Of Sugar and Politics: Last Days in Sao Paulo

Because we were so productive during our first day of meetings, on Tuesday and Wednesday we had one company visit each day and the free time to either meet with companies related to our class project or explore the city on our own!

By now, we have all tried the infamous caipirinhas, Brazil’s potent national cocktail. It contains cachaça (a sugar cane liquor), sugar, and lime. So, it is only fitting that on Tuesday morning we meet with Cosan, the world’s largest sugar producer and the largest conglomerate in the sugar and ethanol sector. We were received by three impressive executives: Guilherme Machado, Mark Lyra, and Phillipe Casale.  Mr. Lyra explained to us that Cosan sees itself as the provider of “energy for life”, whether that energy comes from its ethanol and fuel production or the raw sugar it sells to consumers at the retail level. Cosan’s major units are divided into agricultural properties, sugar and alcohol production, consumer retail products, fuels and lubricants, and logistics and transportation. As is evident from their divisions, Cosan is a fully vertically integrated company, managing the entire sugar and ethanol production process from land ownership to production, trading, exporting, retail, and distribution.

Mark Lyra from Cosan

Saurabh Arora, one of my classmates, inquired further on the benefits of their vertical integration and we found out that Cosan needs to capture value across the value chain because at different times some parts have value and others do not. Thus, much like a portfolio, they are vertically integrated so that they capture some value at all times.

One of the major investments the company has made is in its logistics and transportation unit. Cosan has invested in rail transportation to overcome the infrastructure problems in Brazil and improve their overall efficiency with state of the art containers and logistics management.

During the presentation, we learned some interesting facts about Brazil’s land. Currently, 58% of land is protected, 38% is arable, and 33% is still available, which allows Cosan to continue its expansion of agricultural properties. In addition, the executives informed us that Brazil requires by law that any fuel sold in the country must be 20-25% ethanol. This requirement combined with the flexible-fuel cars of Brazil, allows ethanol to become an important part of the energy consumption in Brazil, and distorts the price of gasoline.

We then had a traditional lunch buffet at A Mineira, close to our Intercontinental Hotel, also in the Jardins neighborhood. The lunch included feijoada, the traditional Wednesday and Saturday dish of Brazil. It is a stew of beans with beef and pork, served over rice with various typical sides like kale.

At night, we headed to Eu Tu e Eles (http://www.eutuelesbar.com.br/) for the alumni and prospective student reception and had a fantastic time!

A couple of us picked up some colorful Bomfim wish ribbons, which also adorned the bar’s ceiling.

Also called fitas, they are from the northeastern state of Bahia and have the phrase “Lembrança do Senhor do Bonfim da Bahia” which translates to “souvenir from the God of Bahia”. The ribbons can be worn in your wrist or ankle and are believed to grant you a wish, every time you tie a knot on it. The wish will come true once the ribbon disintegrates. We can report on the success of this tradition later!

On Wednesday, we went to the Fundaça Getulio Vargas (FGV) for a meeting with Professor Cláudio Gonçalves Couto. FGV (http://portal.fgv.br/en ) was founded in 1944 and it is a higher education institution that offers courses in of economics, business administration, law, social sciences and information technology management. Originally, its goal was to train people for the country’s public and private-sector management. Today, it is internationally recognized for its undergraduate, master’s and doctorate programs.  The campus had a very tropical urban feel to it.

FGV Campus

Professor Gonçalves Couto completed his Post-Doctoral training program at Columbia University (EUA) with CAPES fellowship (2005-6). He has experience in the area of Political Science, particularly in Conflicts and Political Coalitions, with specific focus in Brazilian politics, political institutions, governmental process, political parties, constitutionalism and democracy.

The professor gave us a presentation on the political system in Brazil. He started by reminding us that Brazil is a very young democracy, as it underwent democratization from 1982-1985. Its constitution is thus, very young and still constantly undergoing revisions. Basics to know about the country’s political system is that it is has a strong institutional power in the executive branch, federalism at three levels (federal, state, and municipal) and a multi-party fragmented system (over 20 parties). States and municipalities are autonomous in a way, but still need to negotiate with federal branches in order to get the resources or policies necessary.

Brazil’s parties can essentially be divided into three main groups: a right-wing, left-wing, and the “middle-ground” parties which have the highest number of parties. This group sides and negotiates with whoever is in power of the left or right-wing parties. The relationship between the president and these middle parties is two-sided because they represent 46% of the Congress. The president needs their support and they need hers to pass their reforms. The professor believes the system is effective but very costly.

President Dilma’s party is the leftist one, PT (Partido dos Trabalhadores), and as the professor showed us, it is mostly popular in the poorer areas. The opposition party, on the other hand is the right-wing one and no surprise, it is popular in the wealthy and agri-business states.

We ended our stay in Sao Paulo with another delicious buffet! We have definitely been well fed here! This time, lunch was at the prominent Sao Paulo Museum of Art, also known as the “MASP”.

MASP

Some stayed at the museum while others ran to Oscar Freire street, a posh shopping street in Sao Paulo. More on shopping in Brazil in future posts! Multiple pairs of shoes later, I have become a bit of an expert at it 🙂

However, we did not have much time for either as we had to catch a 7PM flight to Rio. This is a commuter flight in which people who live in Rio de Janeiro fly back home after finishing their work day in Sao Paulo. Indeed, there were multiple flights leaving for Rio and it is clear that there is a need for the much discussed “bullet train” between the two cities. Thus far, no construction has begun on it.

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