Business Plan

Sao Paulo Travel Blog

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By: Mary Beth Strawn, Ryan Martinez

Ethanol is becoming more and more popular as Brazil moves towards requiring all vehicles to work on flexible fuel. Currently, 80% of all new cars now sold in Brazil are equipped to use ethanol. This opens up a large market for the production of ethanol. We propose that you start a company for this particular production. In addition to producing ethanol, you will also pre-mix the ethanol and gas to make the most fuel-efficient and cost efficient for cars and motorcycles. Here is the cost and profit analysis:

• Average Export price of ethanol: US$ 0.23/liter

• Cost of production: US$ 0.18-0.25/liter of gasoline-equivalent

• Profit yield: US$ 0.213/liter

• Initial investment: US$ 60 million

o Several new plants

o Processing capacity: 2.16 million tons of sugarcane per year

o Average yield: 79.39 liters of anhydrous ethanol equivalent per ton of sugarcane

o Price per ton of sugarcane: US$ 11.4

o Plant lifetime: 25 years

• For 300 million tons of sugarcane produced: 700,000 jobs

• Corporate income tax: 15% on adjusted net income

Other great opportunities are exporting our Flex-Fuel to Europe, Japan, and the United States. These three markets have a high demand for environmental friendly cars and an alternative to gasoline. Europe, Japan, and the United States are both looking to lower their dependence on foreign oil and to follow Brazil’s example by becoming energy self-sufficient.

Ethanol is made from fermented sugar cane. It is cheaper for the producer and consumer, clean burning with byproducts of water and oxygen, and renewable by planting more sugarcane. Brazil is an excellent country to produce ethanol because of the large amount of land for sugarcane production. Currently, the state of Sao Paulo is the largest producer of sugarcane with 2.7 million hectares of land devoted to sugarcane production. Brazil, as a whole, is the world’s largest producer of sugarcane.

We recommend your company purchase land in Sao Paulo state because there is more available land to grow the sugarcane. This area is also very valuable because of the large number of unskilled workers. Purchasing land near the coast will make exporting much easier. With the amount of money you are looking to invest, we believe you should consider building your own port for quicker and more efficient exporting.

Works cited

Coelho, suani. Brazilian sugarcane ethanol: lessons learned. Stap workshop on liquid biofuels. The Brazilian reference center on biomass. August 29-september 1, 2005.

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