GIP Brazil: Days 2 and 3

5.30am: Alarm sounds…

6am: After hitting the snooze button many times, my roommate and I stumble out of bed, throw on clothes and head for the elevator.

6.15am: Meet our bleary-eyed classmates in the hotel lobby and board the bus. Everyone is armed with an airplane neck pillow.

6.20am: Sound asleep again, on route to Suzano Papel e Cellulose, a paper and pulp factory

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World demand for paper products is anticipated to grow by 1.9% in 2014, driven by increased consumption in Asia, Eastern Europe and Latin America. In contrast, demand in the US and Western Europe is declining, that said, the US is still the largest consumer of paper, with the average person consuming 24kg of tissue per year. Suzano is able to compete globally and produce paper products at lower cost due to the vast availability of fertile land in Brazil but more importantly, the dramatically increased productivity of the eucalyptus trees it grows – the average life cycle of a tree is around 6 years, versus 10 years in neighboring Chile. They have been able to achieve this increased productivity through innovative cross-breeding techniques, genetic modification and improvements in overall technology.

Suzano places a lot of emphasis on the sustainability of its paper production and only produces from forests where each tree is replaced. However, as the company expands and opens new mills in different states, one has to wonder about the true sustainability if native fauna is destroyed to make way for the eucalyptus forests that provide raw materials. Irrespective of these concerns, the tour of the factory was fascinating, I honestly have never seen so much paper in my entire life. Human-sized rolls of the stuff were stacked everywhere!

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In the evening, Lucas arranged for us to experience the real Sao Paulo nightlife, all you can eat sushi was followed by a nightclub, many caipirinhas and a band that didn’t start until after 3am….needless to say we danced all night!

Thankfully, Wednesday got off to a more relaxed start, with individual time to work on our projects. Our afternoon company visit was with Itau Unibanco, formed by the merger of Itau and Unibanco in 2008 and now one of the 10 biggest banks in the world by market value. Recently, Brazil’s growth has been underperforming relative to its neighbors and the economist speaking to us hypothesized that this was due to structural problems ie aggregate supply, rather than aggregate demand. Therefore, to increase the GDP growth rate, economic policy should focus on helping businesses produce eg supporting technological innovation and improving inefficiencies, rather than driving an increase in consumption.

With that, the first half of our trip is complete and we headed to the airport to catch our flight to Rio De Janeiro.

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