{INSIGHTS SUGARCANE’S ROLE IN FUELING THE ECONOMY}}, institution = {Climate Policy Initiative}, year = {2016}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2016/07/Insights_Sugarcanes-Role_in_Fueling_the_Economy.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }