Relations of the Regional Cane Agroindustry with the National Economy : Analysis Applied to the Center-South and North-Northeast

The cane, sugar and ethanol production in Brazil has been divided in two major production regions, the Center-South (CS) and the North-Northeastern (NNE) Brazil. These regions present very different productivity, and henceforth production costs. The Center-South average productivity is higher than 72 tons of cane per hectare, while the average cane production by hectare in the NNE is about 49 tons. The primary objective of the study was to set up the inter-relations between the cane agroindustry with other regional sectors and with the overall Brazilian economy. This framework was used to compare a demand impact of each regional cane agroindustry upon the regional and the overall Brazilian economy. An inter-regional input-output matrix was used to characterize how a regional demand impact affects both, the regional (CS and NNE) and overall Brazilian economies. Rasmussen-Hirschman indexes, together with a pure linkage index, described by Guilhoto et al. (1996), were used for the analysis. In addition, production multipliers, with and without considering endogenous family consumption were estimated. According to these indexes, a positive demand impact upon the cane agroindustry produces a greater impact upon the NNE compared to the CS economy, when income effects are considered, indicating that cane production is more important for the NNE economy than it is for the CS economy. These results can be useful to evaluate and establish priorities for development policies through public policy for the country