!!!! "#$$%!&'$()!$%*+,-(. "!"-/0- 12-(0%0/+(!-3040,"!0, !305$036-!23$%-7!"6-! 2+'(-7! 89::189;< By Jennifer Eaglin A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of History Ð Doctor of Philosophy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opyright by JENNIFER EAGLIN 2015 !"""ACKNOWLEDGMENTS There are not enough words to express my gratitude to the many people that have helped me complete this project. I will start with my advisor and my committee. Each of you have pushed me to improve this project at every turn and supported and guided me through my graduate school experience. I thank you. I would like to thank Dr. Peter Beattie particularly for the many drafts revised and meetings held to discuss this project. While the academic support was invaluable, financing an interna tional research project is ever more difficult. I could not have completed this project without the financial support of Michigan State University, the US State DepartmentÕs Foreign Language and Area Studies (FLAS) Scholarship and the Fulbright Fellowship, as well as the Mellon Foundation. In my travels, both domestic and international, I have ha d the good fortune to find a great deal of support from friends and colleagues without whom I would not have found the archives let alone used them to complete my project. Thank you to my friends in S‰o Paulo, Ribeir‰o Preto, Bar‰o Geraldo, Rio de Janeiro, New York, and Los Angeles that helped me find my way. This extends from the library to housing to meals to academic connections and support. IÕd particularly lik e to thank Marcos Amatucci for providing more than an academic affiliation at the ESPM (Escola Superior de Marketing) in S‰o Paulo but rather providing an academic community, research network, and interview companion for my research. Finally, I want to th ank my family. Your support through this long journey has been unconditional. I hope you all know how impossible this would have been without you. I love you dearly. This dissertation is for you all. !"##TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES viii ix KEY TO ABBREVIATIONS x Introduction : Sugar and Power: The Rise of the Brazilian Ethanol Industry in Ribeir‰o Preto, S‰o Paulo, 1933 -1985 1 Chapter 1: Ribeir‰o Preto, S‰o Paulo : The Coffee Kingdom and Early Sugar Production before 1930 Sugar and its Byproducts: Industri al Processing from the First From Coffee to Sugarcane 26 32 35 Chapter 2: Pro⁄lcoolÕs Precedents: Early Federal Intervention in Sugar and Alcohol Policy, 1933 -1959 S‰o Paulo, Coffee, and Early Intervention in Agricultural Economic Planning Ethanol Production before 1933 The IAA: Formal State Intervention in Sugar and Alcohol, 1933 -1942 Sugar and Alcohol under the Estado Novo, 1937 -1942 The IAA and Paulista Influence, 1942 -1959 Conclusions 40 42 49 56 69 75 93 Chapte r 3: Modernization and Development of the Sugar Industry in Ribeir‰o Preto, 1959-1975 Sugar Exports and the Changing World Market, 1959 -1964 Modernization: Domestic Policy and Structural Changes Military Dictatorship and Changing Policy Objecti ves, 1964 -1970 The Coup Sugar Policy in the Military Dictatorship Sugar Booms and Deeper Modernization , 1970-1974 The Policies The Usina Santa Elisa Independent Alcohol Expansion and Funpro“ucarÕs Ongoing Funding in 1975 Conclusion 94 97 102 108 108 115 124 126 130 145 150 Chapter 4: Pro⁄lcool at Work: The Usina Santa Elisa, 1975 -1984 The Creati on of Pro⁄lcool - International P ressures and the Political Response Phase I and the Usina Santa Elisa: 1975 !1979 Restructuring Pro⁄lcool a nd the Introduction of the Alcohol -Fueled Car Controversial Foreign Financing: The Entry of the World Bank in 1981 Phase II and the Usina Santa Elisa: 1979 -1984 Conclusion 152 155 171 182 192 198 203 !""## Chapter 5: The Rise of the Brazilian California: Rural Labor Changes and Ribeir‰o Preto , 1955-1984 S‰o Paulo Rural Labor Mobilization Labor Reforms and the Military Dictatorship: Making the Modern Sugar Worker Ribeir‰o Preto in the New Sugar Economy The Declining Brazilian Economy, 1980 -1984 Reapproaching Rural LaborÕs Importance to Devel opment 205 205 209 212 217 219 Chapter 6: Changing the Tide: Pro⁄lcool, Caneworkers, and the Guariba Strikes of 1984 Pro⁄lcool by 1984: Growing Criticism, 1982 -1984 Worker Conditions and Everyday Violence ÒCreating ConsciousnessÓ: The Catholic Church, the CPT, and Padre Bragheto Sparks Fly: The Seven -Row Policy The Strike Guariba and Critiquing Pro⁄lcool Conclusion 221 224 229 237 244 248 263 272 Conclusion : Assessing Pro ⁄lcool: Deregulation, the State, and Development 274 APPENDIX 287 BIBLIOGRAPHY 304 !"""##LIST OF TABLES Table 1: Ribeir‰o Preto Municip alityÕs Population Growth, 1912 Ð1960 29 Table 2: Impact of Coffee Support on S‰o Paulo State and National Debt Table 3: Anhydrous Alcohol Production by Major States (in liters), 1934 Ð1940 Table 4: Alcohol Production (in liters) 44 64 90 Table 5: World Sugar T rade, 1956 Ð1961 (in metric tons) 100 Table 6: Brazi lÕs Role in Sugar Exports, 1962 Ð1974 (in thousands of me tric tons) 104 Table 7: Expected Hydrous Alcohol Production for Phase II of Pro⁄lcool 184 Table 8: Alcohol -fueled Car Sales , 1980Ð1985 190 Table 9: Areas Cultivated for Sugar Production under Pro⁄lcool 225 Table 10: Estimated Job Creation Due to Alcoho l Production Table 11: Alcohol -Motor Mixture, 1932Ð1950 (in liters) 269 289 Table 12: National Alcohol -Motor Production Capacity, 1932 Ð1940 (in liters) Table 13: Sugar and Alcohol Expansion in the Ribeir‰o Preto Region in the 1950s 291 292 Table 14: National Growth Rates, 1964 Ð1975 Table 15: Brazilian Balance of Payment (in US$ millions) Table 16: Brazilian Annual Inflation Rate (Average), 1950 Ð1985 Table 17: Sugarcane Crushed and Production of Sugar and Alcohol, 1970 Ð1985 Table 18: Evolution of Sugar Pr oduction, 1975/76 Ð1984/85 Table 19: Evolution of Alcohol Production, 1975/76 Ð1984/85 (in cubic meters) Table 2 0: Brazilian Alcohol Production, 1930/31 Ð1982/83 (in millions of liters) 293 296 297 298 299 300 301 !"##LIST OF FIGURES Figure 1: Map of Ribeir‰ o Preto 26 Figure 2: The Usina Santa Elisa Directorship in 1996 133 Figure 3: Requested Placard 139 Figure 4 : Federal, State, and Private Interests Align 160 Figure 5 : The Usina Santa Elisa in 1976 172 Figure 6 : The R egion of Ribeir‰o Preto and its S atellite C ities 222 Figure 7 : Dona Guiomar 232 Figure 8: The Guariba Strike 250 Figure 9: Caneworkers Burn the Fields 254 Figure 1 0: Alcohol Production, 1936 Ð1960 288 Figure 11 : Monthly World Sugar Prices, 1973 Ð1982 Figure 12 : World Oil Prices, 1973 -1982 294 295 !"""KEY TO ABBREVIATIONS Anfavea National Automobile ProducersÕ Association BNDE #$%&'($)"*$(+"',"-.'('/&."0121)'3/1(% "Copersucar Sugar OwnersÕ Cooperative of the State of S‰o Paulo CDPA Commission for the Defense of Sugar Production CPT 4$5%'6$)"7$(8"9'//&55&'( "CNAl #$%&'($)":).';')"9'//&55&'( "CNP #$%&'($)"41%6')1%$%<%1 "ETR A<6$)"B'6+16">%$%<%1 "ET 7$(8">%$%<%1 "Funpro“ucar Support Program for the Sugar Agroindust ry GEAT =1.;(&.$)":55&5%$(.1"C6'<3 "GECEP >31.&$)"C6'<3"%;1"9'(%6')"',"46'D1.%"-!1.<%&'( "GEAD :8/&(&5%6$%&21":55&5%$(.1"C6'<3 "II PND >1.'(8"#$%&'($)"0121)'3/1(%"4)$( "IAA Institute of Sugar and Alcohol MIC Ministry of Industry and Commerce MME Minis try of Mines and Energy Pro⁄lcool The National Alcohol Program Planalsucar #$%&'($)"46'?6$/",'6"%;1"E/36'21/1(%"',">F'"4$<)'">%$%1"B$%16"$(8">$(&%$%&'("9'/3$(G ""1 Introduction : Sugar and Power: The Rise of the Brazilian Ethanol Industry in Ribeir‰o Preto, S‰o Paulo, 1933Ð1985 At the United Nations Climate Summit in September 2014, US President Barack Obama stated that the Òonce -distant threat [of climate change] has moved firmly into the presentÓ following more frequent extreme weather as a result of undeniably increasing greenhouse gas emission levels. 1 This statement comes over fifteen years after the Kyoto Protocol first called for collective global efforts to reduce carbon emissions in 1997 to very little success. Given the futility of international climate change agreements over the past two decades, Brazilian sugarcane ethanol still stands as one of the rare examples of an alternative energy program employed on the national level that actually restructured the countryÕs energy matrix in the long -term. As such, it has been and remains a beacon of energy policy possibilities for many countries around the world, particularly agriculture -intensive countries in less developed regions of the world. Sugar -based ethanol, known as alcohol in Brazil, remains a key piece in the countryÕs diversified ÒgreenÓ energy system because of its lower carbon emissions than petroleum and higher production efficiency than compara tive biofuels. 2 Yet current praise for the Brazilian ethanol industry obscures the contentious origins of the 1975 state-led initiative called Pro⁄lcool (the National Alcohol Program) under BrazilÕs bureaucratic military dictatorship. In fact, the governme nt had to forcefully intervene in the market to successfully integrate ethanol into the 1 Barack Obama, ÒRemarks by the President at U.N. Climate Summit,Ó United Nations Headquarters, New York, September 23, 2014, C-SPAN, http://www.c -span.org/video/?321662 -1/president -obama -remarks -un-climate-summit. 2 This is particularly in comparison to the American corn -based ethanol and palm oil biodiesel. For a comparison of ethanol productivity levels, see Eduardo L. Le‰o de Sousa and Isaias de Carvalho Macedo, org., Ethanol and Bioelectricity: Sugarcane in the Future of the Energy Matrix , trans. Brian Nicholson (S‰o Paulo: Unica, 2011), 194Ð220. 2 economy, which had profound environmental, social, and economic consequences. This process began long before Pro⁄lcool took official form, beginning with transformative sugar policies that dramatically affected the national industry, particularly in the state of S‰o Paulo. Previous Brazilian state interventions in the market place to stabilize the sugar industry through ethanol production shaped the military governmentÕs efforts to develop the ethanol industry in the 1970s and 1980s. 3 This makes it an excellent case study to examine the strengths and weaknesses of state-led development projects in relation to contemporary economic theories that have criticized the efficac y of government interventions in the market place and more recent studies that have similarly sought to readdress these criticisms. 4 This dissertation traces the development of the ethanol industry from its earliest inception under the Institute of Sugar and Alcohol (Instituto de A“œcar e Alcool - IAA) in the 1930s to its state-driven zenith in the 1980s under Pro⁄lcool. Drawing on Sidney MintzÕ classic study, Sweetness and Power: The Place of Sugar in Modern History , I Òfollow the commodityÓ as 3 This was the case in the mining industry as well. See Gail D. Triner, Mining and the State in Brazilian Development (London: Pickering & Chatto, 2011), particularly chapter 6. 4 Some of the most popular critiques include: two books by Hernando de Soto Ñ The Other Path: The Invisible Revolution in the Third World (New York: Harper & Row Publishers, Inc., 1989); and The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (Basic Books: 2000); also, James Scott, Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed (New Haven, CT: Yale University Press, 1998). Within Brazilian historiography, important examples include: Stephen Haber, ÒThe Efficiency Consequences of Institutional Change: Financial Market Regulation and Industrial Productivity Growth in Brazil, 1866-1934,Ó in Latin America and the World Economy Since 1800, edited by John H. Coatsworth and Alan M. Taylor (Cam bridge, MA: Harvard University Press, 1998); William R. Summerhill, Order Against Progress: Government, Foreign Investment, and Railroads in Brazil, 1854Ð1913 (Stanford, CA: Stanford University Press, 2003). Recently, economic historians have revisited the stateÕs role, noting the positive connection between state-led development and increased industrial productivity that accompied these policies in many Brazilian firms and sectors. Known as the Ònew institutional economic history,Ó these historians have turned away from the more negative perspective on the state promoted by the Ònew economic historyÓ circles of the 1990s and early 2000s and cited above. See, for example, also, Triner, Mining and the State , 213-214. 3 alcohol grew into a major product in Ribeir‰o Preto. 5 The alcohol industry grew from a sub -product of the sugar industry to a national energy solution in the 1970s and 1980s following extensive government intervention and the important leadership of regional produce rs who accumulated increasing economic and political influence. These players benefitted from international crises that encouraged high -ranking government officials to pursue a large -scale government program to promote the mandated expansion and consumptio n of alcohol. I argue that Pro⁄lcool was the result of a powerful and exclusive network of interconnected private business interests that transformed the sugar sector into a modernized industry. 6 Both domestic and foreign technology drove this industrial transformation prior to the governmentÕs state-led development program. These same producers shaped the governmentÕs promotion of the program, its expansion, and national discourse around Pro⁄lco ol. This network allowed a struggling sugar industry to build its close ties to the economic vitality of the nation through a new connection to energy development, reconstructing the image of the sugar industry from a backward, slave -driven sector in the nineteenth century to a model of a uniquely modern Brazilian development as an agro -industry in the late twentieth century. My project is a history of development through the lens of a micro -history of the region of Ribeir‰o Preto. Using archival research and oral interviews, my work looks at the way alcohol production transformed a region and how regional entrepreneurs transformed a state-led development program simultaneously. This network of sugar entrepreneurs was able to solidify sugar and alcoholÕs preferential position within the militaryÕs economic development agenda as 5 Sidney W. Mintz, Sweetness and Power: The Place of Sugar in Modern History (New York: Penguin Books, 1986), xviii Ðxxi. 6 The use of the word modernize is rather weighted. I generally define modernization throughout this work as an effort to mechanize production, expand production capacity, and incorporate technology into production methods as it relates to agricultural modernization. 4 it connected its economic interests to the militaryÕs political interests. 7 Constructed on available and pliant cheap labor and extensive tracts of land, certain large -scale producers expanded with particularly favorable national financing initiatives under the military dictatorship and proximity to the largest automobile and truck market and industry in the country. Workers, however, inserted themselves into this development discussio n with sugarcane workersÕ strikes in Ribeir‰o Preto in 1984. I chose to study the city and surrounding countryside of Ribeir‰o Preto, S‰o Paulo because it became a national center for ethanol production during the height of the state-led efforts to expand the ethanol industry from 1975 to 1985. My dissertation focuses on the way a specific family in the region of Ribeir‰o Preto was able to exert a great deal of influence on the national direction of alcohol policy along with other usineiros in the region and the state. The Biagi family, sugar producers since the 1930s, emerged as important individual supporters of alcohol production while the powerful sugar cooperative, Copersucar (Sugar Owners Cooperative of the State of S‰o Paulo), pushed the national exp ansion of alcohol production at the same time. As this crucial example illustrates, even with the agricultural, economic, and political advantages that positioned Ribeir‰o Preto to become the major production hub for ethanol, the program required the ongoing cooperation of politicians, private businessmen, 7 The means to winning favor and the way to hold on to that financial support differed in the traditional sugar -producing Northeastern states of Pernambuco and Alagoas vs. S‰o Paulo. Amanda HartzmarkÕs dissertation on the diverging experiences of the two regions under the IAA and culminating with Proalcool does an excellent job of mapping out these varied motivations and different paths. The Northeastern experienc e is beyond the scope of this project. Amanda Hartzmark, ÒBusinesses, Associations, and Regions in the Brazilian Sugar Industry, 1920Ð1990,Ó (PhD diss., University of Chicago, 2014). See also, Barbara Nunberg, ÒState Intervention in the Sugar Sector in Brazil: A Study of the Institute of Sugar and Alcohol,Ó (PhD diss., Stanford University, 1979); Tam⁄s Szmrecs⁄nyi, O planejamento da agroindœstria canavieira do Brasil 1930 / 1975 (S‰o Paulo: Edi“‰o Hucitec, 1979); Pedro Ramos, Agroindœstria canavieira e prop riedade fundi⁄ria no Brasil (S‰o Paulo: Editora Hucitec, 1999). 5 government agencies, scientists, agronomists, engineers, the automotive industry, farmers, sugar cane distillers, and field workers to successfully build BrazilÕs alternative energy industry. Pro⁄lcool remains noticeably absent in Brazilian development debates today although Brazilian scholars have increasingly pointed to the car as an important part of Brazilian development and the creation of a modern Brazilian identity. Joel WolfeÕs study of cars in Brazilian society highlights the important place that Brazilin car production and consumption had in the Brazilian imagination, stating, ÒCars, trucks, and buses became not only the tools for creating the modern Brazilian state but also symbols of hope for its ongoing growth as a modern, developed, and democratic nation.Ó 8 And yet, his work does not emphasize the Brazilian governmentÕs desire to connect this modern domestic industry, established in the 1950s, to a domestic fuel source through the production of sugar -based ethanol. This effort drove nationalist ideas of protective energy consumption since the 1930s, long before the ethanol program took its most iconic form under Pro⁄lcool in 1975. BraziliansÕ connection between the ideas of development and the car cannot be highlighted enough in the discussion of Pro⁄lcoolÕs importance. Political scientist Michael Barzelay makes the connection between the car and modernity more explicit, stating, Òthe automobile generally became the symbol of the style of product ion and consumption that the military tried earnestly to foster [during the military dictatorship].Ó 9 Michael Barzelay posits that the presence of the automobile industry Òperhaps came to mean more to middle and upper -class Brazilians - key supporters of authoritarian rule at least during its first decade - than did the 8 Joel Wolfe, Autos and Progress: The Brazilian Search for Modernity (Oxford: Oxford University Press, 2010), 12. James Woodard, too, reiterates the importance of the car in Brazilian development ideology. James Woodard, ÒInventing ConsumerismÓ (paper presented at the annual meeting for the Brazilian Studies Association, August 20Ð23rd, 2014). 9 Barzelay, The Politicized Market , 80. 6 accomplishment of many earlier developmental feats, such as the implantation of a domestic steel industry in the 1940s or that of Petrobr⁄s in the 1950s.Ó 10 The military government favored a program that tied the maligned sugar industry, in which it had designed its own agricultural development agenda, to the most modern achievement in Brazilian development, the car industry. The history of Brazilian development, which historians have already indicated must include the car, should not pass over the history of the ethanol industry under Pro⁄lcool. 11 My work reinserts Pro⁄lcool in development debates about modernization, technology, and economic growth. The sugar sector dramatically shifted its own objectives between the 1930s and the early 1970s. After the export market collapsed in Great Depression, Getœlio Vargas and his new provisional government created the IAA to aid an ailing sugar industry. New IAA officials encouraged ethanol production as a Òrelease -valveÓ for chronic sugar overproduction. The government continued support for alcohol production despite oscillating interests in fuel additiveÕs national use through the 1950s, but new opportunities for sugar exports after the US embargo on Cuba reoriented government policy toward sugar exports in the 1960s. To capture the growing sugar demand, government officials refocused economic development on the modernization of the sugar industry. Following the military coup in April 1964, a new bureauc ratic -authoritarian military dictatorship declared its objectives in its motto Ònational security and development.Ó The new motto was a semantic modernization of the positivist slogan ÒOrder and ProgressÓ emblazoned 10 Ibid. For more on the connection between cars and modernity in middle class Brazilian values, see Brian Owensby, Intimate Ironies: Modernity and the Making of Middle -Class Lives in Brazil . (Stanford: Stanford University Press, 2002). 11 This point is only solidified given the preponderance of flex -fuel cars, introduced on the market in 2003, dominating Brazilian car sales today. Le‰o de Sousa and de Carvalho Macedo, Ethanol and Bioelectricity , 158Ð187. 7 on BrazilÕs national flag. 12 As historia n Barbara Nunberg describes it, the new military government embraced a ÒState -capitalistÓ development model, applied first in the 1950s and amplified in the 1960s, in which Òan alliance of domestic and foreign industrial interests with a technocratic -burea ucratic elite and with the militaryÓ dictated the countryÕs economic growth with little regard or accountability for the social outcomes attached to the method. 13 The sugar industry became a central tool in this development scheme, given these export opportunities and the rising price of sugar on the world market. Particularly under the military dictatorship in the 1960s and 1970s, government officials connected the increasingly industrial sugar industry with a broader development agenda. As sugar prices rose to dizzying heights in the early 1970s, government officials sought to capitalize on it by financing extensive industrial projects, under the program Funpro“ucar, to build the countryÕs sugarcane production capacity. Under these conditions, special int erest groups, both individual producers and larger cooperatives, rallied political military leaders around nationalist and development objectives in the 1970s. Following the first oil crisis in November 1973, after which oil prices quadrupled on the intern ational market, these leaders capitalized on a period of economic stress to accelerate the transformation of the sugar industry into a modern agro -industrial complex in which ethanol was a central aspect. The alternative fuel became an important part of the countryÕs energy matrix with the creation of Pro⁄lcool in 1975. It represented the national solution to the ongoing energy crisis in 1979, when the officials expanded the program to support alcohol as a gasoline -replacement 12 Alfred Stepan, The Military in Politics: Changing Patterns in Brazil (Princeton: Princeton University Press, 1971), 174Ð180. 13 Nunberg, ÒState Intervention,Ó 24. 8 rather than a substitute with the creation of the alcohol -fueled car. Behind the program, alcohol -fueled cars represented over 80% of all new car sales by 1983 and continued to rise before the program lost public support and financial assistance from the government in the late 1980s. The industry continued thereafter as a private sector sugar and alcohol industry after significant deregulation of the sugar sector beginning in the late 1980s and early 1990s. 14 As sugar and alcohol production expanded, the sugar sector required greater consumption of land and workers to fill its demand. During the first decade of Pro⁄lcool, sugarcane production reached 225,539,928 tons due to Pro⁄lcoolÕs mandated supply. Ribeir‰o Preto grew into the largest alcohol production center in the country and one of the richest regions in the country. 15 Technological innovation and importation drove the mechanization of sugarcane processing that largely accounted for this ÒmodernizationÓ process. This process also favored the concentration of production in the han ds of single large -scale sugar and alcohol producers. As such, a particular development model emerged in the sugar industry that would accelerate the creation of Pro⁄lcool and its expansion between 1975 and 1984. Brazilian scholars have closely studied unequal international development. In the 1940s and 50s, theorists like the Brazilian economist Celso Furtado blamed a small domestic market, lack of modern technology, entrepreneurship, and capital for BrazilÕs failure to industrially develop like the US and Europe in the 19th century. Thus, for Furtado and other early 14 For more on this transition, see M⁄rcia Azanha Ferraz Dias de Moraes, A desregu lamenta“‰o do setor sucroalcooleiro do Brasil (Americana, SP: Caminho Editorial, 2000) and M⁄rcia Azanha Ferraz Dias de Moraes and David Zilberman, Production of Ethanol from Sugarcane in Brazil: From State Intervention to a Free Market (Charn: Springer, 2014). 15 Maurilio Biagi Filho, ÒO ⁄lcool ” nosso,Ó Folha de S‰o Paulo (May 9th, 1983). Also, Ernesto Paglia, Rede Globo (June 1984) in ÒBoias -frias e o Acordo de Guariba ⁄pos a greve de 1984Ó (July 24th, 2014), YouTube, https://www.youtube.com/watch?v=9ZiZbF6WYUk . Accessed May 1st, 2015. For statistics on production levels under the program, see Tables 18 and 19 in the Appendix of this dissertation . 9 structuralists, the state could contest the external forces that challenged development in Brazil. 16 These structuralist arguments supported Latin American import -substitution policies of the 1940s and 1950s, many of which welcomed foreign companies to build partnerships with domestic companies in order to enter the protected national markets. 17 Dependen cy theorists responded that state policies, namely import -substitution policies, alone could not resolve the unequal development of Latin American economies. Rather, dependistas argued that these policies failed because the entire capitalist system structu re disadvantaged peripheral countries in a center -periphery structure. Elites in the center and the periphery allied through multinational organizations. However, the multinational organizations that controlled technological transfers to Latin American com panies proliferated unequal exchange despite the increased industrialization that these policies produced. 18 Peter Evans famously argued that foreign capital through multinational companies combined with private enterprises and government intervention to form a particular model of Brazilian development called the Òtri -p”,Ó or Triple Alliance. His work advanced studies on development beyond the basic dependency model to address the incorporation of multinational 16 See Raœl Prebisch, ÒThe Economic Development of Latin American and its Principal Problems,Ó United Nations Department of Economic Affairs, 1950. The Argentinian economist Raœl Prebisch first articulated this argument in 1949 at the United Nations conference in Havana. 17 For examp le, Celso Furtado, Forma“‰o economica do Brasil (Rio de Janeiro: Fundo de Cultura, 1959) and Desenvolvimento e subdesenvolvimento (Rio de Janeiro: Fundo de Cultura, 1961). For a deeper discussion of FurtadoÕs position, see Joseph Love, Crafting the Third World !: Theorizing Underdevelopment in Rumania and Brazil (Stanford: Stanford University Press, 1996), chapter 10. 18 For a discussion of these policies, see Love, Crafting the Third World . See also, RamŠn Grosfoguel, ÒDevelopmentalism, Modernity, and Depen dency in Latin America,Ó Nepantla: Views from South , vol. 1, no. 2 (2000). For dependency theories, Andre Gunder Frank, Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil , (New York: Monthly Review Press, 1967); Fernan do Henrique Cardoso and Faletto Enzo, Dependency and Development in Latin America (Berkeley: University of California Press, 1979). 10 corporations and the continued presence of for eign interests in domestic Brazilian development. This associated dependency was subtler and yet more pervasive than the original dependency models discussed by earlier dependency theorists because it addressed technological transfersÕ important place in Brazilian development schemes. 19 Michael BarzelayÕs study of Pro⁄lcool closely follows EvanÕs analysis of development in Brazil. He argues that Pro⁄lcool is a classic example of the tri -p” development model driven by the military governmentÕs political strat egy. Thus, state and multinationals enterprises in the economic sector coupled with weak political institutions Òlinking social groups, political elites, bureaucrats, and managers of state enterprises" to create a program driven by political -economic motiv ations for resource allocation. 20 BarzelayÕs detailed study of the national program explores the programÕs growth after the oil shocks through 1982. Pro⁄lcool directed extensive financial support to the sugar sector because of the militaryÕs political agend a to support private enterprise. More recently, Marshall Eakin has claimed that Evans model was incomplete, rather development involved government, multinationals, private business, and an absence of technological innovation. 21 EakinÕs recent work on indus trialization in Belo Horizonte argues that Brazil has developed a unique type of Òtropical capitalismÓ driven by a quadruple alliance characterized by strong state intervention, political patronage, clientelism and family networks, and a pronounced absence of technological innovation. It would seem that such an assertion begs a reanalysis of Pro⁄lcoolÕs development trajectory. 19 Peter Evans, Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil (Princeton: Princeto n University Press, 1979). 20 Barzelay, The Politicized Market , 9. 21 Marshall Eakin, Tropical Capitalism: The Industrialization of Belo Horizonte, Brazil , 1st ed. (New York: Palgrave, 2001), 3. 11 Similarly, recent economic histories have revised earlier criticisms of the stateÕs involvement in national development instead claiming that the state played a necessary role in Brazilian development. In her study of the Brazilian mining industry, Gail Triner explains that the stateÕs role was particularly important with products identified as public goods, the benefits of which ind ividual producers could not completely capture (market externalities) but which still had broader public importance. 22 The state stepped in when private firms were unable to capture these externalities that hindered the development of the larger economy -inh ibited sector. In this respect, state-led industries and policies served to facilitate a market that would otherwise have never developed given the individual producerÕs market behavior. These more recent trends have clear application to the case of Brazil ian alcohol production. I argue that Pro⁄lcool does not follow EakinÕs quadruple alliance model. Pro⁄lcool averted this particular type of development explicitly by involving domestic technological development in alcohol production. The program grew aroun d innovation in alcohol production, both foreign and domestic, but the program took off first and foremost because of the opportunities connected with the development of the alcohol -fueled engine by the Aerospace Technology Center (CTA). The opportunity for a Brazilian made car running on an alcohol -fueled engine developed in Brazil was the height of modernization to government officials in a country where the public considered automobile production to be one of the countryÕs greatest achievements in the 1960s. 23 22 Triner, Mining and the State , 5. Triner identifies the larger body of economic histories that are revisiting the stateÕs role, noting the positive connection between state involvement and the industrial production, as the new institutional economic history, turning away from the more negative perspective on the state promoted by the Ònew economic historyÓ circles of the 1990s and early 2000s. See also, footnote 3 above. 23 Wolfe, Autos and Progress , 12; Barzelay, The Politicized Market , 80. 12 Other historians have previously asserted similar arguments about Pro⁄lcool although not in response to EakinÕs work. Most notably, F. Joseph Demetrius argues that selection of certain technologies drove the program and that domestic innovation was an important factor in these decisions. Demetrius focuses on the politics of the technological choices made in Pro⁄lcool, particularly in favor of sugar -based alcohol production rather over other sources, along with the social and economic consequences of this selection. 24 He asserts, and I support the argument, that ethanol industry sparked homegrown innovations not only in ethanol production and distribution, but also in the automotive industry with the adaptation of the alcohol -fueled car. Certainly, domestic alcohol technology was a central part of the programÕs expansion, but DemetriusÕ scope is too narrow. I posit that one cannot solely analyze Brazilian alcohol production through the small lens of the national program from 1975 to 1984. Rather, the programÕs objectives reflect deeper connections between alcohol production, the sugar industry, the state, and the national development agenda that began in the 1930s and intensified under the military dictatorship in the 1960s. In this model, the state incr easingly invested in the modernization of the sugar industry to drive export -oriented growth and domestic consumption of alcohol to support the industry given the fluctuations of international sugar prices. Recent studies within the new neo -institutional economic history school help explain the larger importance of the state in development and better situate my own argument on alcoholÕs political importance. In alcoholÕs case, the state reshaped the sector by incentivizing alcohol production despite the contrary market forces seemingly facing individual producers. This began after the Great Depression and continued, despite poltiical disagreement, into the 1960s. However, unlike other sectors, such as TrinerÕs mineral example, the government valued alcohol 24 F. Joseph Demetrius, BrazilÕs National Alcohol Program: Technology and Development in an Authoritarian Regime (New York: Praeger, 1990), 2Ð4. 13 production less than private producers in the sugar sector in the late 1960s and early 1970s, who were critical to pushing government policy toward a larger alcohol incentive program. Eakin and Evans are correct that much of Brazilian development involved technology transfers from foreign countries, and the sugar and alcohol sector are not exempt. Certainly domestic -based multinational companies involved in technology development surrounded the alcohol industry. For example, the second -largest domestic sug ar equipment company, Zanini Equipamentos Pesados S/A, (majority owned and run by the Usina Santa Elisa owners, the Biagi family) developed a subsidiary turbine company, AKZ S/A, to produce a key part of advanced mechanized distillation equipment in 1976. The company was the first Òtri -p”,Ó multinational company in the interior of S‰o Paulo. 25 Founded in collaboration with a German company, the partnership was built on technological transfers from the German to the Brazilian company. However, my work nuance s EakinÕs hypothesis that Brazil has industrialized entirely dependent upon the importation of foreign technology. The domestic development of the ethanol technology was a key part of the military governmentÕs unwavering commitment to the program despite its costs. Like TrinerÕs example, the larger value of alcohol production, economic in theory even if politically driven, drove government officialsÕ support of the program. Furthermore, domestic producers remained handily in control of the market, which fur ther controverts EvansÕ assertion about the development path associated with industrial growth in Brazil. Thus, while EakinÕs quadruple alliance does apply to aspects of sugarÕs development in Brazil, it draws the question Ð what about agro -industrial dev elopment in Brazil? Sugar and alcoholÕs milling and distilling requirements open up distinct industrial qualities. As historian 25 Geraldo Hasse, Filhos do fogo: memŠria industrial de Sert ‰ozinho, 1896Ð1996 (Ribeir ‰o Preto, SP: Editora C”u e Terra, 1996), 156. 14 John Soluri notes, coffee and sugar have long had more extensive post -harvest processing than other mass export agricultural products like bananas and oranges. 26 Certainly, the sugar industryÕs growth contravenes other international agricultural exports. On the one hand, Brazil deeply diversified its sugarcane uses, expanding its industrial use as a synthetic chemical base in additi on to food and beverage processing which were more traditional extensions of sugarcane uses in the US in the 20th century as well. Of these, alcohol for fuel was one of the most innovative uses. At the same time, the Brazilian model differs from other agro -industrial models because of domestic producers control of the industry by the mid-20th century contrary to exam ples like banana production in Central America where multinational companies like the United Fruit Company controlled banana production. 27 Even amongst major sugar producers, the Brazilian model differs from its fellow competitors. The advanced use of alcohol both an industrial input and an alcohol -fuel along with the extensive domestic sugar equipment industries that emerged around the sugar sector varies significantly from the Cuban sugar industry. Until the Cuban Revolution, the countryÕs special relatio nship with the US favored Cuban sugar exports in ways that did not encourage sugar 26 Soluri notes that cof fee requires the removal of the fruit pulp before storing the coffee ÒbeanÓ and later roasting it while sugarcane requires rapid transport of cut cane to large mills for the rapid extraction of cane juice in order to maximize the sucrose content before later refining cane into white, granular sugar. John Soluri, Banana Cultures: Agriculture, Consumption, and Environmental Change in Honduras and the United States (Austin: University of Texas Press, 2006), 226. See also, Warren Dean, The Industrialization of S‰o Paulo, 1880Ð1945 (Austin: University of Texas Press, 1969); Peter Eisenberg, The Sugar Industry in Pernambuco: Modernization Without Change, 1840Ð1910 (Los Angeles: University of California Press, 1974). 27 Piero Gleijeses, Shattered Hope: The Guatemala n Revolution and the United States, 1944Ð1954 (Princeton, N.J.: Princeton University Press, 1991); Thomas OÕBrien, The Revolutionary Mission: American Enterprise in Latin America, 1900Ð1945 (Cambridge: Cambridge University Press, 1999); Catherine LeGrand, ÒLiving in Macondo: Economy and Culture in a United Fruit Company Banana Enclave in Colombia,Ó in Close Encounters of Empire: Writing the Cultural History of U.S. -Latin American Relations , ed. Gilbert M. Joseph, Catherine LeGrand, and Ricardo D. Salvatore (Durham: Duke University Press, 1998), 333Ð368; Soluri, Banana Cultures . 15 diversification as BrazilÕs limited hold on sugar exports did in the 1930s and thereafter. After the Cuban Revolution, without a similar growth in car production and domesti c processed food production, sugar exports would remain the primary export without industrialization similar to Brazil. Thus, the history of sugar and alcohol production in Brazil explores a particular agro -industrial model not easily followed in other cou ntries. 28 This dissertation explores the implications of ethanol production as a unique form of agro -industrialization that developed both agriculture and industrial production in the interior through the lens of Ribeir‰o Preto. Recent studies on the Braz ilian state and development have focused not only on how unique development initiatives are across countries but also in specific regions. 29 The conditions that allow for successful economic development exist across regional areas within national borders as much as the international borders traditionally assessed in development studies. In his study of Minas Gerais, Eakin draws attention to secondary markets where state-level government intervention was more important in order to promote industrial growth in smaller, less favored markets. 30 My work on Pro⁄lcool in Ribeir‰o Preto presents a sort of tertiary development case in which agricultural industrialization, rather than the typical 28 One should note that neither was S‰o PauloÕs agro -industrial model easily replicated within Brazil. The Northeast was the traditional sugar -producing region of Brazil until the mid-20th century. Although tangentially discussed below, the Northeastern sugar industry did not follow the same agro -industrial model that the state of S‰o Paulo did. However, the Northeastern case is beyond the scope of this study. 29 For example, economic historian Wilson Cano has led studies on the regional development, looking at the different paths of development between states within the more developed center south region (S‰o Paulo, Rio de Janeiro, Minas Gerais, Espirito Santo) and a deeper analysis of S‰o PauloÕs regional dominance behind its industrial growth. Wilson Cano, Ensaios sobre a forma“‰o econŽmica regional do Brasil (Campinas, SP: Editora da UNICAMP, 2002); Cano, Ra™zes da concentra“‰o industrial em S‰o Paulo (Campinas: Instituto de Economi a, UNICAMP, 1998). 30 Eakin, Tropical Capitalism , 173Ð175. 16 industrial processes, takes on unique forms in a secondary region within an already industrialized market. 31 This dissertation provides an example of the complex development of the sugar industry that led to the National Alcohol ProgramÕs development with a focus on the Biagi -owned Santa Elisa mill in Ribeir‰o Preto. There is already a strong body of literature both on the sugar and the alcohol industry. However, many of the earlier studies have focused on the national politics and policies implemented in the sugar sector. 32 Those that have looked at the regional impact of the sug ar industryÕs growth have not followed a specific mill as closely. 33 The few studies that have brought this detailed level of study on the Usina Santa Elisa in Ribeir‰o Preto have not incorporated the same level of national policy analysis necessary to addr ess the programÕs intricate national and regional implications. 34 A closer examination of the Ribeir‰o Preto region, 31 Barbara Nunberg discusses the unique emergence of the agro -industry with the military governmentÕs development model. She notes that, Òthe increased penetration by capitalist development into agriculture has blurred the traditional divisions between once -autonomous economic sectors typical of the so-called ÔdualÕ economy. Primary, secondary and tertiary sectors tended to merge under the aegis of large agro -business.Ó Nunberg, ÒState Intervention,Ó 28. Like Eakin, Gail Triner also explores non-fuel mineral state-development initiatives in Minas Gerais. As such, my study of the sugar sector and its connection to agro -industrial renewable fuel production unique, but TrinerÕs study introduces important themes about state-development that overlap with this stud y in valuable ways. See Triner, Mining and the State , particularly chapter 6. 32 Szmersc⁄nyi, O planejamento ; Nunberg, ÒState Intervention in the Sugar Sector in Brazil,Ó Maria Helena de Castro Santos. ÒAlcohol as Fuel in Brazil: An Energy Policy AnalysisÓ (PhD diss., Massachusetts Institute of Technology, 1984). More recently, Dias de Moraes , A desregulamenta“‰o . 33 Pedro Ramos focuses on the growth of larger usinas in both Pernambuco and S‰o Paulo, but his analysis does not introduce the detailed account of the BiagiÕs leadership and the growth of the Usina Santa Elisa that my own work does. Pedro Ramos, Agroindœstria canavieira e propriedade fundi⁄ria no Brasil (S‰o Paulo: Editora Hucitec, 1999). 34 For example, Geraldo Hasse provides a detailed account of the sugar sectorÕs growth in Sert‰ozinho without the national analysis. Adriano Santos quickly addresses the industrial development of Sert‰ozinho as well but rather briefly with a greater focus on the 1990s after Proalcool was dismantled. Amanda Hartzma rkÕs work does provide this detailed analysis that connects national policy and regional growth but focuses far more on the corporatist nature of 17 through a focus on the Usina Santa Elisa, reveals the multiple actors and groups involved in the transformations that occurred in the programÕs growth. My dissertation moves beyond the national politics of the programÕs development to analyze the programÕs direct impact on economic, political, and social relations in the region. I argue that certain individual and group actors were able to influence the programÕs growth because of their strategic position in the alcohol industry. For example, paulista sugar and alcohol producers were increasingly aware of the governmentÕs commitment to alcohol production due to its technological accolades, which they leveraged into the programÕs initial development in 1975 and its expansion in 1979. I specifically look at the Biagi family, owners of the Usina Santa Elisa, the largest sugar and alcohol producing sugar -alcohol complexes in the country, and Zanin i, the second -largest domestic sugar equipment company in the country. Maurilio Biagi, Maurilio Biagi Filho, and Luiz Lacerda Biagi held important sway in the programÕs development and were major benefactors of the programÕs expansion. At the same time that these producersÕ reshaped the region around alcohol production, rural laborers were also able to engage the programÕs national importance to insert their own position on the program into public debate. By strategically leading strikes at the beginning of sugar harvests in 1984 and 1985, I argue that rural workers in the region put pressure on sugar producers and fed growing doubt that the program would be able to meet national production objectives. Their mobilization, known as the Guariba strikes, force fully reinserted a neglected but critical group of program participants into the development discussion. This position the IAA and addresses Pro⁄lcool in summary of the trends she had already proposed rather than a new interventi on in the sugar industry. Additionally, Hartzmark focuses less on Ribeir‰o Preto than she does PiracicabaÕs development. Hasse, Filhos do Fogo ; Adriano Pereira Santos, A usinagem do capital e o desmonte do trabalho: reestrutura“‰o produtiva nos anos de 1990, o caso da Zanini S/A de Sert‰ozinho -SP (S‰o Paulo: Editora Express‰o Popular, 2010); Hartzmark, ÒBusinesses, Associations, and Regions.Ó 18 provides an important counterpoint to broader to development debates about international, non-Western state-led development programs. Scholars have addressed Pro⁄lcoolÕs connection to the military dictatorshipÕs own support of capitalist development under the bureaucratic -authoritarian model. Demetrius specifically ties Pro⁄lcool to the bureaucratic authoritarian dictatorship model that Guillermo OÕDonnell famously presented in 1973. Demetrius argues that his consideration of the regimeÕs technological focus, a key component of OÕDonnellÕs bureaucratic authoritarian dictatorshipÕs development agenda ties the political regime to the program more explicitly than his contemporaries. 35 OÕDonnell argued that the bureaucratic -authoritarian regime guaranteed political stability to encourage foreign investment for capital growth. DemetriusÕ structural analysis of the program supports OÕDonnellÕs assumption that the regime successfully diminished internal political and economic divisions within the government as well. However, while the bureaucratic authoritarian military dictatorship focused on development, its internal divisions were far more defi ned than OÕDonnell gave credit in his own summation of the new government structure. 36 35 Demetrius, BrazilÕs National Alcohol Program , 4. 36 Guillermo OÕDonnell, Modernization and Bureaucratic -Authoritarianism: Studies in South American Politics (Berkeley: Berkeley: University of California Institute of International Studies, 1973). Good revisions, expansions, and counterpoints include: David Collier, ed. The New Authoritarianism in Latin America (Princeton: Princeton University Press, 1979); Alfred Stepan, Rethinking Military Politics: Brazil and the Southern Cone (Princeton: Princeton University Press, 1988) and Thomas E. Skidmore, The Politics of Military Rule in Brazil, 1964Ð1985 (New York: Oxford University Press, 1990). The summation of OÕDonnellÕs argument is based on the condensed version presented by David Collier in ÒThe Bureaucratic -Authoritarian Model,Ó in The New Authoritarianism in Latin America, 19Ð32. 19 Pro⁄lcool became a public battleground for these internal divisions. 37 The ethanol program revealed deep divisions between government officials in the shaping of the deve lopment program. For example, while some officials remained enthusiastic about the programÕs nationalist implications, most importantly President Ernesto Geisel himself, others, like IAA President Tavares Carmo and Minister of Mines and Energy Shigeaki Ueki, found the necessary sugar industryÕs expansion to be more problematic. Representatives from the countryÕs financial institutions also resisted the programÕs implementation. The program expanded despite these internal political divisions in part because of the strong -hand of President Geisel but also because of the strong position sugarcane producers like the Biagis had in promoting alcohol production in the midst of the first international energy crisis in 1974 and the second oil crisis in late 1979. While the program rather publicly unveiled divisions within the government about the programÕs objectives, it was clearly a policy -driven undertaking that grew counter to neoclassical market logic. Indeed, Pro⁄lcool was a top -down state-led intervention imposed on the Brazilian market, which was perhaps only possible under a military dictatorship. James Scott famously explored failed top -down development programs of the 20th century. He focuses on high -modernist development schemes meaning state-imposed projects that strongly support the western faith in scientific and technical progress. Following a variety of failed schemes from Russia to Tanzania, Scott argues that these top -down modernization programs were highly unsuccessful because they excluded non-Western cultural knowledge. 38 Certainly, Pro⁄lcool 37 This is a fund amental point in BarzelayÕs own argument about the political influence on decision -making that contributed to the programÕs failure while Santos argues that the fragmented decision -making process in which Pro⁄lcool emerged still managed to be successful despite the conflict. Barzelay, Politicize Market , 4Ð7; Santos, ÒAlcohol as Fuel,Ó 501. 38 James Scott, Seeing Like a State , 7. While Scott included the democratically elected Brazilian President Juscelino KubitschekÕs establishment of the new, ÒmodernÓ capit al city of Bras™lia, he also explored the Russian and Tanzanian agricultural modernization projects. Both of the latter 20 could fit into this framework at first sight. The authoritarian government was the central force behind the top -down programÕs implementation. Although the program grew substantially in its first decade but received a great deal of criticism in the late 1980s after the end of the dictatorship. Yet, a booming ethanol industry today indicates that the program was not a complete failure. My closer look at the program deconstructs general interpretations of the program as a costly failure or a striking success, challenging ScottÕs simplification of state-led development programs. This perspective contributes to other convincing critiques of ScottÕs argument, particularly in the case of Latin America. 39 In the case of Pro⁄lcool, collective sugar producers from the state of S‰o Paulo and individual producers from Ribeir‰o Preto were able to force the authoritarian governmentÕs hand with important political and economic connections as well as the cooptation of the natio nalist rhetoric that anchored the program in the 1970s and 1980s. At the same time, sugarcane producersÕ legalized exploitation of rural workers drove strikes that were explicit failures in part because the government. The ballooning debt produced by the Brazilian project contributed to the conditio ns that fomented the Brazilian militaryÕs coup in April 1964. Beyond James ScottÕs critique in Seeing Like a State , a large anthropological literature has also grown on development projects and the failures of cookie -cutter development projects. For examp le, see Emery Roe, ÒDevelopment Narratives, Or Making the Best of Blueprint Development,Ó in The Anthropology of Development and Globalization: From Classical Political Economy to Contemporary Neoliberalism , ed. Marc Edelman and Angelique Haugerud (Malden, Mass: Wiley-Blackwell, 2004), 313Ð316; Frederick Cooper and Randall Packard, ÒThe History and Politics of Development Knowledge,Ó in The Anthropology of Development and Globalization: From Classical Political Economy to Contemporary Neoliberalism , ed. Marc Edelman and Angelique Haugerud (Malden, Mass: Wiley-Blackwell, 2004). 39 First and foremost, this includes Fernando Coronil, ÒSmelling Like a Market,Ó The American Historical Review 106, 1 (Feb., 2001): 119Ð129. He fundamentally challenges ScottÕs implica tion that all large -scale state programs failed. This was certainly not the case in his example of Venezuela. Much like Venezuela during the oil boom, a unified state did not proctor Pro⁄lcool but rather divided interests behind the veil of a unified military government. My work follows CoronilÕs assertation that the simple explanation of these state programs as successes or failures requires a deeper discussion. 21 unwound the increasingly weak rhetoric of the program in the face of a growing national econ omic crisis, which the program was not able to solve. Thus, my work questions single narratives of the program, the national government, development, capitalism, and modernity in this period. My focus on Ribeir‰o Preto illustrates many of the messy, on-the-ground details that get left out of analysis of state-development projects. For example, sugar and alcohol production in Ribeir‰o Preto expanded prior to Pro⁄lcool because of individual entrepreneurs like the Biagi family. Their actions shaped governmen t action and the programÕs growth thereafter. Despite heavy propaganda from these producers throughout the first decade of the program, the costs of the program and its impact continued to draw questions from economic and political analysts. The social issues were most often swept under the rug of job expansion and disregarded. 40 And yet, the 1984 rural workersÕ strikes in Ribeir‰o Preto helped reshape debate about the national program despite government and entrepreneurial propaganda about the need for and success of the ethanol industry. Pro⁄lcool has received a great deal of attention within Brazilian social histories on rural workers. In fact, this literature emerged in tandem with the programÕs growth in the 1970s. Maria Concei“‰o DÕIncao was one of the most important researchers in this field. Her work on temporary workersÕ living and working conditions began before the Guariba strikes and she was often a special analyst for popular news sources during and after the strikes in 1984.41 More recently, Maria Aparecida de Moraes Silva has expanded much of the work that DÕIncao had 40 This argument is not unique. For a point of comparison, Soluri notes the similar multinationa l companies produced in defense of their banana export industries in Central America as well. Soluri, Banana Cultures , 4. 41 Maria Concei“‰o DÕIncao e Mello, O bŠia -fria: acumula“‰o e mis”ria (PetrŠpolis: Editora Vozes, 1975); Interview with Maria Concei“‰o DÕIncao, ÒDespertar do bŠia -friaÓ, Emanuel Neri, Veja 821 (May 30th, 1984), 3Ð6. 22 begun with an even deeper analysis of temporary rural workersÕ experience in the Ribeir‰o Preto region from the 1950s through the end of the 20th century. 42 Clifford WelchÕs groundbreaking study of rural labor movements in the Ribeir‰o Preto region addressed the connections between mobilization efforts from 1920 to 1964 before the military dictatorship to the Guariba strikes. 43 In my own research, the connection between the formation of the ethanol industry under the military dictatorship, the state of S‰o Paulo, and rural workers is important to understanding the impact of Pro⁄lcool on the region of Ribeir‰o Preto. While other studies have made meaningful contributions to historiograph y by presenting workersÕ perspectives on the strikes, my work diverges from this approach. Instead, I focus my analysis on the strikesÕ impact on the public debate about the program immediately thereafter. Using limited oral interviews and various print and television news sources, my work attempts to reengage the meaning of the strikes to public debate about the program. Ribeir‰o Preto became an important national symbol connected to the image of Pro⁄lcoolÕs success. The strikes in the heart of the succe ssful sugar and alcohol region had a particularly important influence on public debate given regional producersÕ importance in the programÕs execution and promotion. The workersÕ strikes forced sugar producers to change some employment and work policies immediately, but it had a broader influence on public perception as well. I build this approach on Oliver DiniusÕs own interpretation of industrial workersÕ strikes in BrazilÕs national steel industry in the 1950s. DiniusÕ history of the national steel comp any ties 42 Maria Aparecida de Moraes Silva, Errantes do fim do s”culo (S‰o Paulo: Funda“‰o Editora da UNESP, 1999). 43 Clifford Welch, The Seed Was Planted: The S‰o Paulo Roots of BrazilÕs Rural Labor Movement, 1924Ð1964 (University Park, Pa.: Penn State University Press, 1999), 1Ð12. More recently, Welch released his first edition in Portuguese, which extends his analys is of Guariba and rural labor movement. Clifford Andrew Welch, A semente foi plantada: as ra™zes paulistas do movimento sindical campon’s no Brasil, 1924Ð1964 1st edi“‰o (S‰o Paulo: Editora Express‰o Popular). 23 the power of labor into the development of the state capitalist industry, highlighting how important the image of the state-led project was to the government as a beacon of the successful advancement of the countryÕs industrialization efforts. 44 Connecting industrial workers influence to sugarcane field workers strikes for survival and basic wages may seem idyllic. However, their actions had a direct impact on an agro -industrial development program not unlike the developmentalist steel project of the 1940s and 1950s that Dinius addresses. As such, the unique development path followed by the sugar industry, analyzed in this dissertation, gives this parallel credence. Such a perspective makes new contributions to an expanding body of 20th century Brazi lian rural labor historiography. Ribeir‰o Preto is unique because it combines industrialized agriculture with modern technologies of industrial sugar refining, ethanol distillation, and the automotive industry. Here, agro -industry took a more amplified form around the sugar sector. While Nunberg describes agro -industrial firms as those in which, ÒIndeed, under the umbrella of agro -industrial firms, it is not uncommon to find activities that deal with cultivation, industrial processing, and commercializatio n of a given agricultural commodity.Ó 45 Fields and factories come together in ways that are perhaps not replicated in any other sector: this not only rescues sugar production from the historical narrative of slavery and economic backwardness, but powerfully connects it to the most modern of industries, the automotive, but it also has the, dare one call it postmodern, advantage to align itself with concerns to protect the environment. 44 Oliver Dinius, Brazil Õs Steel City: Developm entalism, Strategic Power, and Industrial Relations in Volta Redonda, 1941Ð1964 (Stanford University Press, 2010), 1Ð9. 45 Nunberg, ÒState Intervention,Ó 28. Coffee might be the more traditional example, but Soluri introduces bananas as a less processing -intensive agro -industry. Mauricio Font, Coffee and Transformation in S‰o Paulo, Brazil (Lanham, Md.: Lexington Books, 2012); Soluri, Banana Cultures . 24 Where scholars once discussed food and fuel debates in the 1970s, recently , scholars have connected the environmental impact of the sugar sectorÕs expansion to more specific social conflicts within the country. 46 For example, Thomas RogersÕ recent study of cane agriculture and repressive labor regimes of the Northeast connects the environment to larger planter and laborer discourses that weave socially constructed power dynamics into their very understanding of the landscape. 47 These environmental changes, he shows, had important social implications on workers and drove the way that workersÕ protested exploitative worker legislation with the use of cane burnings, a traditional form of protest used by sugarcane workers in both Brazil and Cuba in the 20th century. 48 My own work connects the political and economic realities of the Pro ⁄lcool programÕs implementation to the environmental transformations of Ribeir‰o Preto. While debates over Pro⁄lcoolÕs longevity increased, workersÕ strikes reintroduced not only the plight of workers but also the environmental impact of the program into public debate. Some critics, like Fernando Homem de Mello, had been outspoken critics of the program long before the strikes began, but public news sources began to engage these impacts more in television reports thereafter. 49 As such, like RogersÕ example in the Northeast, the environment influenced public discourse in new ways thanks to the Guariba strikes. While I simply address the massive land cooptation involved in Pro⁄lcoolÕs expansion, the connection between the environment, policy and industrial 46 For example, Lester Brown, ÒThe Future of the Automobile in an Oil-short World,Ó WorldWatch Paper 32 (September 1979), and Brown et al, ÒFood or Fuel: New Competition for the WorldÕs Cropland,Ó WorldWatch Paper 35 (March 1980), World Watch Institute. 47 Thomas D. Rogers, The Deepest Wounds: A Labor and Environmental History of Sugar in Northeast Brazil (The University of North Carolina Press, 2010), 8Ð13. 48 Rogers, The Deepest Wounds, 1Ð8; see also, McGillivray, Blazing Cane. 49 For example, Fernando Homem de Melo, ÒO ⁄lcool ” nosso, mas quem paga o desperd™cio,Ó Folha de S‰o Paulo (May 15th, 1983). 25 expa nsion remained an aspect of the programÕs praise and thus its eventual shift in public perception. Ribeir‰o PretoÕs was a central platform for these transformations. 26 Chapter 1: Ribeir‰o Preto, S‰o Paulo: The Coffee Kingdom and Early Sugar Production before 1930 Figure 1: Map of Ribeir‰o Preto Source: Secretaria de Economia e Planejamento do Estado de S‰o Paulo, Plano Regional de Ribeir‰o Preto, 1978, trabalho elaborado pela PROPLASA (S‰o Paulo , December 1978). Once a backwater province in the imperial period, the state of S‰o PauloÕs economic and political influence expanded rapidly with the emergence of coffee product ion in the mid-19th century. The flat high plains and hills and fertile soils leant themselves well to coffee production, processing, and distribution. Coffee plantation owners soon established large coffee estates in S‰o PauloÕs vast interior. The city of S‰o Paulo became a railroad hub for coffee from the stateÕs interior on its way to the states major coastal port, Santos. Authorities organized the coffee producing regions of the interior into municipalities in the late 19th century dividing the provinc e into distinct sub -regions. 27 The Northeastern region of the state emerged as a dominant coffee -producing region after 1860. Located more than 500 km from the port of Santos, the regionÕs first settlers came from the neighboring province of Minas Gerais after the end of the gold mining boom in the early 19th century. Coffee entered the region in the mid-19th century and quickly expanded as word of the regionsÕ infamous red soil spread. The soil is particularly rich in oxides, which give the soil a red color , and these characteristics are well suited to the growth of coffee trees. 1 Once covered by the dominating Atlantic Forest so eloquently described by Warren Dean, the region is a plane of agriculturally blessed land with rolling hills and favorable rainfa ll. Known for its heat, rarely does it fall below 50 degrees Fahrenheit even on its coldest days and a day in the 90s is quite common. Settlers in the 1800s would have seen dense forest trees covering the Ribeir‰o Preto region. Prior to the coffee boom, migrants from the neighboring state of Minas Gerais dominated the regionÕs livestock -producing population. However, this tropical environment, with its sundried red soil and warm climate, made for the perfect coffee fields in the 19th century, after Lu™s Pereira Barreto introduced ÒbourbonÓ coffee in the region in 1876.2 Ribeir‰o Preto quickly became the most productive coffee region in the state, then the country, and finally the world. Also known as the Alta Mogiana because of the planter -financed railroad company that reached the region in 1883, Ribeir‰o Preto became the Òmost important coffee -growing area in the world in the late nineteenth century and early twentiethÓ behind the massive production of Òcoffee kingsÓ like Henrique Dumont, Francisco Schmidt, and Geremia 1 Hasse, Filhos do Fogo , 25. The red soil is found in only three places in the country: Northeast S‰o Paulo, Northeast Parana, and Northern Tocatins. 2 Osmani Emboaba, HistŠria da funda“‰o de Ribeir‰o Preto (S‰o Paulo: ÒIMAGÓ Gr⁄fica Editora, 1990 (1955)), 15n5. 28 Lunardelli. 3 These three coffee producers contributed to Ribeir‰o PretoÕs swift rise. The region accounted for over 40-50% of world coffee production in 1909, while Brazil as a whole accounted for 80% of the world market share. 4 As the regionÕ s fame spread, the municipality transformed. Coffee planters came to rely on immigrant labor over slave labor thanks to the state government of S‰o PauloÕs support of imported labor. Predominantly Italian immigrants came as colonatos , or indentured field workers, along with new migrants from other regions, expanding the full municipalityÕs population from 3,000 in 1869 to 12,033 in 1890 to 59,195 in 1900.5 The municipality of Ribeir‰o Preto, officially established in 1871, quickly spawned additional munici palities in the region from the coffee plantations that surrounded it. Important municipalities like the Sert‰ozinho (1896) and Cravinhos (1897) grew around the city, transforming Ribeir‰o Preto into the regionÕs administrative center. Coffee production in S‰o Paulo was the foundation of the stateÕs economic dominance under the First Republic, behind which paulista coffee planters won particularly large national political influence. Expanding railroads to appease the growing coffee industry allowed the state 3 James Woodard, A Place in Politics: S‰o Paulo, Brazil, from Seigneurial Republicanism to Regionalist Revolt (Duke University Press, 2009), 19Ð23; Murilo Pinheiro et al, Ribeir‰o Preto (Ribeir‰o Preto: MIC Editorial Ltda, 1996), 20. See also, Ida Pizzoli Marchesi, Jo‰o Marchesi: HistŠria de um imigrante (Ribeir‰o Preto: Editora Col”gio, 1987), 19Ð20; Luciana Suarez Lopes, Ribeir‰o Preto a din›mica da economia cafeeira de 1870 a 1930 (Ribeir‰o Preo: Funda“‰o Instituto do Livro, 2011), 7Ð15. Today the macro -region of Ribeir‰o Preto includes over 80 municipalities surrounding the city of Ribeir‰o Preto, which is far more expansive than the Alta Mogiana. 4 Steven Topik, Political Economy of the Brazilian State, 1889Ð1930, 1st edition (Austin: University of Texas Press, 1987), 89Ð92. 5 Thomas Walker, ÒFrom Coronelismo to Populism: The Evolution of Politics in a Brazilian Municipality, Ribeir‰o Preto, S‰o Paulo, 1910Ð1960Ó (PhD, The University of New Mexico, 1974), 44. 29 to industrialize at a faster pace with more efficient access from the interior to the capitol and the coast than other regions of the country. While its agricultural wealth expanded, Ribeir‰o Preto held the stateÕs electoral seat for the region, expandi ng the cityÕs political importance during the First Republic (1889-1930). Regional banks emerged for coffee planters to invest their growing wealth in the late 1890s and early 1900s. 6 Historian Thomas Walker noted that the cityÕs economic boom fed a vibran t nightlife and opulent Òcultural sophistication and diversityÓ earned Ribeir‰o Preto the reputation as the Òpetit ParisÓ of Brazil. 7 Year 1912 1920 1940 1950 1960 Rural 39,488 Missing 31,766 28,848 13,565 Urban 18,732 Missing 48,017 63,312 116,153 Total People 58,220 68,838 79,793 92,160 129,718 Table 1: Ribeir‰o Preto MunicipalityÕs Population Growth, 1912Ð1960 Source: Walker, ÒFrom Coronelismo to Populism,Ó 54. Table 5. Ribeir‰o PretoÕs political and economic importance grew with coffeeÕs success and declined when the boom faded. However, some planters reinvested the wealth from coffee exports in regional industrial development, which helped the local economy better weather hard times. By 1912, the cityÕs population, not to be confused with the larger municipalitiesÕ population, had grown to 18,732 inhabitants and was an important center not only for coffee planters but also for colonatos to gather, share ideas, and mobili ze.8 The municipality as a whole 6 Anne Hanley, Native Capital: Financia l Institutions and Economic Development in S‰o Paulo, Brazil, 1850Ð1920 (Stanford: Stanford University Press, 2005), Chapter 6. 7 Walker, ÒFrom Coronelismo to Populism,Ó 44Ð46. 8 For more on the growth of financial institutions in Ribeir‰o Preto in the late 19th and early 20th century, see Hanley, Native Capital , 164Ð165; for more on Ribeir‰o Preto as hub for labor unrest in the 1910s, see Clifford A. Welch, A semente foi plantada: as ra™zes paulistas do movimento sindical campones no Brasil, 1924Ð1964 (S‰o Paulo: Editora Express‰ o Popular, 2010), 58Ð64. 30 reached a population 68,838 by 1920, as Òcommercial, industrial, and liberal professionsÓ grew around the coffee industry. 9 The municipality was thus able to transform its economic importance into political influence in state and national politics. S‰o Paulo was the motor that drove the Brazilian economy with paulista political interests in the driverÕs seat during the First Republic. Winston Fritsch succinctly notes the connection between paulista coffee interests and nati onal politics, stating, Òthe Executive [President] always had to be predisposed to support the coffee valorization programs.Ó 10 During the First Republic, most federal finance ministers hailed from S‰o Paulo because of the favored position the state held in the national economy. The republican constitution gave S‰o Paulo a great deal of financial independence, including autonomous control over state tax revenues and the ability to contract foreign loans. Thus, behind its important coffee production, S‰o Paul o dominated economic policy. 11 As one would expect, Ribeir‰opretano politicians acted aggressively to protect coffee interests, and they were among the most vocal proponents of state and later national coffee support. 12 The First World War had a particularl y harsh regional impact as coffee prices dipped. When the hotly contested presidential election of 1929 arrived, Ribeir‰o Preto unanimously supported the paulista candidate, Jœlio Prestes. Ribeiraopretanos, along with other coffee interests, generally beli eved that Prestes, the former S‰o Paulo governor, would protect paulista coffee interests in the midst of coffeeÕs collapse. 9 Walker, ÒFrom Coronelismo to Populism,Ó 92. 10 Winston Fritsch, ÒApogeu e crise na Primeira Repœblica: 1900Ð1930,Ó A ordem do progresso: cem anos de pol™tica economica republican, 1889Ð1989, org. Marcelo de Paiva Abreu (Rio de Janeiro: Campus, 1989), 32. 11 Joseph L. Love, S‰o Paulo in the Brazilian Federation, 1889Ð1937 (Stanford: Stanford University, 1980), Chapter 8. 12 Walker, ÒFrom Coronelismo to Populism,Ó 81. 31 Coffee planters believed the 1930 election to be critical to defending their interests. Prestes, too, had been a governor of S‰o Paulo and his candidacy created a rift in the Coffee with Milk alliance that had rotated the presidential office with some regularity between politicians of Minas Gerais and S‰o Paulo. Paulista coffee interests believed that PrestesÕ opponent, Getœlio Varga s, who hailed from BrazilÕs southern -most state Rio Grand e do Sul, would not act in favor of their interests. So strong were RibeiraopretanosÕ convictions about PrestesÕ candidacy, that the Ribeir‰opretano -native Secretary of the Interior for the State of S‰o Paulo F⁄bio de S⁄ Barreto illegally financed his campaign with great support from his constituents. 13 Paulistas believed the clashing interests involved in this election to be critical to the future of the stateÕs economic and political power, and they were right. In fact, the election dramatically reshaped national politics and S‰o PauloÕs political place within that structure for decades to come. During the First Republic, S‰o Paulo and Minas Gerais dominated national politics with the ÒPolitics of the Governors,Ó in which national presidents mostly rotated between mineiro and paulista governors from 1898 to 1929.14 In 1930, Lu™s Prestes, a paulista and official candidate of fellow paulista President Washington Luiz, won the election, breaking the political rotation. In response, Getœlio Vargas, the Rio Grande do Sul candidate and the designated non-paulista candidat e, mobilized a coalition of armed forces from Paran⁄, Rio Grande do Sul, and Santa Catarina to march on Rio de Janeiro that unseated Washington Luiz. After his successful revolt, known as the ÒRevolution of 1930,Ó Vargas established his new provisional government and substantially restructured the federal government, centralizing power around him. Many of VargasÕ former paulista supporters were quickly disappointed with 13 Walker, ÒFrom Coronelismo to Populism,Ó 113Ð114. 14 Marshall Eakin, Tropical Capitalism , 27. This ÒPolitics of the GovernorsÓ is also known as the Òcream and coffee alliance,Ó in reference to coffee production in S‰o Paulo and dairy production in Minas Gerais. 32 his failure to gain charge of S‰o Paulo politics upon his ascension to power in additio n to his focus on the economic crisis over their political interests. 15 These efforts stripped paulistas of the autonomous position they had held under the First Republic. As coffee continued to decline, VargasÕ actions further ostracized paulista elites with dramatic outcomes in the 1930s. The regionÕs political power that had been so tied to its political affluence diminished. In coffeeÕs stead, sugarcane interests slowly expanded. Sugarcane and its Byproducts: Industrial Processing from the First Before exploring the expansion of sugar interests in Ribeir‰o Preto, S‰o Paulo, a broader explanation of sugarcane production deserves brief discussion, as it will shape the rest of this study. Introduced into Brazil in the 16th century, sugarcane was the centra l export earner in the Brazilian colonial era until the 19th century. Sugarcane is a raw material for sugar and multiple sub -products like molasses, alcohol (for fuel), aguard ente, fermentation, cellulose, protein for rations, fertilizer, and more. 16 Sugar must be processed upon cutting in order to transform from cane extract into the traditional sugar products to which we are accustomed. The basic process involves a Òseries of liquid -solid operations,Ó involving heating and cooling to turn granulize the sugar. 17 It requires processing technology with an industrial infrastructure to transform the cane into table sugar for domestic or foreign consumption. 18 In the 19th century, this process required around the clock 15 Thomas Skidmore, Politics in Brazil, 1930Ð1964: An Experiment in Democracy (New York: Oxford University Press, 1967), 3Ð7; Love, S‰o Paulo in the Brazilian Federation , 119. 16 Szmrecs⁄nyi, O planejamento , 41Ð53. 17 Mintz, Sugar and Power , 22. 18 Stuar t Schwartz, Sugar Plantations in the Formation of Brazilian Society: Reconcavo, Bahia, 1550Ð1835 (Cambridge: Cambridge University Press, 1985), 106. As Schwartz noted of the 19th century sugar industry, Òthe combination of agriculture and processing necessary to make sugar 33 work with field tasks performed in the day and mill grinding through the night. However, modern usinas of the 20th century consolidated these processes and increasingly mechanized the milling process. This left the most intense labor for the field tasks, including the clearing of fields, planting, weeding, and cutting the cane. Plant ing practices elongate sugarÕs productivity . In Brazil, there are generally two harvests per year. In the south, the harvest begins in mid-May and ends October or November. Conversely, in the Northeast, the harvest exten ds from September to April approximately. 19 The North and South have different planting seasons as well. In S‰o Paulo, there are two planting seasons, the first from January through March and the second from September through October. 20 Upon planting, sugar generally requires nine to eighteen months to mature. 21 Sugarcan e farmers also use a harvesting method known as rationing to extend harvests. Ratooning leaves the roots and lower parts of the sugarcane stalk uncut, which then produce new ratoon, or stubble, crop that matures earlier in the season. Producers would arrange the planting in the fields in a way that would allow the newly planted and ratoon cane to mature in succession, Òthus allowing for consecutive cutting and a steady flow of cane to the roller s of the mill.Ó 22 Such planting structure s permitted for year -round labor despite the fact that producers needed manual laborers more intensely during the short harvest period s. Furthermore, given the made each engenho [small mill] a factory in the field and gave the mills a distinctive industrial character. The inputs of capital, technology, and labor made engenhos costly and large estates by contemporary standards, and the complexity of the operations made them peculiarly Ômodern.ÕÓ 19 Schwartz, Sugar Plantations , 100Ð104; L”o da Rocha Lima and Aluizio de Abreu Marcondes, çlcool carburante: uma estrat”gia bra sileira (Curitiba: Editora UFPR, 2002), 40. 20 Lima and Marcondes, çlcool carburante , 42. 21 Mintz, Sweetness and Power , 21. 22 Schwartz, Sugar Plantations , 110. Ratooning produces less sucrose than the original planting in each harvest. 34 climate and rich soil in the Ribeir‰o Preto region, thes e seasons often begin even earlier in May and extend ed well into December. From cutting to processing, sugarcane has a short shel f life. Cane has to be delivered to sugar mills for processing within days of cutting to capture its sucrose content before it goes bad .23 This process requires an intense labor force, once slaves and later sharecroppers and wage laborers, to cut and collect cane. 24 Field workers cut and remove cane stalks upon maturation. To speed up the process, cane producers employed cane burning, in which they used controlled burns of the stalks before cutting. This does not damage the sucrose content, but producers and workers have to coordinate Òthe burning, collection, and crushing [of cane] to avoid the deterioration of cane.Ó 25 Following the cutting process, the cane arrives at the mill for processing. First, the cane is cleaned to reduce impurities from the field. Ther eafter, the juice and excess bagasse (baga“o) are extracted through the crushing of the sugarcane. It is in the period that mill owners have to select which sugar product they will produce, as each has different production requirements. After juice extraction, the juice is concentrated until sucrose crystallization to produce table sugar (white and brown sugar depend ing on how refined this processing is). The remaining molasses would be left for other sugar byproducts, like alcohol production. These early processing methods and uses of sugarcane prevailed in both the Northeast and the South into the early 20th century . New modern usinas, with centralized milling processes emerged in the late 19th century and slowly displaced the older smaller sugar mills, or engenhos 23 Lima and Marco ndes, çlcool carburante , 64. If producers wish to produce alcohol directly from sugarcane, relatively rare in the 19th and much of the 20th century, it is best to process the cane within 24 hours of cutting the cane. 24 In the modern era, this process has been largely mechanized. Chapter 5 and 6 address this process and its impact on sugarcane field workers in Ribeir‰o Preto. 25 Lima and Marcondes, çlcool carburante , 64. 35 and bangues, both of which used older milling techniques in the 20th century. By the time sugar cane production in S‰o Paulo began to expand in the 1900s, pressure to mechanize the sugar process transformed the structure of the industry that emerged in the state. In conjunction with an advanced agricultural support system connected to coffee producti on, a more mechanized and centralized system emerged in S‰o Paulo. From Coffee to Sugarcane Even as coffee production dominated the paulista countryside in the mid-19th century, sugar production also existed in pockets since the first settlers came to S‰o Paulo. Farmers fed sugarcane to cattle to fatten them and also used it to distill rum (aguard ente ) for local consumption in the 19th century. 26 As a tropical plant, the Ribeir‰o PretoÕs humid climate, extensive sunshine, oxidized soil , and rare frosts were ideal for sugarcane production as well as coffee. 27 However, the Northeastern region of the country, particularly Pernambuco and Alagoas, had dominated Brazilian sugar production since the colonial era. Once the countryÕs major agricultural export, by the turn of the 20th century, sugar accounted for only about 1% of the value of all of BrazilÕs exports. 28 The Northeast, and specifically Pernambuco, dominated sugar -production, exporting sugar abroad and supplying the bulk of domestically consumed suga r, particularly to S‰o Paulo into the 1930s. 29 Northeastern refineries shipped sugar to Santos and then it made its way to S‰o PauloÕs interior via train. Sugar consumption grew in this period as a vital ingredient in S‰o PauloÕs emerging light 26 Hasse, Filhos do Fogo , 21; Warren Dean, With Broadax and Firebrand: The Destruction of the Brazilian Atlantic Forest (Berkeley: University of California Press, 1997), 176Ð178. 27 Temperatures between 70 and 75 degree Fahrenheit at least are ideal for sugar maturation. Lima and Marcondes, çlcool carburante , 41. 28 Eisenberg, The Sugar Industr y in Pernambuco , 5. 29 Eisenberg , The Sugar Industry in Pernambuco , 26Ð29. 36 industries in canned and preserved foods that were ultimately redistributed to markets across Brazil. As southeastern agriculture specialized in coffee production, consumers and local industries there came to rely on sugar supplied from the northeast. Sugar producti on slowly expanded in the paulista countryside to meet growing local demand, especially during the coffee crises of the 1920s. Some former coffee barons opened sugar mills to supply local demand for table sugar that competed on costs because of their lower transportation expenses; some surplus was diverted to distill ca“haca (sugarcane brandy). Take for example, the second Òking of coffeeÓ in the Ribeir‰o Preto region, Francisco Schmidt. Born in Germany, Schmidt immigrated to Brazil with his parents to work the coffee fields in 1858. He worked at a fazenda in Descalvado (SP) before moving to Ribeir‰o Preto in 1890 and purchasing the Fazenda Monte Alegre. His investments in coffee and land quickly spread. With his holdings, he became the single largest coffee producer in Brazil. 30 In 1906, Francisco Schmidt built the Engenho Central de Sert‰ozinho, which is a small municipality neighboring the city of Ribeir‰o Preto. This mill introduced large -scale sugarcane production to the region and demonstrated that cane was a viable economic alternative to coffee production. Government officials and local politicians encouraged diversification of agricultural production during coffeeÕs many economic crises. In fact, many future usineiros , or industrial sugar refinery own ers, would either work as employees or service providers for SchmidtÕs pioneering mill, including the Biagi family. 31 30 Marchesi, Jo‰o Marchesi , 59Ð60. Another important figure in Ribeir‰o PretoÕs history, Jo‰ o Marchesi, briefly referenced below, would later buy this property. Shortly after, Marchesi sold land to the State of S‰o Paulo to establish the Escola Pr⁄tica de Agricultura in 1941. Today, the Universidade de S‰o Paulo -Ribeir‰o Preto medical school is located on the hillside of the former coffee plantation. 31 Pinheiro et al, Ribeir‰o Preto, 20. Hasse, Filhos do fogo, 33Ð37. 37 Italian immigrants in S‰o PauloÕs interior led the transition from coffee to sugar production. For example, Pedro Biagi came to Brazil at the age of seven with his family from P⁄dova, a poor region in Italy in 1887. He and his parents landed at the major paulista port, Santos, after which they moved to Campinas. He and his family first worked for two years in the Campinas region where his family paid off the costs of their Atlantic passage to Brazil. They then decided to move to Sert‰ozinho to work the coffee fields as colonatos on the Fazenda Concei“‰o. Biagi worked in the coffee fields, but he also diversified his specialties. BiagiÕs fath er purchased a brickyard in 1899, where he worked with his father until it was paid off three years later. Additionally, he worked in rum distilling, likely at SchmidtÕs central mill, during this period. 32 He saved his wages to purchase land in Sert‰ozinho, slowly expanding his property around BiagiÕs brickyard business and coffee production. Biagi then diversified his production with sugarcane when he and a partner, Mario Bighetti, purchased the Fazenda Barbacena in 1917. The two began building their own usina in 1918. The Usina Barbacena produced its first harvest in 1922, and they refined 6.4 thousand sacks of sugar. 33 Coffee producers and immigrant families like these would continue to expand sugar production across the state in the 1920s. Italian immigra nts were not the only players in the paulista sugar industry; in fact, the French firm, Soci”t” des Sucreries Br”siliennes, emerged as the largest sugar -producing firm in the state in this period. The firm bought up many small central engenhos in S‰o Paulo between 1899 and 1907 and would expand to four usinas by 1930. It was the first firm to invest in sugar production in the region in S‰o Paulo while many domestic fazendeiros remained focused on 32 Moacyr Castro, ÒPedro Biagi,Ó in Os desbravadores , org. Galeno Amorim (Ribeir‰o Preto: Palavra M⁄gica, 2001), 128Ð129. 33 Ibid. 38 coffee production. Together with the expanding immigrant producers that sprang up across the state, the French firm and local producers etched out there place in the paulista sugar market. 34 By 1930, S‰o Paulo producers had solidified a small but expanding place in the Brazilian sugarcane market, but international events dramatically transformed the industry. 35 After the world market crash of 1929 and the subsequent collapse of commodity prices, the sugar industry, along with coffee and other export commodities, fell deeply into crisis. Sugar prices plummeted from betw een 40 to 80 reis per 60kg bag of crystal sugar in 1928 to 16 reis per bag, which was well below the cost of production. Producers had drastically overproduced for the competitive world sugar markets rocked by the depression, and domestic consumption was far too small to take up the slack. The conditions were ruinous for BrazilÕs sugar industry in the North and the South. In response to the disastrous economic condition of the industry in the early 1930s, sugar producers, primarily from the Northeast, used their political clout to lobby the federal government for intervention in the market place. 36 Given the contentious relationship between the provisional president and paulista statesmen, VargasÕ support of sugar was a political tool to 34 Hartzmark, ÒBusinesses, Associations, and Regions,Ó 231Ð232; see also, Ramos, Agroindœstria canavieira , 100. 35 See Santos, 46Ð49n16 and Hartzmark , ÒBusinesses, Associations, and Regions,Ó chapter 1. Mosaic disease hit paulista cane fields in the 1920s. The disease, which turned leaves a spotted yellow, affected the cane yields all over the country. The S‰o Paulo government established the Experimental Station in Piracicaba in the interior of the state, to test resistant cane varieties. This helped S‰o Paulo producers survive the effects of the mosaic disease faster than Northeastern producers. It was a key part of S‰o Paulo solidifying its position in the sugar market by the 1930s. 36 Dr. Gercino de Pontes, of the Club de Engenharia de Pernambuco, ÒA indœs tria a“ucareira no Brasil, depois de 1928Ð1929,Ó Brasil A“ucareiro III, Vol. VI (September, 1935), 21. In fact, usineiros and sugar producers in Pernambuco first founded the Institute of the Defense of Sugar in 1926 and similar initiatives with state support expanded from 1926 to 1928 but sugarcane producers themselves requested federal intervention in 1930 following the sugar marketÕs collapse. For more on early state intervention in sugar production in Pernambuco , see Szmrecs⁄nyi, O planejamento , 163Ð169. 39 garner support from the traditional elites of the Northeast. With this pressure, President Vargas would create the Institute of Sugar and Alcohol (IAA), in which domestic producers like the Biagis would emerge as important shapers of the industryÕs development and growth. As this chapter has revealed, Ribeir‰o Preto, once the important coffee producer, would again emerge as an important agricultural producer, this time as a growing sugar producing region. Its position as a coffee producer defined its growth in the 19th century while its new position as a growing sugar producer would define its position in the sugar and alcohol industry beginning in the 1930s. 40 Chapter 2: Pro⁄lcoolÕs Precedents: Early Federal Intervention in Sugar and Alcohol Policy, 1933-1959 ÒIt is one of the rare examples, in our country of an industry created and developed under the tutelage, support, and guidance of the State.Ó Moacyr Soares Pereira, O problema do ⁄lcool -motor (1942)1 Moacyr Soares PereiraÕs statement reminds us that BrazilÕs experience with ethanol began long before the military governmentÕs state-led development program of the 1970s. The technology for ethanol production was in place by the early 1900s, and Brazil began to formally pursue such research and development around sugar -based ethanol, or alcohol, in the 1930s. Thereafter, sugarcane and alcohol policy have been closely linked under federal management of the sugar industry. Hence, a history of alcohol production is also a history of state intervention in the sugar industry. Following initial interventions in 1931, federal policy, development, and market manipulation intertwined in the sector with the creation of the Institute of Sugar and Alcohol (IAA) in 1933. Federal intervention in sugar and alcohol production osci llated between financial, agricultural, and technological support, which closely tied sugar and alcohol production for the rest of the 20th century. This chapter reveals how state intervention transformed the sugar industry and gave birth to an alcohol market. This early state intervention in the sugar sector created and sustained the alcohol industry even as it lost political importance and could not be fully sustained in a free market. Government incentives gave regional entrepreneurs the ability to expand sugar and alcohol infrastructure. This perfectly positioned Ribeir‰o Preto to win out in an expanding sugar market in the 1960s and Pro⁄lcool investment in alcohol production in the 1970s. IAA 1 Moacyr Soares Pereira, O problema do ⁄lcool -motor (Rio de Janeiro: Jos” Olympio Editora, 1942), 165. Pereira was a member of the Executive Commission of the Institute of Sugar and Alcohol, on which he served as the Delegate of Banguezeiros and Suga rcane Planters in 1941. He later served as the Superintendent of the Alcohol Plan in 1951 and was a long time advocate of alcohol production in Brazil. 41 policymakersÕ interest in diversifying sugar products for the sector and federal policies that inconsistently subsidized the fuel supply drove support for the alcohol industry, even though it required state intervention to survive and grow. This chapter contributes to recent studies on the growing understanding of the role of the state in development. The state intervened to create the alcohol industry where demand did not exist beforehand. How officials executed this market creation under the Institute of Sugar and Alcohol through sugar policy objectives reveals the role of the state under Getœlio VargasÕ two regimes and the particular preference he gave to the sugar industry . The new sugar policy supported his economic nationalist goals for a Òself-sufficient , modern and industrial domestic economy .Ó2 As such, the sugar industry and alcohol interests evoked an important model of state intervention under the Vargas regime that shaped state-capitalist intervention in the 1960s. The sugar and alcohol industryÕs particular ability to meet VargasÕ dual inter ests and appease Northeastern producers provided the sugar industry with a favorable position compared to other agricultural support programs that proliferated the Vargas era, including the traditional S‰o Paulo -driven export -oriented coffee industry in this period. Studies on Pro⁄lcool almost ubiquitously include a summary of early alcohol production under the IAA. Tamas Szymersc⁄nyi and Barbara NunbergÕs classic studies on the sugar sector address the evolution of alcohol production as a by-product of the sugar industryÕs growth, but both focus far more on the evolution of sugar policy and social dynamics within the sector than on alcohol policy reform. Maria Helena de Castro Santos focuses on alcohol policy to reveal the inconsistent place that alcohol held in a poorly planned fuel policy in the 1930s through the 1970s. Michael BarzelayÕs study of Pro⁄lcool condenses the history of alcohol production into a 2 Triner, Mining and the State , 80. 42 series of policies that strips producersÕ of their importance in early sugar and alcohol development . This study builds on these and other studies by focusing on the evolution of sugar and alcohol production in the specific region of Ribeir‰o Preto through the growth of the Usina Santa Elisa. Maurilio Biagi, the owner of the usina, transformed the usina and the region into a premiere sugarcane and alcohol producer by capitalizing on the stateÕs continual support of alcohol production and investing in imported new technology to expand his sugar complex into a leading usina in the state. This analysis foll ows Marshall EakinÕs assessment of industrial development in Brazil, illustrating the way sugar producers imported new technology to push the development of the sugar industry. However, it also reveals the way domestic producers shaped sugar and alcoholÕs industrial growth with their own drive to mechanize and modernize the industry while still successfully pushing out foreign producers in the sector. As such, the sugar and alcohol industryÕs early development follows a uniquely national agro -industrializat ion path. S‰o Paulo, Coffee, and Early Intervention in Agricultural Economic Planning For many a 20th century Brazilian historian, S‰o Paulo history begins with coffee, and so does this one. Key institutional transformations began in S‰o Paulo that laid the foundation for the burgeoning paulista sugar industry to ascend to national dominance under the IAA. This path began with earlier state interventions in the coffee industry, which was initially successful and later produced extensive state and nationa l debt to finance. These realities influenced the government intervention in the sugar industry in the 1930s in important ways. Brazilian coffee production outpace d world demand between the 1890Ð91 and the 1901Ð1902 harvests. By this time, coffee accounted for almost 60% of the value of all Brazilian 43 exports. 3 It was by far the countryÕs most important agricultural industry, and S‰o PauloÕs economic and political affluence depended on it. As such, the government of the state of S‰o Paulo first intervened in the coffee industry in 1906 with the Taubat” Agreement. The Paulista coffee association proposed a valorization program, in which the state government funded purchasing coffee from producers at a set minimum price but withheld coffee reserves from the wor ld market in order to drive world prices back up. This heterodox economic policy buoyed the stateÕs control of the world market. S‰o PauloÕs coffee exports accounted for such a large percentage of national production that the state could act as a global coffee cartel in and of itself. The state governmentÕs intervention effectively transformed prices in producersÕ favor. 4 The initial program was somewhat successful, beginning a long series of state and federal valorization programs for the industry in the 1910s and 1920s. 5 However, while the program successfully hindered the continued fall in coffee prices through the first decade of the 1900s, the second and third programs in 1917 and 1920 were less successful and more burdensome financially. 6 S‰o PauloÕs government created the Institute for the Permanent Defense of Coffee in 1924, which President Washington Lu™s Pereira de Sousa, a former Governor of S‰o Paulo, transforme d into a federal entity in 1926Ð1927.7 In addition to extensive international marketi ng, the Coffee Institute regulated coffee prices, production levels, and loans, but it also established an important infrastructure of research and development associated with the industry. 3 Steven Topik, The Political Economy of the Brazilian State, 1889Ð1930 (Austin: University of Texas Press, 1987), 70 and 81. Topik notes that by the early 20th century, coffee was responsible for 10Ð15% of total Brazilian production and over half of all exports (56.9% in 1900Ð1901 and 59% in 1901Ð1902) and had important Òconsumer and fiscal linkages with the prosperous and politically dominant center and south of country [sic], it had a firmer hold on the economyÓ than did sugar. 4 Topik, The Political Economy , 71. 5 Top ik, The Political Economy , 77. 6 Love, S‰o Paulo and the Brazilian Federation , 119. See also, Table 2. 7 Topik, The Political Economy , 80. 44 Year Coffee debt (thousands of current contos) Foreign coffee debt (thousands of current contos) Combined public -coffee debt (thousands of 1912 contos) Combined foreign debt as percent of federal foreign debt Coffee support (thousands of current contos) * 1906 121.3 59.3 231.5 14 5.0 1910 221.6 221.6 468.9 26 2.0 1920 49.2 13.4 194.8 4 -23.9 1930 1667.9 1001.7 1492.5 33 113.3 Table 2: Impact of Coffee Support on S‰o Paulo State and National Debt8 Source: Love, The Brazilian Federation , 304Ð305. The S‰o Paulo coffee valorization programs were important precedents and models for subsequent federal intervention in the production of sugar and alcohol. The Great Depression led to the collapse not only of coffee but all agricultural export prices in 1930. Thereafter, President Vargas and the federal government would more actively intervene in the agricultural sector, extending protection to other agricultural industries, including sugarcane. The federal government, which had been hesitant in the initial coffee valorization schemes, became a central part of economic plan ning in the sugar industry in the 1930s. 9 The international crisis that accompanied the Great Depression came to roost just as dramatic political changes began in Brazil with the presidential election of 1930. The new 8 *= The negative number in 1920 illustrates a positive net income. A few notes on this table. Much of the coffee support programs were financed by foreign banks, hence the close connection between coffee debt and foreign coffee debt. The State Bank and the Coffee Institute supported the programs as well, which is accounte d for in the coffee debt column and then separated out in the foreign coffee debt column. The most important note pertains to the coffee support numbers. Love notes that inconsistent accounting and possible attempts to hide true costs means that one should approach this column with caution. The negative number in 1920 illustrates a positive net income. This column roughly illustrates the cost of coffee support programs overall and their burden on foreign and state debt. See Love, The Brazilian Federation , 307Ð308 for a more comprehensive explanation of his data accumulation. 9 Triner, Mining and the State , 80. Triner notes the important role that the state played in development of the state-owned enterprises in the mining industry under VargasÕ regime as well. Economic planning was not exclusive to the sugar industry, but rather I would contest that it was formative to agro -industrial planning while mining took a different path. However, the similarities are notable, illustrating the importance of the state in development during the Vargas era. 45 provisional government under Getœlio Vargas took active steps to salvage the struggling sugar industry, employing similar strategies used in the coffee valorization schemes but focused on helping Northeastern producers. Vargas established the first sugar protection legislation, Decree no. 20.401, on September 15th, 1931. It required that usineiros hold 10% of the sugar produced for domestic sale off the market in order to drive prices back up. However, this decree indicated that such storage only applied to the producers in the regions overpr oducing for their domestic local markets, namely Northeastern producers, which produced for both export and the domestic market. Conversely, the government set a tax of $5 mil-reis (about $2.50 USD) per bag on producers who exclusively produced for domesti c sale and refused to store their product. 10 S‰o Paulo producers largely financed this national tax. The exceptions favored export -targeted Northeastern producers. As S‰o Paulo production was exclusively for the local market, many producers refused to com ply with the storage mandate and withhold sugar from sale in a growing local market. Furthermore, producers that exported sugar to international markets, namely Northeastern producers, would have the stock requirement pro-rated. 11 Thus, the legislation bail ed out overproducing and export -oriented Northeastern producers at the expense of the expanding central -southern producers, much to the chagrin of paulista sugar producers. Shortly after implementing this tax, the provisional government created the Commis sion of the Defense of Sugar Productio n (Comiss‰o de Defesa da Produ“‰o do A“œcar- CDPA) with 10 Szmercs⁄nyi, O planejamento, 172. The Brazilian currency was the real or r”is (commonly referenced in the larger value of mil-r”is, or 1000 r”is) until 1941, when the country switched to the cruzeiro da reforma at a rate of 1000 r”is=1 cruzeiro. All conversions to USD (US dollars) are at nominal rates and are based on conversions as listed in A ordem do progresso: cem anos de pol™tica economica republicana, 1889Ð1989, org. Marcelo de Paiva Abreu (Rio de Janeiro: Campu s, 1989), 387Ð412. 11 Szmrecs⁄nyi, O planejamento, 172. Despite the collapse of the international sugar market, S‰o PauloÕs sugar demand continued to grow. Thus, the sugar limits imposed by the IAA were far more favorable to the export -oriented Northeastern sugar industry than they were to the region -focused paulista industry. 46 decree n. 20.761 on December 7th, 1931, creating a framework for greater sugarcane policy intervention. The Commission set up an administrative body including fed eral government representatives from the Ministry of Labor, Industry and Commerce, from the Bank of Brazil, and the Treasury in addition to delegates from the principal producing states of Pernambuco, Alagoas, Sergipe, Bahia, Rio de Janeiro and S‰o Paulo. 12 Leondro Truda, the representative from the Bank of Brazil, became the President of the Commission. Leondro Truda was a guiding hand in early sugar intervention. Originally from Rio Grande do Sul like President Vargas, Truda was one of many Rio Grande do Sul natives that rose to national political prominence under Getœlio Vargas in the 1930s. Trained in law, he worked as a journalist at the Rio de Janeiro newspaper, ÒDiario de NoticiasÓ before becoming a director at the Bank of Brazil. While there, he wor ked closely with sugar businesses and Òcame to understand the difficult situation of abandonment on the part of the public power that confronted the culture and industry of sugarcane.Ó 13 Truda became one of the main advocates of greater sugar intervention and many credit him with the creation of the first Sugar Commission (the CDPA). Later, when leadership of the original CDPA transferred over to the IAA in 1933, Truda would remain the leader and most vocal supporter of sugar interests in the federal governm ent. The Bank of Brazil was the most important economic entity in Brazilian agricultural economic planning. The bank held a critical financial and political role in the Commission and later the Institute of Sugar and Alcohol. The bank became the primary financier of the agricultural industry and particularly the sugar industry. Originally founded in 1808 to finance the public debt after the royal crown moved to Brazil, the modern Bank of Brazil took from in 12 Szmrecs⁄nyi, O planejamento , 174n22. The listed states represented on the Commission also indicate the order of production capacity at the time of the CommissionÕs implementation. 13 ÒO Banco do Brasil e seu novo presidente,Ó Brasil A“ucareiro Vol. III (July 1934), 300. 47 1905. The treasury took control of the formerly private Bank of Brazil, acted as both a public and commercial bank in this period, technically private but increasingly controlled by the Treasury and tied to government policy. The Bank of Brazil became the primary financial entity through which Congress financed the coffee valorization programs of 1906, 1917, and the 1920s. 14 Thereafter, the Bank of Brazil offered unprecedented levels of agricultural credit to large -scale producers, particularly to the sugar industry. 15 The Bank of Brazil did not finance sugar support but rather acted as an intermediary of the tax employed on sugar production and the distributor of those proceeds to the subsidized production. 16 This positioned the bank in the very center of sugar policy, where it would largely remain. In fact, after Truda became the president of the IAA, the Bank of Brazil delegate traditionally received the nomination for President of the IAA thereafter linking the leadership of these two powerful entitites. The ongoing domestic disputes between the new federal government and S‰o Paulo only exacerbated the economic struggles of the paulista sugar industry and undercut the CDPAÕs response. Regional and racial tensions burned between Vargas and the paulista elite as Vargas 14 Steven Topik, ÒState Enterprise in a Liberal Regime: The Bank of Brazil, 1905Ð1930,Ó Journal of Interamerican Studies and World Affairs Vol. 22, n. 4, Special Issu e: Public Enterprise in Latin America (November 1980), 408Ð413. In fact, more recent studies have unveiled a far more interventionist role of the state and the Bank of Brazil during the First Republic. Gail TrinerÕs defining work on banking in Brazil durin g this period moves beyond traditional analysis of the Bank of Brazil as a prop for coffee export support exclusively. See Gail D. Triner, Banking and Economic Development: Brazil, 1889-1930 (New York: Palgrave, 2000), 8-9. For a specific example of the emergence of regional banking S‰o Paulo and its connection to paulista industrialization in the 19th and early 20th century, see Hanley, Native Capital . 15 Peter Houtzager argues that the Bank of Brazil Òas the principal conduit for credit became the stateÕs arm for capital accumulation in rural areas.Ó I address its connections to agricultural financing under the military dictatorship in the next chapter. Peter Houtzager, ÒState and Unions in the Transformation of the Brazilian Countryside, 1964Ð1975,Ó Latin American Research Review, Vol. 33, No. 2 (1998): 115. 16 Cf. ÒNosso ProgramaÓ, Economia e Agricultura , Ano I Vol. I n. I, 05/12/1932, pp. 1Ð2 cited in Szmrecs⁄nyi, O planejamento , 174n22Ð23. Also note that the magazine, Economia e Agricultura , turned into Brasil A“ucareiro in 1934. 48 stripped paulistas of their federal powers and appointed Jo‰o Alberto Lins de Barros, a Pernambucan lieutenant, as his Interventor of S‰o Paulo. The appointment of the ÒforeignÓ interventor came along with the reduced federalist control over paulista political and economic decisions that had once been in the control of the stateÕs politicians. 17 Unsurprisingly, political relations between paulista politicians and the federal government quickly bec ame contentious. These issues exploded in July 1932 when the paulista opposition led an armed resistance in the city of S‰o Paulo against the provisional governmentÕs efforts to ÒreconstitutionalizeÓ politics in the Constitutionalist Revolt. The politicall y savvy Vargas subdued the conflict with important alliances and armed suppression over two months. 18 However, the event forced Vargas to appease paulistas to thwart further separatist rebellions. The event undercut the IAAÕs new limitation policies as fewe r southeastern producers complied with the CDPA regulation to stock 10% of their sugar. If anything, it exposed the already slow and delayed nature of the CDPAÕs ability to enforce legislation before the revolt. 19 Truda and the CDPA could not enforce the sugar policy on a large -scale initially, lacking the infrastructure to regulate every sugar producer in the country. 20 17 Walker, ÒFrom Coronelismo to Populism,Ó 28Ð30; Love, S‰o Paulo in the Brazilian Federation , 119. In an effort to centralize his own power, Vargas established a network of hand -picked interventors rather than elected governors to govern state politics. That a Northeasterner would hold S‰o PauloÕs position would enflame already established racial and social divisions between for malizing ideas of paulista identity in constrast to Northeastern identity. See also, Barbara Weinstein, The Color of Modernity: S‰o Paulo and the Making of Race and Nation in Brazil (Durham: Duke University Press, 2015). 18 Skidmore, Politics in Brazil, 1930Ð1964, 12Ð21. 19 Comiss‰o de Defesa da Produ“‰o do A“ucar 1932 Report, sent December 8th, 1932 to the Labor, Industry, and Commerce Minister. IAA: National Archives (Rio de Janeiro), Caixa 458. 20 A 1932 Report on the first 6 months of the CDPA indicates that 75% of producers escaped the sugar tax in the 1931Ð1932 harvest. Large producers still sold large quantities underpriced, undercutting the IAA -established price of $30 mil-r”is per sack. Comiss‰o de Defesa da Produ“‰o do A“ucar 1932 Report, sent Decembe r 8th, 1932 to the Labor, Industry, and Commerce Minister. IAA: National Archives (Rio de Janeiro), Caixa 458. 49 The CDPA would implement the initial sugar production limitation legislation as part of the envisioned defense of the sugar industry. Still, the expanding sugar policy remained focused on rebalancing the industry, skewing toward reestablishing Northeastern producersÕ dominance. Compliance with these policies, which started off shaky after the 1932 S‰o Paulo revolt, would continue to draw part icular ire from paulista producers throughout the decade. While sugar limitations were an essential part of this defense, the other was redirecting excess sugarcane toward alcohol production for fuel. Although this connection would become more explicit under the IAA, alcohol as fuel had already gained some support amongst some specialists and government officials in the 1920s because of the possibilities it presented for the sugar industry and the country. Ethanol Production before 1933 The technology behind ethanol production, namely the ability to use alcohol of an agricultural base rather than petroleum to drive internal engines has been around basically as long as the internal combustion engine has. France and Germany all tested the use of alcohol with internal combustion engines in the early 1900s. 21 Henry Ford, Thomas Edison, and Alexander Bell were all early supporters of ethanol use over oil. 22 Brazilian scientists and engineers began experimenting with alcohol as a combustible energy source in the 1920s. Paulista engineer Eduardo Sabino de Oliveira conducted research on 21 Santos. ÒAlcohol as Fuel in Brazil,Ó 18Ð21. 22 As the technology for alcohol -based combustion engines emerged with oil -based combustion engines , the question of oil over alcohol was more political than technical. Bill Kovarik makes a compelling argument about the politics of technology decisions in the US energy market, noting that Henry Ford and Charles Kettering of General Motors led a rather lengthy campaign for alcohol over gasoline in the mid-1920s but petroleum interests were able to edge out the ethanol market in favor of oil using biased scientific reports. See Bill Kovarik, ÒHenry Ford, Charles Kettering and the Fuel of the Future,Ó Autom otive History Review 32 (Spring 1998), 7Ð27. 50 the source in collaboration with the engineer Heraldo de Souza Mattos and Professor Ernesto Lopes da Fonseca Costa at the Escola Polit”cnica de S‰o Paulo in S‰o Paulo and the Nationa l Technology Institute in Rio de Janeiro in the 1920s. 23 While corn and potatoes drove alcohol experiments elsewhere, Brazilian scientists focused on alcohol from sugarcane. As a primary agricultural product, sugar and its derivatives have a long history in Brazil. Traditional uses of sugarcane included processing cane into crystallized sugar (the primary sugar product for export) or demerara (the cheaper domestic market based brown sugar). Sugar producers would often process the rest into such byproducts such as mela“o (molasses), aguardente (a white rum more commonly known as ca“haca ), or alcohol (either for industrial products or as a gasoline additive). Sugarcane byproducts became an important source of recompense for sugar producers during Òrecurring crises of excess productionÓ even in the 19th century. 24 Molasses was used as a raw material in the pharmaceutical and perfume industry as well as for the production of local rum (aguardente). Rum had its own market, and some producers specialized exclusivel y in rum production with their distilleries. After these two primary uses, northeastern sugar producers used the remainder, including the wood pulp or baga“o , as fuel. Until the late-20th century, alcohol, the byproduct from which ethanol is derived, was most often produced from other cane byproducts, like molasses, rather than directly from sugarcane. This is in part because of the higher value of other byproducts on the domestic and foreign market until the 1930s. In fact, many producers preferred to use the molasses as animal 23 Regina Machado Le‰o, çlcool: energia verde (S‰o Paulo: IQUAL, 2002), 89Ð90. Sabino de Oliveira later published this work in 1930. 24 Santos, ÒAlcohol as Fuel,Ó 31Ð32. 51 fodder or dump it rather than purchase the equipment necessary to process the molasses into sugar alcoholÕs industrial (hydrous) and fuel (anhydrous) forms .25 The production costs to produce anhydrous alcohol rather than hydrous alcohol are notable . For industrial use, consumers traditionally used hydrated alcohol, of 96% purity . Hydrous (or hydrated) alcohol allows for more impurities in the product. Carburant mixtures of the 1920s and early 30s use d hydrated alcohol along with oth er substances, such as gasoline and kerosene. Conversely, cars ran better on gasoline mixtures using anhydrous alcohol, of 99% purity or higher. 26 Anhydrous (dehydrated) alcohol required a more extensive dehydration process to reach such purity levels (99.5% generally). Water in the hydrated version created mixture problems with gasoline and thus impaired the performance of the traditional car engine. 27 As automobile ownership grew in the 1920s, drivers drove up demand for petroleum. 28 This growing infatuation with cars meant expanding petroleum imports for gasoline and close 25 Santos, ÒAlcohol as Fuel,Ó 33. Additionally, some producers would reprocess sugar alcohol into rum illegally. 26 For more on sugarcane and its byproducts, see Szmrecs⁄nyi, 130Ð139, and Santos, 32Ð33 27 Santos, ÒAlcohol as Fuel,Ó 55Ð56. Melo describes the troubles with hydrated alcohol in simpler terms. He states, ÒThe quantity of water contained in drinkable alcohol makes its mixture with gasoline difficult, especially at low temperatures. The acidity and other impurities in this type of alcohol can also cause general damage to engines. As its water content gives it a greater density than gasoline, drinkable alcohol settles at the bottom of the tank, while gasoline remains at the top, and they only really mix after the first movement of the car, or, when the external temperature rises. Thes e inconveniences occur, principally, for mixtures rich in gasoline. In order for a mixture to remain more or less stable, it should be composed of about 80% alcohol and 20% gasoline, and the carburant should be regulated and modified for the mixture to produce good results.Ó Joaquim de Melo, A pol™tica do ⁄lcool -motor no Brasil (Rio de Janeiro: Instituto de A“œcar e do çlcool, 1942), 25Ð26 as cited in Santos, ÒAlcohol as Fuel,Ó 55n20. 28 Wolfe, Autos and Progress , 14. Wolfe argues that the car has been intricately connected to Brazilian images of modernity and nation from its early arrival in the 1900s and the expansion of automobiles in the 1910s and 20s. Wolfe notes that while many economic historians have studi ed the importance of Òthe coffee economy in fostering early industrial development, less recognized 52 behind was an expanding interest in alcohol as a gasoline supplement. In fact, President Epit⁄cio Pessoa, a native of Pernambuco, referenced alcoholÕs importance in a speech to Congress in 1922, stating, ÒThe importance of the use of alcohol is highlighted by BrazilÕs colossal gasoline imports. Supporting the use of alcohol would also give a boost to our sugar industry.Ó 29 After President Pessoa explicitly connected sugar and alcohol, private organizations, state governments, individuals, and firms expanded various forms of alcohol additives to gasoline. These efforts included research from the Fuels and Minerals Experimental Station under the Ministry of Agriculture in Rio de Janeiro as well as state-level tax exemptions and subsidies to increase alcohol production and consumption for cars in Ceara, Rio Grande do Norte, Paraiba, Alagoas and Rio de Janeiro. 30 Alcohol mixtures produced for commercial use on the market were of Òvarious mixtures of alcohol with ether, kerosene, gasoline, and so forth, generically designated ⁄lcool -motor [my emphasis].Ó 31 Probably the most popular of the broader variations of ⁄lcool -motor were USGA and Azulina brands, produced in Alagoas and Pernambuco since 1928, respectively. However, formal federal efforts to support ethanol began in the 1930s following the collapse of the world market and the subsequent oversupply of sugar. Following ÒThe Revolution of 1930,Ó economic conditions in the country encouraged Vargas and his close advisors to pursue alcohol production as a means to cut oil imports, stabilize the balance of payments, and help the sugar industry in the early 1930s. Unlike the is the role of consumerism - particularly but not exclusively elite buying habits - in shaping the Brazilin desire for industrialism.Ó This point is particula rly true in relation to the car. 29 Presidential message of 1922 to Congress, President Epit⁄cio Pessoa. Apud. Andrade, 1952: 94 cited in Santos, 39. 30 Nelson Coutinho, ÒEconomia e Indœstria Alcooleiras (III),Ó Brasil Acucareiro , Vol. 26, no. 4 (April): 182 in Santos, 39; Szmrecs⁄nyi, 178. For more on early alcohol production, see Santos, 32Ð40. 31 Santos, ÒAlcohol as Fuel,Ó 40. 53 United States, which had to protect large domestic oil interests, Brazil had long -term incentives to increase alternative options as a non-oil producing country with expanding oil imports. 32 At the same time, the countryÕs foreign debt immediately skyrocketed as the diminished coffee prices drove down the amou nt of foreign exchange the country received. Imports, including oil, quickly created a national deficit that alarmed policymakers .33 Federal promotion of ethanol began with Decree 19.717 of February 20th, 1931. President VargasÕ decree, supported by the Ministry of Agriculture, required that gasoline importers add a minimum of 5% mixture of domestically produced anhydrous alcohol to its commercial gasoline. 34 The Decree encouraged ⁄lcool -motor production for use in standard engines. This fuel was a mixture of regular gasoline and alternative sources. Carburante nacional , included gasoline and anhydrous alcohol exclusively, while less official variations included gasoline and less expensive inputs like hydrous alcohol, kerosene and other ingredients. 35 The decr ee allowed importers to add other products to the requisite alcohol and gasoline mixture pending approval by the Ministry of Agriculture for the formula used. All of these mixtures provided gasoline importers with a sales tax exemption on alcohol. 36 32 Germany, France, and England also aggressively explored expanding alcohol from an agricultural product in the early 20th cent ury. See Kovarik, ÒHenry Ford, Charles Kettering and the Fuel of the Future,Ó 7Ð27. The IAA would continue to publish about other countriesÕ research and experiments in its monthly magazine, Brasil A“ucareiro as well. 33 Werner Baer, The Brazilian Econo my, 35Ð36; Santos, ÒAlcohol as Fuel,Ó 54. The national balance of payments was -$116,100,000 USD in 1930 and quickly recovered to 15,800,000 in 1931. While such economic conditions donÕt draw attention today, this was a point of concern for policymakers in the 1930s. Abreu, A ordem do progresso , 399. 34 Pereira, O problema do ⁄lcool -motor , 6. For a more detailed account of the governmentÕs early efforts to encourage alcohol production from 1931 to 1933, see Santos, ÒAlcohol as Fuel,Ó 53Ð64. 35 Melo, A pol™tica do ⁄lcool -motor no Brasil , 22. Beyond Usga and Azulina, other variations included Nog and Motoli in Campos, Motorina in Paraiba, and Cruzeiro do Sul in S‰o Paulo. 36 Santos, ÒAlcohol as Fuel,Ó 56Ð57. 54 In fac t, Decree no. 19,717 went to great lengths to incentivize anhydrous alcohol production. This included an increase on the import duty of cylinder heads used in low compression rate engines which ran on gasoline, and a 20% decrease in duty rates for those with better compression rates that could thus run on alcohol, the exemption from import duty for all material and equipment used in the construction of usinas producing anhydrous alcohol and a minimum reduction of 50% in the transport cost of denatured alcoh ol, or that mixed with other substances, relative to pure gasoline. 37 These tax breaks were meant to incentivize production through the market rather than extensive state intervention. While alcohol variations expanded relatively quickly, these initial government incentives to encourage anhydrous alcohol production generally failed. For example, the provisional government enacted an incentive program with Decree 20.356 on September 1st, 1932, which offered a Òprize of 50 million reis to the first plant to manufacture and redistill anhydrous alcohol that is established in each of the states of Rio de Janeiro, Pernambuco, or S‰o Paulo, with the capacity to produce, at minimum, fifteen thousand liters daily of alcohol (anhydrous) by March 31, 1932.Ó38 The compe tition was open to producers in Rio de Janeiro, Pernambuco, and S‰o Paulo, already indicating the targeted alcohol production markets, given their proximity to the largest consumer markets in the country. Yet, no producer met the deadline. Contributing to the early incentivesÕ failure, the installation costs far exceeded the incentive thus deterring producers from participating in competition. At 50 million reis (roughly 37 Santos, ÒAlcohol as Fuel,Ó 58. 38 Pereira, O problema do ⁄lcool -motor , 8Ð9. The Brazilian currency, which was the mil-r”is until 1941, switched to the cruzeiro da reforma from 1942 to 1966, and the new cruzeiro da reforma from 1967 (equivalent to 1000 cruzeiros in 1942) until 1985. In 1970, the term new cruzeiro was replaced by the cruzeiro. The government changed the currency in an effort to control persistent inflation in Brazil. Marcelo de Paiva Abreu (org), A ordem do progresso: cem anos de pol™tica econŽmica republicana, 1889Ð1989 (Rio de Janeiro: Editora Campus, 1990), 413. 55 $4,000 USD), the cost of installation rather than continuing with sugar production, even if subsidized by the IAA, was not enough to incentivize the investment necessary, particularly in the short time allotted. Producing alcohol required additional equipment necessary to distill the product, usually a byproduct of sugarcane like molasses, into alcohol. Distillers would have to import expensive equipment to begin distillation and dehydration at the level required for anhydrous alcohol production that exceeded the incentives provided. Instead, paulista producers preferred to dump excess alcoh ol rather than incur the costs of processing it into fuel alcohol. 39 Following the initial decree, President Vargas and the Ministry of Agriculture established the Commission of Studies on Alcohol -Motor (Comiss‰o de Estudos de çlcool Motor ) and the Combusti bles and Minerals Station (Esta“‰o de Combust™vies e Mineiros ) in August and September 1931, respectively. The Ministry of Agriculture supervised the two entities, which they established to improve the infrastructure so criticized with the first incentive program. This included a Òtechnical inspection serviceÓ to enforce fiscal penal ties against violators of the regulations. 40 Both led research and experiments on optimal levels of alcohol mixture with gasoline. 39 Santos, ÒAlcohol as Fuel,Ó 57n22 citing Pereira, O problema do ⁄lcool -motor , 11Ð12. The distillation process for anhydrous alcohol was somewhat expensive because of the requisite equipment. Alcohol production is at its base the fermentation of sugarcane into alcohol. The process distills molasses leftover after sugar juice extraction using a fermentation process. In this process, the molasses ferments by mixing in yeast and is distilled. Drinking alcohol is distilled to around 74 to 96% purity while hydrated alcohol is distilled to 96% purity (traditionally measured in Gay-LussacÕs degrees). Anhydrous alcohol requires dehydration (equal to or higher than 99.5% at 68 degrees Fahrenheit), which cannot be attained simply through distillation. Rather it requires the mixture of an additional dehydrator, most traditionally benzol in Brazil beginning in the 1930s. This additional processing requires more equipment than a sugar mill would have plus the cost of importing benzol, which was not produced in Brazil at the time. Santos, ÒAlcohol as Fuel,Ó 39a and 116Ð117. 40 de Melo, A pol™tica do ⁄lcool -motor no Brasil , 21; Santos, ÒAlcohol as Fuel,Ó 58Ð59. 56 Like the sugar policies of the early 1930s, these early interventions yielded limited results. As Szmrecs⁄nyi notes, these early decrees about alcohol Òdid not produce practical results until the advent of the IAA, in 1933Ó because of the Òlack of technological infrastructure and [É] the insufficient economic stimuli offered by the Government.Ó 41 Mixtures remained inconsistent in different markets. Distribution depended on large usineiros in primary sugar production markets like Pernambuco, while the primary consumer markets in Rio de Janeiro and S‰o Paulo struggled to expand production quickly. Moreover, there was little penalty for non-compliance, hindering these early efforts. 42 Nevertheless, the governmentÕs role in both sugar and alcohol production in the 1920s and the early 1930s opened the door for more formal intervention in both regulating the sugar industry and constructing an alcohol industry in 1933. The IAA: Formal State Intervention in Sugar and Alcohol, 1933-1942 On June 6th, 1933 with Decree n. 22.789, Getœlio Vargas and the Provisional Government created the Institute of Sugar and Alcohol (Instituto de A“œcar e do çlcool - IAA). 43 The IAA, one of many autarchies President Vargas established for agricultural commodities, formalized the federal governmentÕs explicit role in sugar and alcoho l policy planning. 44 The IAA adjoined the previously separated Sugar Production Defense Commission (Commiss‰o da Defesa da 41 Szmrecs⁄nyi, O planejamento , 172. 42 Santos, ÒAlcohol as Fuel,Ó 64. 43 Pereira, O prob lema do ⁄lcool -motor , 21. 44 These autarchies, including those for coffee and cotton amongst others, were semi-autonomous governmental bodies that were able to exert decisive and somewhat independent control of the related agricultural industry behind Varga sÕ approval. Their protectionist polices are part of a broader policy of dirigismo economico , which was VargasÕ own form of import -substitution policies that dominated Brazilian industrialization policies in the 1940s and 50s. Nunberg, ÒState Intervention, Ó 13Ð18; Love, Crafting the Third World , 147. Amanda Hartzmark provides an interesting analysis of the power of the IAA compared to other autarchies in the period. See Hartzmark , ÒBusinesses, Associations, and Regions,Ó 59Ð61. 57 Produ“‰o do A“œcar - CDPA) and the Commission of Studies about Alcohol -Motor Commission (Comiss‰o de Estudos sobre o çlcool -Motor ). The IAA had two objectives: first, to eliminate overproduction and stabilize sugar prices, and second, to construct and/or equip distilleries for the production of anhydrous alcohol. 45 While the institution garnered a great deal of support from President Varg as, the President of the IAA and the Executive Commission guided sugar policy. Vargas nominated Truda, the CDPA President, to be the first IAA president, which he held jointly with the presidency of the Bank of Brazil until 1938. Within the IAAÕs power structure, headquartered in Rio de Janeiro, the Executive Commission allowed representatives from each state and various groups within the industry to influence sugar policy. Transferred from the CDPA to direct policy in the IAA, members included the represen tative from the Bank and Ministries along with nominated representatives for usineiros, planters, and suppliers. 46 The IAAÕs first objective was to control sugar production. It would do this first by employing quotas to each producer. Sugar producers were required to register with the IAA. They would receive a production quota based on their land and previous three harvest production cycles. In 1933, the IAA set quotas for sugar production at 200 modernized mills. However, these quotas did not apply to smaller, more traditional sugar production facilities until 1935, 45 Szmrecs⁄nyi, O planejamento , 180Ð185. 46 The executive commission included: four delegates one each from ministries of finance, agriculture, labor, industry and trade, and the bank to be contracted, namely the Bank of Brazil; four other delegates were chosen by representa tives of the usineiros from states whose sugar production exceeded 200,000 sacks of sugar per year (Pernambuco, Alagoas, Rio de Janeiro, and S‰o Paulo). Those usineiros not chosen for the Executive Commission along with planter representatives for those that produce more than 160,000 tons sat on the Advisory Council, which participated in meetings but had no voting rights. Usineiros had formal access the Executive Commission while suppliers were restricted to the Advisory Council. Santos, 81Ð82. 58 illustrating the challenges to instituting the sugar limitations the IAA was meant to employ. 47 Beyond setting production quotas, the IAA controlled the pricing of sugar product s, from table sugar to alcohol, and handled the commercialization of these products. 48 The IAA tied its sugar production objectives to the expansion of ethanol production. Alcohol for combustion addressed both of the IAAÕs objectives by potentially cutting petroleum imports, thus addressing the ballooning trade deficit, and salvaging the dire situation of the Northeastern -dominated sugar industry. The Institute encouraged ethanol production as an outlet for excessive sugarcane production above the mandated levels. By creating another domestic market for excess sugar production, ethanol production and consumption would protect sugar producers, particularly Northeastern producer s, from the unstable world prices and overproduction that plagued the industry. 49 Rather than dumping excess sugar, which was a strategy employed in coffee valorization efforts, the sugar defense focused on redirecting excess sugar into alcohol production for fuel. 50 This would ideally create a self-sufficient sugar industry in which sugar profits subsidized the alcohol distilleries, which would absorb excess sugar production to ideally reach a market -regulated equilibrium. 51 47 Hartzmar k, ÒBusinesses, Associations, and Regions,Ó 67. 48 Lima and Marcondes, çlcool carburante , 48Ð49. The IAA set the selling price of anhydrous alcohol delivered to gasoline distributors while the National Petroleum Council (CNP) adjusted alcohol mixture prices based on the IAAÕs pricing as stipulated in Decree 22,799 of 1933. The CNP usurped the IAAÕs pricing power in 1966, at which point the CNP set the price of the alcohol mixture and the IAA had to adjust to the price to the distributor accordingly. Santos, ÒAlcohol as Fuel,Ó 129, 149Ð150, and 171. 49 Pereira. O problema do ⁄lcool -motor , 16; Dias de Moraes , A desregulamenta“‰o , 50Ð53. 50 Dr. Gercino de Pontes, Ò A indœstria no Brasil, depois de 1928Ð1929,Ó Brasil A“ucareiro III, Vol. VI (September 1935): 21. It is important to note the usage of the term ÒdumpingÓ in this case. Economically speaking, it meant dumping underpriced products on the world market to manipulate prices. The IAA approved dumping some sugar on the world market to diminish stocks for Northe astern producers by selling under the regulated price in order to manipulate and stabilize prices on the domestic market. 51 Santos, ÒAlcohol as Fuel,Ó 67 citing Pereira, O problema do ⁄lcool -motor , 18. 59 The IAA created the Section on Alcohol -Motor within its government infrastructure to control all alcohol research, the reception of alcohol from producers, preparation and delivery to distributors, and sales of the new product. 52 Although Vargas had already mandated a 5% mixture in 1932, the Alcohol -Motor Section organized the supply and distribution of alcohol -motor based on consumption. Each consumption zone received different alcohol -motor mandated mixtures based on distribution access. The Section set mandates of 20% alcohol and 80% gasoline for the majority of the country. 53 Thus, many areas consumed higher levels of alcohol than the mandate. Additionally, the Institute was the sole supplier of anhydrous alcohol to gasoline distributors. In Rio de Janeiro, the IAA mixed the gasoline and distributed the new ⁄lcool -motor to the gas stations. In Santos, it delivered the mixture to gasoline importers, which they were obligated to purchase. The primary points of distribution, situated near the largest consumer and production markets in the country, were the city of S‰o Paulo, Ponte Nova (MG), Recife (PE), and Campos (RJ). 54 The new gasoline met mixed reviews with consumers. Engineer Eduardo Sabino de Oliveira led research on the proper mixture levels in the IAAÕs Technical Section, confirming that anhydrous alcohol could reach as high as 25% without requiring adjustments in high compression motors. Problems were not related to actual car performance as much as aesthetic perceptions. Marketed as Ògazolina rosada,Ó or pink gasoline, consumers were wary of the new 52 de Melo, A pol™tica do ⁄lcool -motor no Brasil , 69. 53 According to de Melo, Rio de Janeiro, Northern S‰o Paulo, Espirito Santo, Bahia, and Minas Gerais (zone 1), the city of S‰o Paulo (zone 3), and the Northern states of Para, Amazonas, Manhao, Piaui, Ceara, and Acre received mandated mixture rates of 20% alcohol and 80% gasoline while Pernambuco, Paraiba, Rio Grande do Norte, Alagoas, and Sergipe received mandates of 40% alcohol and 60% gasoline. Note that alcohol motor still failed to reach mandated distribution and consumption in certain areas of the country, including the interior of S‰o Paulo, Parana, Santa Catarina, Rio Grande do Sul, Mato Grosso, and Goias. de Melo, A pol™tica do ⁄lcool -motor no Brasil , 69. 54 Ibid, 73. 60 color and unsure of engineÕs ability to run on the new mixture. Popularity for the mixture grew after distributors removed the additive that colored the product. 55 Yet, production and distribution fell well short of the mandated demand. Such shortcomings were not because of a lack of raw material in these early years because sugar overproduction continued, but rather a shortage in production capacity and inadequate price incentive s for producers .56 By 1936, production was not even half of the amount necessary to meet the nationally mandated mixture quota. 57 Production of alcohol in S‰o Paulo sat around 6.5 million liters when the capital alone would need 7.2 million liters to meet the 10% mixture rat e promoted by the IAA. 58 The failure to reach national production goals encouraged more direct action by Truda and the Executive Commission. The IAA board established its own distilleries in an aggressive attempt to spur production. Article 4b of the origin al IAA Decree n. 22.789 states that one of the central goals of the IAA was to Òencourage the production of anhydrous alcohol, through the installation of central distilleries in locations most recommended or helping [É] usineirosÕ cooperative and syndicat es [É] to install distilleries individually or to improve their current installations.Ó 59 As the prohibitive initial cost of early alcohol distillation had limited production, the IAA invested in building its own central distilleries in major production and consumption markets as well as offering substantial financing for additional private distilleries. The Institute financed 50% of the 55 de Melo, A pol™tica do ⁄lcool -motor no Brasil , 42Ð45. 56 See Table 12 and Table 13 in the Appendix of this dissertation for alcohol -motor production between 1932 and 1950 as well as production capacity between 1932 and 1940. 57 ÒGazolina Rosada,Ó Gazeta de S‰o Paulo (July 29th, 1936) as republished in Brasil A“ucareiro Vol. VII, n. 6 (August 1936), 402. 58 Ibid. Composed of 90% gasoline and 10% anhydrous alcohol, Ògazolina rosadaÓ was the commercialized name of the first official alcohol -motor mixture. Named for its unique pink tint, it was actually less popular because of the coloring and later removed for natural gasoline coloring. See de Melo, A pol™tica do ⁄lcool -motor no Brasil , 46. 59 de Melo, A pol™tica do ⁄lcool -motor no Brasil , 30 citing Decree n. 22.789 of June 1st, 1933. 61 installation costs for six different distilleries. It also completely financed two IAA -owned distilleries, the first opene d in Campos, Rio de Janeiro in 1938 and the second, located in Cidade do Cabo, Pernambuco, opened in 1940.60 Given that the IAAÕs role as the sole purchaser of sugar in the country, it directed excess sugar produced in the region from local sugar producers toward the new central distilleries. While the IAA invested in central distilleries, usineiros in the Association of Usineiros of S‰o Paulo instead directed IAA -financing toward distribution and private firms. The intermediary company, the Paulista Industr ial Alcohol Company (Companhia Industrial Paulista de çlcool - CIPA), exclusively controlled the stateÕs alcohol distribution in association with the IAA. CIPA, Òthe corporation constituted by the majority of paulista usineiros,Ó was the first paulista comp any to receive IAA financing for alcohol production. 61 It received 16,000,000 mil-reis (roughly $130,000 USD) for installation and equipment, which it used to equip wagon -tanks for transportation. 62 The Association sugar producers distributed their alcohol to CIPA, which then distributed the alcohol to gasoline distributors in the state. Their actions and interests ensured S‰o Paulo would not receive a central distillery. Notably, this laid a foundation for greater private investment in alcohol production and distillery development that would transform S‰o Paulo usineiros into leading alcohol producers by the 1970s. 60 de Melo, A pol™tica do ⁄lcool -motor no Brasil , 50Ð53; Santos, ÒAlcohol as Fuel,Ó 75n36. The six initial distilleries that received 50% of the funding from the IAA for installation were: the Distillaria dos Productores de Pernambuco (Azulina), the Distillaria dos Productores de Pernambuco (nova), Usina Catende , Central Barreiros, Distillaria de Alagoas, and the Cia Industrial Paulista S/A. The first four were located in Pernambuco. The last was a S‰o Paulo distribution company, which worked in association with the IAA. A third IAA -owned and operated distillery, located in Alagoas, opened in 1960. 61 ÒA entrega da primeira partida de alcool motor ‹s companhias de gazolina em S‰o Paulo,Ó Brasil A“ucareiro Vol VI (February 1934), 368Ð372. 62 Ibid. In S‰o Paulo, the first delivery of alcohol was made in January 1934. CIPA delivered alcohol produced at the Usinas Monte Alegre, Piracicaba, Santa Barbara, and Itahiquara. 62 In the initial years of the IAA, President Truda spent an extensive amount of time defending the IAAÕs limitation policy and convincing sugarcane producers to abide by the policies. For example, at a S‰o Paulo conference in January 1934, President Truda addressed paulista producersÕ unhappiness with the production limitations, stressing the national need for the policy over their own interests. He stated, ÒNot only should there not be, in the solution of the [sugar] problem that we face, particular preoccupations with overlapping general conveniences and the ultimate imperatives of the nation, rather that the true solution will be, really, in the reconciliation of these interests during the clear crisis.Ó 63 At the same time, he rallied support for alcohol production. For example, he stressed to Pernambucan usineiros that Òwe can now take the first steps toward that which ought to be the definitive solution: the transformations of excess [sugar], [É], into a product that greatly interests the national economy, for which we will have practically limitless application and will alleviate the country greatly from the cost that the urgent demands for our advancement in progress increase yearly. This solution will be carburante nacional , ⁄lcool -motor.Ó 64 President Truda worked hard to ease the tensions between S‰o Paulo producers, who felt the IAA limited their production abilities in the growing southern market, and those in the Northeast, who felt the expansion of paulista sugar production threatened their hold on the national market. Truda highlighted the IAAÕs efforts to address national interests as a whole. Alcohol production was central to this argume nt and his early policies. The importance of the emergence of the state-led alcohol intervention and its disposition to favor southern producers is significant. In Barbara WeinsteinÕs compelling study of racialized difference from the Northeast in the crea tion of a paulista identity, she notes the connections between ideas of whiteness and progress and modernization in the formation of the exceptional 63 Leonardo Truda, A defesa da produ“‰o a“ucareira (Rio de Janeiro: IAA, 1971), 50. 64 Truda, A defesa da produ“‰o a“ucareira , 77. 63 paulista identity in contrast to the NortheastÕs increasingly impoverished and black image. 65 The developmen t of the sugar and alcohol industry, though in name supported by the government to bolster the Northeastern economy, contributed to this racialized ideology of regional inequalities in the 20th century. By the 1930s, these ideas were already taking form in paulista identity formation and the sugar industry would be an important platform on which the economic realities and social differences of the two regions would clash for paulista sugar producers. Indeed, the new sugar policies structurally favored Northeastern producers. The IAA continued the sugar tax program initiated in 1931 under the CDPA, in which producers that did not store 10% of their sugar destined for the internal market (from which those that exported sugar could pro-rate the percentage) would be taxed $5 mil-reis per bag. 66 Southeastern producers were particularly adamant about this policy. As southeastern sugar refiners did not produce enough sugar to supply state demand, IAA production limitations kept S‰o Paulo producers from expanding enough to independently supply consumers in the southeast. This aided Northeasterners hold on the sugar market since the more industrialized southern producers already enjoyed cheaper production costs and most importantly lower transportation costs to the major markets in the southeast. Still, paulista production continued to grow in the south despite the IAAÕs efforts to balance Northeastern and Southern production. Fazendeiros , or coffee plantation owners, transitioned coffee plots into cane fields and new producers entered the market. The opportunities to expand sugar production with the growing regional markets drew many former and current coffee producers into the industry. Sugar quickly established itself as an important 65 Barbara Weinstein, The Color of Modernity: S‰o Paulo and the Making of Race and Nation in Brazil (Durham: Duke University Press, 2015), 2Ð5. 66 Szmrecs⁄nyi, O planejamento , 172; See this chapter, 41Ð42. 64 part of the stateÕs agricultu ral production in the 1930s. In the 1930/31 harvest, S‰o Paulo produced 1,108,510 sacks of sugar and that number had doubled by the 1936/37 harvest (2,248,370 sacks). 67 State 1934 1936 1938 1940 S‰o Paulo 481,400 4,052,248 4,443,053 15,192,588 Pernambuco 22,615 9,035,350 11,830,405 18,008,819 Alagoas 187,722 894,189 2,245,142 4,076,372 Rio de Janeiro 203,158 3,811,279 13,296,884 15,674,733 TOTAL 911,861 18,462,432 31,919,934 53,473,533 Table 3: Anhydrous Alcohol Production by Major States (in liters), 1934Ð194068 Source: de Melo, A pol™tica do ⁄lcool -motor , appendix. Many sugar producers that emerged in this period would have an important impact on future sugar and alcohol production in S‰o Paulo. The French owned company Soci” t” des Sucreries Br”siliennes dominated early sugar and alcohol production in the state with three usinas in the region and the first anhydrous alcohol distillery in Piracicaba. 69 By 1933, only one usina in the country produced pure anhydrous alcohol, and it was located in S‰o Paulo. The French -owned Usina Piracicaba produced 100,000 liters of anhydrous alcohol. 70 Although the the Usina Piracicaba was the first to produce anhydrous alcohol in the state (and the country), other domestic producers from the inte rior of S‰o Paulo entered the market in the following years .71 67 Gileno D” Carli, ÒGeographia economica e social da canna de a“ucar no Brasil,Ó Brasil A“ucareiro , Year 6, Vol. X (January, 1938): 391. 68 By 1940, eight distilleries produced anhydrous alcohol in Pernambuco, including the IAAÕs Destilaria Central President e Vargas, three in Alagoas, nine in Rio de Janeiro, and twelve in S‰o Paulo. These four states were the largest alcohol producing states in the country. 69 The firm owned five usinas altogether, including the Villa Rafard, Porto Feliz and Piracicaba usinas in S‰o Paulo and the two in Rio de Janeiro. ÒNotas e Comentarias,Ó Brasil A“ucareiro Vol. III (June 1934), 239. Margarida Cintra Gordinho, Do ⁄lcool ao etanol: trajetŠria œnica (S‰o Paulo: Terceiro NOME/Unica, 2010), 44. 70 de Melo, A pol™tica do ⁄lcool -motor no Brasil , annex. 71 By 1940, twelve private usinas produced anhydrous alcohol in S‰o Paulo. Of these twelve, domestic producers owned nine (Amalia, Ester, Itaiquara, Itaquer’, Junqueira, Monte Alegre, Santa B⁄rbara, Tamoio, Vassununga, and Iracema) in addition to the three French firms listed 65 Although the French company dominated early sugar and alcohol production in the region, many immigrant families started sugarcane firms in this period that would eventually surpass the larger international firm. For example, Maurilio Biagi, son of Pedro Biagi (discussed in the previous chapter), purchased the engenho , or small sugar mill, Santa Elisa in 1936 with his brothers, Baud™lio and Gaudencio Biagi, and their partner Jo‰o Pagano. 72 The familial connections between these immigrant families were an impo rtant part of the expanding sugar production network in the interior of S‰o Paulo, as the BiagiÕs cousin, Jo‰o Marchesi was a major sugarcane producer in S‰o Paulo as well.73 S‰o Paulo producers quickly expanded combustible alcohol production as well, taking advantage of federal incentives and their access to BrazilÕs largest consumer market. The usinas Itaiquara, Monte Alegre, Santa Barbara, Raffard and Vassununga opened distilleries in 1935, producing a composite 37.500 liters of alcohol in that year alone. 74 By the 1934/1935 harvest, S‰o Paulo was the third leading producer of alcohol in the country behind Pernambuco and Rio above. Together these twelve usinas produced almost 30% of all anhydrous alcohol produced in the country in 1940. See Table 3 for production distribution in comparison to other major usinas in the country. Amanda Hartzmark notes the disappearance of the French firm by the 1960s as standardization and personal connections became more important aspects of the sugar industry behind growing regional associations. Hartzmark, ÒBusinesses, Associations, and Regions,Ó 231Ð232; see also, Ramos, Agroindœ stria canavieira , 100. 72 Moacyr Castro, ÒPedro Biagi,Ó 129. In fact, Pedro Biagi had sold his part in the Usina Barbacena in 1929. He then purchased the fazendas Santo Antonio and Retiro Bianconi with his cousin Jo‰o Marchesi but sold his shares not long after. Marchesi founded the Santa Elisa engenho and named it after his deceased daughter. This is the mill that the brothers would then purchase in 1936 and transform into an usina. 73 Pedro RamosÕ work on land and ownership and the sugar industry in 20th century highlights the importance of these familial connections to the expansion of the sugar industry in Piracicaba, S‰o Paulo, particularly for the influential Ometto family, which owned 9 usinas in the Piracicaba region by 1950. Even though the largest usina in S‰o Paulo in the early 20th century was located in the Ribeir‰o Preto region (the Usina Junqueira in Igarapava, S‰o Paulo), Piracicaba had the largest concentration of usinas in the state from the late 19th century unti l the 1950s, after which Ribeir‰o Preto producersÕ emerged as a more dominant region. Pedro Ramos, Agroindœstria canavieira , 86Ð89. 74 de Melo, A pol™tica do ⁄lcool -motor no Brasil , 49Ð53. 66 de Janeiro. 75 However, it transformed a larger percentage of sugarcane directly to alcohol (47.8%) than Pernambucano producers (40.8%). By mid-1937, nine anhydrous alcohol distilleries were in operation and three more were under construction in S‰o Paulo. 76 As President Truda noted at the first Conference on çlcool -Motor hosted in S‰o Paulo, ÒIn no other state, however, has the particul ar initiative been more active than in S‰o Paulo; no region outweighs this region [S‰o Paulo] in the speed and efficiency of the [sugar] solution[.]Ó 77 Indeed, within the state of S‰o Paulo, the Ribeir‰o Preto usineiros began investing in alcohol production as well. The Usina Santa Elisa began producing alcohol in 1939, which was only three years after Maurilio and his brothers purchased the usina. 78 Given the short period allotted between cutting and processing sugar, producersÕ selection of sugarcane products for the harvest were closely monitored and often predetermined. Producers could technically decide upon collection how to distribute the sugarcane toward each byproduct, but the IAA provided quotas for sugar production with tight mandates for byproduct s as well. While it might logically seem that producers could easily redirect excess sugarcane away from table sugar and toward another byproduct, this was not always the case. Necessary equipment, restrictive quotas on byproducts like aguardente, and a higher price for sugar than 75 Dr. C. Boucher, ÒAlgumas deduc“łes tiradas das estatisticas publicadas no Ôannuario a“ucareiro,ÕÓ Brasil A“ucareiro Vol. VI (September 1935), 15Ð18. 76 This was significantly more than the four distilleries in Pernambuco, one each in Paraiba, Alagoas, and Minas Gerais, and even more than the seven in operation in Rio de Janeiro, including the IAAÕs own central distillery in Campos. 77 Leonardo Truda, ÒA Victoria do çlcool,Ó Brasil A“ucareiro Vol. X, n. 2 (October 1937), 93Ð105. As the largest consumer market and the dominant car market, the city of S‰o Paulo was an important hub for alcohol promotion. President Truda nominated the city of S‰o Paulo to host the ÒAlcohol -Motor WeekÓ and the first Conference on Alcool -Motor as part of the Week in October 1937. The week hosted a series of public demonstrations, some of which were held on the popular Avenida Brasil, to commercialize the viability of alcool -motor and the IAAÕs efforts around alcohol research and production. 78 Hasse, Filhos do fogo, 90. The Usina Santa ElisaÕs first harvest produced 18,781 sacks of sugar. 67 alcohol often left sugar producers reticent or unable to redirect sugarcane toward other byproducts. Nevertheless, government policies that limited paulista sugarcane production incentivized some local entrepreneurs to favor incr eased alcohol distillation. While the Executive Commission denied most petitions to expand sugarcane production, petitions that linked a request to expand production to produce more alcohol sometimes succeeded. 79 Take the case of Gon“alves Coelho, a produce r from Ponte Nova, Minas Gerais who requested leniency on his IAA -mandated sugar quota in 1941.80 Like many cane growers, Coelho failed to follow the strict sugar quotas put in place by the IAA because he could not make enough profit from limited production . Coelho claimed that he had planted cane for a far larger harvest than his requisite quota permitted prior to receiving his restrictions. Unlike many other requests for a quota extension, Coelho offered a solution to his overproduction. He requested that the IAA allow him to open an alcohol distillery where he could produce anhydrous alcohol from his excess production. The IAA approved the expanded production. 81 The IAA practiced leniency in CoelhoÕs case because he exploited the IAAÕs predilection to favo r ethanol production objectives. The IAA was also a major financier of a central distillery 79 Files of cases exist at the National Archives. A few examples include, Senhor Joao Alves Nunes, requested extension March 22nd, 1941; Srs. Benjamin Duarte da Silva, Vicente Voltoline, Antonio Andr eoli, etc., Tijuca, March 27, 1941. Extension requests and the Executive Commissions decisions were often issued in the beginning of Brasil A“ucareiro issues in the 1930s and 1940s. Some examples of rejected requests published in the monthly magazine inclu de, ÒUsina Junqueira,Ó Brasil A“ucareiro Vol. IX (March 1937), 6. 80 Correspondence letter from Gon “alves Coelho of Ponte Nova, Minas Gerais sent to the IAA on May 8th, 1941. National Archives: Instituto do A“œcar e do çlcool, LAPA 459, Dept. 508. 81 IAA correspondence no. 103 of October 18th, 1941, response to Gon “alves Coelho of Ponte Nova, Minas Gerais; the Official Cabinet approves of the IAAÕs approval on October 29th, 1941. National Archives: Instituto do A“œcar e do çlcool, LAPA 459, Dept. 508. 68 in Ponte Nova in 1941.82 As such, CoelhoÕs expressed interest in expanding alcohol production would have been particularly favorable in a market that the IAA had already invested additional funds to promote alcohol production. However, this is but one example of various requests that redirected petitions for quota expansions toward incentivizing anhydrous alcohol production instead. 83 It would seem the IAA was far more lenient when producers aligned their own interests with those of the federal governmentÕs. 84 This is yet another reason southeastern producers were able to expand -- or at least evade quota limitations on -- their sugarcane fields despite increased IAA res trictions. In S‰o Paulo, the Soci”t” de Sucreries Bresiliennes enjoyed similar relief from excess sugar penalties in the 1940/1941 harvest. The firm first requested to transform the alcohol remaining from the current 1940 harvest above their usinasÕ quota into alcohol. The Executive Commission discussed the case at the July 4th session and decided on the following conditions to permit alcohol production. First, the SocieteÕs three usinas could process the excess 34,354 sacks of sugar (2,061.24 metric tons of sugar) from the 1940 harvest into anhydrous alcohol exclusively. However, upon verification by the Institute of the firmsÕ compliance in 1940, the IAA would reduce the quotas of the three usinas in the 1941/42 harvest by the equivalent 34,354 sacks of sugar processed in the 1940/41 harvest. The Commission considered the arrangement a Òfavorable solution, because of the urgent necessity of alcohol, for the maintenance of the mixture in S‰o Paulo. The immediate production of anhydrous alcohol, in the indicated conditions, will equal the supply of more than 1 million liters [of alcohol], which will be able to maintain the [gasoline - 82 ÒPol ™tica A“ucareira,Ó Brasil A“ucareiro , Vol. XVIII, n. 3 (September 1941), 3Ð4. 83 This is based on my review of a limited number of cases from the LAPA 459, Dept. 508, 1941 at the National Archives. 84 Pereira, O problema do ⁄lcool -motor , 51Ð52. Pereira notes that sugar producers remained reticent given price differentials between alcohol production and sugar production, in addition to equipment limitations, instead preferring to try to export or hold sugar stocks in hopes of possible relief from producti on limitations. 69 alcohol] mixture, until the definitive beginning of the production of alcohol in all the distilleries in the state.Ó 85 Unde r such conditions, the IAA approved the request. Even so, the commission required that the producer still have to pay the defense of sugar tax on the excess sacks even though it would ultimately end up as alcohol on the market. Nevertheless, the important position that alcohol held in the IAAÕs sugar defense policy, and particularly the paulista consumer market, drew the stateÕs attention and sympathy in a way that the personal requests could not. While the smaller requests like Sr. CoelhoÕs connected to a region where alcohol production was expanding, the the SocieiteÕs success with its larger request was in part because of the size of its production capabilities and its access to such an important consumerÕs market. These individual cases highlight the IAAÕs efforts to encourage the expansion of private distilleries, and yet, the InstituteÕs hardline commitment to enforcing production limitations at the heart of its policies in this period. Sugar and Alcohol under the Estado Novo, 1937-1942 The IAA consolidated sugar policy in the late 1930s. President Getœlio Vargas ended his constitutional presidency and began his dictatorship, known as the Estado Novo, on November 10th, 1937. After the declaration of the Estado Novo, the IAA reported that Òhappily , for the well being and prosperity of the laborious and honored sugar classes, the new constitution does not alter, rather it consolidates and increases the policy of the defense of sugar production.Ó 86 In fact, the political change offered more power to the IAA, of which Vargas always was a strong supporter. Behind this additional political power, the new IAA President, Alexandre Jos” de 85 ÒDiversas Notas,Ó Brasil A“ucareiro , Vol. XVIII, n. 3 (September 1941), 6. 86 Òç Na“‰o,Ó Brasil A“ucareiro Vol. X (November 1937), 175. 70 Barbosa Lima Sobrinho led the InstituteÕs regulatory power. 87 Trained as a lawyer, the Pernambucan Barbosa Lima Sobrinho was also a journalist, published 70 books, and became a member of BrazilÕs Academy of Letters in 1937. As IAA President, he sought to limit the expansion of S‰o Paulo production by tightening sugar limitation enforcement. While this may have been his inten tion, the results were far from favorable to Pernambucans, supporting continued ire amongst Northeasterners toward usineiros in the southeast to this day. In 1939, the IAA started strongly enforcing limitations in the southeastern region, exacerbating a brewing confrontation between the expanding S‰o Paulo producers and the IAA. Usineiros and fornecedores, or cane suppliers, responded through numerous appeals for leniency to basically whoever would listen. This included numerous complaints through the loca l government, lobbying the IAAÕs Executive Commission, and letters directly to President Vargas. The following examples illustrate larger trends that accompanied important policy changes of the late 1930s and early 1940s. In written complaints, smaller usineiros and cane suppliers from various sugar regions in the country often cited personal struggles to evoke sympathy to win quota expansions. The troubled usineiro Jos” Bruno da Silveira wrote the IAA in 1941 from his remote sugar plantation in Minas Gera is of his Òdesperate situation É overloaded by bills, with children to educate, and a family to take care of.Ó He emphasized his familyÕs Òprecarious and anguished situation,Ó because he had Òthe burden to educate and maintain 12 children, [and to] house more than 400 souls [agricultural laborers and their families]Ó on his rural property. 88 These types of requests 87 President Truda stepped down from the IAA presidency and the Bank of Brazil presidency at the same time. While Andrade de Queiroz, TrudaÕs vice -president in the IAA, took over briefly, Vargas, at the suggestion of Truda, nominated Barbosa Lima Sobrinho to succeed Truda in 1938. 88 Excerpts of various denied requests submitted to the IAA in 1941. National Archives: Instituto do A“œcar e do çlcool, LAPA 459, Dept. 508. 71 were very common in producersÕ petitions for government assistance. Federal authorities, however, rarely softened enforcement of quotas when producers claimed personal hardships in contrast to those that expressed interest in expanding alcohol production. In 1941, the IAA passed important legislation that restructured the relationship between sugar producing classes, further exasperating disdain for its production quotas. Much debated within the Executive Commission and the Advisory Council, the Sugarcane Farming Statute (Estatuto de Lavoura Canavieira -ELC) was the product of more than five years of debate amongst bureaucrats within the IAA, usine iros, and cane suppliers. Since the inception of the IAA, large usineiros increasingly supplied their own cane rather than purchase cane from smaller independent growers. The stabilization of high sugar prices removed large usineirosÕ incentive to rely on outsourced suppliers (fornecedores ), instead spurring usineiros to cut out middlemen and provide their own cane. Their large usineirosÕ expansion pushed out small plantation owners that grew and milled their own cane and fornecedores that supplied sugarcan e to large centralized usinas out of the market. 89 The ELC enforced new quota restrictions that required usineiros to Unsurprisingly, petitions sent by lavradores seem to have won far less sympathy than usineirosÕ requests. Class divisions certainly favored usineiros and fornecedores that were former senhores de engenho , and thus still of a higher class within the larger lavoura , or sugarcane industry. Many studies have highlighted the personal relationship urban and agricultural workers felt toward President Vargas, also known as the ÒFather of Poor,Ó becaus e of his rhetorical position in support of labor in order to garner public support in this era. Cliff WelchÕs study of rural labor movements in the Ribeir‰o Preto region also points to this connection between agricultural rural laborers and Vargas. Brodwyn FischerÕs study of citizenship rights and the urban poor in Rio highlights the important role Vargas played in the imagination of poor people. See Brodwyn Fischer, A Poverty of Rights: Citizenship and Inequality in Twentieth -Century Rio de Janeiro (Stanfo rd: Stanford University Press, 2008) and Welch, The Seed Was Planted , 68. 89 Nunberg, ÒState Intervention,Ó 60Ð61. Nunberg notes by the beginning of the 20th century, centralized usinas were replacing outdated engenhos. Many senhores de engenhos turned into fornecedores that supplied the larger centralized usinas that had replaced their engenhosÕ production. Lavradores worked the land on engenhos and/or usinas. In S‰o Paulo, salaried workers dominated the fields under the colonato system. 72 provide suppliers 40% of their cane quotas to fornecedores along with stipulations on how much usineiros had to pay laborers in the cane fields and the establishment of a court to resolve disputes between labor and capital under the control of the IAA. The ELC had less impact on paulista caneworkers than their northeastern counterparts. Largely identified as sugarcane colonos, paulista sugar cane workers were paid based on a percentage of the value of the cane market price that they collected. 90 Paulista usineiros fought hard to maintain workersÕ status as colonos , rather than sugarcane workers, known as lavradores in the the Northeast , because the system allowed landowners to maintain a constant labor force at minimal cost, evading the ELCÕs new labor and pay requirements for suppliers and field laborers . This low cost centered on workers living on land that they worked, giving landowners Òan extraordinary flexibilityÓ by adjusting to price variations through salary reductions, knowing that Òthe colonos would continue residing on the land, available for work, at a reduced price.Ó 91 The ELC sought to break the increasingly exploitative consolidati on of large sugar complexes that was pushing out smaller producers by the 1940s. The ELC was a far deeper intervention into the sugarcane industry than had initially begun in the 1930s, but it was on par with the degree of state control involved in the alcohol industry. The new IAA President Lima Sobrinho strongly supported the ELC as part of his drive 90 Welch, A semente foi plantada , 283n75. The colonato was a family -based labor system that dominated agricultural labor until the late 1950s. It is best known for its connection to coffee production in S‰o Paulo. The system collapsed in the 1950s, and temporary workers, or bŠias -frias , would emerge as the primary cane laborers in the region and the industry. For more on the changing labor system, see Verena Stolcke, Coffee Planters, Workers, and Wives: Class Conflict and Gender Relations on S‰o Paulo Plantations, 1850Ð1980 (New York: St. MartinÕs Press, 1988). BŠias-frias are also the topic of chapter 6 in this dissertation. 91 Welch, A semente foi plantada , 284. Although paulista usineiros successfully won the differentiation between colonos and other caneworkers in the North east, an amendment to ELC in 1944 would actually grant colonos the same rights imparted on other sugarcane workers in the 1941 statute. Welch, A semente foi plantada , 299; see also, Ramos, Agroindustria canavieira , 104Ð105. 73 to defend not only the economic but also the social structure of the sugar industry. The handpicked Pernambucan successor to President Truda, Lima Sobrinho believed that the unstable position of cane suppliers was a central conflict in the sugar industry that the IAA should address as part of a larger agrarian reform with the sugar sector. He viewed the ELC as a means to prevent deeper chaos within the sector if producersÕ expanding power rendered independent suppliers extinct. The Statute expanded the IAAÕs power to regulate social relations between large -scale mill owners, or usineiros, and small-scale cane suppliers. 92 When the bill leaked to the press in May 1941, the issue expanded to a national debate. In response, some producers used the opportunity to expand their complaints of the hardship endured due to quota restrictions by invoking the topic of ethanol production. For example, the Sugar Industry Union s of S‰o Paulo, Minas Gerais, Rio de Janeiro, and Pernambuco expressed their concerns about the quotas in a letter sent directly to President Vargas. They claimed that the compulsory production quotas would have an Òaltering and disorganizingÓ effect on the industry that would Òinevitably increase various regionsÕ shortage of raw materials within the country, and also affect ethanol production, which is of vital interest to the nation.Ó 93 The usineirosÕ lobbying organizations purposely referenced the potent ially negative impact these quotas might have on ethanol production, knowing that VargasÕ national commitment to ethanol production might draw a more favorable response to their complaint. Their reference to national objectives tries to diminish the IAAÕs other central objective: the control of domestic sugarcane production. 92 Nunberg, ÒState Intervention, Ó 59Ð60, 64; Hartzmark, ÒBusinesses, Associations, and Regions,Ó 82. In fact, former IAA Vice-President Alberto de Andrade Queiroz shortly served as the interim president of the IAA from December 1937 to May 1938. Hugo Paulo de Oliveira, Os presidentes do I.A.A. , Cole“‰o Canavieira n. 19 (Rio de Janeiro: MIC/IAA, 1975). 93 Correspondence letter from the Sindicato da Indœstria do A“œcar de S‰o Paulo, Minas Gerais, Rio de Janeiro, and Pernambuco to the IAA regarding Protocolo do IAA n. 964, sent November 11th , 1941. National Archives: Instituto do A“œcar e do çlcool, LAPA 459, Dept. 508. 74 The producersÕ unions tried, and failed, to exploit this interest in order to win support against the social reforms associated with the ELC. The multiple Sugar Industry UnionsÕ unified complaint was one of sugar interestsÕ many approaches to undercutting the IAAÕs authority. The IAA quickly dismissed their complaint, noting that all sugarcane unions had approved the quota implementation, thus undermining the basis of their compla int. 94 This action reestablished the IAAÕs position as the final authority on sugarcane policy. Although individual petitions directed to the President were common, the united front of the producers contested the IAAÕs power. Indeed, these large producers had moderate success in diminishing some of the original social goals in the final draft, but they failed to block the passage of the statute altogether. The IAA repeatedly drew on its past success in salvaging the industry from collapse in the 1930s to assert its position. However, the letter reveals the tensions enforcement of new federal intervention created. In the first decade after the creation of the IAA, alcohol policy successfully supported the expansion of alcohol production. Maria de Castro Sant os argues that the state Òpenetrated into the alcohol sector to fill the void left by the private sector, which did not come forward in sufficient numbers.Ó 95 From the construction of its own central distilleries to the IAAÕs financing for private distiller ies and its lenience toward producers redirecting sugar production into alcohol, the IAA successfully intervened in the sugar market to create an alcohol market. In fact, alcohol use increased in the 1940s with a new threat to Brazilian energy access. 94 Correspondence letter from the IAA to President Vargas and the Sindicato da Industria do A“œcar de S‰o Paulo, Minas Gerais, Rio de Janeiro, and Pernambuco sent November 14th, 1941 in response to November 11th letter. National Archives: Instituto do A“œcar e do çlcool, LAPA 459, Dept. 508. 95 Santos, ÒAlcohol as Fuel,Ó 79. 75 The IAA and Paulista Influence, 1942-1959 When German submarines attacked Brazilian commercial vessels in 1942, it gave Vargas a casus belli to declare war on the axis powers. Brazilians joined the Allies. However, the threat of additional attacks cut off transportation routes for shipping Northeastern sugar to the Southern market. The World War and German submarines also limited gasoline imports into the country, driving up the demand for alcohol in response. Sugar shortages in the Southeast, particularly S‰o Paulo, forced IAA President Barbosa Lima and the Executive Commission to relax sugar quotas for regional producers, most notably the potent S‰o Paulo producers. First, Barbosa Lima authorized the construction of new usinas and freed quotas, suspending restrictions for production of unrefined sugar and freeing the installation of small sugar plants in Òinsufficiently supplied states.Ó 96 Historian Pedro Ramos notes that the IAA tried to control the subsequent S‰o Paulo expansion because of the IAAÕs intenti on to protect Northeastern producers by only authorizing small production quotas of 400 sacks of sugar per year to new engenhos with Portaria n. 49/43. However, the initial release began a virtual scramble among paulistas to register production quotas. Whi le the IAA had used quotas to restrict entry into the sugar sector in the 1930s, the new policy allowed new producers to break into the industry even though the expansion of paulista production slowed down between 1940 and 1944.97 After Brazil entered Wor ld War II in support of the Allies, efforts to promote alcohol production expanded due to diminished sugar exports and gasoline shortages. One of the most 96 Ramos, Agroindœstria canavieira , 107. S‰o Paulo, Rio de Janeiro, and Minas Gerais were insufficient producers, but the most important had been S‰o Paulo, whose imports had secured the Northeastern producersÕ foothold in the industry. 97 Ramos, Agroindœstria canavieira , 108Ð109. Ramos states that S‰o Paulo production grew by 132% (11% per year) between 1932 and 1940, while it grew by an annual rate of 7.2% between 1940Ð1944. 76 successful and influential moves made by the IAA was the establishment of price parity between alcoho l and sugar in 1942 to encourage alcohol production. The lower price previously offered for alcohol production compared to sugar production had hurt producersÕ willingness to invest in sugar production. Parity resolved this issue. It provided an important incentive given sugarÕs rising price on the world market during the war and the governmentÕs favorable interests in expanding alcohol production. 98 However, a shortage of benzol, a key dehydration ingredient in the production of anhydrous alcohol, hindered alcoholÕs expansion beginning in 1943.99 Given this shortage, very few of the wartime measures lasted long, but this new legislation led to greater ethanol production at warÕs end. 100 President Vargas and sugar policymakers refocused on alcohol productionÕs political importance during the Second World War. As Political Scientist Maria de Castro Santos points out, the war connected the industry and alcohol production to issues of national security for the first time. In late 1941, President Vargas established the National Commission for Fuels and Lubricants with Decree 3.755 in response to the wartime fuel shortage. Led by the Secretary General of the National Security Council, the Commission included the president of the National Petroleum Council, the IAA, a representative from the National Gas Commission, and a representative from the Mines and Metals Council; military ministers also participated in the 98 See Santos, ÒAlcohol as Fuel,Ó 112Ð123. In fact, the IAA launched what Santos colloquially calls the Òalcohol war packageÓ intended to promote greater alcohol production. These polici es met limited success, particularly for anhydrous alcohol given the benzol shortage due to difficulties importing the product during the war. Santos gives a thorough analysis of the package and policy outcomes. 99 See Santos, ÒAlcohol as Fuel,Ó 113Ð117. This shortage encouraged a larger proportion of hydrated alcohol production, which did not require the same dehydration process. Hydrated alcohol, primarily used in industrial products, would continue to grow steadily while anhydrous alcohol production dim inished until the 1970s. See Table 20 for a view of over all alcohol production from 1930 to 1982. 100 Dias de Moraes, A desregulamenta“‰o , 49. 77 Commission. This made alcohol production more than the solution to the sugar problem of the 1930s but also a part of national security concerns because of its role in the reduction of gasoline imports. 101 The political transformations of the post -war period influenced sugar and alcohol policy. Civilian opposition against ongoing dictatorial rule pushed the forc eful end of VargasÕ dictatorship with the pivotal support of the military and a return to democratic elections. 102 The former War Minister General Eurico Gaspar Dutra won the first democratic presidential elections in Brazil since the fated 1930 campaign and took office in 1946. Heavily influenced by liberal economic ideology, the new government moved away from the interventionist directed economic policies of the first Vargas era. Instead, Dutra focused on a liberal economic model, embracing a return to high imports in a less restricted economy. In fact, these initial policies quickly drove the balance of payments back into a precarious situation, forcing the Dutra government to readjust its policies by 1948. 103 WarÕs end also changed the sugarcane producers Õ and politiciansÕ sentiment toward the IAA and its protectionist policies. S‰o Paulo producers led an onslaught on President Barbosa Lima Sobrinho and the IAA itself. For example, the editors of Brasil A“ucareiro dedicated multiple articles to the defense of the IAA and its policies in the monthly magazine in 1945. Newspapers attacked the efficacy of the IAA and its leadership. 104 The debate over the IAA and its very existence reached the newly formed Senate, where the former paulista Executive Commission representative Paulo Nogueira was one of the many vehement supporters of the 101 Santos, ÒAlcohol as Fuel,Ó 113Ð117. 102 Skidmore, Politics in Brazil, 1930Ð1964, 48-54. 103 Skidmore, Politics in Brazil, 1930Ð1964, 69. 104 The IAAÕs monthly magazine republished numerous articles and excerpts from the Correia de Manh‰, Diario Carioca , and other newspapers to rebut their claims in the January and February 1946 editions amongst others. 78 dissolution of the Institute. 105 These battles continued through 1948, as the IAA Executive Commission repeatedly defended itself against efforts to replace the entity first with a Rural Bank under the Ministry of Finance and then under the Agricultural Ministry. 106 Amidst these political battles, the IAA policy extended the more liberal wartime policies established by formally separating national production quotas by state. This freed S‰o Paulo producers alone to expand capacity enough to provide for the largest consumer market in the country where they had previously shared that market with numerous other states, most notably Pernambuco. Decree 9,827 of September 10th, 1946 set producti on quota levels per state based on regional consumption rather than national quotas for a unified national market. 107 The state quotas allowed S‰o Paulo producers to expand production to exclusively meet S‰o Paulo demand. With the largest consumer market in the country and having been a net importer of Pernambucan sugar, the decree untethered paulista production from Northeastern production. As the Southern market expanded in response to higher sugar and alcohol consumption around the major consumer markets, the NortheastÕs hold on sugar production and influence in the IAA diminished. 108 It is worth noting that the shift toward S‰o Paulo in the IAA reflects a broader trend on the national scale in the same period. While S‰o Paulo and its other southern neighbor s, particularly Rio Grande do Sul and Minas Gerais, had dominated politics throughout most of the 105 ÒEm defesa do Instituto do A“ucar e do Alcool,Ó Brasil A“ucareiro Vol . XXVII, n. 4 (April 1946), 336Ð340. 106 Szmrecs⁄nyi, O planejamento , 213n84. For more on the heated battle to end the IAA, paulistas producersÕ role in the battle, and the IAAÕs defense, see Santos, 125Ð126. 107 Szmrecs⁄nyi, O planejamento , 214. 108 For a detailed explanation of what happens to Northeastern sugar production and analysis of why the Southern and Northeastern paths diverged so substantially, see Ramos, Agroindœstria canavieira , 115-139. See also, Hartzmark, ÒBusinesses, Associations, and Regions,Ó chapters 3 and 5. The Northeastern case is beyond the scope of this study. 79 First Republic (1889-1930), the Northeast had remained a political and economic block that had to be appeased. However, as its sugar influence diminished, its primary economic engine lost steam and the southern economic and political interests won greater influence. As noted above, this enflamed long existing disdain between Northeasterners and Southeasterners. In S‰o Paulo, a steady stream of migrants to both rural regions and the city promoted a particularly negative image of Northeasterners that was racially and economically driven. 109 Barbara Weinstein explores the construction of the modern paulista in contrast to the racialized image of the poor, uneducated Northeasterner. PaulistasÕ political dominance, connected to a growing population, its increasingly industrialized economy, and newly created identities of whiteness, stood in contrast to the still predominantly black, rural Northeast. As the IAA loosened its regulation of sugar quotas, its control over alcohol production transformed as well. Yet, alcohol maintained an important position in the expansion of sugar production in the southeast after the war. S‰o Paulo producers quickly entered the sugar market to meet the large S‰o Paulo demand. In fact, the number of usinas in S‰o Paulo grew from 42 in 1946 to 71 in 1947 to more than 90 by 1956.110 A larger alcohol capacity accompanied the construction of new usinas where distilling grew from 43,083,152 liters in 1946 to 51,172,271 liters in 1951. 109 See note above for more on the sugar division, but for a deeper analysis of the social implications of the Northeastern and Southeastern divide, see Odair da Cruz Paiva, Caminhos cruzados: migra“‰o e con stru“‰o do Brasil moderno (1930Ð1950) (Bauru: EDUSC, 2004); Paulo de Martino Jannuzzi, Migra“‰o e mobilidade social: migrantes no mercado de trabalho paulista (Campinas: FAPESP, 2000); and most recently, Barbara WeinsteinÕs work on the construction of the Northeasterner as a racialized other in S‰o Paulo based on economic differences in the country, see Weinstein, The Color of Modernity: S‰o Paulo and the Making of Race and Nation in Brazil . 110 Dias de Moraes, A desregulamenta“‰o , 50Ð51; Ramos, 138. 80 Alcohol production grew disproportionately in hydrated alcohol rather than the IAA prefer red fuel supplement anhydrous alcohol. 111 This was partially related to the difficulty of importing the necessary dehydration components during the war, but the IAA continued to incentivize anhydrous alcohol through various promotional projects and legislati ve incentives as it did in the 1930s. For example, the IAA Executive Commission financed another incentive program in 1945 for construction of an usina and distillery similar to the initial 1931 distillery competition. Exclusively directed toward the const ruction of three usinas and attached distilleries in western S‰o Paulo, the program required that the distillery have a production capacity of a minimum of 15 liters of alcohol per 60kg sack of sugar. To participate, producers had to have a requisite IAA sugar production quota of 30,000 sacks or more, meaning that minimum alcohol production capacity would be 450,000 liters per year. The quota requirement thus excluded many of the smaller new usinas, engenhos, and other sugar production mills that sprang up under the expansionary policies of the Second World War and instead favored larger producers. 112 Key legislation pushed dramatic alcohol expansion. First, President DutraÕs Decree n. 25,174A of July 3rd, 1948 reasserted alcoholÕs national importance, commit ting the Institute to increasing stocks of molasses and alcohol and improving transportation from regional producers to mixture locations and distribution to consumers. These goals were not new to alcohol policy, but the Decree also established price parit y between sugar and direct alcohol (alcohol produced directly from the cane), and it added additional bonuses for those that produced alcohol along with sugar. 113 Additionally, the IAA established the Anhydrous Alcohol Fund (Resolution n. 210/48), which fund ed the additional costs of production for installation and maintenance of 111 IAA, Anuario A“ucareiro Ano XVI- 1950/51 (Rio de Janeiro: IAA), 74. Over 90% of the 1950/51 harvestÕs alcohol was hydrated rather than anhydrous. 112 ÒEditais do IAAÓ, Brasil A“ucareiro Vol. XXVI, no. 1 (January 1946), 36. 113 Santos, ÒAlcohol as Fuel,Ó 130. Lower grade alcohol from reprocessing had lower prices. 81 anhydrous facilities. Finally, the IAA set the goal to produce 114 million liters of anhydrous alcohol nationally. 114 The war-driven expansion in the paulista sugar and alcohol industry incentivized more entrepreneurs in the Ribeir‰o Preto region to invest in the sugar industry with the release of sugar production limitations. Take for example Antonio Paschoal, one of the first metallurgy business owners in Sert‰ozinho. A mechan ic by trade, Antonio worked in metallurgy offices in Ribeir‰o Preto and Piracicaba before taking over his fatherÕs company with his brother Braz, in 1928, which they renamed B. Paschoal & Irm‰o. Antonio worked closely with the Engenho Central in Sert‰ozinh o. His trade focused on producing and fixing mill equipment like boilers and other pieces. In the 1940s, he won a license to produce the alternative gasoline option, gasogene, to great success. 115 Paschoal used these profits to build and invest in various new usinas in the region, including the Usina Santa Lœcia in 1947 and the Usina S‰o Francisco in 1946. Other usinas that opened in this period include the Usina Santo Antonio (owned by the Balbo family) and the Usina S‰o Geraldo (owned by the Simioni family) in 1946.116 The BiagiÕs Usina Santa Elisa continued to grow as well. Pedro Biagi divested his shares in the company to his three sons, Gaudencio, Baudilio, and Maurilio in 1941 because of fears that his status as an Italian migrant might create problems during the war. Maurilio was the real leader of the Usina, transforming the usina Òin his image and semblanceÓ as historian Geraldo Hasse states. Maurilio Biagi was the seventh of PedroÕs twelve sons. He studied accounting at the Salesiano Lyceum in Campina s but was known for working closely with his father and his 114 Szmrecs⁄nyi, O planejamento , 221. 115 Gasogene was an apparatus that attached to the back of an automobile and burned wood, charcoal, peat and other combustibles for fuel. It became a popular option during the fuel shortages of the wartime era. Wolfe, Auto and Progress , 107. 116 Hasse, Filhos do Fogo , 69Ð70, 102Ð105; Marchesi, Jo‰o Marchesi , 22. 82 brothers at their nearby usina in Serrana, the Usina da Pedra, before purchasing the Usina Santa Elisa in December 1936. Maurilio Biagi was deeply interested in technical experimentation to improv e cane cultivation and the use of sugarcane alcohol for combustion. He was an important part of the region embracing both industries. 117 Reforms particular to the Usina Santa Elisa in the late 1940s defined it as a premiere Òmodern,Ó industrialized usina. BiagiÕs son, Maurilio Biagi Filho recounts that Biagi Òstarted to import new equipment and test the national prototypes, copied from foreigners. New cane varieties and planting techniques were installed.Ó 118 For example, Biagi modernized his farming technique s in the late 1940s by incorporating tractors in 1945 and 1946. In the 1950s, Santa Elisa began burning cane to speed up cane collection, which still relied on manual laborers, mules, and wagons to transport cane from the fields to the usina. In 1948, afte r a destructive fire threatened the usinaÕs harvest in 1947, the usineiro began a mixed transportation system that utilized both trucks and wagons to deliver the harvested cane to the usina more efficiently. Maurilio Biagi continued to import tractors and expand the mechanized transportation system, turning the usina into Òa reference pointÓ in regard to its cultivation and transportation methods. Other usinas emulated BiagiÕs methods, improving mechanized production methods for numerous producers as a resu lt.119 Maurilio Biagi invested not only in sugar and alcohol production but also the agricultural equipment necessary for sugar production. Most importantly, Maurilio partnered with Ettore 117 Hasse, Filhos do fogo, 94Ð95; ÒAssim nasceu Santa Elisa,Ó A Revista Santa Elisa: Uma Historia de Trabalho e Desenvolvimento , (Ribeir‰o Preto: MIC Editorial Ltda, 1996), 15. 118 ÒAssim nasceu a Santa Elisa,Ó 15. 119 Hasse, Filhos do fogo, 111Ð114. For example, the Luiz Antonio Ribeiro Pinto, director of the Usina Santa Lydia located in Ribeir‰o Preto proper, helped adapt the hydraulic winches used on the tractors for production, which gave birth to the cane harvest equipment industry Santal in 1960. The winch that Pinto adapted became the most used type in the Brazilian sugar industry. 83 Zanini, a local mechanic, in August 1950 to found the Oficina Zanini Ltda. The metallurgy company grew into the largest equipment company in the region. Biagi founded the industry to compete with the dominant Dedini metallurgy industry. Based in Piracicaba, Mario Dedini founded the company that would become the only large producer of major industrial equipment for the Brazilian sugar industry. 120 Zanini Ltd. transformed the Ribeir‰o Preto region into a center for cane equipment and technology. The close collaboration between the Usina and the equipment company fostered more advanced distillation and cane cultivation methods that benefitted not only the Usina Santa Elisa but also neighboring usinas. 121 These technological improvements distinguished the Usina Santa Elisa, establishing an image as a national leader in modernization of the sugar industry, which would have an important influence on Santa ElisaÕs growth through the next decades until the alcohol program in the 1970s. 122 BiagiÕs investment in this early technology pushed the Usina Santa Elisa into a leading position in sugar production, defining the direction of the sugar industry in the region. Amanda HartzmarkÕs illustrates the way usineiros in the south were able to use familial and interpersonal connections to capture the sugar market, which occurred in textile and pharmaceutical industries as well according to Peter Evans. 123 While true, this work illustrates 120 Hasse, Filhos do fogo, 146. 121 Hasse, Filhos do fogo, 150Ð152. As historian Geraldo Hasse described it, the Usina Santa Elisa and Zanini would have a somewhat symbiotic relationship, in which the two grew together with the Usina serving as a test site for Zanini products in the usinas development and the companiesÕ growth. Although majority ownership changed hands early in the first decade of ZaniniÕs existence, Biagi would remain the guiding force of the companyÕs growth in the 1950s. 122 Wolfe, Autos and Progress , 137. Joel Wolfe notes that Òthe promises of industrialism and modernity came to fruition on farms producing for exportÓ because agriculture, truck, and car consumption were key parts of a transforming image of modernity in the country. This connection would become even clearer through the sugar industryÕs modernization efforts in the 1960s, as discussed in the next chapter. 123 Hartzmark, ÒBusinesses, Associations, and Regions,Ó 232; Evans, Dependent Development , 281. 84 the way one family constructed these connections to shape sugarcaneÕs industrial expansion in the years to come. First establishing its prominence in the region with new technology in its production process, the Biagis would use self-financed technological imports to expand their hold of the market in the 1960s and 1970s. These early connections to modernization techniques, domestic and foreign, were critical steps to industrializing sugarcane production. As a collective, paulista sugar production expanded dramatically in the 1950s while alcoholÕs importance as a contributor to the national oil supply diminished in the 1950s. The IAA continued to support alcohol production within the sugar industry, but its national importance diminished because expanding car and steel industries targeted oil consumption and international petroleum prices dropped well below alcohol production prices. Before explaining the important changes in sugar and alcohol production and consumption that occurred in the 1950s, one must understand the broader political and economic transformations afoot in Brazil. President DutraÕs economic policies in the late 1940s encouraged a wave of industrial ization in Brazil that would explode in the 1950s. President DutraÕs policies limited imports with import licensing restrictions and simultaneously maintained a high currency valuation. These conditions made investing in domestic industries more economical ly viable than importing because of the high prices that taxes and the currency exchange imposed on imported industrial goods. 124 This directly encouraged the expansion of agricultural and industrial companies like the sugarcane -processing equipment company, Biagi -owned Zanini. By the beginning of the 1950s, a new focus on developmentalist -nationalism took hold of Brazilian economic policies and national politics even though it had been present in government policies for the previous two decades . Vargas had created the IAA in support of an economic 124 Skidmore, Politics in Brazil, 1930Ð1964, 70. 85 nationalist agenda focused on self-sufficiency in the 1930s, and his support for state-led industrialization as a form of economic nationalism as a key part of the Estado Novo. Import substitution policies followed VargasÕ early initiatives. Theory followed policy in the 1940s, as economic theorists and public opinion alike fostered a growing sense that Brazil could only become an important power if it developed into a modern industrial economy. 125 This sentiment gain ed greater attention through VargasÕ populist campaign for the presidency, run on the promise of the creation of a domestic oil industry. After his victory in 1951, Vargas created the new national oil company, Petrobr⁄s, in 1953, which shifted all oil dril ling and refining to the state-owned company monopoly. 126 VargasÕ campaign made petroleum a symbol of national autonomy and security, which displaced alcoholÕs importance in these arenas. 127 Following President VargasÕ dramatic suicide in 1954, the development alist-nationalist agenda, driven in both the private and the public sectors, expanded. President Juscelino KubitschekÕs promotion of BrazilÕs automotive industry is the best expression of this accelerating agenda. The Minas Gerais native was trained as a physician before entering politics. 125 Triner, Mining and the State , 108Ð109; Love, Crafting the Third World , 120; Skidmore, Politics in Brazil , 86Ð89. 126 Vargas ran his populist campaign, ÒO PetrŠleo ” Nosso,Ó in his return to power based on his promise to nationalize domestic oil exploration and refining. This campaign led to the founding of the Brazilian National Oil Company, Petrobras, in 1953. For more detail on the campaign, see Maria Augusta Tibiri“a Miranda, O petroleo ” nosso: a luta contra o Òentreguism oÕ pelo monopolio estatal, 1947Ð1953 (PetrŠpolis: Vozes, 1983); James Wirth, The Politics of Brazilian Development, 1930Ð1954 (Stanford: Stanford University Press, 1970), Chapters 8 and 9; Laura Randall, The Political Economy of Brazilian Oil (Westport, CT: Praeger, 1993), 9Ð12. 127 Triner, Mining and the State , 115. Many scholars have pointed to Petrobr⁄s and petroleum as the key strategic industry developed under VargasÕ his economic nationalist agenda, but both Triner and DiniusÕ work on state intervention in the mining sector and the creation of the iron ore and steel state-owned industries reveal the far -reaching influence of VargasÕ state-led interventionism during the 1940s and 1950s. My work on alcohol contributes to these studies, highlighting VargasÕ reach into agro -industrial state-led development as well. For classic interpretations, see Skidmore, Politics in Brazil . For newer analyzes of other state-led development projects, see Triner, Mining and the State , chapter 7; See also, Dinius, BrazilÕs Steel City . 86 He rose through the stateÕs political system before winning the governorship in 1945.128 Known most for his economic achievements during his presidency, the former Governor of Minas Gerais, Òembraced the idea of using the state to plan the development of the nation.Ó 129 His vision of a modern Brazil, embodied in his campaign slogan ÒFifty Years of Progress in Five,Ó centered on an industrial Brazil. During his presidency, the popular Kubitschek won the image of the developmentalist president with the establishment of BrazilÕs automotive industry side by side with the construction of the new federal capital in Bras™lia in the interior of the state of Goiais. 130 Both were symbols of modernity and progress. His developmentalist agenda was put in peril as international financial institutions, namely the International Monetary Fund, tried to force Kubitschek to reign in spending to secure a loan. His refusal won him even more fame. For Kubitschek, the establishment of a domestic car industry was the key to a modern country. Joel Wolfe highlights the importance that cars and the domestic production of cars held in the idea of Brazilian modernity and nationalist pride. For example, Volkw agen and Willys -Overland Motors began manufacturing trucks and cars in Brazil using an increasing amount of Brazilian manufactured inputs in 1954 and 1957, respectively. Wolfe indicates that Brazilians connected these achievements to the idea of reaching a tangible level of development. 131 However, this modernity came to rely more on standard oil consumption rather than the 128 Skidmore, Politics in Brazil , 163Ð164. 129 Wolfe, Autos and Progress , 115. 130 Wolfe, Autos and Progress , 137. 131 Wolfe, Autos and Progress , 119Ð121. 87 alternative alcohol product that policymakers had supported so aggressively over the previous thirty years. 132 KubitschekÕs industrializat ion efforts in the 1950s drove an increasing focus on oil for industrial use and diminished alcoholÕs place in the national energy and development scheme. The oil -based fuel economy expanded with the growth of the domestic steel company and car production. The low international oil prices of the 1950s, officially cheaper than alcohol liter to liter, diminished demand for alcohol. In fact, the National Petroleum Commission reduced the national alcohol mixture rate from the previous 10% nationally between 1938 and 1940 to 5% in the 1950s. It would seem that the governmentÕs diminished commitment to alcohol in favor of an oil -based fuel economy in the country in the 1950s would have doomed the alcohol industry. 133 Yet, within the industry, sugar production expand ed dramatically behind new agro -industrial expansion while alcohol production also expanded with less national attention. The current IAA President Fernando Pessoa de Queiroz and the Executive Commission released its new plan for sugar and alcohol producti on in Resolution 501 on February 1st, 1951. This called for an increase in production of over ten million sacks of sugar (from 23,220,794 sacks of sugar to 33,364,158 sacks in the 1956/57 harvest) . The commission justified their action due to the expected domestic consumption growth rate of about 6% per harvest . Even when the commission revised this expansion expectation down to 4.87% per year, the expected domestic sugar 132 Wolfe, Autos and Progress , 234n63. WolfeÕs own dismissal of the important role ethanol had played in the Brazilian energy matrix prior to the 1950s highlights the detrimental effect this obsession with industrialization in the 1950s had on alcoholÕs place in the national economy as an oil supplement and substitute. After citing the IAAÕs creation in the 1940s rather than the 1930s, he claims that the gasogene alternative had a far greater impact on the national energy economy while alcohol production only Òslightly diminished fuel shortagesÓ in the war era. He makes no other mention of the alcohol mixture before the oil crisis of 1973. 133 Santos, ÒAlcoho l as Fuel,Ó 107Ð108, 154. With the exception of 1958 and 1959, at which point the requirement increased to 7 and 7.5% respectively. 88 consumption for the 1956/57 harvest was 30,331,053 sacks of sugar, which fell into the margin of error for the projected expansion. This policy reform had larger implications on a changing Brazilian sugar industry. 134 The creation of agro -industrial complexes across the paulista countryside drove the expanding production capacity in the 1950s. Despite the IAAÕs attempts to contain paulista expansion, usineiros, like the Biagis with the Usina Santa Elisa, consolidated the agricultural production of their sugarcane, the processing of that cane, and even the development of the equipment for processing in one large complex. This became increasingly common in the paulista countryside amongst the largest producers in the state in the 1960s. These complexes included expanding alcohol production capacity. The 1951 Resolution reflects the IAAÕs diminis hing control over sugar production limitations in the face of these structural changes. Brasil A“ucareiro noted that the IAA response showed a solid sugar policy that had Òa handle on crises and upheavals that in the past have put in check the stability of the sugar agro -industry repeatedly.Ó 135 Yet, it would seem that the IAA really continued to expand quotas to reclaim control over sugar production that it had lost after releasing quotas in the 1940s. 136 Following Resolution 501 in 1951, paulista sugar and alcohol production dramatically increased. Nationally, sugar production expanded from 23.4 million 134 ÒPolitica A“ucareira,Ó Vol. XXXVII (March 1951), 3, 10Ð19. The IAAÕs Executive Commission began issuing separate Sugar Crop Plans and Alcohol Plans each year in 1939. The Plans delineated the quotas for the year. Beginning in the 1946, production consistently overshot mandated levels, forcing the IAA to revise and expand these production mandates. See Ramos, Agroindœstria can avieira , 120. The new plan called for the expansion of national sugar production from 23,220,794 sacks of sugar per year to 33,364,158 sacks by the 1956/57 harvest. The additional 10,143,364 sacks were to be divided between established usinas and new usina s (9,264,217 for old usinas based on the production level from 1946 and 879,147 for new usinas). 135 ÒPol™tica A“ucareira,Ó Vol. XXXVII (March 1951), 4. 136 Ramos, Agroindœstria canavieira , 120. The IAA would again readjust quotas to account for sugar overproduction in 1952, 1957, and 1963. 89 sacks in 1950 to 55.2 million sacks of sugar in 1960. Meanwhile, S‰o PauloÕs portion reached 23.97 million sacks alone in the 1960/1961 harvest. 137 As the IAA struggled to grab control over the sugar policy, it continued to press alcohol production as an alternative in the 1950s. Despite its diminishing returns in the 1950s, the IAA continued to support alcohol production. For example, Resolution 501 also encoura ged additional alcohol production, illustrating the still important place the alcohol held within sugar policy and regulation. It required all usinas to direct 10% of their overall sugar production to alcohol production. 138 This requirement indicated that usinas capable of establishing distillation facilities must do so without IAA financing. It stipulated alternatives to those usinas unable to install such capacity, including an option to produce different variations of sugar byproducts. Additionally, the Resolution guaranteed bonuses to all producers that produced anhydrous or hydrous variations of alcohol. Even as demand for alcohol production declined, national production continued to expand, as illustrated in the graph below. This is particularly true in S‰o Paulo. In 1952, the state produced 64,447,332 liters of alcohol. By 1955, that amount had more than doubled. 139 After the resolution, S‰o Paulo particularly expanded production of anhydrous alcohol, which was used for the alcohol fuel mixture. 137 Santos, ÒAlcohol as Fuel,Ó 135; Anuario A“ucareiro, 1960/61 Ð65/66, 32. 138 There were a number of stipulations attached to the Resolution on this topic. First, the usina had to process the alcohol directly from sugar rather than from another byproduct, like molasses, into alcohol. Additionally this alcohol did not necessarily have to be alcohol for carburant mixture. Rather it could be alcohol for industrial use or rum (aguardente). 139 IAA, Anuario A“ucareiro Ano XVIII - 1953Ð56 (IAA: Rio de Janeiro), 40. Importantly, for the first time anhydrous alcohol surpassed hydrated alcoho l in paulista production that year. As Santos points out, the stockpiles of alcohol that the IAA accrued from S‰o Paulo until 1975 positioned paulista producers to take advantage of Pro⁄lcool immediately. I will address this theme more in the next chapter. See Santos, ÒAlcohol as Fuel,Ó 178. 90 1950/51 1951/52 1952/53 1953/54 1954/55 S‰o Paulo 51,172,271 63,621,395 84,202,142 128,567,498 170,159,827 National 140,094,857 170,362,503 229,542,853 274,039,309 306,246,596 Percentage 36.5% 37.3% 36.7% 46.9% 55.6% Anhydrous 4,947,962 5,117,200 12,613,402 50,011,200 80,658,684 Table 4: Alcohol Production (in liters) Source: IAA, Anuario A“ucareiro . The IAA supported continued to support alcohol production for two apparent reasons. First, it still offered an alternative use for sugarcane as initially set out by the IAA in the 1930s. Second, the oil shortages during the war years had proven alcoholÕs value as an alternative to imported petroleum. As these agro -industrial complexes expanded in the countryside, sugar producers still needed alternative markets for sugar that exceeded domestic demand and export capabilities. Agro -industrialization expanded in the largest usinas in the country, bringing with it a larger capacity for alcohol production and continued limitations on the export market, as discussed in the next chapter, incentivized producers to continue diverting excess sugar production to alcoho l among other regulated by-products. The government support for alcohol came in many different forms. The IAA continued to guarantee parity price with sugar, offered bonuses for alcohol producers, and reestablished sugar limits, all of which pushed greater alcohol production at greater expense to the IAA. As the required buyer of alcohol, the IAA purchased and stored all excess alcohol. S‰o Paulo became the leading producer of all alcohol types in 1954. Thus, the state usurped Pernambuco in alcohol production after unseating it in sugar production in 1951.140 140 IAA, Anuario A“ucareiro Ano XVIII - 1953Ð56 (IAA: Rio de Janeiro), xiii. S‰o Paulo produced 8,105,401 sacks of sugar compared to PernambucoÕs 7,903,501 sacks in 1950. Paulista producers would remain the dominant sugar producing state in Brazil thereafter. 91 Individual producers in S‰o Paulo made big gains in sugar and alcohol production in this period behind modernization efforts and consolidating business practices. Like many other usinas across the state, the Usina Santa Elisa not only improved its production methods, but it expanded its capacity in the 1950s. Maurilio and the Biagi Group incorporated smaller usinas into the Usina Santa Elisa to expand its own production capabilities like the Usina Santa Lœcia owned by the metallurgy businessman, Antonio Paschoal. 141 By 1953, the usina produced 111,000 tons of sugar (200,000 sacks of sugar) and 1.2 million liters of alcohol. 142 At the same time, the Usina Santa ElisaÕs management participated in cane cul tivation studies in connection with the Agronomic Institute of Campinas (Instituto Agronomico de Campinas ) that would contribute to the advancement of superior cane varieties for the various soil types across the state. The IAC was founded in 1887 and fell under the state of S‰o PauloÕs governance in 1892. Its Sugarcane Divisions established a series of studies on cane varieties in 1953. The agronomists set up experimental studies at six different usinas in the state, including the Usina Santa Elisa.143 This further involved the Usina Santa Elisa leadership and Regarding the expanding alcohol production, anhydrous alcohol production, used in the alcohol -gasoline mixture, took longer to expand in the decade, as the higher production costs delayed usineirosÕ entry into the industry. However, by the beginning of the 1960s, many usinas, including all the neighboring usinas listed below, were producing more anhydrous alcohol than hydrous. Thus, the increased incentives provided by the IAA successfully transformed producersÕ behav ior in favor of anhydrous alcohol over the cheaper, and previously more voluminous, hydrous alcohol by the early 1960s. 141 Hasse, Filhos do fogo, 70. The Usina would go on to incorporate the Engenho Central (1964), and the Usinas Anhumas and Barbacena (1984). 142 ÒParceiros e Colaboradores,Ó A Revista Santa Elisa: Uma HistŠria de Trabalho e Desenvolvimento , (Ribeir‰o Preto: MIC Editorial Ltda, 1996), 21. 143 The other five usinas sat in different regions across the state. They were the usinas Tamoio (in Araraqu ara), Porto Feliz (near Sorocaba), Itaiquara (in Campinas), Santa Barbara (Santa Barbara do Oeste), and Monte Alegre (Piracicaba). Agro -engineers reported their findings in a series of articles published in the Agronomic Institute of CampinasÕ technical bulletin, Bragantia . For example, A.L. Segalla and R. Alvarez, ÒVariedades de cana -de-a“œcar: II, S”rie de ensaios realizado no per™odo de 1953Ð1956,Ó Bragantia Vol. 17 (1958): 45Ð79. 92 administration in the development of more advanced cane production methods, following Maurilio BiagiÕs vision. Thus, Biagi led early public -private collaboration in the technological development of the industry. However, unlike the equipment imports that characterized the Usina Santa ElisaÕs industrial growth, state intervention focused on the development of new agricultural technology. While sugar production technology expanded and the IAAÕs control over sugar limits diminished, regional producers established early cooperatives to diminish collective commercial and distribution costs and take a stronger hold of the sugar sectorÕs development. In 1953, fourteen usineiros in the Ribeir‰o Preto region form ed Copereste (the Cooperative of Mill Owners of Western S‰o Paulo). The group, replicated in the sugar region of Piracicaba in the same year, was an important precursor to usineiros lobbying for paulista sugar interests in the 1960s. 144 Within Copereste, Maurilio Biagi, owner of the Usina Santa Elisa, was a leading member along with Arnaldo Ribeiro Pinto and Alexandre Balbo, two other leading usineiros in the greater Ribeir‰o Preto region. As president, Pinto focused the cooperatives efforts on increasing the industrial and agricultural production with technological tools and scientific information for increased efficiency. 145 Copereste focused its efforts on research and distribution of better cane seeds for the region and the use of machinery in agricultural processes for member fields. These were activities Biagi had already implemented at the Usina Santa Elisa, reiterating his important position in the industry both as an innovator and a businessman. 144 Copira, the Piracaba cooperative, included the important Ometto and Dedini families. These two families represented the largest portion of sugar production in the state and agro -industrial equipment production in the country. Amanda Hartzmark provides an excellent account of the early activities of the two regional cooperati ves. See Hartzmark, ÒBusinesses, Associations, and Region s,Ó chapter 6, particularly 233Ð245. 145 Hartzmark, ÒBusinesses, Associations, and Regions,Ó 234. 93 Overall, sugar production expanded in Ribeir‰o Preto, par ticularly, while alcohol production sputtered and slowly expanded as seen in the tables below. In the 1950/1951 harvest, the Usina Santa Elisa produced 123,400 sacks of sugar, and by the 1960/61 harvest, it produced 483,562 sacks of sugar, almost tripling its production in that single decade. At the same time, the region expanded its alcohol production as well. For example, the Biagi owned Usina da Pedra began producing anhydrous alcohol in 1953. Conversely, the Usina Santa Elisa expanded its hydrous alcoho l production throughout the 1950s, producing 1,681,320 liters of alcohol in 1955.146 Conclusions Early alcohol production, by way of federal intervention in the sugar industry, influenced the way in which Pro⁄lcool took shape. The IAA first imposed alcohol production under the IAA in the 1930s as a means of limiting sugarcane production to improve the balance of trade. Policy changes in the 1940s and 50s continued to expand production as the industry shifted from the Northeast to the Central southern regions. The sugar and alcohol industry expanded in the Ribeir‰o Preto region behind the leadership of Maurilio Biagi and the Usina Santa Elisa. The connections they fostered allowed the Usina Santa Elisa grow into an advanced sugar and alcohol -producing complex in the region by the end of the 1950s. The Biagi family would expand its sugar and alcohol inve stments, leading the region into a new era of sugar and alcohol development, as the IAA modernized the industry in response to new export opportunities on the world market and the military dictatorshipÕs development agenda. 146 IAA, Anuario A“ucareiro , 1950, 53Ð56, and 60/61 Ð65/66 editions. 94 Chapter 3: Moder nization and Development of the Sugar Industry in Ribeir‰o Preto, 1959-1975 ÒThe essential goal of my government can be summarized in one word: development.Ó President Em™lio Garrastazu M”dici President of the Republic, 1969Ð19731 By 1959, S‰o Paulo's sugarcane producers had already surpassed the sugar and alcohol production of all other sugar -producing states. As Pedro Ramos summarizes in his study of the sugar industry in the Northeast and the Center -south, paulista sugar producers built their control over the sugar industry on private financing, advantageous access to large consumer markets in the southeast, and increasingly industrial sugar and alcohol complexes with superior agricultural and processing equipment to eclipse rival producers in Alagoas and Pernambuco. 2 The paulista share of BrazilÕs sugar and alcohol industries would only increase over the next two decades thanks to a turbulent but expanding international sugar market and a series of new federal development policies. This chapter expl ores the important changes that allowed agroindustry in S‰o Paulo to win an important place in the development agenda employed during the dictatorship and the place that sugar and alcohol held in that model. Alcohol production remained subordinate to domes tic sugar consumption and sugar exports, but paulista usineiros' own economic interests in fostering alcohol production resulted in its continued expansion. Ribeir‰o Preto producers won 1 President Em™lio Garrastazu M”dici in a speech on the Pal⁄cio do Itamaraty, in Bras™lia, April 20th, 1970, as published in A verdadeira paz (Bras™lia: Departamento de Imprensa Nacional, 1971), 29. 2 While the first chapter explored S‰o PauloÕs advantages, it is worth noting that all these qualifications stand in direct contrast to the conditions in the Northeast, whose lack of access to easy financing, good agricultural conditions, equipment, and most importantly the large domestic consumer market of S‰o Paulo sent the industry in a very different direc tion. Szmrecs⁄nyi, O planejamento , 218n94 citing Helio Pina, A agroindœstria a“ucareira e sua legisla“‰o (Rio de Janeiro: APEC, 1972), 41. See also, Ramos, Agroindœstria canavieira and Hartzmark , ÒBusinesses, Associations, and Regions. Ó 95 greater fame as their sugar production began to eclipse that of parts of the state thanks to directed industrial expansion around the sugar industry. Eventually, a new development agenda drove a more frenzied expansion of sugar and alcohol production in the region, particularly through the IAAÕs Support Program for the Sugar Agroindustry (henceforth Funpro“ucar/Pro“ucar) in the early 1970s. 3 As illustrated in the previous chapter, Ribeir‰o Preto producers had already emerged as the ascendant sugar and alcohol producers within S‰o Paulo and thus the country. These usinas, notably the Usina Santa Elisa, were an important part of the growing political and economic power behind the paulista sugar industry. Their expanding production capacity gave paulista sugar producers greater political influence within the IAA and more genera lly in the national development scheme of the 1960s. By 1970, the Biagi family, owners of both the Usina Santa Elisa and the Usina da Pedra, would be the 9th largest producer of sugar in the state, accounting for over 3% of all paulista sugar production between 1946 and 1970.4 While its sugar production expanded, the BiagisÕ empire became increasingly intertwined with alcohol production. The familyÕs leadershi p in the expansion of alcohol in the early 1970s positioned their holdings, and particularly the Usina Santa Elisa, to become one of the premiere alcohol distilleries in the country. This chapter shows 3 This sugar expansion significantly transformed the economic, social, and environmental landscape of the region. To note the massive economic transformations occurring in the region thanks to a new agro -industrial developmen t scheme is to understate the incredible destruction that accompanied sugar and alcoholÕs expansion as well. See chapter 5 of this dissertation, particularly 219-220. 4 Ramos, Agroindustria canavieira , 138. According to Ramos, the Biagi Company held 3.3% of all sugar production in the state from 1946Ð1950, which expand ed to a 3.5% share between 1966Ð1970. This was far inferior to the Ometto family holdings, which also reside in the Ribeir‰o Preto region. The Ometto family held 13.3% of all sugar production in the state. 96 how the Biagis, as a leading distiller, influenced and shaped the development of Pro⁄lcool in 1975. Scholars of the Brazilian sugar industry agree that Funpro“ucar transformed the sugar sector . Both Nunberg and Szmercs⁄nyi focus their analysis on S‰o PauloÕs production growth in comparison to the NortheastÕs , illustrating the diverging paths of each region and the growing influence of paulista producers. Maria Castro Santos studies the alcohol policy in this period in a similar national context. More recently, Pedro Ramos and Amanda Hartzmark have studied mills during under these expansionary programs to light in order to illustrate the land consolidation involved in these modernization programs and the shifting power behind the IAA policy process. While earlier studies have addressed Funpro“ucar as a part of the sugar industryÕs modernization process under the IAA, many historians have summarized the programÕs objectives without detailing with its actual impact on specific usinas. T⁄mas Szmercs⁄nyiÕs detailed history of the sugarcane industry closely explains the programÕs creation but gives no example of how the program affected specific usinas. While Barbara Nunberg goes into more detail, she, too does not examine the experiences of specific distilleries. Maria Castro Santos and Pedro Ramos closely document the modernization of the sugar industry. This chapter provides a closer look at how the IAA, the government, and individual usineiros managed the modernization efforts in the 1970s is still less explored for how specific distilleries responded to new opportunities. 5 In this process, domestic sugar producers introduced more foreign technology to expand their industrial growth. At the same time, domestic producers 5 Szmrecs⁄nyi, O planejamento , chapter 4; Pedro Ramos, ÒUm estudo da evolu“‰o e da estrutura da agroindœstria canaviei ra do estado de S‰o Paulo (1930Ð1982),Ó (MasterÕs Thesis, EAESP-FGV, 1983), chapter 4. 97 maintained control of the sugar market, continuing an agro -industrial development path already initiated in the 1940s and 1950s. Although IAA modernization initiatives focused on the expansion of industrial production capacity in the 1960s, usineiros also used Pro“ucar to extend their alcohol production capacity. This fundamentally restructured the sugar industryÕs growth, transforming it into a truly industrialized agricultural sector. Along with this transformation, alcohol industrial production capacity expanded thanks to certain private businessmen, like the Biagis, who ultimately anticipated and shaped a national alcohol initiative in the mid 1970s. This example lays out the crucial steps that allowed the government to rely on domestic producers over international producers under Pro⁄lcool in the 1970s and 1980s. Somethings get repeated severa l times in this introduction. You might streamline the language. Sugar Exports and the Changing World Market, 1959-1964 Dramatic changes in the international market encouraged greater domestic investment in the Brazilian sugar industry in the 1960s. One must understand the world sugar market and BrazilÕs position within it before to the 1960s to contextualize the significant changes that promoted these transformations. The world sugar market has long been a highly competitive and, at the same time, clos ely protected industry but this was particularly so in the mid-20th century. The largest sugar consuming countries created protective blocks in which they favored ÒpreferentialÓ partners. 6 For example, the world free market only represented 41% of the enti re net global market while 59% 6 Many European nations protected their markets to favor current and former sugar -producing colonies. 98 went to the preferential trade partners of the US and the UK alone. 7 The four largest protected consumer markets were the US, the United Kingdom, France, and the USSR. Of these protected markets, the US was the largest and most desired, and Cuba dominated its preferential imports. From 1934 to 1974, the US defined its sugar policy with the Sugar Acts. In these Acts, the US Department of Agriculture established domestic consumption levels and divided the market for sugar betwe en domestic producers and foreign countries, assigning a quota to import at agreed privileged prices. 8 As of 1955, Cuba and to a far smaller degree the Philippines accounted for nearly 94% of all USÕ foreign sugar imports. 9 BrazilÕs hold on the world marke t had diminished substantially in the early 20th century. Following the Great Depression, it found itself on the outside of many of these preferential markets. Brazilian sugar exports had difficulty competing because of transportation costs and protectioni sm that rigged the global sugar market. In response, the IAA had focused on stabilizing the sugar industry by emphasizing domestic consumption and promoting alcohol production in the face of the countryÕs diminished exports. Brazil had a minimal hold on the international sugar market throughout the first half of the 20th century. Brazil held less than 1% of the world sugar market at the beginning of the twentieth century, and this percentage only decreased in the face of increased competition from Cuba and Puerto Rico. 10 By 1930s, Brazil was no longer considered a major sugar exporting 7 Szmrecs⁄nyi, O planejamento , 245Ð250, A C Hannah and Donald Spence, The International Sugar Trade (New York: John Wiley & Sons, Inc., 1997), 23 and 93Ð95, citing the International Sugar Organization statistics. 8 Ralph Ives and John Hurley, ÒUnited State Sugar Policy: An Analysis,Ó International Trade Administration, US Department of Commerce, (April 1988). 9 Hannah and Spence, The International Sugar Trade, 94Ð95. 10 Eisenberg, The Sugar Industry in Pernambuco , 20; Rogers, The Deepest Wounds, 75. Brazil held .8% of the world sugar market between 1901 and 1905 and .3% by 1910. 99 country. 11 During the 1930s and 1940s, Brazil exported sugar in sporadic numbers to South American neighbors like Argentina, Bolivia, Chile and Uruguay and some European countr ies intermittently, in particular France. This situation changed very little in the early 1950s. In the second International Sugar Agreement of 1953, Brazil received a quota of 175,000 tons (about 158,757 metric tons), while Cuba received a quota of 2.4 million metric tons, and the Dominican Republic and the Philippines received quotas of 651,000 metric tons each. In the third agreement of 1958, Brazilian sugar garnered an annual quota of 550,000 tons on the world free market. The dramatic growth of domest ic Brazilian sugar production during and after World War II led IAA policy -makers to look to the export market to absorb the excess sugar produced in the 1950s. As the IAAÕs control of the domestic production diminished, it was not long before usineiros began to produce more sugar than domestic consumers could purchase. Government negotiators won an even larger quota for BrazilÕs sugar exports on the world market in 1955, but exporters had little access to the coveted US market, which accounted for the lion Õs share of annual world sugar consumption. 12 To illustrate this point, Brazil exported only 3300 tons of sugar to the US between 1946 and 1950, while the US purchased over 2.3 million tons of sugar 11 United States Cuban Sugar Council, Sugar: Facts and Figures (New York: United States Sugar Council, 1948), 25. The top ten net exporters based on the criteria of net exports of 75,000 tons or more between 1935 and 1939. Szmrecs⁄nyi qualifies Brazil as a Òmarginal exporter of sugarÓ by the 1930s. Brazil exported 12,235 tons of sugar in 1931. Tam⁄s Szmrecs⁄nyi, ÒGrowth and Crisis of the Brazilian Sugar Industry, 1914-1939Ó in The World Sugar Economy in War and Depression, 1914Ð1940, ed. Bill Albert and Adrian Graves (New York: Routledge, 1988), 59Ð60. 12 Szmrecs⁄nyi, O planejamento , 245Ð250; Hannah and Spence, 23 and 93Ð95, citing the International Sugar Organization statistics. As of 1955, the US was the leading importer of sugar in the world, importing 3.66 million tonnes of sugar that year alone, while the United Kingdom, the second largest preferential market, imported 1.55 million tonnes, respectively. These numbers do not account for the USSRÕs sugar consumption, which was largely self-sufficient until incorporating Cuban sugar imports into the bloc in the 1960s. 100 from Cuba in 1946 alone. 13 Still, an expansion into the Eng lish and Japanese markets contributed to the countryÕs overall sugar export growth in the mid-1950s. 14 This encouraged IAA executives to begin lobbying for a portion of the USÕs preferential trade market in the late 1950s. For example, IAA President Manoel Gomes Maranh‰o and the Executive commission agreed to send a Òstrong delegationÓ to London to lobby for a larger international quota in the upcoming international sugar agreement as other countries, like Cuba, did the same.15 Year Cuba exports to closed markets Sugar exports of all countries Brazil total Production Brazil total exports Brazil exports to the US 1956 2,813,000 14,160,000 2,335,000 184,000 0 1957 2,785,000 14,730,000 2,385,000 328,000 0 1958 3,241,000 15,045,000 2,817,000 566,000 0 1959 2,937,000 15,057,000 3,319,000 717,000 12,000 1960 4,229,000 17,002,000 3,229,000 854,000 114,000 1961 4,825,000 19,619,000 3,438,000 783,000 293,000 Table 5: World Sugar Trade, 1956Ð1961 (in metric tons) 16 Source: Heinrich Brunner, Cuban Sugar Policy from 1963 to 1970 (Pittsburgh: University of Pittsburgh Press, 1977), 20; US Department of Agriculture, Statistical Bulletin No. 562, October 1976, ÒSugar: World Supply and Distribution,Ó 1954/55 Ð1973/74, p. 12 The break in US-Cuban relations dramatically reshaped the world sugar market, which profoundly affected the BrazilÕs fortunes. Cuban sugar dominated the protected US market until 13 IAA, Anu⁄rio A“ucareiro , Ano XVI- 1950Ð1951 (Rio de Janeiro), 87Ð97; US Cuban Sugar Council, Sugar: Facts and Figures , (New York: US Cuban Sugar Council, 1948), 100. Brazil exported 50,000 sacks of sugar at 60kgs per sack. 14 IAA, Anu⁄rio A“ucareiro. Ano XVIII - 1953-1956 (Rio de Janeiro), 53Ð56. 15 79th Ordinary Session of July 23rd, 1959, ÒAtas da Comiss‰o Executiva do IAA,Ó Brasil A“ucareiro Vol. LVI, n. 1, (July 1960), 26. 16 * Closed markets= US, UK, Communaut” (France), and the USSR. For these numbers, see Heinrich Brunner, Cuban Sugar Policy from 1963 to 1970 (Pittsburgh: University of Pittsburgh Press, 1977), 20. All other statistics from US Department of Agriculture, Statistical Bulletin No. 562, October 1976, ÒSugar: World Supply and Distribution,Ó 1954/55 Ð1973/74, p. 12 as cited in Nunberg, ÒState Intervention,Ó 134. 101 the Revolution of 1959. Thereafter, negotiations with the new Fidel Castro -led Cuban administration deteriorated in 1960 and with it, the Cuban sugar quota. The US sugar market, which accounted for over 87% of all Cuban exports, became the central tool through which the American government sought to tame the new communist Cuban administration. Thereafter, the US Congress and President Dwight Eisenhower swiftly reduced CubaÕs sugar quota to zero in 1960.17 With this new embargo on Cuban sugar, other sugar partners in the Western Hemisphere benefitted substantially, including Brazil. EisenhowerÕs decision allowed Brazilian sugar to fill a large part of the void left from the embargo of Cuban sugar. The US Department of Agriculture allocated to Brazil one tenth of the 1,000,000 tons quota previously allotted to Cuba in 1960, and Brazil won a permanent protected quota to the US in 1962, representing 6.4% of the total US quota. 18 The US Congress added another amendment to the new Sugar Act of 1961, giving special quota consideration to Western Hemisphere countries and those purchasing US commodities. Brazil and the US quickly solidif ied their sugar relationship, in which Brazil won a larger portion of the new US sugar quota in connection to BrazilÕs own importation of American wheat exports. 19 Between 1961 and 1965, Brazil exported over 1.5 million tons of sugar to the US with an average rate just under 17 Gail M. Hollander, Raising Cane in the ÔGladesÕ: The Global Sugar Trade and the Transformation of Flori da (Chicago: University of Chicago Press, 2008), 168Ð169; 284Ð287, Appendix B. 18 Welch, A semente foi plantada , 297; Information from M. Golodetz & Co., ÒMercado Internacional do A“œcar,Ó Brasil A“ucareiro Vol. 56, n. 2 (August 1960), 105Ð106. These statistics are in short tons. One should note the use of the term ton, short ton, tonnes, and metric tons. A ton in the US, known as the short ton internationally, is 2000 pounds or 907.2 kilograms, roughly. A British tonne, or the long ton, is 2240 pounds or roughly 1016 kilograms. A metric ton is equal to 2000 kilograms or 2204 lbs. The metric ton is also more formally referenced as the tonne. Brazilian statistics are often reported in metric tons and sacks of sugar. One sack is the equivalent to 60kg of sugar. Thus, one metric ton is equal to about 16.75 sacks of sugar. For the most part, my statistics work in short tons. Otherwise, I delineate if using metric tons or sacks. 19 Hollander, Raising Cane, 287; Szmrecs⁄nyi, O planejamento , 260n139; Nun berg, ÒState Intervention,Ó 101Ð105. 102 26.5 thousand tons per year, turning the US into the largest Brazilian export market by a lofty margin. By 1967, the Brazilian total exports (including the US and the world market) was just over 2 million tons a year. 20 The newly acquired export market triggered important changes in Brazilian sugar policy that stimulated modernization to meet the growing international demand. Modernization: Domest ic Policy and Structural Changes Within Brazil, expanding demand for sugar supported a push to modernize sugar production infrastructure across the country. Although focused on the Northeast initially, it would come to benefit paulista producers most. Development of light industrial food production, like jellies, sodas, and other such products, again concentrated in S‰o Paulo, buoyed this growth as well. In fact, the Biagi family led the growth of sodas, opening the first Coca -Cola factory as a shareholder in Refrescos Ipiranga in the 1960s. 21 Important structural changes facilitated the sugar industryÕs expansion. President J›nio Quadros passed Provision n. 1/61 on April 7th, 1961 encouraging the Òcentralization and coordination of export activities.Ó 22 In coordination with this provision, the IAA President Ambassador Edmundo Penna Barbosa da Silva and the Executive Commission created the Export Division within the IAA two months later under Decree no. 50,818 on June 22nd, 1961. The new division encouraged the export of sugar, molasses, and other sugar derivatives while also maintaining important connections with the government organs connected to foreign 20 IAA, Anu⁄ rio A“ucareiro, Safras de 1960/61 Ð1965/66 (Rio de Janeiro: IAA, 1967), 54Ð56 and Szmersc⁄nyi, O planejamento , 254n127. In this period, Japan was the only other country to receive over 1 million sacks (about 66,138 tons) of sugar from Brazil in any one year, and that was only in 1961. Conversions to US tons are my own. 21 Truthfully, the company, founded in 1948, was a bust in the first decade, not turning a profit until 1960. However, in this period, Maurilio Biagi became the majority shareholder. The company would become a crucial part of the Biagi Empire. Other soda and beer producers opened factories in Ribeir‰o Preto, including the popular domestic company, Antarctica. Hasse, Filhos do fogo , 123Ð124. 22 Szmrecs⁄nyi, O planejamento , 256. 103 commerce. In this transformation, alcohol received less attention than other more profitable sugar deriva tives although the IAA did pursue opportunities to export alcohol. This task was all the easier when President Quadros made the IAA subordinate to Ministry of Industry and Commerce in 1962.23 These important structural changes allowed the IAA to restructur e primary and secondary sugar interests. That is to say, sugar exports became the most important secondary market for sugar production after the domestic sugar market. This relegated alcohol to the third most important market for domestic sugarcane producers. After 1961, supplying the booming export market became the IAAÕs primary objective (See Table 5). Facilitating this process involved financing extensive modernization projects, first in the Northeast but increasingly in the S‰o Paulo interior. This early modernization process focused on mechanizing the sugar production process with increased industrial equipment and expanding production capacity through the consolidation of mills to improve efficiency and quality. The IAA encouraged expanding industri al inputs for greater production capacity and yield by making low interest credit available to usineiros, planters, and cooperatives . Domestic equipment producers grew with the IAAÕs modernization initiatives. Much of the modernization projects involved expanding industrial technology with both international technology and a growing domestic specialization. The modernization efforts further centralized sugar production, particularly in S‰o Paulo. 23 ÒNotas e Coment ⁄rios, Ó Brasil A“ucareiro , Vol. LIX, n. 1Ð2 (Jan./Feb. 1962), 3Ð5. 104 Year Sugar Exports of All Countries Brazil Total Producti on Brazil Total Exports Share of World Exports (%) Brazil Exports to U.S. 1962 18439 3568 645 3.4 361 1963 16785 3243 527 3.1 417 1964 17419 3400 453 2.6 162 1965 19793 4000 710 3.5 323 1966 18756 4200 1005 5.6 492 1967 20406 4360 1001 4.9 591 1968 20887 4464 1026 4.9 615 1969 19999 4357 1099 5.5 652 1970 22315 4593 1075 4.8 607 1971 21692 5117 1191 5.5 598 1972 21285 5648 1854 8.7 621 1973 22345 6163 2177 9.7 446 1974 24433 6959 2879 11.8 700 Table 6: Brazi lÕs Role in Sugar Exports, 1962Ð1974 (in thousands of metric tons) Source: Nunberg, ÒState Intervention,Ó 134. 105 These modernization initiatives were, in part, a result of the IAAÕs ongoing efforts to revive the Northeastern sugar industry. As paulista production expanded, Northeastern producersÕ lost their hold on the national market. Even as the Northeast, primarily Recife, remained the primary port of embarkation for sugar exports because of its greater proximity to US and European markets, Northeastern producersÕ distance from the growing southern markets of S‰o Paulo and Rio de Janeiro far outweighed this advantage. 24 While scholars have explored the Northeastern case in great detail elsewhere, it is important to note the role the region had in directing national sugar policy in the 1960s. 25 For example, to aid the ailing NortheastÕs sugar industry, the IAA created the Fund for the Recuperation of the Sugar Industry in August 1961 under Decree 51,104. The IAA used funds earned from Brazilian exports to the US to provide financial assistance and credit to northeastern sugar producers. 26 IAA officials led a massive modernization effort to improve Northeastern production capacity and efficiency to compete with the more industrialized southern producers, particularly in S‰o Paulo. Even as the IAA targeted Northeastern producers in the early 1960s with various modernization initiatives, S‰o Paulo sugar and alcohol production continued to expand. For example, President Quadros issued Decree n. 79 on October 26th, 1961, creating the Executive Group for Rational ization of the Coffee Industry . The group worked with the Institute of Brazilian Coff ee to transform old coffee plantations into cane fields and build usinas on the land to mill the new sugar fields. Poor coffee harvests in 1962 and 1963 and increased international competition in the world coffee market drove down coffee prices and encouraged more coffee 24 Nunberg, ÒState Intervention,Ó 108. 25 Pedro Ramos and Amanda Hartzmark give particularly detailed account of the diverging paths of the Northeastern industry and the Southeastern, namely paulista, industry in her work. See Pedro Ramos, Agroindœstria canavieira and Hartzmark , ÒBusinesses, Associations, and Regions.Ó 26 Santos. ÒAlcohol as Fuel,Ó 161Ð162. 106 planters and producers to transition to the expanding export -oriented sugar industry. 27 As the dominant coffee -producing state in the countr y, this initiative naturally favored paulista expansion. At the same time, consolidation efforts to concentrate sugarcane producers for larger -scale production capacity accelerated, particularly in S‰o Paulo. The IAA passed a series of decrees between 1961 an 1964 that made definitive steps toward consolidating usinas and cane production under larger, modernized usinas. After establishing the Fund for the Recuperation of the Sugar Industry, the IAA President and the Executive Commission created the Fund for the Consolidation and Support of the Sugar Agroindustry in November 1961. The new fund, largely financed by new export profits to the US and a Cr$50 tax on each sack of sugar, provided substantial financial support to improve production and expand export s.28 The legislative support for sugarÕs expansion continued. In 1962, IAA President Ambassador Barbosa da Silva established the Plan for the Expansion of the National Sugar Industry, formalizing clearer modernization efforts. Setting the bold goal of producing 100 million sacks of sugar by the 1970/1971 harvest, the plan encouraged a massive restructuring of sugar production in the country around large usinas with large economies of scale to support such lofty goals. 29 Thereafter, the IAA Executive Commissi on passed Resolution n. 1761 and n. 27 Additionally, the new rural labor legislation, the 1963 Estatuto do Trabalhador Rural, drew more producers to the sugar industry, which had less manual labor requirements than coffee productio n. Szmrecs⁄nyi, O planejamento , 273n154. See also, Chapter 5 of this dissertation. 28 The Brazilian currency, then the cruzeiro da reforma, switched to the new cruzeiro da reforma in 1967 (equivalent to 1000 cruzeiros in 1942) until 1985. In 1970, the term new cruzeiro was replaced by the cruzeiro. The government changed the currency in an effort to control persistent inflation in Brazil. Marcelo de Paiva Abreu (org), A ordem do progresso: cem anos de pol™ tica econŽmica republican, 1889Ð1989 (Rio de Janeiro : Editora Campus, 1990), 413. 29 Szmerscanyi, O planejamento , 256Ð263. This was only a year before Cuba set the goal of producing 10 million tons of sugar in a single harvest by 1970. The Cuban endeavor failed disastrously, primarily because of the addition al technology improvements necessary to meet the 107 1762 on December 12th, 1963, which first set new quotas with dramatically expanded quotas for S‰o Paulo and second authorized the construction of 50 new usinas. Thus began another wave of expansion in the sugar industry in early 1964.30 The IAA continued to fund the expansion of usinas, but the largest proportion went to S‰o Paulo and Paran⁄ under the New Usinas Commission formed in January 1964. Alcohol production substantially expanded in this period even as the IAA redi rected policy toward sugar exports. In fact, the greatest challenge to alcohol production in this period was an expanding petroleum -focused policy from the National Petroleum Council. The Council, which previously shared control of alcohol pricing with the IAA until receiving full control in the 1960s, diminished the mandated amount of alcohol mixed in the national gasoline supply to 5% in 1950s. 31 As a result anhydrous alcohol production, which the government officially used in the gasoline mixture, dropped to 5% of total alcohol production in the 1950s and remained at that level in the 1960s. The IAA still aggressively promoted the expansion of hydrated alcohol for industrial use. Producers in the Northeast, for example, used alcohol as a prime material for goal with a higher agricultural yield, such as new cane varieties, the expansion of irrigation, and increased use of fertilizers and insecticides. These were all things that the Brazilian modernization effor t successfully implemented. Moreno Fraginals and Teresita Pedraza Moreno, ÒThe Ten Million Ton Sugar Harvest,Ó unpublished article. Accessed April 20th, 2015 at htt p://faculty.mdc.edu/tpedraza/MMF -Ten%20Million%20Ton%20Harvest.htm 30 The President and the Executive Commission created the first with Decree n. 51.104 on August 1st, 1961 and the second on November 17th, 1961 under Decreen. 156. Szmrecs⁄nyi, O planejamen to, 265Ð267. 31 Santos, ÒAlcohol as Fuel,Ó 149Ð152. As Santos notes, while the mixture rate had been set at 5% legally, the country had extended the mixture above this level throughout the 1940s. When the National Petroleum Council (CNP) took over control of setting the mixture rate from the IAA in 1948, setting the mixture rate became a yearly battle that the IAA lost. The CNP cited the limited legal documentation on the mixture rate despite the common practice to set it above 5% since the 1930s. 108 synthetic rubber production. 32 Although the IAA pursued opportunities to export alcohol, it never found a substantial international market while cheap petroleum limited demand for anhydrous alcohol thus leading to a dramatic oversupply of anhydrous alcohol stocks. 33 Thus, expanding sugar exports drove continued modernization while alcohol production temporarily took a backseat in the sugar sector. This new export -oriented sugar policy took more formal shape as a key element in a new domestic political arena in the late 1960s when sugar became an important part of a new Brazilian development model under the new military dictatorship. This made S‰o PauloÕs producers even more prominent in national politics. Military Dictatorship and Changing Policy Objectives, 1964-1970 The Coup Although Brazil had important international incentives to transform substantially in the early 1960s, changing domestic fac tors also restructured the sugar industry. A new political regime redefined sugarÕs already shifting place in the national economy. Sugarcane became a modernizing industry connected to the dictatorshipÕs image of development. S‰o Paulo producers sat square ly in the center of this redefinition. BrazilÕs economic situation had eroded by the beginning of the 1960s. While sugar exports were booming, the rest of the economy entered into a dangerously unstable economic 32 Santos, ÒAlcohol as Fuel,Ó 174. The Companhia Pernambucana de Borracha Sint”tica (COPERBO) was under construction in Recife in the early 1960s. This provided an alternative use for alcohol in the Northeast but was not a major option in S‰o Paulo. Ultimately, the synthetic rubber industry using alcohol failed as sugar prices increased and Northeastern producers had to meet anhydrous alcohol demands for the gasoline mixture. Additionally, molasses, from which Northeastern producers derived residual alcohol, was a more profitable export by the late 1960s with an increasingly profitable market as a foodstuff for farming animals. Szmrecs⁄nyi, O planejamento , 268Ð269n149. 33 Santos, ÒAlcohol as Fuel,Ó 145. In fact, Santos notes that: ÒBy 1959, S‰o Paulo was virtually drowning in alcohol.Ó 109 slump. The prices for exported coffee fell precipitously, thus encouraging the Executive Group for Rationalizatio n of the Coffee Industry efforts to encourage producers to shift to sugarcane production. At the same time, the balance of payments deficit grew due to former President KubitschekÕs nati onalist development investments financed largely with foreign loans. These large -scale projects, best embodied in the establishment of the Brazilian auto industry and the building of the new ÒmodernÓ capital, Bras™lia, had been incredibly popular. However, government debt and KubitschekÕs refusal to cooperate with international financial institutionÕs pressure to adhere to an economic stabilization program left the national economy in tatters. 34 At the same time, the Cold War heated up in Latin America. After the Cuban Revolution, fear of another Cuban -style communist revolution permeated US-Latin American relations. Latin America development became a central hotbed of US-Soviet intervention in promotion of each superpowerÕs ideological visions of modernity and development. 35 In Washington, Domino Theory shaped communist containment policies, and after the Cuban revolution, Brazil became Latin AmericaÕs biggest domino because it bordered every South American nation save for two. The Cuban Revolution strengthe ned US interest in imposing its Cold War ideology on the country and the entire Latin American region, allowing right -wing elites to reclaim control of the state and violently maintain oppressive power often with the assistance of the United States. In Brazil, the US presence in development models increased through the military. Close military ties between the US and Brazil began in World War II and grew in the notable Superior War College (Escola Superior de Guerra ). Founded by General Cordeiro de Farias and other 34 Wolfe, Autos and Progress , 133. Joel Wolfe argues that the creation of the auto industry in Brazil was seen as the epitome of modernity. This was probably symbolically even more popular than the famed construction of Bras™lia. 35 Odd Arne Westad, The Global Cold War: Third World Interventions and the Making of Our Times (New York: Cambridge University Press, 2007), 2. 110 high -ranking Brazilian military officials with the collaboration of US military officials in 1949, the school was structured after US military schools. Many of the officials that studied and taught at the school would go on to hold high ranking positions within the Brazilian military and the federal government. The USÕs influence in the school and its pervasive importance in the Brazilian military leadership contributed to the Brazilian militaryÕs own growing anti -communist obsession. 36 Economic tro ubles and Cold War politics drove dramatic changes in Brazilian politics in the early 1960s. When President Juscelino Kubitschek ended his highly successful nationalist -development focused presidency in 1961, he left his successors ballooning debt and cree ping inflation. The mercurial J›nio Quadros succeeded him. Inconsistently supporting populist reforms and heterodox anti -inflationary economic policies, Quadros suddenly stepped down after only seven months in the presidency. His puzzling exit left a polit ical vacuum that exasperated already contentious disagreements about the political direction of the nation. 37 Vice-President Jo‰o Goulart succeeded the former president but his association with VargasÕ state-centered development model and left -wing politica l activism made right -wing politicians and military officers suspicious of GoulartÕs intentions. The socialist -democratic politician irked many conservative forces within the country, most notably high -ranking military officials. 38 The Rio Grande do Sul native entered Brazilian politics in the 1950s under the tutelage of Getœlio Vargas. He rose to national prominence in the 36 Stepan, The Military in Politics , chapter 8; See also, Maria Helena Moreira Alves, State and Opposition in Military Brazil (Austin: University of Texas Press, 1985), 14Ð23. 37 For a detailed overview of the short yet polarizing presidency of President J›nio Quadros, see Skidmore, Politics in Brazil , chapter 6. 38 Alfred Stepan extensively documents the military leadershi p considered a coup upon the controversial ascension of then Vice-President Goulart to the presidency. For more on military leadersÕ diverging opinions and the coup that never was, see Stepan, The Military in Politics , 19 and chapter 5. 111 Brazilian Labor Party (Partido Trabalhista Brasileiro ) before entering the state assembly in the 1940s. In 1953, Vargas appointed Goul art the new Minister of Labor. Viewed as the Òheir -apparentÓ of the Vargas era, military officials forced GoulartÕs dismissal upon VargasÕ death. However, closely connected with labor unions, he had earned a reputation for working with communists and socia lists, stoking military leadersÕ fears after his rocky ascension to the presidency in 1961.39 Right wing and even many moderate politicians, military officers, and business owners feared the new president might lead or unwittingly promote a socialist revo lution in Brazil. With an increasingly professionalized military, its influence expanded in various government positions and economic industries in the 1960s. Their infiltration into economically powerful civilian positions drove the militaryÕs expanding power. One of the most important was the former president of the domestic oil refining industry, Petrobr⁄s, General Ernesto Geisel. Geisel is an excellent example of the increasingly technocratic military officials that defined this period. Although Geisel had served in previous administrations, he held important political positions following QuadrosÕ resignation in 1961. Originally from Rio Grande do Sul, Geisel attended the influential General Staff School (Escola de Comando e Estado Maior do Ex”rcito) and was later a permanent staff member at the influential Superior War College. Following his time there, he became an administrator at Petrobr⁄s, where he was able to Òsharpen his skills as a military technocrat.Ó 40 In the early 1960s, he served in the nat ional government under the War Minister Od™lio Denis, where he was nominated as head of Presidential Military Staff, a position he would hold again in the future, under the temporary president Ranieri Mazzilli before Goulart returned to the country from China to be sworn in as 39 Skidmore, Politic s in Brazil , 114, 204, and 215. 40 Skidmore, Politics in Brazil , 160Ð161. 112 the next President. In fact, the moderate Geisel was one of the military leaders that supported GoulartÕs ascension to the presidency when more hard -line military officials opposed it in 1961. At the same time that the militaryÕs political influence expanded, social unrest simmered both in the Northeast and in the Center -south. In Pernambuco, cane workers, led by Francisco Juli‰o, formed the famous Peasant Leagues to call for the redistribution of land to workers and contest state labor policies. These leagues were in many ways the manifestation of the failures of the social and economic programs employed by the IAA since the passing of the Sugar Statute (Estatuto de Lavoura Canavieira - ELC) in 1941. The Northeastern sugar industry slumped while paulista production boomed. This downturn hit northeastern cane workers especially hard. Inflation, stagnant wages, lack of employment, and unsafe work conditions damaged already tenuous relationships between workers, planters, and usineiros. The Leagues organized strikes and occupied plantations that soon spread across Pernambuco and Alagoas, and then leaped to distant Mato Grosso. 41 By the early 1960s, rural unrest spread in the south as well. Although historians have been quick to point to the Northeastern conflicts as the heart of social unrest, historian Clifford Welch closely documents the important influence worker mobilization in the Ribeir‰o Preto region had on agrarian elitesÕ support for the 1964 military coup. 42 After the creation of the Superintendency for Agrarian Reform (Superintendencia de 41 The Peasant Leagues emerged between 1955 and the military abolished them after the coup in April 1964. For more on the Peasant Leagues and the modernization of agricultural production in the Northeast, see Anthony Pereira, The End of the Peasantry: The Rur al Labor Movement in Northeast Brazil, 1961Ð1988 (Pittsburgh: University of Pittsburgh Press, 1997), particularly Chapter 2 for a history pre-military dictatorship. See chapter 5 of this dissertation for more on emergence of these temporary workers in S‰o Paulo and their impact on the Ribeir‰o Preto sugar industry. 42 This commentary is based on Clifford WelchÕs extensive work on rural labor mobilization in the Ribeir‰o Preto region before the coup. See Cliff Welch, ÒRivalry and Unification: Mobilising Rural Workers in S‰o Paulo on the Eve of the Brazilian Golpe of 1964,Ó Journal of Latin American Studies 27, no. 1 (February 1995): 161Ð187. 113 Reforma Agr⁄ria ) in 1962, agrarian elites not only feared land reform but also the unification of the previously disjointed rural peasant movements across the country that might lead to a full Cuban -style revolution. As Cliff Welch convincingly argues, these fears were not entirely unfounded, as Communist and Catholic leadership led, albeit mostly peaceful, rural peasant protests in the Ribeir‰o Preto region in the late 1950s and early 1960s. However, agricultural elites, and particularly coffee landowners, overemphasized their broader threat to the national socio -political structure. 43 However, President GoulartÕs populist concessions to rural labor workers and the push for significant land refor m incited these agrarian elitesÕ fears of a Cuban -style rural labor uprising, encouraging their support of dramatic military action. 44 By 1964, these economic and social pressures converged to ostracize BrazilÕs elites. Increasing demands on the federal government further strained the countryÕs stability. Expanded social programming, employment, and other forms of federal expenditures contributed to rising inflation rates. In 1960 inflation rose to 39.5% and reached 140% in early 1964. Prices skyrocketed. The federal deficit expanded. GoulartÕs attempt to employ a radical nationalist agenda left the country on a collision course to unilaterally default on its $3 billion foreign debt. Elites on the right and the left disliked the state of the economy and President GoulartÕs populist policies became unpopular for many Brazilians. 45 43 The Estatuto de Trabalhador Rural (ETR) specifically addressed the rights of colonatos, which were key to the coffee labor system. However, the complicated structure of the sugar sector, in which cane suppliers and cane cutters held different positions, allowed mill owners to circumvent the new law and maintain the sugarcane sectorÕs economic structure. The legislation is addressed in more detail in chapter 5 of this dissertation. 44 Welch, ÒRivalry and Unification,Ó 161. The concession that most incited these fears was Goulart passing the 1963 Rural Labor Statute that granted rural laborers state protection as industrial workers had already received in the 1940s. 45 For a more detail ed account of the factors and events leading up to the coup, see Thomas Skidmore, The Politics of Military Rule , 3Ð17. Also, for an economic analysis, see Stepan, The Military in Politics , 139Ð142. 114 Most importantly, GoulartÕs populist agenda had united the divisive interests of the Brazilian military factions. Moderates and extremist right -wing, or hard -line, factions within the military agreed that GoulartÕs leadership endangered the future of the country. 46 Overblown fears of communist infiltration into the Goulart administration rallied both moderate and hard -line military officials on an anti -communist mission against potent ial threats to national security. Thus, a united military -civilian coalition led a coup on March 31st, 1964, after which Goulart quickly fled the capital. Within days, a military -civilian alliance elected General Carlos Castello Branco, leader of the cons piracy, to the presidency. He thus became the first military president in the new dictatorship. 47 Castello Branco was a leader of the moderate, pro-constitutional military faction, henceforth known as the castelistas. A native of Cear⁄ in the Northeast, Cas tello Branco served in the Brazilian force sent to World War II and, like General Geisel biographed above, he was a disciple of the ESG. He had served as GoulartÕs Chief of Military Staff prior to the coup. Under his presidency, Castello Branco supported a pro-development agenda with the support of foreign investment and close alliances with the civilian technocrats and businessmen to encourage industrialization. Castello Branco passed the National Security Law (Lei de Seguran“a Nacional ) on March 13th, 1967. The Law, based on the National Security and Development Doctrine most succinctly disseminated at the ESG in the 1950s and 1960s, formalized the militaryÕs development ideology into the mid-1970s. 48 The ideology promoted a close connection between 46 Skidmore, Politics in Brazil , 303Ð304. 47 Skidmore, The Politics of Military Rule , 161. 48 Stepan, The Military in Politics , 178. Stepan notes the connection the school made between national development and security in its teachings, stating, Ònational security for the Escola Superior da Guerra was seen to a great extent as a function of rationally maximizing the output 115 develo pment and national security, which permeated the military officer corps in the 1960s. The new 1967 law articulated the militaryÕs primary objectives. Reworking the Brazilian national motto, Òorder and progress,Ó the militaryÕs new mission was Ònational security and development.Ó In this context, the military would fight the communist threat with economic development and repression of subversives. 49 This new development benefitted the sugar industry significantly, as the previously discussed changes in the international market increased incentives to reform and expand the industry. Sugar Policy in the Military Dictatorship Initially, sugar policy continued along much the same lines as it had before the coup. The IAA continued its modernization schemes. Whil e international sugar prices soared to $190USD/ton on the world market in 1963, inciting additional expansion in the sugar industry, they quickly fell to $40USD/ton in the 1965/66 harvest. 50 However, producers had expanded sugarcane planting in 1964 because they anticipated high international prices. Their record yields saturated the market, creating a dramatic overproduction crisis for cane growers when of the economy and minimizing all sources of cleavage and disunity within the country, consequently great stress was put on the need for strong government and military planning.Ó 49 Alves, State and Opposition , 1423. The suppression of these subversives really manifest as the repression of broader popular sectors, political and otherwise. Much as OÕDonnell discusses in his bureaucratic -authoritarian model. He claims that Latin American bureaucrat ic-authoritarian governments, particularly Brazil and Argentina, followed a standard model in which they suppressed popular conflict, looked to technocratic policies to solve social problems, and proliferated capitalist relations in industries with a notab ly transnational bend. Although Brazil Õs strength as an example weakened with the rise of popular sectors in the 1980s, certainly the model applies to Castello Branco Õs administration, in which he promoted the expansion of foreign capital in private busine sses. This would change in the late 1960s under hard -line president, de M”dici, discussed below. OÕDonnell, Modernization and Bureaucratic -Authoritarianism , 2Ð4; Collier, ÒThe Bureaucratic -Authoritarian Model, Ó in The New Authoritarianism in Latin America, 26Ð27. 50 Alberico Leite, former IAA Director of Exports in published speeches from Encontro nacional dos produtores de a“œcar (Campos: Coperflu, 1974), 77. 116 international sugar prices unexpectedly fell. Excess sugar led the military government to reconsider alcohol production to absorb crop excess and provide an alternative energy option. Copersucar, a S‰o Paulo -based sugar cooperative organization founded in 1959, strongly pushed government officials to reconsider its alcohol policy. Copersucar (Cooperativa Cen tral de Produtores do A“œcar e do çlcool do Estado de S‰o Paulo ) combined two earlier cooperatives in the two major sugar -producing regions of S‰o Paulo: Copereste (the Cooperative of Mill Owners of Western S‰o Paulo) and Copira (the Cooperative of Mill Owners of Piracicaba). Copersucar combined the interests of leading sugarcane producers in both regions to market and distribute sugarcane as well as lead research on improving cane production methods. Copersucar would unite all of these earlier features and create a lobbying cartel that heavily influenced and at times directed sugar and alcohol policy by the early 1970s. CopersucarÕs primary functions were to Òreceive, finance and sell the sugar and alcohol products of the associated firms in order to maximi ze the profit and welfare of the members, defending at the same time their overall economic and social interests.Ó 51 The cooperative combined the original members of Copereste, including the Biagis, and Copira with nine other usinas and refineries in the state.52 The cooperative handled producersÕ dealings with the IAA and local government, provided credit and technical assistance to its members, and led its own research experiments on cane varieties for its members. It would also become a major alcohol refin ery 51 Nunberg, ÒState Intervention,Ó 174. 52 Outside of Copereste and CopiraÕs members, the nine additional usinas to join the state cooperative were: Cia. A“ucareira Barbacena S.A., Cia. Industrial e Agr™cola Santa Barbara, Cia. Itaquer’ Industrial e Agr™cola, Cia. Usina Vassununga, E. Marchesi e Irm‰o, Refinadora Paulista S.A., Usina A“ucareira Ester S.A., Usina Albertina Ltda., Usina Itaiquara de A“œcar e çlcool S.A., and the Usina Santa Clara S.A. Hartzmark, ÒBusinesses, Associations, and Regions,Ó 247n55. 117 operator, processing 33 million liters of alcohol a year from raw material gathered from associated usinas. 53 In fact, Copersucar would play an important role in reasserting alcoholÕs importance in Brazilian sugar policy even as sugar had lost favor in national policy in the late 1960s with its growing importance for sugar producers in S‰o Paulo. Copersucar Òblended agricultural, industrial, and commercial activities; packaged and distributed its own brands of sugar and alcohol and operated a large alcohol refinery.Ó 54 following another overproduction crisis of the 1966/67 harvest, paulista members increasingly relied on Copersucar for distribution and protection from the harsh realities of excess production. 55 Amidst this new crisis period, Jorge Wolney Atalla, a prominent paulista usineiro, would rise to power within Copersucar. Atalla was the son of a Lebanese immigrant family, but he was more unusual because he was the first Brazilian to receive his engineering degree in oil technology from the Univer sity of Tulsa, Oklahoma in the early 1950s. 56 He worked as technical assistant at P”trobrasÕ President Bernardes Refinery from 1951 to 1958, where he Òprepared the technical documents that ended up convincing the government of the need to invest more in the carburant mixture [alcohol and gasoline].Ó 57 Through his ties to Petrobr⁄s, Atalla built a close professional and personal relationship with the eventual Petrobr⁄s president and future military 53 Nunberg, ÒState Intervention,Ó 176Ð178. 54 Barbara Nunberg, ÒStructural Change and State Policy: The Politics of Sugar in Brazil since 1964,Ó Latin American Research Review, Vol. 21, n. 2 (1986): 63Ð64. This refinery processed nearly 33 million liters a year by 1977. 55 Regina Machado Curi, ÒOs barłes do a“œcarÓ Veja 411 (July 21st, 1976), 78. 56 Jorge Wolney Atalla, Reflexłes e sugestłes para o desenvolvimento brasileiro (Bras™lia: Confedera“‰o Nacional da Agricultura, 1979), 75; Nunberg, ÒState Intervention,Ó 189; ÒMorre Jorge Wolney Atalla,Ó (August 4th, 2009) Unica (Uniao da industria de cana -de-acucar ) (S‰o Paulo), accessed January 28th, 2015, < http://www.unica.com.br/noticia/15975202920334743692/morre -jorge -wolney -atalla/>. 57 Curi, ÒOs barłes do a“ucarÓ, 78. 118 president, Ernesto Geisel. Atalla entered the sugar industry after his coffee farming family acquired the Usina Varj‰o in Brotas, S‰o Paulo in 1956. He became the secretary of Copersucar in 1966, just as the sugar industry was buffeted by the overproduction crisis. Atalla was an avid supporter of expanding alcohol production in the state and the country. He saw a great opportunity for sugar producers to expand production and profits through the alcohol sector. AtallaÕs rise to power in Copersucar was closely connected to his support of alcohol production as a means to dissipate the ailing sugar crisis in the mid-1960s much as it had been under earlier IAA policy. As a major coffee and sugar producer, his support of alcoholÕs expansion certainly involved expanding his own economic and political power in Copersucar, however he often cited nationalist interests in expanding the sugar sector and diminishing oil imports for such support. 58 As the Copersucar leader looked toward alcohol as a greater solution, this helped turn government attention back toward alcohol as a fuel option again. Under AtallaÕs leadership, CopersucarÕs influence expanded, defining what Atalla claimed to be the ÒBrazilian model of agroindustrial expansion [sic].Ó 59 This included a focus on private producer -driven manufacturing and distribution of sugar , coffee, and other agricultural products. Wolney Atalla won international fame when he turned Copersucar into the first Brazilian multinational firm with CopersucarÕs takeover of the American coffee distributor, Hills BrothersÕ Coffee Inc., in the June 1976.60 His promotion of this type of agro -industrial development would shape his own contributions to the National Alcohol ProgramsÕ 58 For example, see Jorge Wolney Atalla, Òçlcool ” pouco e irregular na gasolina,Ó O Estado de S‰o Paulo (November 5th, 1972), 57. 59 Jorge Wolney Atalla as cited in Nunberg, ÒStructural Change and State Policy,Ó 64. 60 Arthur M. Louis, ÒBrazilÕs Coffee (with Sugar) Billionaire ,Ó Fortune 96 (July 1977): 82Ð88; Nunberg, ÒState Intervention,Ó 177. 119 implementation in 1975. Given Copersucar and AtallaÕs expanding influence, his consistent defense of private interests, first to support expanded alcohol production, and then against the nationalization of alcohol production in 1975, shaped the unique agro -industrial development model followed by Pro⁄lcool. By 1960, S‰o Paulo was the largest producer of alcohol in the country. The IAA lost the power to set alcohol prices in 1960 along with other institutional transformations, leaving policy interests in sugar far lower than the financial interests of sugar producers in the region. Due to inconsistent international sugar prices, many usineirosÕ alcohol production grew the most in the crisis years. For example, S‰o Paulo produced 352,568,838 liters of alcohol (almost 2 million in anhydrous alcohol and a little over 1.5 million liters of hydrous alcohol) in 1965. This was over 1.5 million liters more than it produced the year before. Hydrated alcohol levels remained about the same. The expansion was almost entirely in anhydrous alcohol production, which contributed not only to the alcohol -fuel mixture but also other emerging industrie s in the south, like the growing processed food and beverages industry. 61 Nationally required alcohol mixture rates in gasoline remained at 5% during the 1960s. As the primary use for anhydrous alcohol was as a gasoline supplement, this low mixture rate made the expanding alcohol supply problematic. Initially, anhydrous production dropped significantly in the early 1960s when sugar export opportunities opened up for the Brazilian industry. However, the overproduction crises in 1964, 1965 and 1967 encouraged increased alcohol production with no relief for the IAA from an increased mixture mandate. This was 61 Szmrecs⁄nyi, O planejamento , 107Ð108; Anu⁄ri o A“ucareiro, Safras de 1960/61 Ð1965/66 , 40. 120 particularly true in S‰o Paulo. For example, over 70% of all anhydrous alcohol produced in the country came from S‰o Paulo in the 1965/66 harvest. 62 With Atalla and more broadly CopersucarÕs support, paulista sugar and alcohol producers won an important supporter that counteracted the diminishing role of the IAA in setting alcohol policy. Atalla became CopersucarÕs first Director -President in 1968 after whic h he was able to lobby for improved sugar and alcohol policy. Beyond alcohol promotion, Atalla used his important connections to government officials to win support for favorable sugar policies for paulista producers. First and foremost, Atalla consolidate d CopersucarÕs role as interlocutor and spokesperson for S‰o Paulo producers in policy debates within and outside of the IAA. His close relationship with President Geisel and other government officials allowed him to often sidestep the IAA to win favorable policies, particularly in price policy, expanding quotas, and legal amendments for and in favor of paulista producers. For example, Nunberg notes that Copersucar was particularly successful in winning faster sugar price adjustments that followed the mini -devaluations of the currency on behalf of usineiros. This protected usineiros from inflationary impact on production costs in the 1970s. 63 In conjunction with AtallaÕs influence, Copersucar membersÕ sugar and alcohol production aggressively expanded. By 1975, Copersucar members produced 56 million sacks of sugar and 377 million liters of alcohol, representing 91% and 92% of all paulista production. This near monopolistic representation of the sugar and alcohol industry reflects CopersucarÕs support of alcoh ol production. With such lop -sided representation in both parts of the sugar industry, Atalla could use CopersucarÕs hold of the market to push policymakers to support a 62 Santos, ÒAlcohol as Fuel,Ó 177. 63 Nun berg, ÒState Intervention,Ó 180Ð182. For a more detailed account of Atalla, his connections to the military dictatorship, and the political influence he yielded over national sugar policy, see Nunberg, ÒState Intervention,Ó chapter 8. 121 large -scale increase of alcohol in the gasoline mixture. The ready stock of alcohol available in the organization alone could provide for the large consumer -driven market of S‰o Paulo. 64 As paulista sugar producers consolidated their ties to and influence within BrazilÕs military government, the hard -line Marshal Artur Costa e Silva succeed ed the moderate, foreign interests -oriented President Castelo Branco in March 1967. Originally from Rio Grande do Sul, Costa e Silva was the former commander of the Fourth Army in the Northeast at the height of the rural labor protests in 1961-1962 before self-appointing himself Minister of War after the coup in 1964. As president, Costa e Silva shifted the countryÕs economic development model dramatically to focus on agricultural exports to generate revenue to drive industrial growth in the country. Anton io Delfim Netto led his new economic team. A middleclass paulista native, the young University of S‰o Paulo -trained economist would have an important influence on not only the Costa e Silva policy but would emerge as one of the most powerful technocrats of the bureaucratic -military era. After serving as Minister of Finance of the state of S‰o Paulo in the mid-1960s, Costa e Silva invited Delfim Neto to lead the federal economic planning under his administration. Given the reigns to strategize the federal policy after tepid economic results under Castello BrancoÕs Octavio Bulhłes -led policy team, he quickly restructured economic policy toward a new national development model built on export -focused agricultural production. By extending export incentives and providing easily accessible credit at favorable rates, the national agriculture growth rate quickly jumped to 7.1% in 1967 while the total national GDP growth rate decreased to 4.2% in the same year. Most importantly, this new policy 64 Santos, ÒAlcohol as Fuel,Ó 145 and Curi, ÒOs barłes do a“ucar ,Ó 78. 122 focused on sugar, rathe r than coffee, as the means to expand agricultural export earnings, given sugar exports favorable hold on the international market and the slumping coffee market. 65 General Em™lio Garrastazu M”dici solidified Costa e SilvaÕs national economic development agenda after he ascended to the presidency in October 1969, following Costa e SilvaÕs stroke a few months earlier. Originally from Rio Grande do Sul, M”dici served as the chief of the National Intelligence Service (Servi“o Nacional de Informa“łes ) under his close friend and fellow hard -liner, President Costa e Silva. Under the new constitution of 1967, the Service became a crucial part of an increasingly centralized federal government structure behind the President and strategically placed military officials within every ministry. Upon succeeding President Costa e Silva in 1969, General M”dici continued to tighten authoritarian control over decision -making, amending the 1967 constitution to expand the executiveÕs powers to protect national security. 66 This opened the door for the implementation of a more intense national development agenda with a more authoritarian control of divisive issues like agrarian reform. M”dici rallied domestic nationalism around the growing success of the economic development agenda while implementing a new wave of repression to control political and social opposition. Under his presidency (1969Ð1974), M”dici continued Costa e SilvaÕs economic policies, led by Treasury Minister Delfim Neto and Economic Planning Minister Reis Velloso, with important implications for the sugar industry. Most pertinent to the sugar industry, these policies loosened export taxes and provided credit incentives to encourage a sustainable export economy 65 Skidmore, The Politics of Military Rule , 66Ð71 and 89Ð90; Baer, Brazilian Economy , 462. National GDP had been 6.7% in 1966. Thus, the increased agricultural growth rate in 1967 preempted the Brazilian Miracle that began in 1968. See Table 16 in the Appendix of this dissertation . 66 Skidmore, The Politics of Military Rule , 56Ð57; 109. Alfred Stepan posits that General M”dici was chosen to succeed Costa e Silva only because of his close relationship with the former president and his ability to control an increasingly divided military. Stepan, The Military in Politics , 264Ð265n23. 123 while also setting a Òcrawling pegÓ exchange rate that regularly devalued the currency in small increments to control inflation and help exports on the international market. 67 Notably, the new President focused on increasing export revenue by more than 10% a year in manufactured goods and non-traditional agricultural products, moving away from the traditional dependence on coffee exports to drive growth. 68 These policies resulte d in a period of unprecedented sustained growth known as the ÒBrazilian MiracleÓ in which national GDP growth rates averaged above 10% per annum from 1968 until 1974. The sugar industryÕs growth illustrates the close connections fostered between the military, private businessmen, and civilian technocrats under the dictatorship in the name of development. The military focused on industrialization as a means to development, giving certain civilians close access to high -level officials with similar interests in developing private industries. Copersucar President AtallaÕs close connection to numerous ministers, particularly General Geisel, reiterates this. Ministers like Delfim Neto targeted agricultural export expansion to finance this industrial growth. Hence, military, technocrats, and private businessmenÕs interests aligned to drive industrial expansion, particularly in the sugar industry. Thus, while the government focused on import -substitution policies in the industrial sector, President M”dici connected exports in the agricultural sector to the militaryÕs national security objectives. M”diciÕs administration promoted an export -oriented agricultural model that was central to his specific goal, as noted above, to simply ÒdevelopÓ with extensive industrial 67 Skidmore, The Politics of Military Rule , 91 and 138Ð144. Neto identifies the mini -devalorizations as the key to igniting the economic growth of the late 1960s, benefitting both small and large agricultural producers. Weceslau Gon“alves Neto, Estado e agri cultura no Brasil: pol™tica agr™ cola e moderniz a“‰o economica brasileira, 1960Ð1980 (S‰o Paulo: Editora Hucitec, 1997), 155. 68 Federative Republic of Brazil, First National Development Plan 1972Ð1974 (Bras™lia, 1971), xii and 17Ð18. 124 growth in the sugar sector. 69 The modernization programs that emerged in the 1970s focused on domestic industrial production of sugarcane and sugar -related capital goods to capitalize on skyrocketing international sugar prices. As discussed in the next section, the Biagi family was a central actor in this agro -industrial development path, as owners of both the Usina Santa Elisa and the heavy agro -industrial equipment company, Zanini S/A. The next section looks at how deeper modernization policies in the early 1970s manufactured a unique development plan based on M”diciÕs policies through the lens of modernization projects at the Usina Santa Elisa in the early 1970s. Sugar Booms and Deeper Modernization, 1970-1974 At the same time that the President focused the agricultural sectorÕs development on exports, international sugar prices surged in the early 1970s. While prices began at USD 3.06¢ per lb. (USD$61.20 per short ton) in January 1970, thanks to failed crops in other sugar markets, prices spiked to USD 56.14¢ (USD$1122.80) by November 1974.70 Such a dramatic rise in prices drove an increased interest in modernization of the sugar industry. The military governmentÕs deeper modernization efforts explicitly focused on the consolidation of production facilitat ions, quotas, and land for larger production capabilities concentrated in the hands of fewer large -scale producers that manifest in the IAA program, Funpro“ucar, discussed below. 69 Stepan, The Milit ary in Politics , 236. In fact, M”diciÕs own vision of development was an extension of his predecessor, and fellow non-ESG affiliate, Costa e Silva. Unlike Castello BrancoÕs support of foreign investment, Costa e Silva believed Òthat it was possible to over come foreign exchange shortages by increasing exports and that development should be financed by domestic resources.Ó 70 Note that prices are given in USD cents per lb. Given the different metrics used in the US, the UK, and Europe for tons (short ton, long ton, and metric ton), this is a clearer valuation than tons. See Figure 11 in the Appendix of this dissertation for a detailed graph of sugar prices. 125 Funpro“ucar accelerated agricultural industrial development the sugar sector , which differs from the development path of traditional industrial goods. Evans famously critiques the Brazilian development model of the 1970s for its heavy use of multinational investment to create a form of dependent development in which the country still relied on foreign goods to support its own intermediate industrialization. He claims that ÒAs industry moves toward more capital intensive, technologically based production, the differentiation of capital will leave local capital increasingly marginali zedÓ in favor of larger and more powerful multinational firms. 71 While true for pharmaceuticals and automobiles, this was not exactly the case in the sugar industry. Instead, the sugar sector remained under the control of domestic producers while deepening industrialization under M”diciÕs development strategy. Not only did domestic producers control the sugar industry but domestic companies also controlled the industrial equipment industries supporting the sugar sector. Brazilian sugar producers like Maurili o Biagi imported foreign technology with local and national funding to drive expansion and the growth of domestic equipment production just as they had in the 1950s. This is more in line with EakinÕs assertion that foreign technology was a fourth prong in Brazilian development models. 72 Importantly, these companiesÕ hold on the domestic market is critical to the different development path followed by Pro⁄lcool in the late 1970s and 1980s. By expanding their holdings and investing in foreign technology behi nd equipment production in the 1960s, the Brazilian sugar industry had domestic companies capable of providing technology with greater 71 Evans, Dependent Development , 120Ð121. This is to say that foreign firms dominated durable consumer goods industries (like transportation equipment, rubber goods, chemicals, machinery and electrical machinery) while intermediate goods and nondurable consumer goods sectors (like textiles, food and beverages, wood and some metal production) received more national private capital to develop. 72 Eakin, Tropical Capitalism , 3 126 specialization than international companies could provide at the prospect of a national alcohol expansion in 1975.73 The Policies The modernization policies employed between 1970 and early 1974 were less a coherent, articulated plan and more a confluence of various policies that streamlined financial support to large usineiros while minimizing labor costs to maximize cost -efficient production expansion. 74 These policies intensified the early modernization efforts of the 1960s and further separated the advantages the government bestowed upon larger usinas over smaller producers. Focused on usineirosÕ productivity, the increasin gly centralized policy -makers closely monitored the implementation of an improved sugar agroindustry that would exacerbate Òtraditional distortionsÓ in the industry. 75 As these producers gained greater support through the new national development strategy, paulista producersÕ took advantage of increased government -based financial resources. The Usina Santa ElisaÕs own experience with government support in the early 1970s best illustrates this phenomenon. 73 Hasse, Filhos do fogo , 155Ð156. For example, Zanini imported the Atlas turbine and recreated it for sale in the sugar industry. The company paid Cr$50,000 in royalties for the technology. 74 See chapter 5 and 6 of this dissertation for the impact of these modernization policies on laborers in the sugarcane industry and particularly within Ribeir‰o Preto. 75 Wilson Carneiro, ÒComent⁄rio econŽmico - cotas de produ“‰o,Ó Brasil A“ucareiro, 39, vol. 77, n. 6 (June, 1971), 17Ð20. President M”diciÕs Minister of Planning Jo‰o dos Reis Velloso confirms this point, noting the direct involvement and oversight M”dici had in economic planning. Additionally, the new administrative structure within the IAA included a greater number of government bureaucrats on the newly structured Deliberative Council, which replaced the Executive Commission of the earlier IAA administration in 1967. Among the changes to this new council, the reform reduced the number of usineiros on the council and increased the government bureaucrats on the council, including a representative from the Ministry of Planning. Szmrecs⁄nyi, O planejamento , 289. 127 Pedro Ramos highlights Decree law n. 1.186 of 1971 and 1.266 of 1973 in summary of the modernization efforts of this period. 76 The military governmentÕs political party, the Alliance for National Renewal (Alian“a da Renova“‰o Nacional ), passed Decree n. 1.186, which enacted the Rationalization of the Sugar Agroindustry Program (Programa de racionaliza“‰o da agroindœstria a“œcareira ). The program stipulated that only usinas with quotas above 400,000 sacks of cane per harvest could receive absorb quotas transferred from smaller producers ingested into larger usinas and relocate usinas to more favorable land at the discretion of the usineiros. Financial support for this program targeted the Òfusion, incorporation, and relocationÓ of usinas to maximize large -scale productivity. 77 This policy allowed large usinas to grow and excluded smaller and medium sized sugar producers from these consolidation benefits. In fact, Barbara Nunberg discusses the aggressive efforts that usineiros in S‰o Paulo made to acquire smaller usinas, land for cane farming, and medium -sized usineiros quotas for their own cane complexes. Nunberg recounts a report from a local interviewee, Jos” Maria Azambuja Rolim, director of the Agricultural Association of Mogi -Murim in Campinas, published in the national economic newspaper, A Gazeta Mercantil , stating: ÒAccording to Jos” Maria Azambuja Rolim, director of the Agricultural Association of Mogi -Murim in Campinas [another dominant sugar producing region in the interior of S‰o Paulo], most of the cultivatable land in that region is worth, on the average [sic], a maximum of 100,000 cruzeiros per hectare. The sugar usinas which are intent on acquiring more land for cane cultivation are offering to pay as much as 200,000 per hectare, however. Indeed, it has also been rumored that although small land owners are officially registering sales of their property at a price of 100,000 cruzeiros per hectare, the actual payment received from sugar usineiros is considerably higher.Ó 78 76 Ramos, Agroindœ stria canavieira , 159. 77 Szmrecs⁄nyi, O planejamento , 298. 78 A Gazeta Mercantil (November 16, 1976) cited in Nun berg, ÒState Intervention,Ó 160Ð161. 128 Such demand would also push smaller producers out of the industry, favoring larger usineiros that could make such offers with government loans. Thus, the government supported a very different form of land reform than the peasant leagues had envisioned in the early 1960s. After the IAA instituted the program in 1971, the Vice Presi dent of the IAA created special groups to oversee the programÕs administration. The Technical Assistance Group (Grupo especial de assessoramento tecnico - GEAT) and the Administrative Assistance Group (Grupo especial de assessoramento administrativo - GEAD) allocated the financial and technical assistance provided through the program. Funding for the program came from the IAAÕs Special Export Fund. 79 These funds financed the modernization programÕs projects. Later allocation of the Special Export Funds intens ified the IAAÕs modernization efforts in the 1970s. President M”dici formalized the use of the Special Export Funds with Decree law n. 1.266 on March 26th, 1973 and act 19 of April 4th, 1973.80 The law, which officially renamed the program the Support Progr am for the Sugar Agroindustry (Programa de apoio a agroindœ stria acucareira - Funpro“ucar/ Pro“ucar), explicitly dictated where the IAA could apply funds from the Special Export Fund. Among other objectives, this included: financing the fusion, incorporatio n, and relocation of industrial units and planter quotas; the reduction of capital costs to finance the sugarcane subsector (such as alcohol); the rationalization of industrial sugar complexes; the financing the acquisition of agricultural machines, vehicl es and other 79 First created in December 1965, the Special Export Fund acquired the profits from gen erated from the difference between prices paid to domestic producers for sugarcane and prices collected in sugar exports. It did not have a positive balance until 1968, but as international prices began to rise, the fund accumulated a great deal of money, which officials then redistributed into the sugar industry to finance development and support for producers and workers. Szmrecs⁄nyi, O planejamento , 303. 80 Santa Elisa GEAT form of 23/08/1973. IAA Collection, A6.06 Box 0393, National Archives, Rio de Jane iro. 129 goods; and the promotion of better quality cane and through the new research program, the National Program for the Improvement of Sugarcane (Planalsucar). 81 Pro“ucar and Planalsucar best embody President M”diciÕs commitment to the overall expa nsion of the sugar industry as a part of his administrationÕs development plan. In the PresidentÕs first national strategy document, ÒTargets and Foundations for Government Action, 1970-1973,Ó he and his advisors reiterated the importance of technology in the expansion of agricultural production for export. 82 Pro“ucar and Planalsucar research and development would be critical to allowing the industry to meet this goal. His overall agricultural development policy focused on three major means to meeting this goal: first, expanding Òfiscal and financial incentives for production increase, investments, marketing and technological innovation in the agriculture sector;Ó second, expanding Òthe use of modern input materials;Ó and third, continuing Òlarge scale agricu ltural research.Ó 83 Planalsucar was an important part of reaching this goal. 84 In the 1972 National Development Plan, I PND, M”dici set the lofty goal of a 7% annual agricultural growth rate. 81 Szmrecs⁄nyi, O planejamento , 304. 82 Neto, Estado e agricultura no Brasil , 132; Presidencia da Repœblica, Metas e bases para a a“‰o de governo: s™ntese (Bras™lia, September 1970). This was a more general outline of the goals while the I PND, discuss ed above, laid out goals by sector. 83 Neto, Estado e agricultura no Brasil , 133; M”dici, I PND, 18. 84 Rogers, The Deepest Wounds, 180Ð181, 199, and 260n12. Planalsucar has drawn more attention in the historiography. Thomas Roger Õs work on sugarcane workers in the 1960s and 1970s, closely notes the important role Planalsucar played in the national modernization efforts for the Pernambucan sugar industry. Planalsucar most succinctly connects Brazilian modernization efforts to the ÒGreen Revolution, Ó which focused on expanding agricultural yields with agricultural technology like man-made fertilizers and cane varieties. Rogers notes the scant studies on the impact of the Green Revolution on Brazil even today. However, the focus on increasing the industri al yield of sugarcane, associated with PlanalsucarÕs primary goal of improving cane yields, had varying outcomes between regions. While more successful in S‰o Paulo, even then, it was largely unsuccessful in increasing the industrial yield per hectare in both regions. Rather, it encouraged the expansion of sugarcane production onto land inappropriate for cane production. 130 Pro“ucar -financing shaped the expansion of the industry in the 1970s, providing the capacity necessary for Pro⁄lcool to become a viable option in 1975. Pro“œcarÕs focus on increasing production capacity extended to alcohol production as well as the incorporation of sugarcane lands under concentrated sugar complexes. Many usinas used the funds gained from Pro“œcar to build, expand, or improve their sugar holdings as well as their ethanol distilleries within their industrial complexes. Their project approvals passed through the IAA after which the Bank of Brazil released the funds for their specified modernization efforts. The Usina Santa Elisa is an important example of the benefits that Pro“ucar bestowed on participant usinas and particularly usinas that already had a relatively modernized industrial outfit. The Usina Santa Elisa By 1970, the Usina Santa Elisa had transformed gradually into a premiere usina in Ribeir‰o Preto. Founded and led by Maurilio Biagi in the 1930s, the entrepreneur had integrated his sons into his expanding holdings in the 1960s. BiagiÕs eldest son , Maurilio Biagi Filho, joined him as a key part of the Usina Santa ElisaÕs administration while his second son, Luiz Lacerda Biagi would work in their metallurgy holding, Zanini (discussed below). The BiagisÕ investment in ethanol production under Pro“uca r, improving equipment for both sugar and alcohol production, was a risk that they felt was sure to pay off even if the government had not yet explicitly supported a nationally -driven alcohol program. Biagi Filho grew up working at the Usina and studied business in Ribeir‰o Preto. His father trained his eldest son to succeed him at the Usina, where Biagi Filho began as an agricultural manager at age 20 in 1962.85 He would assume the superintendent position under his father by 1970. Biagi Filho stated that after he moved into the superintendent position, Biagi Sr. 85 ÒDe pai para filho,Ó A Revista Santa Elisa: Uma Historia de Trabalho e Desenvolvimento , (Ribeir‰o Preto: MIC Editorial Ltda, 1996), 23. 131 Ònever contracted anyone without talking with me beforehand.Ó 86 The two worked together closely to drive the expansion of the Usina Santa Elisa and alcohol production in the 1960s and 1970s. Not all usineiros were enamored with CopersucarÕs leadership, and many broke from the cooperative as a result. The Usina Santa Elisa was one of these many, breaking all ties with the cooperative in 1973.87 The Usina Santa Elisa was the biggest usina to break away from Copersucar in the state of S‰o Paulo. As such, the Biagis emerged as sugar and alcohol industry leaders outside of the umbrella of Jorge Wolney Atalla and CopersucarÕs own actions. Outside of CopersucarÕs access to preferential lobbying access (provided primarily by Atalla, as discussed above), the Biagis found another means to lobby the military directly: hiring Coronel Milton Camara Senna as director at the Usina Santa Elisa. Prior to joining the Usina, the Rio de Janeiro native served as the former Chief of the 7th Military Region and the Superintendent of the Amazonian development program (Superintendencia do Desenvolvimento da Amazonia ). At the Superintendent program , he had been tasked with recruiting southern businessmen to invest in development programs in the Amazon region. 88 Although unclear, this may have been where the Biagis first connected with Senna. Regardless, such experience would make Senna invaluable in the BiagiÕs own development . Not coincidentally, Senna joined the Usina in 1974, only a year after the Biagis broke from Copersucar and the same year that they 86 ÒDe pai para filho,Ó 24; Hasse, Filhos do fogo , 193-194. Biagi Sr. and Biagi Filho would work closely until BiagiÕs sudden death in February 1978. Thereafter, the family matriarch and widow, Edilah Lacerda Biagi became the acting president, giving full control of the familyÕs sugar -alcohol business to Biagi Filho while Lacerda Biagi continued in the metal-mechanic company, Zanini, with Jos” Rossi Jr. 87 Santos, ÒAlcohol as Fuel,Ó 380. In fact, these producers founded SOPRAL in 1975 as an alternative coop erative to the aggressive Atalla and the dominant Copersucar. For the case of the Usina Santa Elisa, see Hasse, 194. 88 Houtzager, ÒState and Unions ,Ó 116n30. 132 applied for Funpro“ucar -financing. 89 SennaÕs presence reiterates the important role that lobbying played in applications winn ing funding and usineiros successfully travailing the difficult Brazilian bureaucratic bottlenecks. Father and son applied for Funpro“ucar -financing only months after the program began. Economist Roberto de Oliveira first reviewed the Usina Santa ElisaÕs financial capability to participate in Funpro“ucar in October 1973. Project approval involved an extensive review of the UsinaÕs financial situation over the previous three years as well as its board of directors in order to assess its ability to repay the Funpro“ucar loans. A demand like this, while logical for the Bank of Brazil as an investor, would have been a key step in weeding out smaller usinas that were less financially capable of incurring such large loans. IAA President General çlvaro Tavares Carmo approved Santa ElisaÕs application for Funpro“œcar funding on April 4th, 1974. It approved Cr$18,501,100 ($2,720,750 USD in 1974 terms) to improve industrial capacity with the Òacquisition of industrial equipment, installations, consignments, and civil projects.Ó 90 As with all the projects, Funpro“ucar did not finance 100% of the project, rather the respective usina directorate was also expected to incur some costs for the modernization project. In the case of the Usina Santa Elisa, the IAA allocated Cr$976,600 ($143,617 USD), or less than 5%, of the funding to the owners themselves. 91 As a large usina in 89 In fact, Senna signed off on all of the Usina Santa ElisaÕs first Pro⁄lcool applications. Usina Santa Elisa Pro⁄lcool Application, CNAl n. SP06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro; Hasse, 170. 90 Funpro“œcar approval letter from General Tavares Carmo to the Usina Santa Elisa on April 4th, 1974. GPCt 515/74, IAA Coll ection, A6.16 Box 0443, National Archives, Rio de Janeiro. 91 Internal economic report with the Santa Elisa Funpro“ucar application by Economist Roberto de Oliveira and approved by the Economic Advisor Carlos Alfredo Hiss for the Secretary Executive of GEAT in Rio de Janeiro on October 23rd, 1973. A6.06 Box 0393, IAA Collection, National Archives: Rio de Janeiro. 133 the region and the state, the governmentÕs additional financial assistance provided to the usina solidified its position as a leading usina in the countr y. Figure 2: The Usina Santa Elisa Directorship in 199692 Source: A Revista Santa Elisa: Uma Historia de Trabalho e Desenvolvimento , (Ribeir ‰o Preto: MIC Editorial Ltda, 1996), 27. The Bank of Brazil, the official financial institution through which the IAA distributed government funds, provided the credit on a 10-year repayment plan including three years of forbearance and a 12% interest rate. While the Usina Santa Elisa had outstanding loans to other regional banks, the Bank of BrazilÕs position as the primary lender in Funpro“ucar was an important illustration of the federal governmentÕs commitment to the program. 93 The Bank of 92 Pictured in the middle and to the center -right are Edilah Lacerda Biagi and Maurilio Biagi Filho, in the photograph in the middle is the patriar ch, Maurilio Biagi. When Biagi Sr. died in 1978, Maurilio Biagi Filho took over all sugar -alcohol family operations, including the Usina Santa Elisa, for which he had been Superintendent for years. 93 Santa Elisa GEAT form of 23/08/1973. IAA Collection, A6.06 Box 0393, National Archives, Rio de Janeiro; See also Santa Lydia and Nossa Senhora da Aparecida UsinasÕ applications for 134 Brazil had become the primary arm of the federal governmentÕs agenda for agricultural development. Conveniently situated between commercial and federal lender until the late 1960s, the Bank of Brazil remained the most important symbol of federal support in agricultural financing. Federal financing provided was well below market rates for other regional banks. Funpro“œcar provided interest rates fixed at 12% in the Center -south and 10% in the North and Northeast. As a point of comparison, according to the presentation given at the local Ribeir‰o Preto Commerce and Industry Association by S‰o Paulo State Development Bank President Dr. çlvaro Coutinho, small and medium sized companies received loans with a notable 22% interest rate in 1974.94 While interest rates varied between regions (Northeast and Center -south), given BrazilÕs history of rampant inflation, the guaranteed 12% interest rate with no monetary correction for inflation was more than a deal; it was a steal.95 In a presentation to the Federal Senate on October 25th, 1973, IAA President General çlvaro Tavares Carmo stated in regard to the financial conditions of the program, ÒI believe that no other credit establishment could offer financing under these conditions.Ó 96 With such varying interest rates and chronic inflation, there was great incentive both for the state to intervene with and for producers to participate in the nation al program. more examples. GEAT form of 23/08/1973 of A6.06 Box 0395 and GEAT form 12/10/1973 of A6.03 Caixa 0378. 94 President of the State BADESP President Alvaro Coutinho, ÒThe Role of State Banks,Ó Presentation to the ACI -RP on 19/04/74. Caixa 187, ACIRP Archive, Ribeir‰o Preto, SP. 95 In fact, this would be the case as the program continued. In 1973, the average inflation rate was sat betwe en 17% and 22%. However, by 1981, when the majority of the loan should have been repaid, inflation sat at 99.7%. Skidmore, The Politics of Military Rule , 139, 254, and 356n129. 96 ÒConjuntura a“ucareira ” analisada pelo President do IAA no Senado Federal,Ó Brasil A“ucareiro, Year 40, Vol. 83, n. 1 (Jan., 1974), 18 as cited in Ramos, Agroindœstria canavieira , 160Ð161. 135 The Bank calculated annually payments based on the usinaÕs authorized production in alignment with the IAAÕs Harvest Plan. Thus, usineiros still had to apply for new quotas despite increasing their production capacity under the program. For some usinas, this production limitation may have been a mere formality by the 1970s, as exports were such a central part of the national agenda and the IAAÕs own policy structure. However, the IAA explicitly noted that the IAAÕs financing for the modernizati on and capacity expansion through Funpro“ucar Òdid not constitute a right to a new official production quota.Ó 97 While the project was beneficial to any usineiro that could corral financial support from the IAA, it was all the more beneficial to the Biagi family as they were able to purchase the majority of the new industrial equipment from their own company, Zanini S/A.98 This included: rollers and electric winches for cane reception, a cane feeder table, a rotating filter, evaporation boxes, centrifuges for sugar processing, multi -jet vacuums, turbo -generators, regulators, and water boilers among other equipment. The Usina Santa Elisa was one of many usinas to purchase distillery equipment as well as other agro -industrial equipment first under Funpro“ucar and then more extensively under Pro⁄lcool. Thus, as agro -industrial complexes expanded first in the region and then in the country, the BiagiÕs two industries were able to expand their economic power and prowess both in the Ribeir‰o Preto and the country. ZaniniÕs expansion, driven by Funpro“ucarÕs preferential use of domestic companies, transformed the important sugarcane region into an agro -industrial capital. 97 Funpro“œcar approval letter from General Tavares Carmo to the Usina Santa Elisa on April 4th, 1974. GPCt 515/74, IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 98 See also, Santos, ÒAlcohol as Fuel,Ó 255; Barzelay, Politicized Market , 183. 136 While BiagiÕs eldest son ran the Usina Santa Elisa alongside his father, the second son, Luiz Lacerda Biagi, developed the familyÕs equipment production company, Zanini. From a young age, Lacerda BiagiÕs interests had always favored the technical side of the familyÕs metallurgy company. Trained in economics at the Mackenzie University in S‰o Paulo, Lacerda Biagi set up the Zanini office in the capital city in the 1960s, as Biagi Sr. and his partners restructured the company. 99 Maurilio Biagi, Ettore Zanini and Arnaldo Bonini incorporated Zanini in 1961, shifting its production scope from the 14 usinas in the Ribeir‰o Preto region to a national agro -industrial equipment company. Founded to compete with the first major domestic agricultural equipment company, Dedini S/A, in 1950, Biagi Sr. wanted to expand its production capacity beyond regional rum and sugar mills to other custom industrial equipment outside the sugar sector in the agricultural industry in the 1960s. In 1970, Biagi Sr. and the other shareholders decided to expand Zanini with increased international partnerships to acquire foreign technolo gy in order to win more contracts in Brazil. They reconstructed the company, and Luiz Lacerda Biagi assumed the vice -presidency prior to the company going public. 100 With Funpro“ucar, and more importantly Pro⁄lcool in the late 1970s, Zanini became the second largest sugar mill and distillery producer in the country after the domestic company, Dedini S/A.101 99 Maurilio Biagi owned 44% of the company, while Arnaldo Bonini and Jos” Rossi Jr., an engineer that joined Zanini in 1961, owned 20% and the founder, Ettore Zanini, held 16%. Hasse, Filhos do fogo , 146Ð148. 100 The partner and engineer, Jos” Rossi Jr., took the presidency, but Lacerda Biagi would remain the talking -piece of the Zanini operations from 1970-1985. Maurilio Biagi continued as the president of the companyÕs advisory council until his death. Hasse, Filhos do fogo , 162Ð163 and 168. 101 Together, the two companies produced 70% of all related equipment in the country by 1979. For a more detailed history of the Zanini company and its impact on the region, see Santos, A usinagem do capital , 33Ð47. 137 ZaniniÕs growth alongside the Usina Santa Elisa captures the way domestic producers were able to maintain control of the sugar industry using national and domestic private funds to keep foreign capital out of the sectorÕs development. Exports not only fueled interest in Pro“ucar, but they also funded the projects, initially. The government redirected these funds into the sugar industry in the early 1970s, in order to increase Òcapital intensive, technologically -based production,Ó to quote Evans again. While multinational investment drove other industryÕs development, MediciÕs sugar development agenda was largely driven by domestic funds and domestic industrie s when possible. The domestic companies contracted to execute the modernization programs at the Usina Santa Elisa reiterate this point. The Usina Santa Elisa used Pro“ucar funding to expand its ethanol production capacity substantially along with its sugar cane production under this modernization program. While the various pieces of equipment listed above accounted for the larger portion of the overall credit, the largest single equipment piece went to the usinaÕs distillery. Pro“ucar financed a distillation , rectification, and dehydration apparatus that would produce 70,000 liters per day. At the same time, the IAA financed buildings for cane deposits, a warehouse, technical and mechanical offices, the expansion of the boiling room, the transformation of old cane crushing buildings into sugar depositories, and the distillery. 102 The project employed three different companies to construct, expand, and lay down the modernization projects. The IAA approved the local Ribeir‰o Preto -based construction company, H”lio FŠz Jord‰o Ltda., to do the civil construction projects, including the building in which the 102 Funpro“œcar approval letter from General Tavares Carmo to the Bank of Brazil President Dr. çngelo Calmon de S⁄ on April 4th, 1974. GPO 324/74, IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro; Cedula de Credito Industrial contract between the Bank of Brazil and the Santa Elisa shareholders, Maurilio Biagi Sr. (Director), Maur™lio Biagi Filho (Superintendent Director), Edilah Lacerda Biagi, and Luiz Lacerda Biagi on May 6th, 1974 and the annexed equipment budget of May 3rd, 1974. 138 distillery would go. The IAA contracted the Piracicaba -based company, Metalœrgica Conger S/A for the construction of the actual distillery. Finally, the projec t employed the BiagiÕs majority share -owned and regional agro -industrial equipment company, Zanini S/A, for the sugar cane processing equipment like the turbines and centrifuges, and other electric energy equipment pieces. 103 The Usina Santa Elisa drew part icular attention for the remodeling financed by the IAA. In a letter to Santa ElisaÕs Director -President, the Special Group the Control of Project Execution (Grupo Especial de Controle da Execu“‰o - GECEP), which was the administrative organ of the Technica l Assistance Group (GEAT), requested that the Usina clearly display a placard, pictured below, indicating the UsinaÕs part in the Funpro“ucar program. 104 While a simple identifier, its implications are notable. First, it highlights the important role that visibility held in the programÕs execution. Modernization was not just about efficiency but it was also a show of greater technical prowess. Funpro“ucar captured the essence of President M”diciÕs clear goal, as stated earlier, to simply Òdevelop.Ó The nebulo us term was best captured through extensive mechanization, international competition, and efficiency for M”dici and his team. Funpro“ucar reflected this idea. Industrial capacity in the Brazilian countryside was equally important to an idealized version of spreading development. The placard was a part of this effort. 103 Ibid. In fact, GECEP initially approved a fourth company, Balan“ as Chialvo, in addition to the Usina Santa Elisa itself to be involved in the projectÕs expansion, but no mention was made of the company again in the record so it is possible that its obligations were small (only having been allocated Cr$110,900 compared to the other larger projects employed by the other companies) or they were transferred to another company. Letter to the Usina Santa Elisa from GEAT/GECEP Coordinator Augusto Cezar da Fonseca on June 10th, 1974. GECEP Processo 533/74, IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 104 GECEP - 544/74 of April 16, 1974. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 139 Second, such earmarking highlights the exclusive number of usinas that were able to win Pro“ucar funding. With a required minimum production quota of 400,000 sacks of sugar a year, many usinas would not be eligible for the programÕs financing. 105 Entry into this small group of usineiros was exclusive and beneficial. Not only did it open up access to greater expansion, but it also tagged the usina for greater government investment under the followi ng sugar -related development program, Pro⁄lcool in 1975. Figure 3: Requested Placard Source: GECEP - 544/74 of April 16, 1974. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. Quickly after the GEAT approved the UsinaÕs financing, Maurilio Biagi Filho, the Director Superintendent of the Usina and advisor to the usinaÕs transportation section, submitted a request to IAA President Tavares Carmo to restructure the financial distribution allotted to the 105 According to the neighboring Usina Santo AntonioÕs application, 115 other usinas received funding under the program across the country by May 1975. Presumably, this was a good portion of the usinas with a 400,000 sack production base. However, that is simply speculation on the part of this author. GEAT-III-86/74, Report on the Usina Santo Antonio - SP, A6.07, Box 0397. IAA Collection, National Archives: Rio de Janeiro. 140 new equipment. 106 In particular, Biagi Filho proposed changes to the allocated Zanini S/AÕs equipment production. He states, ÒWith the evolution of the approved PlanÕs application, there arose, as is normal, more convenient alternatives, not only for more modern and more consistent equipmen t quality with the purpose [of Pro“ucar] in mind, but also the said equipment will be more adequate for the projected systems, better attending to the focus on economy.Ó 107 These economized changes included a reduction in turbo generators and Zanini and Wood ward speed regulators for the turbines, which were part of the electric energy equipment outfit, and a complete replacement of the cane feeding equipment for a new unloading system. Additionally, Biagi Filho requested the expansion of the Òsulfitation ense mbleÓ (which includes new ovens, compressors, and other accessories for cane processing) based on the outcome of the 1973/74 harvest. 108 These changes shifted the financing of the project as well, for which Biagi Filho proposed that the IAA approve redirect ing the funds saved from the unnecessary equipment to the distilleryÕs financing. The excess funds (Cr$412,500) after the subtracting the canceled equipment and the additional equipment, would instead go to the approved financed equipment for the expansion of the distillery. Originally, the distillery had an allotted production capacity of 70,000 liters per day. Correspondence with details of the new distillery reveals that the new distillery was to be equipped for both hydrous and anhydrous alcohol product ion, using benzol as its primary dehydrating ingredient. These additional funds would allow the Biagi Filho to expand 106 Letter from Maurilio Biagi Filho to General Tavares Carmo on June 16th, 1974, IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 107 Funds request letter from Maurilio Biagi Filho to IAA President General Alvaro Tavares Carmo on June 17th, 1974. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 108 Ibid. 141 the Usina Santa ElisaÕs distillery production capacity from the projected 70,000 liters/day to 240,000 liters/day. 109 The distillery seems to have been BiagiÕs primary focus for these changes. Biagi Filho explains his interest in expanding the distillery in relation to his own interest in alcohol as a gasoline additive. He states, ÒGiven the global oil crisis, the Usina Santa Elisa believes that the production of ANHYRDROUS ALCOHOL (sic) will be of great importance for the national economy.Ó 110 In this application, Biagi Filho reasserts his position on the need to promote further use of alcohol through the request for the Usina Santa Elisa. The unprompted mention of alcoholÕs connection to the national economy reflects broader ruminations on the importance of alcohol within the sector and even within the government during this period. Biagi FilhoÕs request was timely. Between the expansion of a sugar research program, Planalsucar, in 1970 and Funpro“ucar in 1971 and early 1973, the federal government and the IAA subsequently had invested extensive money into the sugar industry to maximize sugar profits on the international market. However, suga r prices began to dip in 1974 after the first oil shock in 1973 shook the Brazilian financial scheme and development agenda. Following the OPEC-induced oil shock of 1973, oil prices precipitously increased in 1974.111 As Laura Randall noted, the first oil shock did not damage the Brazilian economy the same way it did other countries, like the US, because of its more protected oil production structure. Following the creation of Petrobr⁄s in 1953, Brazilian oil production was significantly 109 Funds request letter from Maurilio Biagi Filho to IAA President General Alvaro Tavares Carmo on June 17th, 1974. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 110 Ibid. 111 See Figures 11 and 12 in the Appendix of this dissertation. The comparison shows the change in oil prices in dollars per barrel. For a more detailed account of the OPEC (Organization of Oil Exporting Countries) embargo on the US and the related increase in global oil prices, see Francisco Parra, Oil Politics: A Modern History of Petroleum (Ne w York: I.B. Tauris, 2004), 175Ð188. 142 more costly than oth er countriesÕ as it developed the infrastructure and training for its employees. Thus, the oil price increases did not adversely affect the slowly diminishing price of production that occurred with Petrobr⁄sÕ development. 112 Thus, Maria Helena Castro Santos summarizes the first oil shock in 1973 as more of a Òwarning signalÓ for Brazil than an immediate emergency even though the balance of payments quickly national balance of payments. 113 Yet, less known is the significant shift in sugar prices the next year. The poor international harvests that had driven prices up in the early 1970s rebounded by late 1974. Along with an expanded beet sugar market, prices plummeted. Additionally, untimely droughts and cold spells in S‰o Paulo hurt Brazilian production. With these successive events, the militaryÕs massive investment in the sugar industry, which already sat around Cr$10 billion (almost USD$1.5 billion) by 1975, was in trouble. The decreasing sugar prices endangered a significant industry in the development agenda that had been so successful (and costly) under the M”dici administration. Biagi Filho and his father Maurilio Biagi Sr., director of the Usina Santa Elisa, were very vocal about their interest in the expansion of alcohol production to decrease dependence on oil imports. For example, the two invoked the national implications for larger alcohol production in their June 1974 Funpro“ucar request. This was likely an intentional plug in support of concurrent debates in public forums initiated by Maurilio Biagi Sr.Õs April 1974 anonymous report 112 Randall, The Political Economy of Brazilian Oil, 15. Randall notes that between 1954 and 1973, Brazil actually paid 3.7 billion dollars more for its domestic oil than it would have with imports because of related bureaucratic red tape and the high cost of inexperience in oil production within Brazil. 113 Santos, ÒAlcohol as Fuel,Ó 195Ð196. As Santos concisely illustrates, oil imports accounted for 11% of the value of total imports but jumped to 22% and rising in 1974, while the current accounts deficit grew by 320% in one year, expanding from 1.7 billion dollars in 1973 to 7.1 billion dollars in 1974. 143 proposing a large -scale alcohol program to the National Petroleum Council. 114 As Biagi Filho revealed in an interview I conducted with him, ÒIn 1974, we [Biagi Filho, his father, and other specialists in the industry] sent a report to the President of the Republic, during the General Geisel era, which was titled ÔPhotosynthesis as Energy.Õ The report [proposed] subsidies for the government to create the ÔNational Alcohol ProgramÕ or ÔPro⁄lcool. When the agent delivered the report to the government, [it] was coordinated by Dr. Lamartine Navarro Junior, then vice -president of Associgas, a gas association[.] Thus it was an oil man that made the alcohol [program] work [É] with the collaboration of my father, Maurilio Biagi.Ó 115 Indeed, the 1974 report directly influenced subsequent policy. It proposed two different programs that would promote the expansion of alcohol production in S‰o Paulo and the country. The first program supported financing the construction of autonomous dist illeries for direct alcohol production and expanding the idle capacity of annexed distilleries, like that on the Usina Santa Elisa. In fact, IAA President Tavares Carmo and the Deliberative Council of the IAA approved the construction of new autonomous dis tilleries under restrictive conditions in Resolution n. 2081 on May 13th, 1974.116 Thus, Biagi FilhoÕs Funpro“ucar request was far from coincidental. Rather, it was consistent with outside efforts to push greater alcohol production on the national level, in which the Biagis were actually important leaders. The Usina Santa Elisa was not the only usina to use Pro“ucar funding to enhance its alcohol production capacity. For example, the Usina Santa Lydia was a prominent usina in Ribeir‰o Preto owned by Arnaldo Ribeiro Pinto. Unlike the Usina Santa Elisa, the Usina Santa Lydia began as a cacha“a distillery and transitioned to a fully equipped sugarcane and anhydrous 114 Szmrecs⁄nyi, O planejamento , 310. In fact, the authors of the report were unknown at the time of its distribution in 1974 but broadly considered to be related to Copersucar usineiros. Maur™lio Biagi Sr. was one collaborator to later claim authorship. 115 Interview with Maurilio Biagi Filho, May 20th, 2013, Ribeir‰o Preto, S‰o Paulo. 116 Szmrecs⁄nyi, O planejamento , 310Ð311. The IAA had to approve autonomous distilleries directly and could not directly compete with sugar for other usinas. Also, these autonomous distilleries had to have a minimum production capacity of 60,000 liters per day, predominantly produce anhydrous alcohol for the fuel supply, and could produce alcohol from sugar directly or from a residual source, like molasses. 144 alcohol usina in 1946.117 Between the 1969 and 1972 harvests, the Usina Santa Lydia increased its alcohol production from 2,976,000 liters to 3,291,000 liters while its sugar production actually decreased from 391,000 sacks of crystallized sugar (processed) to 363,000 sacks. In the original bid for Funpro“ucar funding, the GEAT only approved financing for crystallized sugar equipment. However, upon a reassessment approved in July 1974, the GEAT committee approved additional financing for a new distillery apparatus, new alcohol storage tanks, and the construction of a building to house the distillery much like the Usina Santa Elisa.118 Santa LydiaÕs financing highlights the important role increased alcohol production held in the IAAÕs modernization efforts beyond the Usina Santa ElisaÕs own interests, benefitting regional producers. Also, purchasing distille ry equipment from the Biagi -owned Zanini further benefitted the BiagisÕ leadership in the sugar and alcohol industry. In the case of the Usina Santa Elisa, IAA President Tavares Carmo denied Maurilio Biagi FilhoÕs request to redirect funds and streamlin e the bureaucratic process. He accepted the requested changes to the equipment, replacing the two turbines for the one Stork -Toshiba turbine and canceling the cane -crushing table. However, the IAA did not support Biagi FilhoÕs request to replace previously approved equipment based on the programÕs financial limitations. Instead, GECEP informed the Usina Santa Elisa that the Bank of Brazil, the financier of the projects, would recollect the funds that had been distributed to Zanini for those pieces. Furtherm ore, the 117 Hasse, Filhos do fogo , 127. 118 GEAT Processo III-22/73, Usina Santa Lydia Credit Supplement, signed by Chemical Engineer Manoel M. de M. Correia on June 2nd, 1975. IAA Collection, A6.06 Box 0395, National Archives : Rio de Janeiro. 145 Usina Santa Elisa would have to cover the additional costs of the new imported Stork -Toshiba turbine, which exceeded the previously approved domestically produced turbineÕs cost. 119 While the IAA would not comply with Biagi FilhoÕs request, it did approve the Usina Santa ElisaÕs own financing of the requested expansion. As such, the Usina Santa Elisa benefitted from the Pro“ucar program but was able to execute its own modernization agenda, namely the expansion of its distillery, beyond the federal path laid out by the program. Biagi FilhoÕs desire to expand the Usina Santa ElisaÕs distillery capacity and improve its production equipment despite the resistance of administrators in the IAA like President Tavares Carmo and the GECEP bureaucracy allowed the Biagis and the Usina to shape future alcohol production initiatives in the region and the country. Instead, the Biagis increased alcohol production of their own volition and financing, driving the regionÕs involvement in the future alcohol program more broadly, as will be discussed in the next chapter. Independent Alcohol Expansion and Funpro“ucarÕs Ongoing Funding in 1975 By 1975, the Usina Santa Elisa had already completed its Funpro“ucar construction, and the Biagis looked to further expand the usinaÕs distillery capacity. The Pro“ucar funding (GECEP 533/74) approved in April 1974, Òoptimized the process for a capacity of cane crushing of 5,500 TCD [tons of cane per day] and allows [the Usina] to produce up to 1,500,000 sacks of sugar with a an industrial yield of 110kg ton of cane.Ó 120 On February 21st 1975, Biagi Filho received approval from the IAA (GPCt 89/75) for the expansion of its distillery to 180,000 liters per day, which the Usina Santa Elisa would have to 119 GPCt/GECEP - 67/74, Letter to the Usina Santa Elisa on July 30th, 1974. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 120 As stated in the Usina Santa ElisaÕs Pro⁄lcool application, ÒJustificativa do Projeto.Ó Maurilio Biagi Filho to IAA President Tavares Carmo on February 13th, 1976. National Alcohol Commission, Division of Assistance for Production N. SP06/76, February 12th, 1976. A6.16 Box 443, National Archives: Rio de Janeiro. 146 finance with its own resources . Thus, in addition to the new 60,000 liter per day distillery financed by Funpro“ucar, the Usina Santa Elisa built a second distillery with a capacity of 120,000 liter per day. 121 The Biagis successfully financed the UsinaÕs own expansion, which was still under construction in 1976 when the producers applied for Pro⁄lcool funding. Biagi Filho anticipated and shaped the trend toward increased alcohol production to salvage the energy sector and the sugar industry. First with Biagi Sr.Õs participation in early alcohol expansion proposals in 1974 and then with the self-financed expansion of the Usina Santa Elisa in 1975, the Biagis placed the Usina Santa Elisa a step ahead of many other usinas in alcohol production. Such a position further illustrates the asserti ve position Biagi Filho took toward expanding alcohol production even where the IAA had failed to do so in the years leading up to Pro⁄lcool. Despite the IAAÕs hesitance, other indicators, particularly the 1973 oil shock , and some early policyÕs supporting increased alcohol mixtures in the fuel source, the Biagis took a risk investing in alcoholÕs expansion so early. 122 As Biagi Filho noted in the Usina Santa Elisa Pro⁄lcool application, Òwe were certain, us and the IAA, even in 1974, of the opportunity for the increase in national production of alcohol to contribute.Ó 123 This certainty placed the Usina in a particularly favorable position to win early project approval under the new program in 1976. While the BiagisÕ independent expansion of the Usina Santa ElisaÕs distillery capacity pushed the creation of a national alcohol program with its alleged preparation for a national response to the oil shocks, the BiagisÕ actions also illustrate the way producers forced the 121 Usina Santa Elisa Pro⁄lcool Application, Maurilio Biagi Filho to IAA President Tavares Carmo on February 13th, 1976. National Alcohol Commission, Division of Assistance for Production N. SP06/76, February 12th, 1976. A6.16 Box 443, National Archives: Rio de Janeiro. 122 See cha pter 4 of this dissertation, 155-157. 123 Usina Santa Elisa Pro⁄lcool Application, Maurilio Biagi Filho to IAA President Tavares Carmo on February 13th, 1976. National Alcohol Commission, Division of Assistance for Production N. SP06/76, February 12th, 1976. A6.16 Box 443, National Archives: Rio de Janeiro. 147 governmentÕs hand in the midst of sugarÕs fal ling international prices and slumping harvests in the region in 1975. As discussed above and illustrated in Figure 11 (see the Appendix of this dissertation) , sugar prices collapsed in 1975. While world market prices began at USD 38.31¢ per lb. (USD$766.2 0 per ton) in January 1975, then dropped to USD 13.65¢ per lb. (USD$273 per ton) by June. At the same time, unseasonable frosts and a prolonged drought swept across the state of S‰o Paulo in the 1975. These Òadverse conditionsÓ cut deeply into the state of S‰o PauloÕs sugar production. 124 In a report submitted to Director of the Usina Santa Elisa and the Companhia Agricola Sert‰ozinho, the incorporated agricultural holdings of the Biagi family, Agricultural Superintendent Gabriel Rabelo de Oliveira Neto repor ted that the corporationÕs sugar holdings were producing almost half of what they had produced per hectare the year before. While in September 1974, their holdings had produced 104,357 tons of sugar per hectare, they only produced 62,589 tons per hectare by the same time the next year. At this time, world market sugar prices sat at a paltry USD 18.61¢ per lb., seriously endangering sugar producersÕ financial solvency for the harvest. Consequently, usineiros looked to the IAA for help. Biagi Filho submitted a request to suspend the UsinaÕs Bank of Brazil interest payments for Funpro“ucar -financing on September 25th, 1975.125 The GEAT/GECEP Coordinator Augusto Cezar da Fonseca and IAA President Tavares Carmo deferred the interest payments for the Usina Santa Elisa along with nine other usinas (including another Biagi holding, the Usina da Pedra) in November 1975.126 At the same 124 In 1975, extensive frosts caused S‰o Paulo to produce only 47.2 million sugar sacks of the anticipated 60 million. MIC/IAA, RelatŠrio 75 (Rio de Janeiro: IAA), no page numbers. 125 Letter to the IAA from Maurilio Biagi Filho sent September 15th, 1975. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 126 GECEP letter to IAA November 6th, 1975. IAA President Tavares Carmo approved the proposal on November 7th, 1975. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. The other Pro“ucar -funded usinas (and their respective regions) that received this 148 time that the Usina received assistance for the poor 1975 harvest, the IAA continued to release Funpro“ucar funds for the Usina Santa ElisaÕs modernization project. The IAA, via GECEP, allowed the Bank of Brazil to release the remainder of the Cr$18,501,000 in funding for the UsinaÕs modernization in April of that year. 127 Ultimately, the IAA used the Special Export Fund to extend credit via the suspension of interest payments to the tune of over Cr$51,500,000 (USD$6,296,296) to usineiros in the state of S‰o Paulo alone in 1975.128 Upon deferring the payments, the IAA explicitly noted that they would not accrue additional interest nor should the delayed payments be subject to any monetary correction for inflation. Given the rising inflation rate (an average of 29.4% in 1975), with no monetary adjustment and in real terms, the required payments were progressively cheaper each year, giving usineiros additional financial support through the program. 129 The governmentÕs commitment to sugar producers reached Ònon -retractable,Ó or Òtoo big to fail,Ó levels by the end of 1975. Through the Special Export Fund, the IAA had released over Cr$13.5 billion (USD$1 .6 billion) of a committed Cr$18.3 billion (USD$2.2 billion) in modernization projects, consumer price subsidies, interest subsidies, support for cooperatives, financial extension were the Usina S‰o Geraldo (Sert‰ozinho) the Usina Barra Grande (Len“Šis Paulista ), Catanduva (Catanduva), S‰o Carlos, S‰o Domingos, S‰o Jose (Macatuba), and Santa B⁄rbara (Santa B⁄rbara DÕOeste). The payments were suspended for the 1975/76 harvest and forwarded to the 1976/77 harvest. This list would expand to other Copersucar member Pro“ucar participants by the next week, including the Usina Bonfim (Jaboticabal) and Cresciumal (Leme). Letter from GECEP Executive Secretary Ricardo Rico Gomes on November 14th, 1975, GECEP 91/75, IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 127 GECEP release approval of April 24th, 1975. Parecer n. 307/75. A6.16 Box 0443, National Archives : Rio de Janeiro. 128 Minas Gerais, Paran⁄, and Rio de Janeiro also received interest rate suspensions accounting for a little over Cr$52,558,000 collectively. MIC/IAA, RelatŠrio 75 (Rio de Janeiro: IAA), no page numbers. 129 Letter from President Tavares Carmo to the Manager of the Bank of Brazil - Ribeir‰o Preto Branch on November 7th, 1975. GPCt - 604 and GPCt - 590, IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 149 start -up capital for cooperatives and cane -suppliers, export infrastructural work, and Planalsuc ar for the sugar industry nationally. This does not include the nearly Cr$1.7 billion (over USD$200 million) in assistance to usineiros and cane suppliers for climate troubles nationally. 130 The weak harvest in 1975 and diminished international sugar prices , linked to recovering beet sugar and international sugarcane markets, increased the governmentÕs already ample support for the sugar industry. By 1975, the IAA had granted nearly Cr$3.5 billion (USD$432,098,765) in funding to 111 usinas through the Funpro “ucar program. The program benefitted S‰o Paulo more than another other state, but Ribeir‰o Preto usineiros particularly won big. Of the 111 projects approved for Funpro“ucar funding by May 1975, S‰o Paulo received nearly half of the projects (52), of whic h 12 were located in the Greater Ribeir‰o Preto region. 131 The concentrated number of usinas financed in S‰o Paulo drove the program. With these staggering numbers, many historians of the program call the original National Alcohol Program (Programa Nacional do çlcool - Pro⁄lcool) a sugar bailout initiative. Barzelay is one of the more adamant voices regarding Pro⁄lcoolÕs bailout foundations. 132 Even with 130 MIC/IAA, RelatŠrio 75. 131 Santa Lydia GEAT Processo III-22/73, Letter from Economist Terezinha Florencio to Economic Advisor Carlos Alfredo Hiss on May 27th, 1975. IAA Collection, A6.06 Box 0395, National Archives : Rio de Janeiro. The 12 projects in the Ribeir‰o Preto region included: the Usinas Am⁄lia, Da Pedra, Santa Lydia (all within Ribeir‰o Pre to), Bela Vista, Nossa Senhora Aparecida, Santa Elisa, Santo Antonio, S‰o Geraldo (all in Sert‰ozinho), Bonfim, Santa Ad”lia, S‰o Carlos and S‰o Martinho (all in Jaboticabal). This is my assessment of the filed projects, based on the Bank of Brazil branche s used for the respective projects as issued by Pedro Cabral da Silva, Director of the Department of Modernization of Sugar Agroindustry in the attachment to Of. DMA- 207/80 of June 17, 1980. A6.23 Box 0480. These included the usinas that used branches in Ribeir‰o Preto, Sert‰ozinho, and Jaboticabal. Another usina in Ribeir‰o Preto, the Usina Martinopolis would receive funding after the December 1974 and before June 1980. More generally, of the 111 approved projects by January 1st, 1975, 21 were in Pernambu co, 17 in Alagoas, 9 in Rio de Janeiro, 5 in Minas Gerais, and the rest were individually dispersed between 6 other states. 132 See Barzelay, Politicized Market , chapter 5, ÒFrom Sugar Industry Bailout to Energy Strategy,Ó 129-153. He notes that the politic al environment of 1975 and the military 150 DemetriusÕ more idealized view of the program, he agrees. 133 Conversely, Castro Santos claims that the program did not focus on a sugar bailout until later in the program. 134 In part, I would agree with all three of them. The government had invested so much money in the sugar industry, which pushed government officialsÕ hand in the matter. However, the program was more than that. The alcohol initiative, driven by special interest groups and producers alike, was considered a viable economic option because of the technical and economic development of the sugar industry and its related equipment industry, in the 1960s and early 1970s. The BiagisÕ leadership in alcohol expansion through the Usina Santa Elisa best illustrates this active role producers had in shaping the governmentÕs response to the economic crisis in 1975. Biagi FilhoÕs aggressive negotiation for increas ed alcohol production under Funpro“ucar solidified the Usina and the Biagi family as important leaders in alcohol policy and production. This position encouraged the Biagis to fund their own alcohol expansion during Pro“ucar and placed the Usina Santa Elisa in the front of the line for Pro⁄lcool funding in 1976. Conclusion By 1975, the government had already tied its agricultural development and modernization interests to the sugarcane industry, as illustrated first through an increased focus on sugar exports in the 1960s and followed by extensive government investment in the early 1970s under Pro“ucar. The modernization programs facilitated the expansion of the sugar industry largely at dictatorshipÕs failing macro -political strategy were losing private capital, representatives of the national bourgeoisie that had been so critical to the militaryÕs political legitimacy throughout the dictatorship. Barzelay , Politicized Market , 149. 133 Demetrius , BrazilÕs National Alcohol Program , 10Ð11. 134 Santos, ÒAlcohol as Fuel,Ó 321Ð322n44. Santos claims that it became a sugar bailout in 1977 when President Geisel ordered the purchase of 15 million sacks of excess sugar for alcohol conversion given the dire state of the international sugar prices over the previous three years. 151 the cost of the federal government through the IAA and the Bank of Brazil. The modernized usinas that received Funpro“ucar -financing would become the first Pro⁄lcool projects, requiring less risky investments than large -scale investment to new producers. Under Funpro“œcar, the Biagis became independent leaders in alcohol production in the region. The Usina Santa Elisa and the broader Biagi holdings were particularly positioned to win this extended financing once alcohol production became an explicit focus of the government as they had already shaped the governmentÕs agend a through their own actions in the 1970s. Pro⁄lcool, created in 1975, increased the importance of the sugarcane industry for the country broadly but for the military governmentÕs own economic development model, specifically. Funpro“ucar, its precursor, was the height of the militaryÕs intense federal investment and financial assistance directed toward the sugar industry in the early 1970s. Funpro“œcar would continue to finance and aid other sugarcane and ethanol producers even as Pro⁄lcool expanded in the 1970s and 1980s. However, the Usina Santa ElisaÕs alcohol expansion would grow under Pro⁄lcool in 1976. 152 Chapter 4: Pro⁄ lcool at Work: The Usina Santa Elisa, 1975-1984 ÒAlcohol is ours. Ó Maurilio Biagi Filho Folha de S‰o Paulo, May 9th, 19831 By mid-1975, President Geisel and his administration were making definitive moves toward developing an alcohol expansion program. Modernization efforts centered on the sugar industry of the early 1970s maximized an increasingly profitable international sugar market. In 1974, sugar was the top earning Brazilian export for the first time in over a century. 2 Yet, the prices quickly declined in late 1974. At the same time, the government faced the effects of an ongoing oil crisis, which began in 1973 and exacerbated bigger problems with declining economic growth after the effects of the ÒEconomic Miracle Ó faded. Finally, individual usineiros, like the Biagi family of Ribeir ‰o Preto, and larger interest groups, like Copersucar, also aggressively promoted and lobbied government officials and policymakers on alcohol production Õs importance to national security. These issues created the necessary incentives for a large -scale government response that incited nationalist sentiments similar to BiagiÕs comment above. 1 In a nod to the famous Brazilian motto for the nationalization of the petroleum industry in the 1950s, Maurilio Biagi Filho penned an article on the nationalist implications of Pro⁄lcool, so entitled, on May 9th 1983. Maurilio Biagi Filho, ÒO ⁄lcool ” nosso,Ó A Folha de S‰o Paulo (May 9th, 1983). 2 Coffee held the top spot since the 1840s. Barbara Nunberg notes, ÒBy 1972, sugar earned U.S. $403.5 million for a volume of 2,640,000 tons, making it the second most important export next to coffee. [É] [In 1974,] the revenues earned by Brazilian exports were U.S. $1.26 billion, an increase of 127 percent over the previous year.Ó See Barbara Nunberg, State Intervention in the Sugar Sector in Brazil: A Study of the Institute of Sugar and Alcohol, Ó Stanford Unive rsity, Doctoral Dissertation, 1979: 135. Fernando Homem de Mello cites exports valuation to be USD$1.322 billion in 1974. Fernando Homem de Mello, Pro⁄lcool, energia e transportes (S‰o Paulo: Enio Matheus Guazzelli & Cia. Ltda., 1981), 17. 153 On November 11th, 1975, President Ernest Geisel instituted the National Alcohol Program (Programa Nacional do Alcool, PNA, or Pro ⁄lcool) with Decree n. 76.593. The new alcohol program would attend to Òthe necessities of the internal and exte rnal market and to the policy of automotive gasoline. Ó3 The program was one of several alternative fuel efforts the government pursued to diminish dependence on the unstable petroleum market, on which Brazil depended for over 80% of its oil consumption by 1975. Pro⁄ lcool became a big part of the government Õs national development agenda under the final two military presidents during major energy crises in the 1970s and early 1980s. 4 Traditional analyzes of the Pro ⁄lcool have focused on the government Õs respo nse to the oil shocks and sugar interests through a national lens. For example, Maria Helena Castro Santos Õ classic study unveils the important factors that led to the program Õs development and its impact from a national policy perspective. Conversely, Michael Barzelay and F. Joseph Demetrius study the political and technological impact of the program. More recently, M⁄rcia Azanha Ferraz Dias de Moraes addresses Pro ⁄lcool Õs regulatory structure and the deregulation of the sugar and alcohol industry thereafter. 5 My case study brings into focus for the first time how individual producers responded to government incentives in order to provide detailed examples of the local impact the program had on specific producers and also the impact that these producers had on the development of the program. This chapter makes an intervention into this body of literature by giving a detailed 3 Diario Oficial, November 14th, 1975. Decree n. 76.593 of November 14th, 1975. Other alternative energy sources pursued included nuclear and hydroelectric energy, among others. 4 Homem de Mello, Pro⁄lcool, energia e transportes , 1; Baer, The Brazilian Economy , 77 and 87. 5 Santos, ÒAlcohol as FuelÓ; Barzelay, Politicized Market ; Demetrius, BrazilÕs National Alcohol Program ; Maria Helena de Castro Santos, Pol™tica e pol™ticas de uma energia alternativa: o caso do Pro⁄lcool (Rio de Janeiro: Notrya, 1993); Dias de Moraes, A desregulamenta“‰o ; Dias de Moraes and Zilberman, Production of Ethanol from Sugarcane in Brazil . 154 account of Pro ⁄lcool Õs implementation at the Usina Santa Elisa, owned by the prominent sugar and alcohol producing family, the Biagis. The Usina Santa Elisa was the first usina to receive approved financing from the Pro ⁄lcool project to expand its distillery capacity and production. As such, it illuminates the way the program Õs implementation in a specific rather than national context. Led by the Biagis multiple sugar and alcohol industrial holdings, Pro ⁄lcool dramatically promoted Ribeir ‰o Preto into the forefront of national sugar and alcohol production. Large -scale producers played an important role in shaping the at times rocky implementation of Pro ⁄lcool. Domestic producers like the Biagis were important promoters of alcohol production expansion before the program, but they were equally important and vocal actors in the promotion of ethanol fuel consumption under the nationa l program. As such, this case study of the Usina Santa Elisa addresses the unique form of development that Pro ⁄lcool followed. National sugar -alcohol and equipment producers paved a different development path than that followed in more traditional develop ment models of this period. Barzelay asserts that Pro ⁄lcool is the quintessential example of Peter Evans Õ triple alliance. However, I argue that Pro ⁄lcool deviated from the traditional tri -p” model by maintaining domestic producers Õ control of production, without the entry of foreign producers even if foreign capital did pervade equipment production. It also deviates from Eakins Õ quadruple alliance by promoting a distinctly domestic technology - the alcohol -fueled engine. Producers and politicians sought to protect domestic interests more aggressively and successfully in the program Õs implementation partially because of the pervasive nature of the tri -p” model by the 1980s. 6 6 My interpretation of the Pro⁄lcool falls more in line with that expounded by F. Joseph Demetrius. Unlike his contemporary, Michael Barzelay, Demetrius argue s, Ò In the case of Pro⁄lcool, it is clear that the policies pursued by Brazilian technocrats represent a conscious and 155 Thus, this case is a valuable counterpoint to traditional development studies in Brazilian history. It is not the nationalist intentions of the program that subvert traditional analyses of Brazilian development of the era, but rather the way in which domestic sugar and alcohol producers remained central to the program Õs implementation that is unique. Thus, this chapter reinserts the importance of Pro ⁄lcool as a definitively alternative Brazilian development model, not only because of its fuel source but also because of its application. The Creation of Pro⁄lcool - International Pressures and the Political Response The oil shock of 1973 initiated early expansion in alcohol production. Thanks to new OPEC policies, international oil prices quadrupled between November 1973 and January 1974.7 The impact of the shocks cannot be overstated. The country relied on petroleum imports for over 80% of its oil consumption, thus more than doubling BrazilÕs total import bill between 1973 and 1974 ($6.2 billion USD to $12.6 billion USD in 1974).8 Given the high growth rates that had established the ÒBrazilian MiracleÓ and the military governemntÕs commitment to development with economic growth, the oil shocks presented a serious threat to policy outlooks at the end of 1973 and beginning of 1974. The sho cks encouraged quick, incremental changes to the alcohol policy. The Minister of Industry and Commerce Marcus Vin™cius Pratini de Moraes first called for more alcohol in the gasoline mixture in December 1973, supporting increased alcohol production in resp onse to the consistent effort to fortify national groups while excluding international capital.Ó Demetrius, BrazilÕs National Alcohol Program , 100; Barzelay, Politicized Market , 195. I would also argue that Marcia Azanha Ferraz Dias de MoraesÕ work on the deregulation of the sugar industry in the late 1980s and 1990s reiterates this point by following the unique deregulation of the industry in the 1980s and 1990s. Dias de Moraes , A desregulamenta“‰o , 15Ð18. 7 Baer, The Brazilian Economy , 87. 8 Werner Baer, The Brazilian Economy: Growth and Development 6th ed. (Boulder: Lynne Rienner, 2008), 79. 156 initial price hikes. Thereafter, Brazilian officials began to expand alcohol policy to stave off the dependence on foreign energy and to help the newly endangered balance of payments recover. 9 The most interested and important actor in the propagation of the National Alcohol Program was President Ernesto Geisel himself. The idea of investing in a large -scale alcohol as fuel initiative intrigued the former Petrobr ⁄s President . In a speech in September 1974, President Geisel acknowledged the multiple challenges facing the economy in the formation of his national development plan (II PND). These included: Òthe international monetary system, the energy and essential raw materials, the epidemic inflation, the foreign trade which deteriorates the balance of payments, the crisis of confidence in future stability which foments social unrest and eruptions of irrational and destructive violence. Ó10 As his statement reiterates, in the eyes of politicians, one could not disaggregate the energy crisis and the government Õs response from the compounding economic issues that faced the economy. Furthermore, the new national development plan was the new presidentÕs opportunity to assertively respond to the oil shocks. 11 The interest in alternative energy sources was a function of all of these factors together. President Geisel vowed to expand Ònew sources of energy Ó with a Òrealistic policy of import substitution, favored by the availability of resources and by the new levels of international prices which offer us concrete perspectives of competitive advantage even 9 ÒPratini v’ maior uso de ⁄lcool na gasolina,Ó Jornal do Brasil (December 11th, 1973), 20; see also, ÒMIC estimula produ“‰o de ⁄lcool combust™vel,Ó Gazeta Mercantil (December 11th, 1973). In fact, the Minister approved an increase in the planting of cane beginning in January 1974 in order to support this object ive. In SantosÕ study of Pro⁄lcool, she identifies this as the moment that the National Alcohol Program truly began. Santos, ÒAlcohol as Fuel,Ó 232. As illustrated in Table 15 in the Appendix of this dissertation , the countryÕs balance of payment was a positive US$2178.6 million in 1973 and negative 936.3 million in 1974 in large part due to the ballooning oil bill. 10 President Ernesto Geisel statement at the Meeting of Ministers on September 10th, 1974 in Federative Republic of Brazil, Second National Development Plan - II PND (1975Ð1979) (Bras™lia, 1974), 3. 11 Baer, The Brazilian Economy 6th ed., 79. 157 in foreign markets. Ó12 These new sources of energy included a the expansion in alcohol production The Second National Development Plan illustrates GeiselÕs commitment to alternative energy development even before an expanded alcohol program to drive a larger consumption of alcohol -gasoline mixture on the national level was a possibility. For example, II PND focuses first and foremost on the oil shortage and the need for a new energy policy to address the global oil crisis. He notes that, Òevery effort will be made to reduce the consumption of oil to a minimum, particularly in transport: a pricing policy for gasoline without any subsidy (the increase in the price this year - 1974- has already been over 100 per cent), creation of systems of mass public transport, the electrification of railways, the addition of alcohol to gasoline and the elimination of waste.Ó13 In fact, beyond this recognition, President Geisel made very little mention of alcohol productio n in relation to a growing energy policy and instead gave hydroelectricity and nuclear energy far more attention. 14 While the addition of alcohol to gasoline was one tool to address the oil price increase, it was far from the only one. In his assessment of the massive investment programs initiated by Geisel under IIPND, economic historian Werner Baer notes that these programsÕ investments were largely Òundertaken by state enterprises (in energy, steel), whereas others (especially capital goods) were carrie d out by the private sector, with massive financial support by the National Bank of Economic Development (BNDE).Ó 15 While state enterprises formed in the steel industry, to compliment the iron ore and oil industries already in place, the initial modernizati on programs under the IAA, Funpro“ucar, which emerged in its most formal state in 1973, did not mirror such 12 President Ernesto Geisel statement at the Meeting of Ministers on September 10th, 1974 in II PND, 3Ð4. 13 II PND, 17. 14 II PND, 81Ð83; see also Santos, ÒAlcohol as Fuel,Ó 218Ð221. 15 Baer, The Brazilian Economy 6th ed., 79Ð80. 158 financial support avenues in its creation. Rather, the IAA financed the intensified modernization programs in the midst of the first oil shocks with the Special Export Fund, which booming exports financed. A national program focused on alcohol production still was not a formal idea for consideration during the formation of II PND. Still, sugar remained a major part of the President Õs development agen da. The sugar industry received substantial support from the government through the IAA. II PND states that the Geisel administration would promote the Òexpansion of agro -industry (particularly sugar and other tropical products), taking into account its role as a center or the diffusion of new technologies in agricultural production. Ó16 Sugar and alcohol led the field in this development. Under Planalsucar, founded in 1971, the industry produced new cane varieties while industrial sugar complexes increasin gly incorporated new mechanical equipment. It is in this way that GeiselÕs administration implicitly committed to expanding alcohol as a fuel for future alcohol -fueled cars. Beyond initial policy mandates to support the expansion of alcohol production in the MIC, Geisel was also particularly interested in the technological aspect of an expanded alcohol presence in the fuel supply. On June 28th, 1975, President Geisel visited the Technical Aerospace Center (Centro T”cnico Aeroespacial - CTA) to learn more about the research that the government -financed center had developed on internal combustion engines propelled by alcohol. 17 Located in S‰o Jos” dos Campos in the interior of the state of S‰o Paulo, the renowned 16 II PND, 44. 17 ÒCTA revela a Geisel pesquisa sobre ⁄lcool,Ó O Estado de S‰o Paulo (June 18th, 1975), 14. 159 government research center had been involved in research on domestic -developed alcohol -fueled engines since the arrival of the influential engineer, Urbano Ernesto Stumpf in 1972.18 The Rio Grande do Sul native, Stumpf, first worked as a mechanic in the Brazilian Air Force. He was a student of the firs t class at the Aeronautical Technology Institute in 1950. There, he continued his post -graduate studies in Motors and Reaction, Turbomachines, Turbines and Vapor, and Motor and Combustion Foundations. He served as a professor thereafter. He published early results on his research on alcohol -driven motors in 1952 in various journals and magazines, including the Institute of Sugar and Alcohol Õs Brasil A“ucareiro and at the Aeronautic al Technology Institute amongst others. 19 He would leave the Aeronatuical Inst itute to teach at the University of S‰o Paulo -S‰o Carlos and the University of Bras ™lia before returning to the CTA to direct research on the adoption of ethanol as a combustible source. As a director at the CTA, he was a regular spokesman for the alcohol program and the alcohol -fueled engine Õs technology amongst sugar and alcohol interest groups. 20 Stumpf led the visit with President Geisel at the CTA to great success in mid-1975. According to a report in the daily newspaper, Estado de S‰o Paulo , Geisel wor ried about the use of sugar as the base input in the renewable source because of the higher price that sugar still earned as an export on the international market. 21 Stumpf and his team of engineers responded 18 The CTA was affiliated with the Aeronau tical Technology Institu te, which is an aviation engineering school created in 1946 by a group of aviation military officials and civilian professors led by Coronel and engineer Casimiro Montenegro Filho. 19 Ozires Silva and Decio Fischetti, Etanol: A revolu “‰o verde e amarela (Bizz Communica “‰o e Produ“ł es: S‰o Paulo, 2008), 47Ð51. For a broader biography of Stumpf Õs published works and influence on later engineers that worked in the field, see Idem, Chapter 4. 20 Ibid. For example, Urbano E. Stumpf, Òçlcool carburante em mistura de combust ™vel,Ó A“œcar e ⁄lcool: o grande projeto para a economia do Brasil , proceedings of III Encontro Nacional dos Produtores de A“œcar, Campos, 1975 (Rio de Janeiro, APEC, 1976), 155Ð170. 21 ÒCTA revela a Geisel pesquisa sobre ⁄lcool,Ó O Estado de S‰o Paulo (June 18th, 1975), 14; Silva and Fischetti, Etanol , 75. 160 that other bases were just as viable, including manioc. One account of the event indicates that the President remained at the center hours longer than initially planned for the ceremonial visit and was particularly taken with the technological work behind the development of the engine to run on alcohol. 22 Figure 4: Federal, State, and Private Interests Align 23 Source: Matthew V. Veazey, ÒBrazilÕs ÔFather of EthanolÕ Sees Bounty for Biofuel,Ó (February 8th, 2012). . S‰o Paulo Õs public and private interests held important sway in GeiselÕs thoughts on the formation of an alcohol expansion initiative. Within the government, important paulista officials 22 Allen L. Hammond, ÒAlcohol: A Brazilian Answer to the Energy Crisis,Ó Science (11 February 1977): 564, as cited in Barzelay, Politicized Market Economy , 139. 23 Pictured above are (from left to right): Governor Egydio Martins, President Ernesto Geisel, and Anfavea (Associa“‰o Nacional dos Fabricantes de Ve™culos Automorores - Car ProducersÕAssociation) President M⁄rio Garnero (driving). While some credit M⁄rio Garn ero as the Ògodfather of ethanol,Ó this duo (Martins and Geisel) was critical to facilitating Pro⁄lcool along with the car industry leader, M⁄rio Garnero, whose role would expand in the program in the late 1970s. 161 had the President Õs ear. For example, another important attendee to this private visit was the current governor of S‰o Paulo, Paulo Egydio Martins. 24 Martins had previously served as the Minister of Industry and Commerce (MIC) under the first military president, Castelo Branco, from 1966 to 1967. During his tenure as minister, sugar and alcohol policy went through an intense crisis. It was in this time that Copersucar president, Jorge Wolney Atalla, became an increasingly vocal alcohol promoter. President Geisel nominated Martins for the S‰o Paulo governorship in 1974 (pictu red in Figure 4 above). 25 MartinsÕ close ties to President Geisel and his position as governor of the most economically powerful state in Brazil likely gave paulista sugar and alcohol interests another important advocate for a national alcohol program. One illustration of the important pau lista influence in the new program Õs formation would be the very selection of sugarcane as the material base for expanded alcohol production. Stumpf and his engineers highlighted that sugarcane was but one possible raw material source for the alcohol -fuele d engine. In fact, many studies indicated that manioc would be a better source, given sugar Õs importance as an export. 26 However, sugarcane would win the vast majority of the attention, with officials quickly dismissing most other sources. Certainly the pau lista sugar interests, like the heavily campaigning Copersucar, would have been of particular import to Martins and other paulista government officials. Policymakers ultimately favored sugarcane 24 Other attendees included Minister of Avi ation Araripe Macedo and General Hugo Abreu, Chief of the Military Cabinet, and General Antonio Jorge Correa, Chief of the Armed Forces. ÒCTA revela a Geisel pesquisa sobre ⁄lcool,Ó O Estado de S‰o Paulo (June 18th, 1975), 14. 25 Szmersc⁄nyi, O planejamento , 277; Skidmore, The Politics of Military Rule, 171. 26 The implications of this decision were far greater than just paulista interests. The decision connects to larger debates on the use of an agricultural source as food versus fuel. Economically, the use of an agricultural source as fuel put pressure on consumers to pay the costs of the program with the increased cost of food while the use of sugar reduced export earnings and export taxes. These issues remain critical in the American corn -based ethanol program. Food concerns seem to have been less central issues in the selection of cane over manioc in the Brazilian case but rather infrastructure and upfront costs seem to have dominated public debate. 162 because of the well-developed infrastructure already establis hed within the national sugar industry, first built under the IAA in the 1930s, and the advanced technology available from Brazilian sugar equipment producers, like the Ribeir ‰o Preto -based equipment company, Zanini S/A Equipamentos Pesados, discussed in the previous two chapters. Despite a national alcohol program seeming far -fetched at the construction of IIPND in November 1974, it quickly became a certainty less than a year later. President Geisel announced the impending program on October 9th, 1975, committing the country to a 20% mandated alcohol in the alcohol -gasoline mixture along with a series of other measures to address the rising oil prices and its effect on the current balance of payments. 27 After President GeiselÕs announcement, politicians and interest groups continued to debate the structure and control of the program over the next month. According to Castro Santos, the IAA, MIC, Ministry of Mines and Energy, and Petrobr ⁄s all disputed over control of the expanding alcohol program. 28 Proposed drafts of the program emerged from both Minister of Industry and Commerce (MIC) Severo Fagundes Gomes and the influential Minister of Mines and Energy (MME) Shigeaki Ueki, vying for greater influence in the program, while the IAA President Tavares do Carmo proposed an opposing program draft. 27 Santos, ÒAlcohol as Fuel,Ó 244Ð249; ÒGeisel autoriza contratos de risco, aumenta barreiras para importa“łes, a passa gasolina comum a Cr$3,19,ÓJornal do Brasil Vol. 85, n. 185, (Rio de Janeiro, October 10th, 1975), 1. These other measures included the authorization of expanded domestic oil exploration, a 25% increase in the price of gasoline and a 10% increase in diesel oil prices. The Petrobr⁄s agreement authorized the state company to employ risk contracts with foreign companies to expand domestic petroleum exploration, inciting questions about the continued status of the industryÕs state monopoly on petroleum in the country. See ÒGeisel a Adalberto: Estou vivendo numa roda-viva,Ó and ÒUm discurso histŠrico de 44 minutos,Ó in Jornal do Brasil Vol. 85, n. 185, (Rio de Janeiro, October 10th, 1975), 12Ð13. 28 Santos closely documents each ministryÕs diverging and converging interests in her own assessment of the fragmented political decision -making process invo lved in the implementation and application of Pro⁄lcool. For Santos, she argues that this fragmented structure worked for the program and that it was a success, while others, like Barzelay, argue this fragmented structure hindered the programÕ development. 163 Even if the program was guaranteed to happen, its administrative and financial structure, leadership, and purpose were still under great debate, as these diverging government officials illustrated. Gomes led the Ministry of Industry and Commerce (MIC) during the pivotal initial phase of Pro ⁄lcool from 1974 to 1977. The paulista businessman first served as the Minister of Agriculture during Castello Branco Õs administration and Òearned the reputation of an economic nationalist Ó during his service. 29 Scientist and politician Jos ” Walter Bautista Vidal claims that national technology development reached its zenith during the Gomes Õ term at the MIC. 30 During his tenure, the MIC supervised the development of the alcohol -fueled engine with the STI, the CTA under the Aeronautics Ministry, and the auto industry (discussed below). Gomes reasserted the importance of alcohol as a Òhigh priority Ó project that would ensure that Brazil be Òan independent nation. Ó31 Under Gomes, the Ministry of Industry and Commerce vied for control of Pro ⁄lcool. For the most part, the MIC won, beating out other interested parties like Petrobr ⁄s and the Ministry of Energy and Mines . Ueki was an opposing force in the program Õs expansion. Trained as a lawyer, the S‰o Paulo native Ueki first entered government administration as an advisor to Egydio Martins during the latterÕs tenure as Minister of Industry of Commerce and Industry in Castello BrancoÕ s administration. There, he formed close ties with Gene ral Geisel while he served as Chief of the Military Presidential Staff to President Branco. This connection drew Geisel to appoint Ueki to become Commercial and Financial Director under his own presidency at Petrobr ⁄s in 1969. 29 Skidmore, The Politics of Military Rule, 162. 30 J.W. (Jos” Walter) Bautista Vidal, O esfacelamento da na“‰o (PetrŠpolis: Editora Vozes Ltda, 1994), 50. 31 ÒPara Severo, prioridades s‰o ⁄lcool e metalurgia,Ó (October 12th, 1976), 43. Vidal reiterates this point in his book, Poder dos Tropicos , as well. Gilberto Felisberto Vasconcellos and J.W. Bautista Vidal, Poder dos Tropicos: medita“‰o sobre a aliena“‰o energetica na cultura brasileira (S‰o Paulo: Casa Amarela, 1998), 32. 164 When Geisel accepted the pres idency in 1974, he invited Ueki to be Minister of Mines and Energy. 32 As Minister of Mines and Energy, Ueki used his experience in petrochemicals at Petrobr ⁄s to promote the use of alcohol as a petrochemical replacement during Pro ⁄lcool Õs implementation. At Petrobr ⁄s, Ueki had pushed to replace the common gasoline additive, lead, with alcohol. 33 He then pushed the same policy as MME Minister, particularly with the expansion of Pro ⁄lcool. However, this position became increasingly controversial given other politicians Õ interests in using alcohol as a gasoline substitute or even replacement rather than a petrochemical replacement, particularly those in the IAA. 34 Accordingly, IAA President Carmo Õs interests diverged from the MIC and MME leaders because of the implications the expansion of alcohol would have on sugar production. As sugarcane exports remained the IAA Õs primary concern, President Carmo proposed that the government invest in standalone, or autonomous, distilleries in areas away from the most dominan t sugar -producing regions so as not to interfere with the existing sugar agro -industrial complexes. These autonomous distilleries would convert cane to alcohol directly rather than the 32 Silva and Fischetti, Etan ol, 67Ð70. 33 Ibid. In fact, this was a common additive used to diminish corrosion and boost combustion energy not only in all car fuel at this time. The US, too, began replacing lead in its car fuel with its own ethanol program in the 1970s. However, the US ended up using MTBE (methyl tertiary buthyl ether) as its primary booster replacement. American ethanol would only replace MTBE in 2005. Marcos Jank, ÒPerspectives for Hemispheric Cooperation in Agro -energy,Ó Seminar ÒEnergy Cooperation in the Americas Ó presented December 11, 2006 in Rio de Janeiro, Brazil to the CSIS -CEBRI). See also, the US Environmental Protection Agency , ÒMethyl Tertiary Buthyl Ether (MTBE),Ó Web Archive, Last updated on November 15, 2014, accessed on April 7th, 2015, http://www.epa.gov/mtbe/gas.htm . 34 Ueki remained a staunch advocate for the smaller version of Pro⁄lcool that embodied the first phase of the program rather than the massive expansion demanded of the second phase. For exam ples, see ÒUeki e Calmon: d ois destinos para o ⁄lcool,Ó Di⁄rio Com”rcio e Indœstria (December 14th, 1978) and ÒUeki nega ter mudado prioridade para ⁄lcool,Ó Estado de S‰o Paulo (December 14th, 1978), as cited in Barzelay, Politicized Market , 178. 165 intermediary process used on the current sugar -alcohol complexes, in which producers processed sugarcane into molasses and then reprocessed this derivative into alcohol. 35 In fact, the ongoing dispute between these factions took on a very public nature thanks in part to the assertive role of private business interests in the debate. 36 After a draft of the forthcoming decree leaked to the press on October 31st, Atalla used Copersucar to remain a vocal and aggressive lobbyist for the private sector in the formation of the alcohol initiative. He objected to the IAA Õs proposal to disaggregate alcohol distilleries from the existing sugar -alcohol complexes as their connection favored the already concentrated number of sugar producers in the S‰o Paulo, many of whom already had alcohol distillation capacity. He voiced his criticisms of government action by placing Pro ⁄lcool in the center of a growing debate on the presence of the state in Brazilian development. Atalla argued that it was Òincomprehensible psychology Ó to tell the sugar -alcohol agro -industry Ògo to the battle, but you will win none of the spoils for yourselves Ó in the national emergency of the energy crisis. 37 AtallaÕs comments highlight the important role of the state in alcoholÕs development. As Triner highlights in her study of the Brazilian mining industry, state interv ention accounts for public goods that our outside the producersÕ individual interests. The Brazilian alcohol industry followed similar difficulties presented in the mining industries state intervention. As Triner states, ÒConflict over the public provision of a good or service is often fraught with political competititon. Strong interest groups identify externalities that they have no incentive to provide, or cannot capture, and they attempt to influence the state to provide for the collective 35 Santos, ÒAlcohol as Fuel,Ó 259. 36 Szmersc⁄nyi, O planejamento , 314-315; Santos, ÒAlcohol as Fuel,Ó 277. ÒDisputa atrasa a divulga“‰o do texto do ⁄lcoolÓ Folha de S‰o Paulo (November 13th, 1975) as cited in Santos, ÒAlcohol as Fuel,Ó 277. 37 Jorge Wolney Atalla, ÒO perigo da estatiza“‰o da comercializa“‰o do ⁄lcoolÓ O Estado de S‰o Paulo (November 6th, 1975), 5. 166 creation .Ó38 Certainly, Pro⁄lcoolÕs formation involved this public conflict, but AtallaÕs response was not to push a state-owned industry, as emerged in the iron ore and steel industries, but rather to encourage more state support of private businessmen. Atalla, as a representative of the powerful sugar interest group, Copersucar, pushed government intervention to support increased alcohol production without the creation of a state-owned enterprise. He claimed that government monopolization of alcohol production would be a Òconfiscation against business, businessmen, and agricultural workers - genuinely national - to which the country owes a substantial part of its incredible export figures. Ó By structuring his argument around the need to support private -public collaboratio n to reward national businesses, Atalla was able to influence the way government officials shaped Pro ⁄lcool. 39 Individual producers also privately pushed policymakers to expand sugarcane alcohol in fuel as well. As discussed below, the Biagis would be impo rtant promoters of the program. Barzelay notes that equipment producers, including the Biagi -led Zanini, supported AtallaÕs position on the dangers of nationalization of the program for their own benefit. Given that the Usina Santa Elisa had broken ties with Copersucar, and thus Atalla, in 1973, their own lobbying of the government took different forms. The BiagiÕs relied on Coronel Senna Õs close ties to the military government to lobby for their interests .40 Although it is unclear how common this was, it was certainly effective for the Biagis. 38 Triner, Mining and the State , 5. 39 Ibid. See also, Atalla, ÒConsidera“łes economicas da COPERSUCAR sobre o Plano Nacional do çlcoolÓ O Estado de S‰o Paulo (November 6th, 1975), 11. Copersucar took out add space to publish these articles in all major newspapers. Szmresc⁄nyi, O planejamento , 315. Broader debate about the ÒstatizationÓ of the national economy emerged in this era as government -led com panies, like telephones, water, and other services, dominated economic development of the era. Barzelay, Politicized Market , 92Ð93; Szmersc⁄nyi, O planejamento , 314. 40 See chapter 3 of this dissertation, 131Ð132. See also, Barzelay, Politicized Market , 195n70. 167 President Geisel ultimately instituted the National Alcohol Program (Programa Nacional do Alcool, PNA, or Pro ⁄lcool) with decree n. 76.593 on November 14th, 1975. The program was not exclusive to alcohol from sugarcane, rather it included manioc and Òwhatever other ingredient will be an incentive through the offer of the expansion of primary resource materials, Ó as specified in article 1. However, the program focused on the expansion of sugarcane. Much like its predecessor, Pro “ucar, Pro⁄ lcool provided Òspecial emphasis on the increase of agricultural productivity, on modernization and amplification of existing distilleries and of the installation of new production units, connected to usinas or autonomous, and on storage units. Ó41 An Exposition of Motives (Exposi “‰o de Motivos) attached to the decree explicitly enumerated the program Õs goals. It states that the program would: economize foreign currency through the substitution of imports for combustibles and primary materials derived from petroleum; reduce regional and individual income disparities; increase internal income through the expansion of domestic jobs; and expand the production of capital goods through Òhighly nationalizedÓ equipment contracts , going toward the expansion, modernization, and implantation of distilleries. 42 To support these ends, Pro ⁄lcool would finance industrial and agricultural investments. Unlike other investment programs developed under IIPND that received support as a formal state enterprise or through BNDE , financing for Pro⁄lcool came from the Central Bank . These funds were allocated through a series of different government -related banks although the Bank of 41 Ibid , article 1 and 2. Manioc -based alcohol production never received the same focus that sugarcane did. However, it did continue at low levels throughout the program. 42 ÒMeta: equilibrar o balan“o,Ó Estado de S‰o Paulo (November 15th, 1975), 30; Tam⁄s Szmrecs⁄nyi, O planejamento , 436Ð437. 168 Brazil was the primary bank.43 Pro ⁄lcool offered financing at interest rates of 17% over a 12-year period with a three -year grace period for industrial equipment. This included the physical implantation of distilleries and the necessary equipment involved in the establishment of the distillery. 44 For agricultural equipment, interest rates were 7% with a maximum time frame of five years to repay and a two-year grace period. 45 The reader should recall that Funpro “ucar, the previous modernization program financed by the IAA, offered producers Õ financing with an interest rate of 12% in S‰o Paulo (and the rest of the Center -south) and 10% in the North/Northeast. National nominal interest rates averaged above 40% through the end of the 1970s and exponentially rose in the 1980s. 46 These comp arative numbers reiterate the favorable conditions offered to producers through Pro ⁄lcool. This huge transfer of public finance to private 43 Commiss‰o Executivo Nacional do Alcool (CENAL), Pro⁄lcool: Informa“łes Basicas para Empresarios (Rio de Janeiro: BNDE, 1980), 21. This is an important distinction with other state-led programs. Private busine ssmen had to secure banking support from a number of different institutions as described by the Commiss‰o Executivo Nacional do çlcool (CENAL) in 1980. These institutions were divided between industrial credit and agricultural credit. All agricultural cred it ame through banks related to the Sistema Nacional de Cr”dito Rural, which included the Bank of Brazil. Industrial credit financiers included the following institutions (in the order listed): Banco Nacional do Desenvolvimento Economico - BNDE, Banco do Brasil, Banco da Amazonia, Banco do Nordeste do Brasil, Banco Nacional de Cr”dito Cooperativo, state and regional development banks, and official state banks where there are no state development banks. Despite the long -list of possible bank financiers, the vast majority of successful projects were tied to the Bank of Brazil. Few of the applications reviewed noted BNDE or state banks as primary financiers, but this may have been unique to cases in S‰o Paulo and is subject to further review. 44 CENAL, Pro⁄lcool , 17Ð19. Until 1977, Pro⁄lcool financed 100% of total industrial investments. After this, that percentage diminished to 70% for annexed distilleries, or those connected to sugar production complexes, and 80% for independent, stand -alone distilleries. Confœ cio Pamplona, Pro⁄lcool: Technical -Economic and Social Impact of the Program in Brazil (Belo Horizonte: Ministry of Industry and Commerce/The Sugar and Alcohol Institute, 1984), 20. 45 ÒMeta: equilibrar o balan“o,Ó Estado de S‰o Paulo (November 15th, 1975), 30. 46 Baer, The Brazilian Economy , Statistical Appendix, Table A5. By 1984, nominal interest rates averaged 242.8% with a national inflation rate of 224%. 169 firms incentivized producers to invest in the alcohol industry, accounting for the market externalities that had disc ouraged producers to enter the market previously. President Geisel created an interministerial commission, the National Alcohol Commission (Commiss ‰o Nacional de çlcool - CNAl) to administer the program. 47 Representatives from the Ministry of the Interior, Agriculture, Mines and Energy, Industry and Commerce, the Interior, and the Secretariat of Planning made up the new entity, over which the General Secretary of the Ministry of Industry and Commerce Paulo Vieira Belotti presided. Its responsibilities inclu ded defining the role of each government sector involved from the IAA to Petrobr ⁄s. The Commission allocated control of the alcohol policy largely to the National Petroleum Council (CNP). It received the power to set prices and quotas for alcohol producti on through its control over the quotas of alcohol -gasoline mixture for distribution companies. Additionally, the CNP received control of the amount of alcohol directed to chemical industries to substitute for petroleum -based production. 48 In the process, the Commission further stripped the IAA of its primary control over sugar and alcohol policy, whose new role centered on the processing of applications submitted to the IAA for economic and agricultural review. Projects would remain private endeavors, which Pro ⁄lcool would help finance, thus quieting growing complaints amongst private businessmen of excessive nationalization efforts by the state. However, the state became the exclusive purchaser of alcohol. Petrobr ⁄s would continue to vie for more control of the program although it largely controlled the distribution of alcohol. 47 The Economic Development Council included high -level ministers over which the President of the Republic presided. Santos notes that this is another way in which President Geisel repeatedly intervened with executive authority to ensure Pro⁄lcool successfully got off the ground. Santos, ÒAlcohol as Fuel,Ó 520. 48 ÒO plano, afinalÓ, Veja 376 (November 19th, 1975), 120Ð121. See also, ÒSai, enfim, o programa do ⁄lcool,Ó O Estado de S‰o Paulo (November 15th, 1975), 30. 170 In its initial phase, from 1975 to 1979, the government set the conservative goal to produce 3 billion liters of alcohol by 1980.49 The requisite distillery capacity to meet this goal was well within reach given the extensive idle capacity available in paulista distilleries alone. However, the actual agricultural capacity to produce enough sugarcane to meet alcohol Õs demand remained the greater question. Specialists and government officials, including the IAA President Tavares Carmo, expressed doubt regarding the necessary cane expansion needed to successfully meet the program Õs objectives upon its formation. 50 Ultimately, Ribeir ‰o Pre to was an ideal region for project expansion. Already a major sugar -producing region, the presence of the second largest domestic equipment industry in the country, Zanini, alongside the concentration of 14 other usinas in the region was advantageous. Its relative proximity to S‰o Paulo and other large paulista markets were even more important. As S‰o Paulo consumed the vast majority of Brazilian fuel, markets near the major center were preferable. Despite the program Õs alleged interest in redistributing regional wealth, the lower transportation costs and established agricultural and industrial capacity in Ribeir ‰o Preto were prime for the program Õs initial projects. As such, it is unsurprising that the Usina Santa Elisa would receive this accolade. As one of the first projects approved under Pro ⁄lcool, the case of the Usina Santa Elisa illustrates the development path followed through Pro ⁄lcool Õs 49 CENAL, Pro⁄lcool , 5. 50 ÒSai, enfim, o programa do ⁄lcool,Ó O Estado de S‰o Paulo (November 15th, 1975), 30. As of 1975, the majority of alcohol in the country was produced from residual sugar production, where a 60 kg sack of sugar produced about 7 liters of alcohol. Carmo noted that, given these numbers, Òwe have a current production of 800 million liters. Perhaps, with residual alcohol as the source of production, we can never reach the goals of the National Alcohol Program, set around 4 million liters by 1980, which is what is necessary to be added to all gasoline consumed [to meet GeiselÕs alcoho l-gasoline mixture goal] at the proportion of 20%.Ó See also, Szmersc⁄nyi, O planejamento , 440. 171 implementation and the way producers, particularly the Biagi family, were able to influence this path in the process. Phase I and the Usina Santa Elisa: 1975Ð1979 The first phase of Pro ⁄lcool explicitly favored existing producers with established alcohol and sugar capacity in the southeast to get it off the ground. The Usina Santa Elisa had expanded its distillery capacity first with Pro “ucar financing in 1974 and then again with its own financing in 1975. As such, it was already a major sugar and alcohol producer in the well-positioned Ribeir ‰o Preto. Thus, a close examination of the project Õs execution at the Usina Santa Elisa provides valuable insight into the influence of usineiros on the program and its immediate impact on the region. The National Alcohol Commission (CNAl) approved its first three projects in December 1975. All three of these projects were for sugarcane -based autonomous distilleries. 51 However, this was an anomaly for the first phase of the program, which focused far more on expanding the production capacity for sugar -based annexed distilleries. Early projects, like the Usina Santa Elisa, focused on annexed distilleries because they were less risky and relied on mills that already had the infrastructure and technology to support them. Of these, the Usina Santa Elisa was the first project, and it was the first completed project. 51 Szmersc⁄nyi, O planejamento , 316. 172 Figure 5: The Usina Santa Elisa in 1976 Source: Usina Santa Elisa Pro⁄lcool Application, CNAl n. SP06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro CNAl was responsible for clarifying the roles of each of the ministries involved in Pro ⁄lcool Õs administration and determining project locations, as discussed above, but the Commission also defined the steps for approval and distribution of funds for projects. In Resolution n. 3/76 of January 27th, 1976, the Commission laid out this very process. Usineiros had 180 days, starting on the day of proposal submission to the program, to secure a contract with a financial agency. As was the case with most government financing in agricultural projects, the Bank of Brazil was Pro ⁄lcool Õs primary financier. 52 If usineiros could not find a financier 52 The Central Bank and the National Monetary Council split control of the financing. While the National monetary council formulated the financial policy, the Central Bank controlled financial 173 capable of providing the loan within the next 90 days, CNAl would automatically cancel the project. 53 Following the laid out application process, Maurilio Biagi Filho, superintendent director of the Usina Santa Elisa, submitted an application for the expansion of the usina Õs distillery capacity to the IAA on February 13th, 1976.54 As set out in the application, Biagi Filho requested a two-step expansion of the Usina Õs distillery capacity. First, he requested the additi on of another 120,000 liters per day distillery. Together with the Funpro “ucar -financed 60,000 liters distillery and the additional 120,000 liters per day of the Usina Õs second distillery, the additional Pro ⁄lcool distillery expansion would increase the Usina Õs total alcohol production capacity to 300,000 liters per day under Pro ⁄lcool. 55 Biagi Filho also requested financing for the installation of an additional treatment unit for the distilled sugar syrup, which would allow the usina to process vinhasse (vinha “a), a hazardous alcohol by-product, into a fertilizer to diminish the run-off water pollution at the Usina. Although no more mention is made of the request in the project Õs financing, the Biagis were already one of the first usinas to use this by-product as a fertilizer. Whether financed or not, this practice would grow as their production capacity expanded. It became standard in the industry in the 1980s, implementation. As the Bank of Brazil was the usual financier, the process would go as follows: a financial agent approved the project, then set up a contract with a local Bank of Brazil branch. Thereafter, the Bank of Brazil financed the project to be reimbursed by the Central Bank upon the Central BankÕs approval. Thus, the Central Bank really had the final word despite approval from the initial financial institution. Santos, ÒAlcohol as Fuel,Ó 323Ð325. 53 CNAl - Act n. 30. Letter to the Director of the Usina Santa Elisa S.A. on April 1st, 1976. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 54 Usina Santa Elisa Pro⁄lcool App lication, CNAl n. SP06/76. IAA Collection, A6. 16 Box 0443, National Archives, Rio de Janeiro. 55 The second distillery, financed independently by the Biagis, was still under construction at the time of the application and was expected to begin production beginning in the 1976/77 harvest. 174 diminishing a major pollution issue with the early program. This agro -innovation illustrates the Biagis Õ leading role in the shaping of Pro ⁄lcool and the sugar and alcohol industry at large. 56 Regarding the primary request for the distillery expansion, the Usina Santa Elisa would need a larger sugar quota to use its expanded distillery capacity. Biagi Filho addressed the necessary quota expansion in his Pro ⁄lcool application. The Usina Santa Elisa first obtained approval for the expansion of its industrial distillery capacity through Funprocuar in 1974 but did not receive an additional sugar production quota expansion. 57 The Usina Santa Elisa did, however, receive a new quota for the 1977 harvest, which included an additional 900,000 tons of crushed cane. This would be added to the previous sugar production quota of 1,300,000 sacks of sugar (approximately 7,1650 tons) in 1975. Biagi Filho thus proposed that with the new quota, the Usina Santa Elisa could produce 1,500,000 sacks of sugar (9,9208 tons) and 294,500 liters of alcohol per day over a 150-day harvest schedule. 58 This proposal touched on one of the key fears surrounding the program, that of sugarcane production diminishing at the expense of alcohol expansion. To the contrary, the Usina proposed to expand both. The Commission approved the Usina Santa Elisa as a pre-project on March 31st, 1976.59 CNA l president Belotti notified Biagi Filho of the project Õs approval on April 1st, following CNAl decree n. 30 of the same date. The IAA approved the expansion of Santa ElisaÕs distillery from 180,000 liters of alcohol a day, which included the expanded dis tillery capacity from 56 Usina Santa Elisa Pro⁄lcool Application, CNAl n. SP06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro. Confœcio Pamplona calls this a Òwidespread practiceÓ in S‰o Paulo by 1984. Pamplona, Pro⁄lcool , 44. 57 Usina Santa Elisa Pro⁄lcool Application, CNAl n. SP06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 58 Project Summary in the Usina Santa Elisa Pro⁄lcool Application, CNAl n. SP06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 59 CNAl Report n.100/8 0, Processo CNAl/SP -06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 175 Funpro “ucarÕ s modernization, to 300,000 liters of alcohol a day, as had been requested in the application. 60 Original funding for the project included an approved initial loan of Cr$119,075,000 (approximately USD$11,128,505) plus interest of Cr$13,440,000 (USD$1,256,075). Distillery equipment accounted for the vast majority of the loan (Cr$116,023,000). The usi na would put up Cr$56,586,000 (USD$5,288,411) of its own resources and generate Cr$42,250,000 in third party investments. 61 The inflation rate and interest rates connected to these loans are important to assessing the program Õs real value. According to Wern er Baer Õs study of the Brazilian economy, nominal interest rates were valued at 41.15% in 1976 but their real rate was -3.63%.62 Additionally, the average inflation rate was 47% in 1976 and rising. 63 On the one hand, the preferential interest rates offered for Pro ⁄lcool (17% in S‰o Paulo) were incredibly low with real values below zero. In fact, the program Õs interest rates made the loans a rather substantial money transfer more than 60 The applicationÕs approval included minor revisions such as the storage tank capacity used on site. Following the review of the application provided by IAA officials over the course of the previous month, the IAA required that the Usina adjust the volume of its tank from the proposed 21.6 million liters to 27 million liters of alcohol to Òassure the gradual flow of production at its full capacity.Ó See IAA Industrial Sector Review by Cl⁄udio Hartkopf Lopes on March 11th, 1976; CNAl - Act n. 30. Letter to the Director of the Usina Santa Elisa S.A. on April 1st, 1976. IAA Collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 61 Letter from the Bank of Brazil to the Commiss‰o Nacional do Alcool (CNAl) of July 14th, 1978. IAA Collection, A6.16 Caixa 443, National Archives, Rio de Janeiro. 62 A brief explanation of nominal and real rates is necessary for non-economic readers. Money has a nominal value, meaning its everyday listed value, which changes quite regularly based on inflation, the amount of printe d money circulating in the economy by the government, etc. Thus, nominal rates are subjective. This applies to interest rates as well. Real values indicate the value of the currency (or interest rates) in comparison to stable values that take into account the regular fluctuations of nominal currency values. In a country with such a high inflation rate, the nominal value of a currency one month may change dramatically with inflation increases the next month. Therefore, economists prefer to discuss money and interest rates in real terms to account for these discrepancies with relative values. 63 Baer, The Brazilian Economy , Statistical Appendix, table A5, 392Ð393. 176 a loan. 64 At the same time, the value of the loans was inferior to the amount needed to actually complete project construction and installation because of the rising inflation. Hence, projects Õ costs, including the Usina Santa Elisa, often needed increased finances to account for the inflationary realities of the economy. This woul d be a key complaint among project participants and applicants into the program Õs second phase when the government agreed to index projects to inflation, making them even more profitable for individual businessmen. After traversing the approval process, securing financing was difficult. The program was a very divisive topic amongst government ministries, as discussed above. While officials like Minister Ueki were somewhat vocal about the direction of the program, the Bank of Brazil and the Central Monetary Bank of Brazil used delay tactics to express their own worries about the financial burden of the program. 65 The key topic on which the Bank of Brazil and the Central Bank objected to Pro⁄lcool was the burden of financial risk absorbed by financial investor s, and thus the Bank of Brazil as the primary lender. The Bank of Brazil had already served as the primary financial investor in the sugar industryÕs modernization program, Funpro“ucar. Many of these rather extensive loans remained outstanding at the begin ning of Pro⁄lcool, including the loan to the Usina Santa Elisa. After the Usina received approval from the National Alcohol Commission (CNAl) in April, Biagi Filho requested to move the credit line provided by the Bank of Brazil for the 64 See J.G. Baccarin, ÒO papel do estado no Pro ⁄lcool, Ó Ciencia Agronomica - Jaboticabal , 3(2), 1988: 17Ð18. Baccarin describes the economics of this process in more detail in his 1988 study. However, essentially the rampant inflation characterizing the Brazilian economy in this period made fixed low interest rates incredibly valuable because they were not subje ct to inflation. A low interest rate matched with a high inflation rate meant that, for example, nominal money in 1970 would actually be equal to that nominal amount plus the adjusted amount accounting for inflation. If interest rates did not account for inflation, the loans were worth more than the low interest payments, ever cheaper in real terms with inflation rising, every year. 65 Barzelay, Politicized Market , 12. 177 Funpro “ucar projec t to second lender behind a Pro ⁄lcool loan, which included not only different interest rates within the Bank of Brazil Õs financing structure but also third party lenders like the Antonio Queiroz Bank. 66 Such an action would have subordinated the long -term financing provided by the Bank of Brazil at such preferential terms for Funpro “ucar projects to the Pro ⁄lcool financier Õs shorter -term private financing. Most importantly, the new loans required a substantial overall financial commitment on the part of the Bank of Brazil to the program with little guarantee that businesses would be able to repay the loan if the program was unsuccessful. This became a point of contention for the Bank of Brazil and the Central Bank, which delayed the release of funds in respon se to their conflict of interests throughout much of 1976.67 In the case of the Usina Santa Elisa, the IAA went to great lengths to push project financing even as the Bank of Brazil dragged its feet. The IAA overrode the Bank of BrazilÕs preference to keep the funds separate and subordinate to the original Funpro“ucar funding by waiving fees accumulated on the original Funpro“ucar loan in its grace period. IAA President Tavares Carmo sent a letter to the Usina Santa Elisa on July 7th, 1976, indicating: ÒSee ing that funding conceded to this Usina, by this Institute, is in the grace period, with the new development in the construction phase, [É] I authorize the Bank of Brazil to suspend the collection of interest due on the 1976 to 1977 harvest, concerning the [Pro“ucar] funding EII -74/6, as well as to repay the corresponding deductions possibly already made.Ó 68 Indeed, it even required the Bank of Brazil to return previous interest payments made by the Usina related to that loan. 66 Letter from Maurilio Biagi Filho to IAA President General Alvaro Tavares Carmo of June 28th, 1976. A6.16 Box 443, IAA Collection, National Archives : Rio de Janeiro. 67 Santos notes, ÒUsina equipment was mortgaged to the IAA as collateral for credit authorized from the Special Export Fund. However, the Bank of Brazil was unwilling to become a second creditor, claiming that its risk would be far greater than those of the Institute.Ó Santos, ÒAlcohol as Fuel,Ó 326-327; See also, ÒComo Conter as dificuldades?Ó Veja 426 (November 3rd, 1976), 74Ð75; ÒPlano de alcool um ano depois, poucos resultado s,Ó Vis‰o (November 22nd, 1976). 68 Letter from IAA President Tavares Carmo to the Usina Santa Elisa S/A. GPCt - 205/76, A6.16 Box 443, IAA Collection. 178 The IAA was not the only entit y to force the Bank of BrazilÕs hand. As a Veja report stated in November 1976, a full year after the programÕs promulgation, government officials sought a Òscapegoat (um bode expiatŠrio )Ó to blame the lack of progress made on the program over its first year. Basically, the Economic Development Council placed blame on the Central Bank that finally Òapproved a credit mechanism for the installation of distilleries, and the Bank of Brazil, which pushed difficulties for the approval of financing.Ó 69 In response, President Geisel recommended that the Bank ease the loan guarantees (collateral requirements) demanded of interested businessmen. Project financing clearly separated Pro⁄lcool financeable items from non-eligible items. Certain aspects of the project were not financeable. Civil construction, equipment and installation, assembly and transportation, as well as interest during the construction period were all financeable parts of a project. Non -financeables included: imported equipment, expected readjustment costs, and additional start -up capital. The program would account for 80% of a given projectÕs financeable parts while the private businessmen accounted for the other 20% of the project plus non-financeable objects. 70 In the case of the Usina Santa Elisa, early project financing quickly changed as the Commission, and then the Bank, reassessed the projectÕs costs. In the proposed project, the Usina Santa Elisa had estimated that industrial equipment would cost Cr$116,023 but separated the cost of civil constru ction from the project financing. Following the proposed budget of 69 ÒComo conter as dificuldades?Ó Veja 426 (November 3rd, 1976), 75. 70 CENAL, Pro⁄lcool , 15Ð20. 179 Cr$116,023,000, the IAA approved that the Bank finance Cr$92,818,000 (80% of the initial financeable cost) and the Usina Santa Elisa provided Cr$23,205,000 (20%) of their own funds. 71 Santa Elisa management contracted many of the same companies to construct the new distillery on the Usina that is had during Funpro“ucar. For example, the Usina contracted H”lio FŠz Jord‰o S/A to do building construction as it had under Funpro“ucar previously. However, the Usina constructionÕs largest contracts went to the Piracicaba -based metallurgy company, Conger, and the Biagi -owned, Zanini S/A. At the beginning of Pro⁄lcool, Zanini still did not have the technology to construct its won distilleries. Thus, Conger and Zanini would create a partnership in the first phase of Pro⁄lcool in which ÒZanini, the mill and boiler manufacturer, would absorb Conger, the distillery manufacturer.Ó 72 Though short -lived, the partnership allowed Zanini to enter the distillery market, after which the company would begin producing its own distillation equipment. The two domestic companies combined to compete with the larger Dedini -CODISTIL distillery production company. The Usina Santa Elisa also contracted Brazilian companies like Arno S/A, KSB S/A, Siemens S/A for hydraulic tanks, ventilators, pumps, electric motors, and other necessary industrial equipment. These companies, many of the tri -p” nature explained by Evans, reiterate the ways that the sugar industry was able to rema in a domestic industry with the purchase of technical equipment from domestic companies that had joint -venture agreements to purchase new technology. 73 Yet, these domestic -based companies did not penetrate the actual sugar mills 71 CENAL Report n.100/80, Processo CENAL/SP -06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 72 CENAL Report n.100/80, Processo CENAL/SP -06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro. In fact, Zanini itself set up a subsidiary company to produce turbines in with the German company, AEG Kanis in 1976. Hasse, Filhos do fogo , 171. 73 In fact, Zanini S/A set up the first triple alliance business in the interior of S‰o Paulo with the establishment of AKZ with AEG Kanis in 1976 to produce turbines. Hasse, Filhos do fogo , 156. 180 and distillery structure, meaning foreign interests did not control the market. Rather, they remained suppliers to domestic -owned mills unlike other industries. Pro⁄lcool maintained this separation as the equipment companies, like Zanini, grew around the sugar mills and distilleries. Only four months after construction began, the Bank of Brazil reported to CNAl that, in fact, the project would need greater financing in order to complete construction. Rather than the original Cr$116,023,000 for equipment the project proposed in the Usina Santa ElisaÕs application, the Bank assessed that the Usina would need Cr$231,356,000 (USD$21,622,056) for distillery completion. This included Cr$157,045,000 (USD$92,379,412) for technical expenditures (civil construction, industrial equipment and ins tallation, as well as assembly and transport), Cr$16,806,000 (USD$1,570,654) for interest in the construction period, and Cr$57,505,000 (USD$5,374,299) for start -up capital. 74 Although the Bank blamed the Usina Õs application for inappropriately excluding civil construction expenses in financeable objects, the ever -increasing inflation rate, running somewhere in the 40% range during the project Õs implementation, was also to blame. 75 The Bank of Brazil thus authorized an expanded financing of Cr$132,520,000 (or 80% of the financeable parts of the project) on September 27th, 1976, six months after the initial project financing approval. 76 74 Letter to Dr. Getœlio Valverde de Lacerda of CNAl from Bank of Brazil Financial Manager Jos” Vasquez Rodriguez on July 14th, 1978. Ref.: GERFI/GEPRO -78/268. A6.16 Box 443, IAA Collection, National Archives: Rio de Janeiro. 75 Santos, ÒAlcohol as Fuel,Ó 330. 76 CENAL Report n.100/80, Processo CENAL/SP -06/76; Letter from the Bank of Brazil to the Commiss‰o Nacional do Alcool (CNAl), July 14th, 1978. A6.16 Box 0443, IAA collection, National Archives: Rio de Janeiro. While the two entities signed the contract outside the requisite 180 days stipulated by CNAl, it was quite normal in the notoriously delayed process. Azanha Ferraz notes that it typically took an average of 7-12 months for a project to sign a contract with a financial agency after receiving project approval. In fact, the Central Bank tried to tighten project support in July 1978, refinancing only Cr$122,042,800 of the project, which the Bank of Brazil contested and expande d in 1980. See Dias de Moraes, A desregulamenta“‰o , 71. 181 One should also note the small percentage of imported goods used in the Usina Santa ElisaÕs project. Of the Bank approved budget, imported equipment accounted for only Cr$1,408,000 of the entire budget (less than 1%).77 Such a small percentage reiterates how the program focused on domestic suppliers for domestic producers almost exclusively. The fact that much of the domestic equipment was the product of the tri -p” model, including the BiagiÕs Zanini, supports Evans and even Eakins assertion about general Brazilian development. However, the small amount of direct foreign capital involved in Pro⁄lcool equipment illuminates the alcohol industryÕs different development path. Even as disputes over the financing of the project and delays continued, Pro⁄lcool distillery construction began on the Usina Santa Elisa in April 1976. The new distillery was up and running by June 1977.78 The Minister of Industry and Commerce Dr. çngelo Calmon de S⁄, who took over the position earlier that year, and IAA President Tavares Carmo attended the inauguration on June 11th, 1977. In a letter to IAA President Tavares Carmo, Biagi Filho notes the signifi cant impact the Pro⁄lcool -financing had on the UsinaÕs position in the country, stating, Ò[É ] as a result of this support, we already produced, in the 1977 harvest, 50,007,000 liters of alcohol, which, compared to 8,712,000 liters in 1976, truly represen ts a significant increase and positions us as the 3rd largest producer of alcohol in the Country and the 1st in relation to sugar/alcohol. Ó79 77 Letter to Dr. Getœlio Valverde de Lacerda of CNAl from Bank of Brazil Financial Manager Jos” Vasquez Rodriguez on July 14th, 1978. Ref.: GERFI/GEPRO -78/268. A6.16 Box 443, IAA Collection, National Archives: Rio de Janeiro. 78 Biagi Filho response to oficio OF/CNAl n. 84 of April 18th, 1978 sent to the General Secretary of the Ministry of Industry and Commerce on May 3rd, 1978. A6.16 Box 443, IAA Collection, National Archives: Rio de Janeiro. 79 Letter from Maurilio Biagi Filho to IAA President Tavares Carmo on March 7th, 1978. A6.16 Caixa 443, National Archives, Rio de Janeiro. Biagi notes that the inauguration was also a symbolic inauguration of the Cia. A“ucareira Vale do Ros⁄rio and Irm‰os Biagi S.A. A“œcar e Alcool, which also received support and financing from Pro⁄lcool. Both companies are affiliated with the Usina Santa Elisa and owned by other members of the Biagi family. In fact, Biagi notes that together the three units accounted for 10% of all alcohol production in the state of S‰o Paulo in the 1976/77 harvest. 182 These accolades highlight the premiere position the Biagi family and the Usina Santa Elisa held in alcohol producti on by 1978. As such, the Biagis were most committed to seeing the program grow along with national alcohol consumption. Maurilio Biagi Filho aggressively pushed to expand alcohol production despite the bureaucratic delays around Pro⁄lcool financing. Even when the programÕs financing was under fire, the Usina Santa Elisa continued to expand. The BiagisÕ commitment would be critical to traversing difficult periods in the programÕs development over the next several years. Restructuring Pro⁄lcool and the Introduction of the Alcohol -Fueled Car No single event solidified the government Õs commitment to the national alcohol program and consumers Õ interest in expanded ethanol consumption more than the second oil shock of 1979. The beginning of the Iranian Revolution in December 1978 sparked a 14.5% increase in OPEC prices in December alone. Iran, as the second largest Brazilian oil supplier, left Brazilians particularly vulnerable to the new crisis. 80 The new Iranian government cut oil production by 2.7 million barrels/day, after which oil prices nearly doubled from around USD$12.85 in October 1978 to US$24 by the end of 1979.81 While the first oil shock had justifiably caused alarm, the second shock dramatically reshaped mentalities on the energy, establishing a new reality in which consumers knew they could no longer count low energy prices as they had before. With this shift, the fragile balance of payments, which had recovered from the last oil shock in 1973, quickly turned negative, and the Brazilian government found itself in crisis anew. The new oil shock came at a pivotal period in national politics as Pro ⁄lcool Õs most important supporter, President Geisel, was leaving office and the new President Jo‰o Batista de 80 Barzelay, Politicized Market , 174. 81 Santos, ÒAlcohol as Fuel,Ó 360. 183 Oliveira Figueiredo entered in 1979. Born to a military family, General Figueiredo had played an important role in the military during the dictatorship. He serve d under the head of the National Security Council, General Golbery, before the coup of 1964, in which he was key conspirator. Figueiredo then began his political career under President M”dici as Chief Minister of the Military Presidential Staff before serv ing as the head of the National Intelligence Service (Servi “o Nacional de Informa “łes) under President Geisel.82 Partially because of his ties to both the hard -line M”dici and the moderate Geisel administration, President Geisel nominated his former Nationa l Intelligence Service head for the presidency in November 1978. The oil crisis intensified only a month later, and Figueiredo Õs administration began in March 1979. Addressing the energy crisis became a central part of President Figueiredo Õs new developme nt agenda, in which Pro ⁄lcool was a major piece. He stated in an interview with Veja reporter, Paulo Sotero, ÒAlcohol is the Brazilian response to the energy crisis. More than a solution for external contingencies, [the crisis] is the great challenge of the 1980s that the entire nation - the people and the government - will have to confront and overcome. Ó83 President Figueiredo and the Economic Development Council raised the target production for the alcohol program to 10.7 billion liters by 1985. President Figueiredo Õs Third National Development Plan for 1980 to 1985 supported his earlier assertion. The Plan identifies the acceleration of the National Alcohol Program to be a central part of national energy policy, Òthrough the development of research in the program Õs areas of production, transport, conservation and application, [and] to incorporate the respective 82 Skidmore, The Politics of Military Rule , 162 and 210. 83 Paulo Sotero, ÒFigueiredo e o desafio dos anos 80,Ó Veja 562 (June 13th, 1979), 93. 184 technological progress. Ó84 While President Geisel had indirectly addressed alcohol as an option in II PND, alcohol production received particular attention in the new administration Õs agenda. The Ministry of Mines Õ Energy Report laid out alcohol Õs importance in more detail in its 1979 Energy Report. It reasserted the goal of 10.7 billion liters of alcohol by 1985 set for the second phase of Pro ⁄lcool. Having reached the program Õs original goal of 3 billion liters of anhydrous alcohol production in 1979, there was less focus on the expansion of anhydrous alcohol and a greater focus on the expansion of hydrous alcohol for car use while expanding hydrous use for industrial use as well.85 Of the 10.7 billion liter goal, the Report marked 6.1 billion liters toward hydrous alcohol for alcohol cars, 3.1 billion for the alcohol -gasoline mixture, and 1.5 billion liters for industrial use. 86 Expected production (in billions) 1980 1981 1982 1983 1984 1985 Industrial Alcohol .3 .6 .8 1 1.2 1.5 Hydrous Alcohol for Cars .4 .9 1.5 2.5 4.1 6.1 Table 7: Expected Hydrous Alcohol Production for Phase II of Pro⁄lcool Source: Ministry of Mines, O modelo energ”tico brasileiro (Bras™lia: Ministry of Mines and Energy, 1979), 38Ð42. The second phase Õs alcohol expansion required the resolution of important problems with the program Õs early implementation. Castro Santos identifies the major problems facing the 84 Secretaria do Planejamento, BrazilÕs III National Development Plan 1980Ð1985 (Bras™lia: Presidencia da Repœblica, 1979), 44. 85 In fact, the government only reached President GeiselÕs original goal of a 20% alcohol mixture in some states by 1977 and nationally in 1983. In the interim, this mixture rate diminished with the expansion of hydrous alcohol in the second phase to attend to the new alcohol -fueled car demand. Santos, ÒAlcohol as Fuel,Ó 250. 86 CENAL, Pro⁄lcool , 8; Minis try of Mines, O modelo energ”tico brasileiro (Bras™lia: Ministry of Mines and Energy, 1979), 38Ð42. 185 program in 1979 to be: poor distribution and storage infrastructure, delayed approval process connected to a poor administrative structure, complaints about alcohol pricing, and limited resources to finance expansion. 87 The government sought to address many of these issues with the greater incorporation of private businesses. Key steps in this process included: incorporating Petrobr ⁄s, facilitating new project approvals, and introducing the car industry into the program. Barzelay describes a structure in which various government organs and private companies bought into the program in 1979 and 1980 in ways their diverging interests had previously resisted. 88 For example, in response to the continual battle for control over the program, President Figueiredo and his Economic Development Council created the new entities to simplify the application process and streamline the program Õs administration. 89 Led by the new Minister of Industry and Commerce Jo‰o Camila Penna after he replaced çngelo Calmon de S⁄ in March 1979, the new administrative structure was an important step toward facilitating the expansion of the program in the 1980s. 90 As Penna stated to the weekl y magazine, Veja, following the program Õs restructure: ÒThe success of Pro ⁄lcool is linked to the national effort. It depends on the action of the new National Alcohol Council, on the government as one united entity, on the businessmen that want to take part in the program, on the automobile industry, on Petrobras, on the National Congress, on all Brazilians, in total. And the government is committed. Ó91 87 Santos, ÒAlcohol as Fuel,Ó 381Ð383. 88 Barzelay, Politicized Market , 198. 89 With Decree 83.700 of July 5th, 1979, the President Figueiredo created the National Alcohol Council (CNAL) and the National Executive Commission on Alcohol (Commiss‰o Executivo Nacional de Alcool - CENAL) to replace the original National Commission on Alcohol (CNAl). Diario Oficial , July 5th, 1979. Decree n. 83.700 of July 5th, 1979. A6.06 Caixa 0392, National Archives: Rio de Janeiro. 90 Penna would hold the position until August 1984, which was through the duration of the ProgramÕs expansion. 91 ÒO petrŠleo da canaÓ Veja 562 (June 13th, 1979), 97. 186 Additionally, Petrobr ⁄s acquired primary control over the distribution of alcohol in the second phase of the program through its distribution companies in 1980, which resolved ongoing transportation issues. 92 The National Petroleum Company guaranteed the additional infrastructure at gas stations if the government guaranteed distribution and demand. 93 These inte r-governmental steps facilitated the advancement of the program, while the car industry Õs involvement expanded with the new alcohol -fueled car. The use of alcohol as a replacement for gasoline with the alcohol -fueled car drove the second phase Õs expansion. Technological research for the car had intensified in the early years of the Pro ⁄lcool. Brazilian engineers at the CTA were the first to develop the new engine technology. Professor Stumpf and his team at the CTA were only a small group of the many engine ers involved in the adaptation of the internal combustion engine to run completely on alcohol rather than a gasoline -alcohol mixture as promoted initially under Pro ⁄lcool. The new engine ran on hydrous alcohol rather than the anhydrous alcohol, which had been and remained the base for the alcohol -gasoline mixture since the 1930s. 94 The CTA developed the alcohol -fueled engine in conjunction with the newly formed Industria l Technology Secretariat, led by its first Secretary Jos ” Walter Bautista Vidal under the Ministry of Commerce and Industry (MIC). Originally from Bahia, he received his bachelors from the University of Santiago and his doctorate in physics from Stanford University. Vidal 92 Santos, ÒAlcohol as Fuel,Ó 406Ð410. This also diminished divisions on the federal level, as the industry stopped vying for complete control of the program against the MIC. 93 General Oziel Almeida Costa, President of the National Petroleum Council (CNP), pledged the installation of the hydrous alcohol pumps at gasoline stations in the regions with sufficient alcohol for consumption and a fleet of alcohol -driven cars. He said, ÒOn the day that the National Alcohol Commission says that there is enough alcohol and cars for the use of the com bustible, we will be quick to activate the distribution system, which is pretty easy.Ó See, Òçlcool: CNP j⁄ tem plano de distribui“‰o,Ó O Estado de S. Paulo (February 7th, 1979), 29. 94 For a good summary of the development of the technology for the car, see Santos, ÒAlcohol as Fuel,Ó 413Ð416. 187 served as the first Secretary of Industrial Technology under the MIC, upon invitation from the new Minister of Industry and Commerce Severo Gomes in 1974.95 The MIC created the Secretariat to trace the country Õs industrial technology policy and to supervise and coordinate the related organs under the ministry, but in practice it was created Òalmost exclusively for the research of alcohol as an energy source. Ó96 As the former IAA President Barbosa Lima Sobrinho noted, Vidal was known for his Òpassion and combative defense Ó of Pro ⁄lcool; however, Barzelay claims that Vidal Òchose to promote the program so ardently that he gained a reputation among auto producers as a clown. Ó97 Regardless, his fervent support remained an important piece in pushing the early expansion of alcohol -fueled cars before his dismissal in 1979.98 Fears of the new oil crisis accelerated the launch of the alcohol -fueled car for national production. In fact, The CTA launched the first fleet of experimental alcohol -fueled cars in 1977. Although most of the test fleet cars in 1977 had been with the Dans model Volkw agens, the car companies remained hesitant. 99 Government agencies used the new cars across the country, as the ministries debated the appropriate level of multinational involvement if the initiative expanded to national car distribution. 100 A new phase base d on the alcohol -car required the cooperation of the multinational car companies. The four major car companies in Brazil (Fiat, Volkwagen, Ford, and General Motors) were hesitant to commit to the program without guarantees from the government that it would supply and distribute enough alcohol to make the car a worthwhile endeavor. Fiat was the 95 Vidal, O esfacelamento da na“‰o , 42. 96 ÒO petroleo da canaÓ, Veja 562 (June 13th, 1979), 94. 97 Vidal, O esfacelamento da na“‰o , 10; Barzelay, Politicized Market , 175. 98 Vasconcellos and Vidal, Poder dos tropicos , 82. 99 Ò500 ve™culos andam apenas com ⁄lcool,Ó Jornal do Brasil (May 29th,1978), 15 100 ÒCTA diz que pode utilizar o Programa çlcool -Motor no pa™s,Ó and Ò500 ve™culos andam apenas com ⁄lcool,Ó Jornal do Brasil (May 29th,1978), 15. 188 first to commit after launching its first alcohol car in 1978. The US companies lagged behind. Of the four, Volkwagen, the country Õs largest auto producer, took the biggest step forward when it announced that it would accelerate the development of the alcohol -fueled car in February 1979, setting a target roll out date for November of the same year. 101 M⁄rio Garnero, the president of the National Automobile Producers Õ Association (ANFAVEA - Associa “‰o Nacional dos Fabricantes de Ve™culos Automotores), played a critical role in negotiating the car industry Õs participation. Trained as a lawyer, the young paulista was a close friend of Juscelino Kubitschek, entering politic s in 1961 as a manager for a 1965 Kubitschek campaign that never materialized thanks to the military coup in 1964. Returning to corporate work after the military government began, he became a director at Volkswagen do Brasil in the early 1970s, during whic h time he assumed the presidency of ANFAVEA.102 Garnero was one of the only businessmen invited to join the National Energy Commission. 103 As such, he had an important voice in the collaboration of Pro ⁄lcool and the car industry as well as direct access to the President in energy policy formation. Garnero recalls the situation facing the car industry with the second oil shock in an interview I did with him, 101 Pedro Lobato, ÒPronto o Fiat-çlcool,Ó Gazeta Mercantil (September 4th, 1978); Barzelay, Politicized Market , 179; Interview with M⁄rio Garnero by Jennifer Eaglin on December 11th, 2013 in S‰o Paulo; Hasse, Filhos do fogo , 195. 102 M⁄rio Garnero, JK: a coragem da ambi“‰o (Campinas, SP: Editora MM, 2011), 13-24 and 29. 103 After the new oil shock, President Figueiredo formed a new National Energy Commission in July. The Commission, presided by Vice-President Aureliano Chaves, combined high -ranking officials in the MME, finance, agricult ure, transportation, industry and commerce, planning, and social communications to centralize national energy policy. Garnero asserts that Minister of Mines and Energy C”sar Cals was the first to suggest the creation of the National Energy Commission to President Figueiredo. The other two private representatives on the Commission were Professor Eduardo Celestino Rodrigues and engineer Ney Webster de Araœjo, both of which technical specialists. M⁄rio Garnero, Energia: o future ” hoje , 52Ð53 and 81. See also, ÒFigueiredo prepara a economia de guerra,Ó Jornal do Brasil (July 5th, 1979), 1. 189 Òwith the oil crisis which elevated the price of petroleum, we [car producers] had a choice, which was rationing [gasoline] or creating something new, and from this choice arose, objectively, our work to coordinate with the car industry, the government, and with producers and distributors, in this case Petrobr ⁄s, [to expand Pro ⁄lcool.] Ó104 Indeed, Garnero would remain an outspoken supporter of the alcohol program, winning the image of the ÒFather of Ethanol Ó to some today for his involvement in the industry Õs collaboration. 105 One of the major victories for Brazilian nationalist interests, from the military to private businessmen to government officials, was winning the royalties to the alcohol -fueled engine. As discussed above, Brazilian researchers at the CTA under the Aernonautics Ministry conducted alcohol -fueled engine research before Pro ⁄lcool began. Upon the commitment of the car industries, the foreign companies filed for royalties on the technology as they had been developing privately as well. The CTA strongly opposed this position. Lieutenant Coronel Sergio Ferolla, Director of the Institute of Research and Development at the CTA noted that Brazil already had the alcohol motor patented, claiming that the country Òwill talk on equal footing with international manufacturers. Ó106 Ultimately, the foreign companies desisted, giving Brazil full rights to the alcohol -fueled engine. Brazilian ownership of the alcohol -fueled engine is an important deviation from Evans Õ and Eakins Õ assessments of Brazilian development. The alcohol -fueled engine established Brazilian technology in the quintesse ntial model of modernity to Brazilian consumers: the car. Joel Wolfe highlights the importance of the car in 20th century Brazil, stating ÒCars, trucks, and buses became not only the tools for creating the modern Brazilian state but also symbols of hope 104 Interview with M⁄rio Garnero by Jennifer Eaglin on December 11th, 2013 in S‰o Paulo. 105 Veazey, ÒBrazilÕs ÔFather of EthanolÕ Sees Bounty for Biofuel.Ó 106 Jo‰o Batista Olivi, ÒCTA ditar⁄ padrłes para motor a ⁄lcool,Ó O Estado de S‰o Paulo (April 27th, 1979), 30; See also, ÒINPI n‰o aceita royalty sobre motor a ⁄lcool,Ó O Globo (April 24th, 1979) as cited in Santos, ÒAlcohol as Fuel,Ó 416. 190 for its ongoing growth as modern, developed, and democratic nation. Ó107 Although not yet democratic, the government Õs ability to connect energy, technology, the economy, and the car through Pro ⁄lcool held greater importance than just the royalties. It represen ted a type of modernity that held currency for government officials. Despite this victory, the roll out of the car was not without its troubles. As discussed below, sugar producers would embrace the meaning of the new car technology and become major promot ers of the program in the 1980s. 1980 1981 1982 1983 1984 1985 Expected alcohol -driven cars* 330,000 717,000 1160,000 1598,000 2032,000 2461,000 Alcohol car sales 254,015 128,828 237,585 592,984 560,492 642,147 Total Car Sales** 873,721 516,329 619,984 689,897 601,929 687,360 Table 8: Alcohol -fueled Car Sales , 1980Ð1985108 See Ministry of Mines, O modelo energ”tico brasileiro (Bras™lia: Ministry of Mines and Energy, 1979), 41 and Anfavea 2015 Annual Report. Behind the fears of the continued oil price increases, the public commitment to the alcohol initiative expanded as well. This was most visible through alcohol -fuel car purchases in late 1979 and early 1980. President Figueiredo and ANFAVEA President Garnero signed an agreement setting the car indust ryÕs production commitment to the program for the first year of 107 Wolfe, Autos and Progress , 12. 108 This table illustrates the Ministry of Mines expected alcohol -driven car numbers projected in 1979, real alcohol fueled car sales from 1980 to 1985, and the estimates of actual alcohol -fueled cars on the road over the same period. One should note that the governmentÕs first estimate is based on a combination of new alcohol fueled car sales and gasoline car conversions. *The government approved the legal conversion of gasoline cars at certified auto shops in February 1980. However, this practice began before and continued after this law without certification. ** This does not include light commercial trucks, trucks, or buses. 191 production at 250,000 in September 1979.109 Combined with the expected conversion of gasoline cars to alcohol cars, the Ministry of Mines estimated alcohol car production from 1980 to 1985, as displayed in Table 8.110 Even as consumer preference leaned toward the new alcohol -fuel car, technical difficulties with the car challenged their support. Veja reported problems with starting the cars in cold weather and strong exhaust odors in 1979, but in fact, deeper problems persisted. First and foremost, the engines were difficult to start at temperatures around or below 15 degrees Celsius (about 60 degrees Fahrenheit). However, problems with corrosion also challenged the cars Õ efficiency. Also, anothe r notable issue for consumers was that the cars burned through alcohol at a faster rate than gasoline, thus requiring more refills than gasoline cars. 111 Additionally, steelworkerÕs strikes in early 1980 slowed alcohol car production, further challenging the alcohol -car roll out. Led by In⁄cio Lula da Silva, a Volkwagen metalworker and future president of Brazil, union workers of the famous ABC municipalities in S‰o Paulo (Santo Andr”, S‰o Bernardo, and S‰o Caetano) began striking 1979 amid a declining econo my. Some supporters argued that the alcohol car would buoy car production and thus steelworkersÕ jobs as Brazilian car production declined during the growing economic crisis. Ultimately, steel workers were able to assert their own influence on the program through their strikes. As Barzelay notes, ÒThe 41-day strike of metallurgical workers in the S‰o Paulo area during April and May 1980, 109 ÒUm acordo com as f⁄bricas para a produ“‰o de carros a ⁄lcool,Ó Gazeta Mercantil (September 11th, 1979) as cited in Politicized Market , 212n47. 110 Ministry of Mines, O modelo energ”tico brasileiro , 40. 111 ÒO petrŠleo da cana,Ó Veja 562 (June 13th, 1979), 95; Santos, ÒAlcohol as Fuel,Ó 417Ð418. 192 however, caused the [alcohol -fueled car production] target to be revised downward by 50,000 units.Ó 112 This strike signific antly affected the roll out of the alcohol car, but alcohol -fueled car sales rebounded in late 1980 due to external international affairs. The Iran -Iraq War began in September 1980. This drove consumer fears of increased oil shortages and gasoline rationin g, pushing sales back up for the next six months. In fact, this bump allowed producers to exceed the original 250,000 cars for the year. 113 However, sales continued to drop in 1981, as noted in Table 8 above, as financial struggles further challenged public support for the program. Controversial Foreign Financing: The Entry of the World Bank in 1981 While resolving the administrative issues and promoting the alcohol -fueled car were important steps taken by the government to support Pro ⁄lcool, the most controversial was the acquisition of foreign financing to support the program Õs expansion in 1980. Former Minister of Mines and Energy Shigeaki Ueki proposed the incorporation of foreign financing to form a Òtripod modelÓ for the program Õs expansion based on private domestic, state, and foreign capital for production projects. Ultimately, Minister of Mines and Energy Cesar Cals vetoed the suggestion along with other private business owners, including the vocal Zanini Vice-President and Usina Santa Elisa sha reholder, Luiz Lacerda Biagi. 114 112 Barzelay, Politicized Market , 212Ð213. See also, ÒAnunciada a redu“‰o na meta de carros a ⁄lcool,Ó O Estado de S‰o Paulo (May 16th, 1980), 25. 113 Barzelay, Politicized Market , 31; Santos, ÒAlcohol as Fuel,Ó 201. See also, S. Stefani, Òçlcool: o susto da guerra provocou o ÔboomÕ,Ó RelatŠrio da Gazeta Mercantil, (November 28th, 1980). 114 UekiÕs model positioned Petrobras in control of state repres entation in the projects. See ÒCals veta o plano tripartite,Ó Gazeta Mercantil (March 19th, 1980); Luiz A. Tur™bio, ÒPlano triplica o Pro⁄lcool,Ó Gazeta Mercantil (March 21st, 1980), ÒPara Setœbal, Petrobr⁄s n‰o deve produzir ⁄lcool,Ó O Globo (March 21st, 1980) as cited in Santos, ÒAlcohol as Fuel,Ó 402Ð403. 193 However, financing for the program slowed project approval to a complete halt in June 1981. While sugar exports, federal budget allocations, and the sale of alcohol -gasoline had supported the program until 1979, these financ ial bases had been stretched thin by 1980. For the program to continue on the scale to which the government had expanded it in 1980, foreign capital was the only option. Despite dismissing Ueki Õs plan, the costly Pro ⁄lcool needed additional funding to supp ort its expansion. Additionally, the expanding alternative fuel initiatives driven by the government, including nuclear, coal, and hydro-energy, began to pick from the same federal budget in 1980, further diminishing available capital for the program Õs exp ansion. 115 Proposals, issued in numerous national newspapers, for the incorporation of foreign financing incited a public debate amongst private entrepreneurs and public officials involved in Pro ⁄lcool. Amongst the most outspoken public officials were Gener al Ernani Ayrosa, Chief of the General Staff of the Army, and General Antonio Carlos de Andrada Serpa, Chief of the Military Personnel Department. General Ayrosa claimed, Òprudence shows that the energy problems ought to be solved within our own country, without foreign dependence. Ó116 Similarly, General Serpa specifically raised concerns of foreign inclusion as a threat to national security, particularly in comparison to the pharmaceutical industry, which he described as Òa sector where wild capitalism devel oped in the country. Ó117 That both of these detractors of foreign influence were from the military certainly reminded the public of the program Õs national security implications, but it also highlights a deeper desire to avert the standard development model of the 115 Santos, ÒAlcohol as Fuel,Ó 422Ð423. 116 As cited in ÒO nacionalismo e o Pro⁄lcool,Ó O Estado de S‰o Paulo (April 9th, 1980), 3. 117 ÒSerpa prega Ôcorre“‰o de rumoÕ em quarto setores,Ó O Estado de S‰o Paulo (April 16th, 1980), 5; See also, ÒSerpa condena presen“a das multis na pol™tica energetica brasileiraÓ A Folha de S‰o Paulo (February 14th, 1980) as cited in Santos, ÒAlcohol as Fue l,Ó 426; ÒCapital externo fora do Pro⁄lcool na distribui“‰o,Ó O Estado de S‰o Paulo (April 9th, 1980), 29; 194 era, specifically invoking the famed pharmaceutical example. Thus, the problematic entry of foreign capital in other industries remained present in the public response to foreign capital in the alcohol program. However, the military officials Õ positi on also fired up private interests anti -state monopoly (statization) movement. Pro⁄ lcool remained wrapped in trepidations and anxiety around previous state and private industry development problems. Those against state intervention in the market place, known as the anti -statization movement, claimed that the exclusion of foreign capital was not worth the failure of the entire program with rather vitriol rhetoric, invoking the failures of the state-led oil industry, Petrob ⁄s, to push for foreign entry. 118 Pri vate businessmen also weighed in on the topic. For example, ANFAVEA President Mario Garnero noted his conditional support of foreign financing so long as domestic capital outweighed foreign capital interests. Such nuanced support illustrates the divisive nature of the World Bank Õs entry brought to the fore. 119 Still, the most adamant proponent of the foreign financing was Minister of Planning Delfim Neto. Minister of Planning Antonio Delfim Neto was one of the strongest and most influential supporters of the new financing. As former Minister of Finance under M”diciÕ s administration, he employed strict orthodox policies and was considered the manufacturer of the Brazilian ÒEconomic Miracle Ó of the late 1960s. 120 Already known for his focus on controlling inflati on during the M”dici years, he took over as Minister of Planning of Figueiredo Õs new administration in August 1979. With decisive control over economic policy, he focused his economic campaign 118 In a Estado de S‰o Paulo commentary article, ÒO nacionalismo e o Pro⁄lcool,Ó a critic of the state claimed that the exclusion of foreign capital would lead to the same disaster as the creation of Petrobr⁄s, Òa state within a stateÓ whose inefficiencies had led to BrazilÕs failed oil industry. ÒNacionalismo e o Pro⁄lcool,Ó O Estado de S‰o Paulo (April 9th, 1980), 3; ÒDebatido o interesse do capital externo no ⁄lcool,Ó O Estado de S‰o Paulo (May 27th, 1981), 24. 119 ÒDebatido o interesse do capital externo no ⁄lcool,Ó O Estado de S‰o Paulo (May 21st, 1981), 24. 120 Skidmore, The Politics of Military Rule , 67. 195 on Pro ⁄lcool in late 1980. He stressed the connection between Pro ⁄lcool and the rising inflation rate, noting that it cut into agricultural exports while only exchanging one fuel for another rather than diminishing fuel consumption, thus not cutting actual energy costs. 121 He employed an anti -inflationary policy, which led to the program Õs financial suspension in June 1981. Thus, when the topic of foreign financing entering the program arose, Delfim Neto argued that foreign financing would improve the country Õs balance of payments and pushed through the financing. 122 After the testy debate, international financial intervention would not come to fruition until 1981. The government approved the World Bank Õs financial incorporation into Pro ⁄lcool under very stringent conditions. The World Bank gave Pro ⁄lcool a credit of US$2 50 million. The contract required an Òinternational bidding for distillery equipment for industrial projects to be supported by the Bank; reduction and eventual elimination of interest rate subsidies on Pro ⁄lcool loans; an alcohol pricing policy that would maintain the ex-distillery alcohol prices paid to producers at levels that would adequately remunerate them, implying a constant adjustment according to the rate of inflation. Ó123 While World Bank financing introduced foreign capital into the program, dome stic entrepreneurs still dominated the alcohol program. These producers and businessmen had a say in the policy debates waged around the new World Bank loan. Additionally, a 15% preference margin in bidding prices virtually guaranteed that domestic industr ies would win all the bidding, 121 ÒO Pro⁄lcool, inflacion⁄rio,Ó O Estado de S‰o Paulo (January 6th, 1981), 24; Barzelay, Politicized Market , 221Ð222. 122 Santos, ÒAlcohol as Fuel,Ó 430 and 463. Also, see Table 15 in the Appendix of this dissertation for the state of the Brazilian balance of payment. 123 Santos, ÒAlcohol as Fuel,Ó 430Ð431. The contract demarked how the funds were to be distributed, with the vast majority (US$281.5 million) for alcohol producing units, including agricultural projects between 1981 and 1983. In fact, given the budget cuts, the World Bank loan provided all the funding for projects approved in 1982 and by 1984, about 75% of Pro⁄lcoolÕs funds came from the World Bank. Santos, ÒAlcohol as Fuel,Ó 430Ð436; Demetrius, BrazilÕs National Alcohol Program , 100. 196 which they did. 124 Thus, even when foreign financing was allowed into the program, government officials structured the financing to still heavily favor domestic producers. Furthermore, the technological innovation involved in the program, and distinctly denied in EakinÕs assessment of traditional Brazilian development programs, further asserts the Pro⁄lcoolÕs unique development path. The program heavily favored domestic producers, but protection of domestic technology remained central to the program. This was a point on which politicians were unwilling to compromise, as patent negotiations with the car industry over the alcohol -fueled engine revealed in 1979.125 Equipment producers proliferated the tri -p” model of development to acquire more technology, following Eakin Õs assessment of Brazilian development. 126 However, the alcohol engine defied this model, and sugar and alcohol production remained in the control of domestic producers. Thus, the level of international influence that slowly eroded domestic presence in the pharmaceutical industry for Evans and the steel industry for Eakins did not occur under Pro ⁄lcool despite the late entry of foreign capital. The government removed the freeze on program expansion in August 1981, but public support required more coaxing. 127 Alcohol car sales did not recover from the 1981 collapse until the government intervened with additional alcohol car incentives in 1982. At the pressure of interest groups like ANFAVEA, the National Energy Commission expanded alcohol -fueled car 124 See Santos, ÒAlcohol as Fuel,Ó 433Ð436 for a detailed account of the bidding process. Through 1982, no foreign companies won any bids. In fact, the BiagiÕs Zanini S/A won the largest share of projects after the World Bank entered the program because it cut prices even further below CENAL requirem ents. This practice, among others, would wreak havoc on the companyÕs financial structure in the mid-1980s when Pro⁄lcool financing dried up. See below in this dissertation, 201n140. 125 See above, p. 189Ð190. 126 Eakin, Tropical Capitalism , 59. Eakin states, Òrather than moving toward continual technological innovation - a true sign of self-sustaining and dynamic industrialization - the Brazilians continue to rely on others for technological advances and innovation.Ó 127 ÒO impasse do ⁄lcool,Ó Veja 677 (August 26th, 1981), 84Ð86. 197 incentives to reignite sales. Incentives included: a guarantee that alcohol prices would not surpass 59% of the price of gasoline (per liter); a lowerering of the IPI (industrial product tax) for alcohol cars to 28% (from 32% previously) while increasing gasoline cars Õ IPI to 33% (32% previously); a reduction in the price of the alcohol car to 2% below the gasoline car despite the fact that its production costs exceeded the gasoline car; and longer lease terms for new alcohol cars .128 Thus, government intervention and foreign finance salvaged Pro ⁄lcool Õs most important indicator: alcohol car sales. These events, including additional OPEC cuts in 1982, and the government Õs subsequent measures solidified the Brazilian alcohol car boom, which had begun in late 1980.129 Certainly, it led to the expansion of alcohol consumption and production. Still, the carÕs adaptation was far from seamless. In fact, as Castro Santos asserts, private alcohol equipment producers were critical to pushing public opinion in favor of the program and alcohol -fueled cars in periods of waning support over the next few years. 130 In this case, the Usina Santa Elisa and Zanini were one in the same. Pro ⁄lcool and the success of the alcohol -fueled car united the equipmen t production sector Õs interests most explicitly with its sugar holdings in this period. Both Luiz Lacerda Biagi and Maurilio Biagi Filho Õs combined efforts would be essential to the program Õs growth in Ribeir ‰o Preto. 128 ÒA subida da montanha,Ó Veja 708 (March 31st, 1982), 100Ð101; ÒProdutores de ⁄lcool acusam as montadores,Ó Folha de S‰o Paulo (June 10th, 1983); see also, Santos, ÒAlcohol as Fuel,Ó 471. 129 Stefani, Òçlcool: o susto da guerra provocou o ÔboomÕ,Ó RelatŠrio da Gazeta Mercantil, (November 28th, 1980); ÒO outro lado da moeda,Ó Veja 707 (March 24, 1982), 92Ð94; ÒA subida da montanha,Ó Veja 708 (March 31st, 1982), 100Ð101. 130 Santos, ÒAlcohol as Fuel,Ó 203. 198 Phase II and the Usina Santa Elisa: 1979Ð1984 The transition to Phase Two of Pro ⁄lcool took particular importance in Ribeir ‰o Preto. Pro⁄ lcool had transformed Ribeir ‰o Preto into the largest alcohol -producing region in the country in the late 1970s. The Usina Santa Elisa had already establis hed itself as one of the largest alcohol -producing usinas in the country, and thus its investment in the program Õs expansion and continued success was significant. Additionally, the equipment production company, Zanini S/A, was one of many holdings the Bia gi family owned in the sugar and alcohol industry. As the second largest alcohol equipment company in the country, Zanini Õs success was also intricately connected to the continued growth of the program. The Biagi leader and patriarch, Maurilio Biagi, died in 1978, after which his widow, Edilah Lacerda Biagi, took formal control of the empire. She divided leadership of the family Õs biggest holdings, the Usina Santa Elisa and Zanini, between her two eldest sons, Maurilio Biagi Filho and Luiz Lacerda Biagi. Maurilio Biagi Filho remained Superintendent and navigator of the Biagi sugar and alcohol holdings. However, acting president of the Usina Santa Elisa in 1980 was Eduardo Diniz Junqueira. 131 Thus, while Maurilio Biagi had directed his sugar empire into the government Õs alcohol program, his sons would shape the program Õs growth in the second phase. The two were particularly aggressive promoters of the program in Ribeir ‰o Preto. Geraldo Hasse recounts, ÒOn the offensive for clients, Luiz Biagi mobilized author ities, friend and relatives. One of his partners in this effort was his brother Maurilio. The two sought to make business in all corners of Brazil, arriving to attract ranchers to the alcohol sector. In battle for the Pro ⁄lcool market, the objective was to create for Zanini a large market of technical assistance, maintenance and spare pieces and equipment. Ó132 131 Hasse, Filhos do Fogo , 194. 132 Hasse, Filhos do Fogo , 171. 199 At the same time, the two brothers promoted the program by purchasing the first alcohol -driven car, produced by Fiat, in 1978.133 They promoted the program to local businesses. The two marketed the program to consumers in the region as well. Again, Hasse notes that the brothers Òdistributed caps and t-shirts with the national motto ÔSee this t-shirt, Choose alcohol. ÕÓ134 As the Biagis promoted the program, the Usina Santa ElisaÕs sugarcane production capacity substantially expanded in the first years of Pro ⁄lcool. In the 1975/76 harvest, the Santa ElisaÕs sugarcane agricultural capacity reached 15,321 hectares of which 7,596 hectares belonged to the Usina directly and sugarcane suppliers provided the additional 7,725 hectares. 135 Over the next five years, the Biagis purchased land and contracted suppliers deeper and deeper into neighboring regions, extending their cane fields to an estimated 44,332 hectares (109,547 acres) by the 1980/81 harvest. Of this land, the Usina and its shareholders owned 16,562 hectares and suppliers accounted for 27,770 hectares. 136 In conjunction with its growing cane capacity, the Usina Santa Elisa also returned to the government -fin anced Pro ⁄lcool well in 1980 to further expand its distillery capacity. In September 1980, the Usina Santa Elisa leadership applied for Pro ⁄lcool assistance to expand their annexed distillery from 300,000 liters a day to 540,000 liters a day. 137 Pro⁄ lcool financing would support the addition of two more 120,000 distillers to the four already in place at the Usina Santa Elisa. The additional distilleries would all be for hydrous alcohol production. 133 Hasse claims the family ÒadoptedÓ despite Biagi Filho recounting how awful the original models were. Ò[The] first generation of motors was awful, the second awful, the third, bad, the fourth good [É].Ó Interview with Biagi Filho on May 21st, 2013 by Jenni fer Eaglin; Hasse, Filhos do Fogo , 195. 134 Hasse, Filhos do Fogo , 171. 135 Usina Santa Elisa Pro⁄lcool Application, CNAl n. SP06/76. IAA collection, A6.16 Box 0443, National Archives, Rio de Janeiro. 136 CENAL RelatŠrio 169/80; Processo CENAL n.122/80, signed by President of the IAA, Hugo Almeida on November 19th, 1980. J5.19 Box 4634, National Archives: Rio de Janeiro. 137 Ibid. 200 According to the application, the Usina Santa Elisa produced 71,001,100 liters of alcohol in the 1979/1980 harvest and 40,722,100 liters as of September 20th, 1980 in the 1980/1981 harvest. With the anticipated production expansion requested, Biagi Filho projected that the usina would produce 81,000,000 liters in the 1981/1982 harvest with the additional distillery units. 138 CENAL approved the Usina Santa Elisa expansion project on November 19th, 1980.139 In the application, Santa Elisa management requested extensive financial support for their industrial sector. This included Cr$51,165,900 in civil works like filters, heaters, generators, and tanks and Cr$474,642,500 (approximately USD$9,006,500) in industrial equipment assistance. The industrial equipment requested included: electric energy generation, vapor generation, cane reception and unloading. Most significantly, the distillery itself accounted for over half (Cr$223,533,000) of the industrial equipment funds requested and the vast majority of all funds requested. Vehicles, installations, and loads rounded out the industrial equipment requests for a total of Cr$626,938,900 in requested funds. As with all Pro ⁄lcool projects at this time, the Usina shareholders were to put up 20% of the project Õs funds (Cr$125,378,800) while Pro ⁄lcool financed the other 80% of the project (Cr$501,506,100). The application estimates that total production costs, including manual labor and various operation and non-operational costs, totaled at an estimated Cr$674,945,900 (USD$12,807,323). Despite the additional capacity expansion slated for the Usina Santa Elisa, alcohol car sales fell along with public support for Pro ⁄lcool in 1981. Public opinion had grown wary of the program and the alcohol -fueled car, given the publically debated troubles and the financial straights of the program documented above. Upon the entry of the World Bank, Luiz Lacerda 138 Ibid. 139 CENAL RelatŠrio 169/80; Processo CENAL n.122/80. signed by President of the IAA, Hugo Almeida on November 19th, 1980. J5.19 Box 4634, National Archives: Rio de Janeiro. 201 Biagi became a frequent voice in support of the potential influence of the new foreign financing, claiming that the new bidding process was a Òbenefit by stimulating the improvement of the nati onal industry. Ó140 Barzelay claims that his support was opportunistic as Zanini benefitted substantially from the World Bank financing. 141 This is probably true, but Lacerda Biagi Õs voice was influential, and his support was important to the program regaining public support. As confidence in the alcohol -fueled car dwindled in 1981, Maurilio Biagi Filho continued to place the usina at the forefront of expanded support for alcohol use. In 1981, all of the trucks used at the Usina Santa Elisa were alcohol -fueled trucks. 142 This was generally unheard of at the time, as only a handful of these trucks had been produced in the country prior to 1981 (10 in 1979 and 14 in 1980, respectively). In fact, in 1981, the car industry only produced 1,126 alcohol -fueled trucks, of which the Biagis purchased 300 to employ at the Usina Santa Elisa. As alcohol -driven agricultural equipment, particularly tractors, became available, the Usina Santa Elisa would be one of the first to use this equipment by 1983 as well.143 Biagi Filho con sidered the Usina Santa Elisa to be an important leader in the Pro ⁄lcool program, and promoting the new truck fleet was a sign of the usina Õs leadership in the industry. As Biagi Filho stated in an interview with me, Santa ElisaÕs inclusion as an early Pro ⁄lcool 140 ÒPara Belotti, descren“a no ⁄lcool ” injustific⁄vel,Ó Estado de S‰o Paulo (June 24th, 1981), 27. In fact, Zanini was a big winner under the new structure as it established prices well below CENALÕs matrix of prices. However, it created problems for the company in the 1980s, which started to fall behind on projects and lose clients. The company ran into major problems in 1984. Things turned dire as the World BankÕs US$250 million credit line tha t had bolstered the Pro⁄lcool project, dried up. Lacerda Biagi left Zanini in 1985, and Biagi Filho assumed the presidency. Hasse, Filhos do Fogo , 195Ð196 and 200. 141 Barzelay, Politicized Market , 195n70. 142 ÒAssim nasceu Santa Elisa,Ó A Revista Santa Elisa: Uma Historia de Trabalho e Desenvolvimento , (Ribeir ‰o Preto: MIC Editorial Ltda, 1996), 15. 143 Anfavea (Associa“‰o Nacional dos Fabricantes de Ve™culos Automotores), 2015 Annual Report (S‰o Paulo, 2015), 59; Maurilio Biagi Filho, ÒO ⁄lcool ” nosso,Ó Folh a de S‰o Paulo (May 9th, 1983); Pedro Zan, ÒA grande usina. Aqui se produz,Ó O Estado de S‰o Paulo (June 16th, 1985), 20. 202 project Òwas the beginning of the Usina Santa Elisa already as a leader by then but Santa Elisa was a leader not only in production but principally in intellectual leadership [É] in the conduct of the program. Ó144 As a leader first in the expansion of the program in the late 1970s, as discussed above, the Biagis led by example at the Usina Santa Elisa with alcohol -fueled car and truck fleets as well in the second phase. As the Usina Õs production capacity expanded with Pro ⁄lcool -financing, Biagi Filho also embraced the role as a leader in pushing consumer confidence in the program as well. In 1983, Biagi Filho would continue this campaign in a series of articles published in various newspapers. In his article, ÒO ⁄lcool ” nosso, Ó published in the nationally circulated newspaper, Folha de S‰o Paulo , Biagi asserted the importance of the program and the need for support from the Brazilian public. He stated, ÒIf much still needs to be done, all of us Brazilians must, here and now, support and incentivize Pro ⁄lcool. We ought to, indeed, defend our nationalist interests. The technology and labor are ours, we do not pay royalties [on the technology], on the contrary, we have an international market to import our technology .Ó145 For Biagi, the Usina Santa Elisa embodied these nationalist development efforts, and its growth through Pro ⁄lcool over the previous decade supported his assessment of the program Õs success. The Usina Santa Elisa would end its expansionary phase in 1984, as a recession already rampant in the rest of the country finally hit Ribeir ‰o Preto. 146 It completed the modernization of its milling equipment along with the incorporation of a neighboring mill in Sert ‰ozinho, the Usina Barbacena. Santa Elisa produced its largest yield of alcohol up to that date in 1984 and 1985, producing a respective 158,004,000 and 162,500,000 liters, respectively. The Usina Santa 144 Interview with Maurilio Biagi Filho by Jennifer Eaglin, May 21st, 2013 in Ribeir‰o Preto, SP. 145 ÒO ⁄lcool ” nosso,Ó A Folha de S‰o Paulo (May 9th, 1983). This article elicited a fiery response from Pro⁄lcool detractors, as will be addressed in the next chapter. 146 Hasse, Filhos de fogo , 199. 203 Elisa would financially support its counterpart, Zanini, in the following years as the company struggled on the edge of collapse with the end of Pro ⁄lcool. 147 In the course of a decade, beginning with the Biagis Õ self-financed distillery expansion in 1974 and through two Pro ⁄lcool -financed expansion projects, the Usina Santa Elisa had become one of the leading sugar and alcohol producing mills in the country. Pro ⁄lcool drove this growth, but Maurilio Biagi Filho, too, had shaped the programs Õ growth, defining a development path particular to the alcohol industry. Conclusion Thanks in part to sugar sector leaders like the Biagis, via both the Usina Santa Elisa and Zanini S/A, the National Alcohol Program successfully promoted the growth of alcohol production over the first decade of the program. The program Õs growth was a reflection of a government -led deve lopment model that successfully employed domestic technology and prioritized domestic producers in the process. This model drew criticism and was thoroughly debated in the public sphere, but the Biagi family and the Usina Santa Elisa thrived under this mod el. The program continued to grow despite the program Õs diminishing financial feasibility behind expanding alcohol -fuel car sales. In fact, sales peaked in 1986 at 699,183 units compared to 219,347 gasoline cars. Between 1983 and 1989, alcohol -fuel cars accounted for 90% of the 147 Hasse, Filhos de fogo , 92; see also, ÒAssim nasceu Santa Elisa,Ó A Revista Santa Elisa: Uma Historia de Trabalho e Desenvolvimento , (Ribeir ‰o Preto: MIC Editorial Ltda, 1996), 18, 200, and 238. 204 cars sold in Brazil. 148 While sugar producers like Biagi Filho ensured the program Õs economic value, in fact, the program Õs expansion grew increasingly problematic in the mid-1980s. Meeting the expanding fuel demand required a massive expansion in sugarcane production, and Ribeir ‰o Preto was central to this growth. Maintaining steady alcohol production in Ribeir ‰o Preto was critical to the program Õs ongoing success, especially after the struggles producers had getting Brazilian consume rs to commit to the alcohol -fueled car in the early 1980s, as discussed above. Thus, any threat to Ribeir ‰o PretoÕ s production would have national implications for alcohol production levels. As Pro ⁄lcool had a dramatic impact not only on business developme nt and sugarcane producers conversely had a major impact on the program, cane workers, too, would assert their voices on the program in the 1984 Guariba Strikes in Ribeir ‰o Preto. 148 Barzelay, Politicized Market , 31; Anfavea, 2015 Annual Report, 59; M⁄rcia Azanha Ferraz Dias de Moraes, ÒConsidera“łes sobre a indœstria do etanol do Brasil,Ó in Biocombust™veis: realidade e perspectivas , org. Minist”rio das Rela“łes Exteriores (Bras™lia: Minist”rio das Rela“łes Exte riores, 2007), 143. 205 Chapter 5: The Rise of the Brazilian California: Rural Labor Changes and Ribeir‰o Preto, 1950Ð1984 As the center of agro -industrial complexes of sugar planters and mills, people began to reference Ribeir‰o Preto as the ÒBrazilian CaliforniaÓ for its agriculture -driven wealth, but these economic changes accompanied dramatic social change. 1 The previous chapters have addressed the important political and economic changes that occurred around the emerging sugar and alcohol industry in the 1930s through the early 1980s. However, the social landscape of sugar -producing regions transformed along with the political and economic changes that accompanied the federal and private investments in the sugar sectorÕs development. This chapter explores the social ramifications of alcoholÕs growth under Pro⁄lcool on sugarcane workers in the region as a larger assessment of the development program. To engage these issues properly, one must first understand the trajectory of rural workersÕ legal standing in the country and their particular position in the region as it evolved in relation to the emerging agro -industrial model. S‰o Paulo Rural Labor Mobilization Significant changes to the Brazilian sugar industry Õs labor structure began in earnest in the 1950s after a relatively uniform labor structure had defined it over the previous centuries. The Brazilian sugarcane industry, first established in the 16th century under Portuguese coloniza tion, created and maintained a semi-feudal power structure that continued to dominate the Northeastern region of Brazil for the next three centuries. The colonization program built on agricultural export commodities laid the foundation for a Òland tenure system [that] concentrated 1 Welch, The Seed Was Planted , 350. 206 the colony Õs income in the small group of large landowners and the commercial community, and subjugated the rural populations to the hegemony of the landed elite.Ó2 In S‰o Paulo, the coffee industry Õs labor structure defined the growth of the sugar industry Õs structure in the 20th century. After the abolition of slavery in 1888, a family -based work system, known as the colonato, pervaded the southern coffee industry. 3 Coffee plantation owners contracted free immigrant families, or colonos, to work in the coffee fields until the contracted labor and all debts for the families Õ transport to Brazil were repaid. Thus, coffee producers were able to maintain their economic interests with little to no agrarian reform. This system remained in place until the 1950s, and the prosperity of the coffee boom allowed some colonato families to experience prodigious social mobility. The decline in the coffee industry began after the collapse of the coffee market in 1930 and the slow transition to sugarcane began. By the 1950s, the pressure to modernize the sugar industry with extensive mechaniz ation and agricultural technology for a growing domestic and international market pushed dramatic changes in the labor system. With this mechanization process, the previous colonato system collapsed. Modern agricultural complexes began to emerge in which contract short -term employment replaced the longer -term colonato land -labor structure that had preceded them. 4 Thus, the shift away from coffee production to sugarcane in the Center south coincided with and contributed to decreased wages, diminished investm ent in community development, and undercut permanent labor in favor of temporary seasonal workers. 5 2 Eisenberg, The Sugar Industry in Pernambuco , 7. 3 Welch, A semente foi plantada , 51. Welch notes that although the system had been used in tandem with slave labor since 1860, frequent worker protests left coffee producers hesitant and it did not transition to the dominant system until 1890. 4 Welch, The Seed Was Planted , 8Ð9. 5 Welch, ÒMobilizing Rural Workers,Ó 172. 207 This fundamental shift fomented the growth of rural labor unions in the 1940s and 1950s. It was only in the 1941 that Vargas began the process of forming a rural labor law, which would not take form until 1945 with the formation of the Consolidated Labor Laws.6 The movement began in earnest thereafter when rural workers received the right to unionize, through which rural workers would Òopen their path in the public domain, demanding a voice and a vote, in the sociopolitical and economic life of the country. Ó7 The coffee and sugarcane workers used these newly legalized unions to contest severe working conditions, low wages, and came to incorporate demands for federally supported legal land reform, and wage increases. 8 Leaders like the agricultural worker, Irineu Lu™s de Moraes, who led the formation of the Dumont Peasant Leagues (Ligas Camponesas de Dumont ), rural labor mobilized to successfully influence elections in the region and lead protests for agrarian reform and labor rights. 9 As anthropologist Verena Stolcke points out, workers identified the pre-1964 period as a Òtime of plenty Ó when Òall the poor sang. Ó10 While this seems odd given the extensive politi cal and economic struggles of the era, it reiterates workersÕ reflections on the time as one in which they were able to actively proetest and hope for substantive change. These opportunities seemed less plausible thereafter under the new military regime. Alongside the growing rural labor movement, a separate but effective industrial labor movement emerged around the urban centers. Labor mobilization had pervaded the industrial growth of the city of S‰o Paulo, beginning in the textile and metallurgy industr ies in the early 6 Welch, A semente foi plantada , 108Ð112. 7 Welch, A semente foi plantada , 40. 8 Welch, ÒMobilizing Rural Workers,Ó 172Ð179. 9 Welch, A semente foi plantada , 151. 10 Verena Stolcke, Cafeicultura: homens, mulheres e capital (1850-1980) (S‰o Paulo: Editora Brasiliense, 1986), 308 and 327 as cited in Welch, A semente foi plantada , 41. 208 20th century. 11 Industrial workers won important labor rights with the establishment of the CLT as well, including a required minimum wage. 12 Indeed, in the early 1950s, with the return of the populist Getœlio Vargas to the presidency, some of the Ministry of Labor Õs controls loosened and industrial workers to further extended workers Õ basic labor rights through large -scale minimum wage deliberations. 13 Political tensions between the unions, political leaders and the elites continued to grow throughout the early 1960s in both the city and the countryside. Following the unexpected resignation of President Quadros in 1961, the contentious former Minister of Labor of President Vargas, Goulart, came to power. Goulart Õs ties to worker movements accelerated military fears of a communist revolution in the country. Conservative forces, including the military, most feared the threat of Goulart Õs support of land reform, workers Õ minimum wage increases, and more broadly the growing economic crisis. These conditions would lead to the military coup in March 1964, after which the military and police quickly and violently repressed leftist leaders from union leaders to political Òsubve rsives.Ó 14 Beginning in the 1960s, the new sugar export opportunities drove a growing focus on agro -industrialization. After the coup, the new military government more explicitly pursued an 11 See Joel Wolfe, Working Women, Working Men: Sao Paulo and the Rise of BrazilÕs Industrial Working Class, 1900Ð1955 (Du rham: Duke University, 1993), 2Ð5; For more on industrial labor mobilization in S‰o Paulo, see classic studies such as: John French, The Brazilian WorkersÕ ABC: Class Conflict and Alliances in Modern S‰o Paulo (The University of North Carolina Press, 1992); Barbara Weinstein, For Social Peace in Brazil: Industrialists and the Remaking of the Working Class in S‰o Paulo, 1920Ð1964 (Chapel Hill: University of North Carolina Press, 1996). 12 In fact, anthropologist James Holston argues that these laws were one of several toward redefining Brazilian citizenship rights to include larger portions of the population throughout the 20th century. James Holston, Insurgent Citizenship: Disjunctions of Democracy and Modernity in Brazil (Princeton: Princeton University Press, 2009), chapter 5. 13 Wolfe, Working Women, Working Men , 171-185. 14 Thomas Skidmore, Brazil: Five Centuries of Change (Oxford: Oxfo rd University Press, 2010), 150Ð151. 209 agro -industrial development model focused on maintaining and proliferating landowners and large -scale producersÕ control over low -cost rural workers in support of economic growth. 15 Government officials controlled the ÒproblematicÓ social unrest that preceded the coup with both formal legal intervention and force, solidi fying landed elites support and executing the militaryÕs commitment to security as a means to development. 16 These major changes in the Brazilian national development agenda particularly influenced Ribeir‰o PretoÕs socio -economic profile in the 1960s throug h the 1980s as a major sugar -alcohol hub in the country. Labor Reforms and the Military Dictatorship: Making the Modern Sugar Worker Two major legal reforms of the 1960s combined with the military governmentÕs own economic development polices to signific antly diminish rural laborers political and economic position in this period. First, President Goulart passed the Rural Worker Statute (Estatuto de Trabalhador Rural - ETR) before his ouster in 1964. The ETR extended urban workersÕ labor rights to rural wor kers. Full -time rural workers gained the right to worker registration cards that confirmed employment and required employers provide certain benefits like health care, social security, and legal assistance, holidays, a paid weekly rest day, unionization, job stability after 10 years of work, and a minimum salary. 17 15 This is a simplified explanation of a far more complicated conflict. See Welch, The Seed Was Planted for a more in depth discussion of the issues at play in the 1964 coup and their impact on rural labor movements in the S‰o Paulo. 16 Stepan discusses the influence of the Superior War College on the pervasive influence of this ideology on military leaders in this era. See Stepan, The Military in Politics , chapter 8; See also, chapter 3 of this dissertation, 99. 17 Silva, Errantes , 63-64; Luiz Antonio da Silva, ÒSindicalismo, assalariados rurais e a luta pela cidadania, Ó in Moderniza “‰o e impactos sociais: o caso da agroind œstria sucro -alcooleira na regi‰o de Ribeir‰ o Preto (SP) , Rosemeire Scopinho e Leandro Valarelli, org, (Rio de Janeiro: FASE, 1995): 87. For more on urban labor reforms that first consolidated these rights under 210 Seemingly beneficial, the new extension of these regulations would force employers to pay more to workers than they had in the earlier structure, cutting into their profits. They quickly found ways to exploit loopholes to their benefit with the use of salaried temporary workers excluded from the ETR requirements. Full -time rural workers could technically use labor courts to contest labor abuses, but these important legal reforms created an entire labor force that existed ÒoutsideÓ the stateÕs legal protection. 18 The military government would go to further lengths to undercut laborersÕ rights and support usineirosÕ use of employment loopholes to their benefit. The M”dici administration issued Decre e n. 5889 in 1973, essentially revoking the ETR gains by legalizing the differentiation between temporary agricultural workers and permanent workers. The Geisel administration then issued Decree n. 6.019 in 1978 further minimizing salaried laborers rights by qualifying temporary workers as those that did not remain employed for more than 90 days, and, if contracted by an intermediary, that worker had no right to rural laborer benefits. The ETR and the subsequent amendments in 1973 and 1978 provided a legal exception for usineiros to not employ workers full -time but rather to focus on contract seasonal workers that did not meet the requirements for full -time benefits that employers did not want to pay. 19 The second law, the Land Statue (Estatuto da Terra- ET) was a product of the military dictatorship and its evolving economic development policy. First military President Marshal Humberto Castelo Branco and his Minister of Planning Roberto de Oliveira Campos used President Getœlio Vargas in the 1940s, see Fischer , A Poverty of Rights and Holston , Insurgent Citizenship . 18 Full time workers did try to use formal legal means to contest abuses by usineiros in the Labor Court of Ribeir ‰o Preto in the 1980s. These files are stored at the Arquivo Pœblico e HistŠrico de Ribeir ‰o Preto. Clifford Welch analyzes these cases between 1957 and 1964 in his extensive work on rural labor mobilization in Ribeir ‰o Preto prior to the dictatorship. Welch, A semente foi plantada , 279Ð289. 19 da Silva, ÒSindicalismo , assalariados rurais e a luta pela cidadania, Ó 89; Silva, Errantes , 115. 211 agricultural expansion as an orthodox approach to stabilizing the troubled economy in the first years after the coup, laying the foundation for agricultural modernization to become Òa key to economic developmentÓ under the dictatorship. 20 Campos structured the ET in the first months after the coup in resp onse to earlier demands for agrarian reforms. The law pushed rural development by Òmodernizing the latifundia and consolidating smaller land holdings into capitalist enterprisesÓ using land taxes, zoning, and a rural land registry. 21 The law actually reform ed very little agrarian landholding in practice. Internal military conflicts between hard -liners and moderates hindered its application, but the law solidified the militaryÕs support of land consolidation rather than diversification in order to expand production. The ET was the first step in the military governmentÕs economic development plan, which took clearer shape under the tutelage of the next Finance Minister Antonio Delfim Neto, during General Artur da Costa e SilvaÕs presidency in 1967. Neto waived taxes on farm products and included significant tax breaks for industrialized products like fertilizer, tractors, and processing equipment to incentivize the type of mechanized, capitalist development that the government wanted. Landowners consolidated their power under the ET. The legislation legalized the displacement of small farmers in favor of larger landholdings. This modernization 20 Neto, Estado e agricultura no Brasil , 53; Houtzager, ÒState and Unions,Ó 114. The famous Brazilian economist Celso Furtado contested the agricultural policies, claiming that Castello Branco and Campos subjected the country to a Òpastoralization Ó plan. This economic modernization program driven by loose credit really took shape under the following Minister of Finance Delfim Netto in 1967. Skidmore, The Politics of Military Rule , 68Ð70, 90Ð92. 21 Historian Peter Houtzager notes the important role paulista business groups had in the development of the law and the disproportionate ly favorable position they had in its structure. Houtzager, ÒState and Unions,Ó 112. See also, Roberto Campos, ÒAgricultura, reforma agr ⁄ria e ideologia, Ó Folha de S‰o Paulo (November 12, 1995). Accessed August 29, 2014: http://www1.folha.uol.com.br/fsp/19 95/11/12/brasil/4.html . 212 focus, beginning with the ET in 1964, restructured labor relations while the dictatorship effectively silenced agrarian debates with extreme suppression of rural union leaders. 22 The ET and ETR were crucial to agro -industrial growth in the 1970s and 1980s. The nominal expansion of rural labor rights and agrarian reform driven by the ET and ETR paved the path for the dramatic growth of temporary contract workers in rural agricultural production like sugarcane, oranges, cotton, and peanuts. These regulations ensured the low labor costs necessary that allowed for relatively cheap yet substantial industrial expansion in the sugar industry throughout Pro⁄lcool. 23 At the same time that the government employed these legal transformations, a tacit reconstruction of Ribeir‰o Preto followed these new agro -industrial demands. Ribeir‰o Preto in the New Sugar Economy The expansion of sugar cane production dramatically changed the Ribeir‰o Preto countryside as the national agenda focused more on agricultural exports to drive economic growth under the military dictatorship. The legal justification for temporary workers contributed to an expand ing migration to the region to fill the sectorÕs rural labor demand. Migration heavily favored Ribeir‰o Preto in the 1960s. While the military government instituted federal legal reforms, Northeastern migration accelerated to provide a ready workforce to fill the temporary labor demand that developed in conjunction with expanding agricultural and 22 da Silva, ÒSindicalismo, assalariados rurais e a luta pela cidadania, Ó 87. See Pereira , The End of Peasantry for effects on Pernambucan rural labor unions and Welch, The Seed Was Planted and A semente foi plantada for more on S‰o Paulo impact. For an alternative interpretation of state and union control, see Houtzager, ÒState and Unions .Ó 23 Paulista sugarcane businessmen were able to influence policy and draw federal funding disproportionately to the state of S‰o Paulo, and specifically Ribeir ‰o Preto, even before Proalcool. The S‰o Paulo Sugarcane Cooperative, Copersucar, was an important part of this political maneuvering. See Hartzmark, ÒBusinesses, Associations, and Regions. Ó 213 industrial production in S‰o Paulo. First, landowners legal right to greater land consolidation legitimized an accelerating process of land expropriation that had driven Northeastern rural labor strikes prior to the coup in the 1950s and 1960s. Additionally, increased droughts in the Northeast and the promise of higher wages in the Southeast enticed rural workers to migrate south, particularly to the booming state of S‰o Paulo. In the sugar industry, the agro -industrial development model focused on technical improvements and mechanization had an adverse effect on workers. Historian Clifford Welch notes, ÒBetween 1950 and 1970, the number of permanent rural workers in the Upper Mogiana [the greater Ribeirao Preto region] diminished by 65% while the number of temporary workers, commuting daily from the city to the countryside, increased by 15%. The demand for manual labor was reduced with the concentration of land, more developed agricultural techniques and with the use of machinery. Ó24 For example, Maurilio Biagi Õs use of the trucks to transport sugarcane at the Usina Santa Elisa drew attention to the Usina Santa Elisa as one o the most advanced usinas in the country but also set a the path toward more mechanized production and agricultural practices in the region. Thus, the modernization efforts of the era and the increased focus on export market would relied heavily not on permanent rural workers but instead on a new source of labor, temporary rural workers, to undergird the industry Õs growth. The connection between the expansion of sugar production and the growth of temporary rural workers is clear. In the sub -region of Sert ‰ozinho within Ribeir ‰o Preto, where the Usina Santa Elisa is located, less than 40% of rural laborers were considered pv permanent laborers by 1960.25 This trend in Sert ‰ozinho, and more broadly the region, preceded the new legislation that 24 S‰o Paulo Secretaria da Economia e Planejam ento (Seplan) Trabalho volante na agricultura paulista (Estudos e pesquisas) n. 25, 1978, p. 220Ð225 as cited in Welch, A semente foi plantada , 286n81. 25 Welch, A semente foi plantada , 298. 214 facilitated greater dependence on temporary labor in the 1963 and 1964. This practice accelerated in the 1960s and early 1970s behind the IAA Õs modernization efforts before the creation of Proalcool in 1975. Labor recruiters facilitated the migrations of some rural workers. Landowners exploited the legal para meters of the ETR by employing empreiteiros , or labor contractors, to recruit and employ contract rural laborers rather than directly employing full time laborers. 26 These contractors used recruitment programs to draw workers to meet employment demands with loans to pay for transport, coercion, and exploitative propaganda. ContractorsÕ recruitment practices were exploitative. They often trapped workers with exorbitant charges on transportation from their native regions to the town of the employer, housing, and work materials. These purchases exceeded their expected pay for the season. Thus, many workers were forced to stay in their migrant cities rather than returning to their native regions in the interim off -season. 27 The creation of the National Alcohol Progam drove job creation in the sugarcane industry due to Pro ⁄lcool -driven sugarcane expansion in Ribeir ‰o Preto in the 1970s and 1980s. In fact, the expansion of jobs in the interior exceeded that of the Greater S‰o Paulo region, in which the growing temporary rural laborers were an important part. 28 This drew high numbers of migrants to the region, which included direct migration from the Northeast and Minas Gerais as well as 26 For a detailed history of the colonato , or the rural labor syst em that dominated the region before the ETR, and a more detailed account of the rise of the labor contractor under the new rural labor system, see Stolcke, Coffee Planters, Workers, and Wives , particularly chapter 4, ÒNew Forms of Labor Exploitation and New Conflicts. Ó 27 Rosemeire Aparecida Scopinho, ÒModerniza “‰o e superexplora “‰o na agroindu œstria sucroalcooleira, Ó Moderniza “‰o e impactos sociais: o caso da agroind œstria sucro -alcooleira na regi ‰o de Ribeir ‰o Preto (SP) , Rosemeire Scopinho e Leandro Valarelli, org, (Rio de Janeiro: FASE, 1995), 76. 28 Maurilio Biagi Filho states that from 1970 to 1986, jobs in the interior of Sao Paulo increased by 121% compared to 54% in the metropolitan region of S‰o Paulo. Maurilio Biagi Filho, ÒA industrializa“‰o do interiorÓ Isto … Senhor (November 8th, 1988), 34. 215 indirect migration through the city of S‰o Paulo into the interior. Migration fro m the city increased as Pro ⁄lcool expanded in the early 1980s and the industrial economy contracted in an increasingly stagnant industrial market. Thus, a large supply of cheap labor became available, and planters took advantage. Legalized with the new ETR legislation discussed above, temporary workers lowered their costs. Minas Gerais migrants were the most abundant in Ribeir‰o Preto. 29 Sociologist Maria Aparecida de Moraes SilvaÕs study of temporary rural workers, or bŠias -frias , and their migration to the Ribeir‰o Preto region from the Vale do Jequitinhonha in Minas Gerais reveals important and surprising statistics about migration to the region in the Pro⁄lcool era. Ribeir‰o Preto became a major permanent and seasonal migration destination for rural work ers in the 1970s and 1980s. According to a 1980 study, between 1970 and 1980 alone, 120,030 people permanently migrated to the region. Of those workers, Minas Gerais and Paran⁄ furnished the largest number of inter -state migrants, although a significant number came from the interior of Bahia and a smaller number from other Northeastern states as well. In fact, the largest number of migrant workers came from other regions within the state of S‰o Paulo, including the Greater Metropolitan region of S‰o Paulo. 30 In fact, between 1980 and 1991, the Ribeir‰o Preto region had a higher rate of population growth than the entire state of S‰o Paulo and the entire country. 31 29 S‰o Paulo Secretaria de Economia e Planejamento Coordenaria de A“‰o Regional, Plano Regional de Ribeir‰o Preto, 7. 30 Silva, Errantes , 68Ð72; A.C.C.R. Motta and M.C. ÒQuinteiro, Repercuss łes do Pro ⁄lcool no comportamento migrat Šrio do Estado de S‰o Paulo: o caso de Ribeir ‰o Preto, Ó Informe Demogr ⁄fico (S‰o Paulo) (Funda “‰o SEADE, n. 10, 1983) cited in Silva, Errantes , 69. 31 This applies to the macroregion of Ribeir ‰o Preto, which is larger than the admini strative region of Ribeir ‰o Preto. However, the administrative region of Ribeir ‰o Preto had the second highest rate of population growth in the same period behind the macroregion. Rosemeire Aparecida Scopinho, ÒA regi ‰o de Ribeir ‰o Preto e a agroind œstria sucro -alcooleira, Ó Moderniza “‰o e impactos sociais: o caso da agroind œstria sucro -alcooleira na regi ‰o de 216 By 1990, around 40,000-50,000 workers in the region were seasonal, returning to their native regio ns at the end of each harvest. Over half of these migrant laborers came from the neighboring Minas Gerais, less than 6% came from Paran⁄, and less than 1% came from the other states, including the Northeast. 32 Thus, the particularly concentrated Pro⁄lcool -specific modernization of Ribeir‰o Preto region incentivized a significant increase in both permanent and seasonal migration in the 1970s and 1980s. 33 While Ribeir‰o Preto led an increasingly mechanized sugar production model, demand for rural laborers remained high. Mechanization displaced permanent workers along with the additional impact of rural labor legislation like the ET and ETR. Clifford Welch notes, Òmachines had become a normal part of life in the agro-industrial complex of paulsita sugar production.Ó The increasing use of machines in Brazilian agriculture also pushed conflict between temporary workers and mill owners. 34 Sugarcane cutting remained a manual labor -intensive job in the 1970s and early 1980s, but the pressures of mechanization would further usurp the stability of temporary workersÕ positions as well. Ribeir ‰o Preto (SP) , Rosemeire Scopinho e Leandro Valarelli, ed. , (Rio de Janeiro: FASE, 1995), 40. 32 52.9% were from Minas Gerais, 5.9% from Paran ⁄, and less than 1% came from Pernambuco, Bahia, Espirito Santo, Goi ⁄s, Rio de Janeiro and Par⁄. Silva, Errantes , 71. 33 According to the IEA (Instituto de Economia Agronomica), in the Ribeir ‰o Preto region, land committed to cane production more than tripled under the dictatorship Õs modernization efforts thanks to Proalcool, increased from 182,500 hectares in 1968 to 624,700 hectares in 1989. As cited in Silva, Errantes , 68. 34 Scopinho, ÒA regi‰o de Ribeir‰o Preto e a agroindœstria sucroalcooleira,Ó 26; Welch, A semente foi plantada, 436Ð437. In fact, Clifford Welch notes that the Guariba Strikes in 1984 would only accelerate mechanization as employers sought to avoid the social costs of labor conflict in sugar production. 217 The Declining Brazilian Economy, 1980-1984 No account of the Brazil in the early 1980s would be complete without a brief account of the collapsing economy that surrounded the alcohol industry. This section introduces the traditional analysis of the economyÕs decline and Ribeir‰o PretoÕs general immunity thanks in large part to the growth of the sugar sector around the state-driven alcohol industry. In the midst of these major changes, Ribeira‰o PretoÕs image as an island of success, commonly known as the Brazilian California, emerged. The military dictatorship began in response to the national economic crisis of the early 1960s. They used this economic distress, particularly rampant inflation, as an indicator of the political mismanagement of the democratic -elected Goulart. Thus, it is not without a touch of irony that the same inflation problem would derail the military governmentÕs legitima cy in the early 1980s. While inflation had been an alarming 90% in 1964, after which the military intervened, in 1980, inflation surged to 110%. By 1984, the national inflation had reached 224%.35 The extensive demands on government financing employed by the multiple state-led programs developed in the 1970s required extensive foreign debt to support its economic growth model, thus beginning a period of debt -led development. The public sector held much of the growing foreign debt. In 1979, when the second oil shocks hit, the Brazilian economy suffered again, but this time, it did not have the fiscally sound economic foundation of the ÒEconomic MiracleÓ -era to fall back on. Instead, foreign debt was already Òtaking up two-thrids of export earnings,Ó while 35 See Table 16 in the Appendix of this dissertation . See also, Skidmore, Brazil: Five Centuries of Change, 169Ð170. 218 inglation continued to rise and GDP growth rates threatened to stagnate again. 36 The new president, General Figueiredo, had to deal with these issues will trying to maintain export incentives that had driven growth, particularly in the sugar industry, during the early 1970s. 37 By December 1979, government officials turned to more orthodox and harsh economic solutions. The new economic package called for a Òcurrency devaluation, elimination fo export subsidies and various tax incentives, increases in the price of public services, temporary taxes on windfall gains in agricultural exports (later abolished),Ó amongst others. 38 These were still unsuccessful as inflation continued to rise. President Figueiredo and his economic team attempted to impose even steeper macroeconomic policy reforms in the second half of 1980. They tightened up the monetary policy and notably curtailed investments in state programs, including Pro⁄lcool. 39 However, the policies ultimately affected durable and capital goods the most, and the coutnryÕs external debt continued to rise. By 1982, debt service (amortization plus interest) accounted for 83% of export earnings. By the end of 1982, the disastrous economic conditions forced the Brazilian government to seek aid from the International Mone tary Fund (IMF). Although the Brazilian government continued to contest the terms of the agreement, the trade balance began to improve in 1983.40 Workers were directly affected by these new economic realities despite the industryÕs growth. First and foremos t, the galloping inflation eroded their real wages even if nominal prices increased. At the same time, the recessionary economic conditions of the early 1980s pushed 36 Baer, The Brazilian Economy 6th ed., 83. 37 Ibid. 38 Baer, The Brazilian Economy 6th ed., 84. 39 Baer, The Brazilian Economy 6th ed., 86. 40 Ibid, 86Ð88. 219 workers out of other industries. Thus, despite the exploitative realities of these jobs, workers still flocked to the region in response to the midst of BrazilÕs economic struggles in the 1980s. Reapproaching Rural LaborÕs Importance to Development Given this basic synopsis, rural workers, as an extension of an important element of the dictat orshipsÕ economic policy, were an important part of the dictatorshipÕs legitimacy from its inception. Rural labor mobilization drove the militaryÕs action in 1964 after active strikes in both the Northeast and the Southeast throughout the 1960s although the Peasant Leagues of the Northeast have garnered more attention. 41 The militaryÕs repression was swiftest against these workers and their leaders. Connecting agrarian reform to wage demands and evolving ideas of workersÕ rights, rural worker protests were key to the militaryÕs extreme action. Controlling workers, but particularly rural workers, was a fundamental part of the militaryÕs defense of the socio -economic status quo. The military government silently dismantled these rural labor movements with the application of important legal reforms, like the ET and the ETR, to enact its own modernization project in the 1960s and 1970s, of which Pro⁄lcool was the largest and most influential in the Ribeir‰o Preto region. Rural workers continued to migrate to the region in the hopes of finding better pay and decent working conditions than those they left behind, often to their disappointment. The very make -up of the region transformed around the growing sugar agroindustry. Where fields of trees had once covered the region deforestation accelerated to support sugarfield 41 For a comparison of the 1961 Guariba strikes and the 1984 Guariba strikes, see Welch, A semente foi plantada , 419Ð437. Also, Clifford Welch and Sebasti ‰o Geraldo, Lutas camponesas no interior paulista: memorias de Irineu Luis de Moraes (S‰o Paulo: Paz e Terra, 1992). Verena Stolcke points out that S‰o Paulo, Rio Grande do Sul, and Paran ⁄ witnessed extensive rural mobilization prior to the dictatorship in her work on coffee and labor. Stolcke, Coffee Planters, Workers, and Wives . 220 expansion. In fact, sugarcane expansion had a damning impact on the decimation of the remnants of the Atlantic Forest in this era. Warren Dean notes that, ÒIn the Ribeir‰o Preto district of S‰o Paulo, sugarcane was responsible for almost half the loss of primary forest between 1962 and 1984 and was even more damaging to savanna formations, destroying 457 square kilometers of it.Ó 42 Today, one sees unending miles of sugarfields alongside the highway appro aching Ribeir‰o Preto. This transformation was dramatic and relatively quick. Workers that came to the region in this period to work the cane fields would be most susceptible to these transformative effects. Ribeir‰o PretoÕs economy, agricultural landscape, and its population were intricately connected to sugar production by the 1980s. Thus, the intensification of alcohol production under Pro⁄lcool would have the most poignant impact on workersÕ lives. However , these workers found a means to influence national debate about the program in 1984 thanks to the regionÕs critical importance to the programÕs success. 42 Dean, With Broadax and Firebrand , 294. See chapter 3 of this dissertation, 95n3. 221 Chapter 6: Changing the Tide: Pro⁄lcool, Caneworkers, and the Guariba Strikes of 1984 ÒThe reasons [for the Guariba strikes] are so clear, so known, that this explosion is only surprising for not having happened earlier.Ó Historian Jos” Murilo de Carvalho, Folha de S‰o Paulo May 16th, 1984 By the beginning of 1984, Brazilian sugarcane production had more than quadrupled over the previous decade under the national alcohol program, Pro⁄lcool. These numbers were even more drastic in Ribeir‰o Preto, a region that produced over a third of national alcohol production and a fourth of national sug ar production, respectively. 1 This study has contested that alcohol production followed a development trajectory different from the traditional Brazilian development models of the era, thanks to intense government intervention and a decidedly diminished foreign presence in the industry. Pro⁄lcool ensured this unique process with the development of the alcohol -fueled car and sugar producersÕ massive expansion of sugarcane production to supply the program -created demand. Yet, sugarcane workers are largely left out of this development discussion despite their critical importance to the regionÕs intense sugarcane expansion under Pro⁄lcool in the 1970s and 1980s. Temporary workers provided the labor that accompanied the massive expansion of the sugar industry in this period. 2 However, workersÕ absence from national discourse on Pro⁄lcool briefly reversed at the beginning of the S‰o Paulo harvest in May 1984 in the town of Guariba, S‰o Paulo (see Figure 6 below). When over 5,000 temporary salaried sugarcane worker s, known as bŠias -frias , went on strike to contest extended workdays, poor work conditions, underpay, and 1 Maurilio Biagi Filho, ÒO ⁄lcool ” nosso,Ó Folha de S‰o Paulo (May 9th, 1983). Ernesto Paglia, Rede Globo (June 1984) in ÒBoias -frias e o Acordo de Guariba ⁄pos a greve de 1984,Ó (July 24th, 2014), YouTube, https://www.youtube.com/watch?v=9ZiZbF6WYUk . Accessed May 1st, 2015. 2 For more detail on this process, see chapter 5. 222 poor transportation services among other complaints, these workers finally gained national attention. 3 Figure 6: The Region of Ribeir‰o Preto and its Satellite Cities 4 Map: Celso Donizetti Talamoni, Eliana Mastroianni Dieguez, and Teresa Cabral Jahnel. ÒRegi‰o administrativa de Ribeir‰o Preto.Ó S‰o Paulo, SP: Instituto Geogr⁄fico e Cartogr⁄fico, 2003. http://www.Ribeir‰oeregiao.com.br/mapas.asp . I argue that the Guariba strikes introduced the realities of sugarcane workers labor conditions under the national program into already brewing critiques of the social impact of the program in the public eye. Sociologist Maria Concei“‰o DÕIncao studied tempo rary workersÕ 3 The term bŠias -frias means cold -sandwiches in referen ce to the cold lunches that fieldworkers ate in the fields during their long workdays. The term ha s a generally negative connotation. Ubaldo Silveira, Igreja e conflito agr⁄rio: a comiss‰o pastoral da terra na regi‰o de Ribeir‰o Preto (Franca: Unesp, 1998), 14. ÒPro⁄lcool, quem sai ganhando,Ó Cadernos de Estudos, no. 11, published October 1984. Brazilian Popular Groups: agrarian reform Collection, UNICAMP - AEL. 4 Located about 50 kilometers southeast of Sert‰ozinho and a little under 60 kilometers from the central city of Ribeir‰o Preto, Guariba remained far more rural than the more dominant cities of Ribeir‰o Preto, Sert‰ozinho, and Jaboticabal, The usinas S‰o Martinho and Bonfim encircle the city, both benefactors of the state-led program. 223 lives in the 1970s and 1980s in the middle of the strikes outburst. More recently Cliff Welch and Maria Aparecida de Moraes Silva have connected temporary sugarcane workersÕ strikes in the Ribeir‰o Preto region to larger rural labor mobilizat ion movements in the regionÕs history. Their work illuminates the connection that these workers had to the movement and continued mobilization efforts of these workers with the reconstruction of the sugar and alcohol industry after the strikes. 5 This work contributes to these important rural labor histories by broadening the analysis of the Guariba strikes influence on the discourse around Pro⁄lcool. The strikes questioned the key tenets of the militaryÕs development agenda employed through Pro⁄lcool. Thei r actions assert their place in the programÕs implementation, be they disjointed and refracted through the national lens. In the midst of shifting public opinion about the program, the Guariba strikes contributed to a tipping point. The military dictatorsh ip had held its political legitimacy through economic success since the Òeconomic miracleÓ in 1968-1970. As the economic crisis of the 1980s fostered increased national discord, Pro⁄lcool came under increased fire about not only its economic impact but also its social impact. The previous chapter highlighted the extensive growth in alcohol production thanks to Pro⁄lcool and the influence of private businessmen, like Maurilio Biagi Filho, on alcoholÕs expansion. However, the events in Guariba illuminate the other side of Pro⁄lcool: its impact on everyday workers. As such, the Guariba strikes are an important addition to a study of sugarcane, alcohol, development, and Ribeir‰o Preto because it fills out the spectrum of participants, though deeply marginalized, that were able to influence the final word on the program at the end of its expansionary phase. 5 Maria Concei“‰o DÕIncao e Mello, O bŠia -fria: acumula “‰o e mis”ria (PetrŠ polis [Brazil]: Editora Vozes, 1975); Silva, Errantes ; Welch, A semente foi plantada . 224 Pro⁄lcool by 1984: Growing Criticism, 1982-1984 By May 1984, Pro⁄lcool had approved 489 sugarcane distillery projects, which accounted for over 10 billion liters of alcohol per harvest year. Having increased from 1.2 billion liters in 1975, the southern and southeastern region accounted for 65% of Pro⁄lcoolÕs increased production. 6 To successfully lead such an expansion, Pro⁄lcool had to have a dramatic impa ct not only on business development, but also the economic and agricultural composition of the region. Nationally, the government authorized the subsidized expansion of sugarcane production capacity to meet Pro⁄lcool -driven demand. In 1972, Brazil cultivat ed 1,541,033 hectares (over 28.5 million acres) of land with sugarcane. This included 619,743 hectares of land in the state of S‰o Paulo alone. By 1983, this number had more than doubled nationally and nearly tripled in the state of S‰o Paulo (See Table 9).7 In fact, sugarcane production expanded so quickly that a Pastoral Land Commission pamphlet from Mato Grosso claimed that the program had turned Brazil into Òan ocean of sugarcane.Ó 8 If Brazil was an ocean of sugar, Ribeir‰o Preto was at its center. Suga rcaneÕs expansion was particularly acute in the region. Between the 1974/75 harvest and the 1980/81 harvest, cane 6 Pamplona, Pro⁄lcool , 22-23. Overall Pro⁄ lcool had approved 499 projects of which ten were from different sources (manioc, babassu nut, and sweet sorghum). Overall, Pro⁄ lcool accounted for 10.2 billion liters of alcohol per harvest by this period. These regions represented 85% of national gasolin e consumption, thus targeting its prime consumption regions. 7 Barzelay, The Politicized Market , 31. 8 Associa“‰o de solidariedade as comunidades carentes de MT (Mato Grosso), Comiss‰o Pastoral da Terra/regional de MT, and Centro de documenta“‰o terra e indio, ÒPro -⁄lcool: Mar de cana, mar de mis”ria,Ó (Cuiab⁄ -MT, 1984): 10Ð11. Brazilian Popular Groups: Agrarian Reform Collection. 225 cultivation expanded in the region by 63%.9 Extensive deforestation and the diminished variety of crops in favor of a single -crop economy drew increasing attention from critics. 10 1972 1977 1980 1983 Brazil 1,541,033 ha 2,176,218 ha 2,675,646 ha 3,720,300 ha S‰o Paulo 619,743 ha 927,500 ha 1,217,900 ha 1,836,830 ha Table 9: Areas Cultivated for Sugar Production under Pro⁄lcool 11 Source: IAA as cited in Pamplona , Pro⁄lcool , 33 Table XVII. In the two years leading up to the strikes, criticism of the program mounted. When the powerful Minister of Planning Delfim Neto questioned the inflationary influence of the program and froze national financing of the program in 1982, public opinion quickly turned on the national program. Although alcohol -fueled car sales rebounded following extensive marketing by sugar and alcohol producers and additional government incentives, critics remaine d vocal. 12 Some critics, like Professor Fernando Homem de Melo, spoke out often against Pro⁄lcool. In response to Biagi FilhoÕs promotion of Pro⁄lcool, he notes the inefficient nature of the alcohol industry. Homem de Melo argued that the program was reall y the product of sugarcane lobbyists that Òpressur[ed] a political and economically authoritarian government,Ó which supported a Òcoalition of planters, mill owners, equipment producers, the automobile 9 Scopinho, ÒA regi‰o de Ribeir‰o Preto e a agroindœstria sucroalcooleira,Ó 31. 10 Fernando Homem de Melo was one of the most outspoken critics of Proalcool and its social and environmental impact on the population. For a few examples, see Fernando Homem de Melo, ÒPor que o ⁄lcool n‰o ” a melohor alternativa?Ó Revista Exame (S‰o Paulo), v. 256 (July 28th, 1982), 102; ÒCrise agr™c ola,Ó Folha de S‰o Paulo (February 13th, 1983), 18; ÒO ⁄lcool ” nosso, mas quem paga o desperd™cio?Ó Folha de S‰o Paulo (May 15th, 1983), 40; ÒO problema ” mais s”rio do que se imaginaÓ O Estado de S‰o Paulo - Suplemento Agr™cola , S‰o Paulo, (October 26th, 1983), 3. 11 Hectare (ha)= 2.471 acres. 12 See Chapter 3 of this dissertat ion, 190Ð192. 226 industry, and middle and high income classes.Ó 13 A rath er acute and astute review of the program, Homem de Melo also highlighted the low production efficiency of the Brazilian sugar industry compared to production in Hawaii, Florida, Australia, and other more efficient regions internationally. Instead, Homem de Melo pointed to more efficient alternative fuel options like coal, shale oil, hydro-electricity as better alternative energy options. 14 In fact, some of the interest groups that had benefitted most from the program began to question its long -term durabili ty. For example, in the midst of the programÕs economic struggles in June 1983, the new ANFAVEA (National Automobile Producers Õ Association) President Newton Chiaparini suggested that the government Òlimit the incentives for the alcohol -car and questioned the production of a sufficient amount of alcohol -fuel to supply the fleet at the current growth rate [of car sales].Ó 15 Doubters voices grew as the programÕs dependence on national financing drew increasingly negative attention. Supporters of the program quickly spoke out against the car industryÕs programÕs proclamations. Copersucar President Jos” Luiz Zillo noted the hypocrisy of the car industryÕs position. He stated, ÒHowever, while the alcohol -fueled car was the salvation of the industrial complex no one complained. Now that the alcohol car represents 81% of sales, the [automobile] sector changes its position.Ó 16 Equally outspoken, Maurilio Biagi Filho, one of the strongest supporters of the program, reinforced the programÕs nationalist connections to draw support to the programÕs impact. He called those that questioned the program, like ANFAVEA President 13 Fernando Homem de Melo, ÒO ⁄lcool ” nosso, mas quem paga o desperd™cio,Ó Folha de S‰o Paulo (May 15th, 1983) as cited in Cl⁄udio de Araœjo Pe“anha, ÒO ⁄lcool ” do povo brasileiro,Ó O Di⁄rio (May 31st, 1983). 14 Ibid. For a more comprehensive account, see also, Homem de Melo, Pro⁄lcool, energia e transportes , 5Ð31. BarzleayÕs assessment of the program follows Homem de MelloÕs quite closely. 15 ÒProductores de alcohol acusam as montadores,Ó Folha de S‰o Paulo (June 10th, 1983). 16 Ibid. 227 Chiaparini, Òunpatriotic.Ó Instead, Biagi claimed that the program remained Òa part of BrazilÕs energy solution and can not be under attack at such a dif ficult moment in the countryÕs economic recovery.Ó 17 For both supporters, the countryÕs economic realities should not apply to reviews of the national program. The car industryÕs doubts were not new but rather returned to concerns voiced about the program in its early implementation. Minister of Energy and Mines Shigeaki Ueki and even IAA President Tavares de Carmo, who questioned the sugar industryÕs ability to produce enough alcohol to fuel the programÕs more conservative goal alcohol -mixture goals in 1975.18 After involving the car industry more deeply with hydrous alcohol fueled cars, these questions became more pertinent given the alcohol -fueled car sales rate of around 450,000 cars per year in 1983.19 Copersucar President Zillo guaranteed that there would be no alcohol shortage, citing the forthcoming 7 billion liters of alcohol committed for the 1983/84 harvest with expectations of producing 8 billion in the 1984/85 harvest. 20 Such a guarantee put even more pressure on alcohol producers, who sought more ways to push productivity in their work force in 1984. Supporters of the program also turned to the programÕs positive impact on labor to validate the program as questions about its financial efficiency mounted. For example, the avid Maurilio Biagi Filho argued Pro⁄lcoolÕs positive influence on the economy in an opinion editorial submitted to the Folha de S‰o Paulo on May 9th, 1983 just before the new harvest began. Biagi Filho noted that Ribeir‰o Preto had many jobs available for sugarcane workers 17 Ibid. 18 See chapter 4 of this dissertation, 163Ð164. 19 Rubens Rodrigues dos Santos interview with engineer and industrialist Jo‰o Augusto do Amaral Gurgel, ÒValeu a pena investor tant o?Ó O Estado de S‰o Paulo (May 20th, 1984), 48. 20 ÒProductores de ⁄lcool acusam as montadores,Ó Folha de S‰o Paulo (June 10th, 1983). 228 connected to alcohol production in contrast to other industries in the recessionary national economy. He states, ÒIn this harvest, in the region of Ribeir‰o Preto alone, [É], more than 11,000 new openings for jobs are available. This is without speaking of other producing regions where usinas and autonomous distilleries absorb large contingents of manual labor while in other sectors of the economy dismissals are accumulating every day that passes.Ó 21 Biagi Filho also highlighted that producers were not making as much money through the program as it appeared to the public. Rather, Òglobally, we are losing, and that which keeps us on our feet is a business philosophy that reigns in the sector.Ó 22 However, this business philosophy included an increasingly exploitative relationship with agricultural workers. A growing literature on the social impact of Pro⁄lcool has highlighted the detrimental impact Pro⁄lcool had on capital and labor relations. 23 This shift was not borne of Pro⁄lcool but rather Pro⁄lcool was able to succeed in part because of legally structured shifts in these relations had begun in the 1960s and accelerated in the 1970s (see chapter 5). Scopinho argues that Pro⁄lcool Òdefinitively opened the doors for the consolidation of capitalist relations to production in Ribeir‰o Preto agriculture [É]. [The program] consolidate[d] a perverse model of development that brought economic, environmental, and social consequences.Ó 24 While this dissertation has explored the economic transformations associated with the program in more depth, the growth of a large salaried temporary work force was one of the most obvious social impacts. Temporary labor drove the expansion of this Òperverse model of developmentÓ under Pro⁄lcool. 21 Maurilio Biagi Filho, ÒO ⁄lcool ” nosso,Ó Folha de S‰o Paulo (May 9th, 1983). 22 Ibid. 23 For example, Antonio Thomaz Junior, Por tr⁄s dos canaviais, os ÒnŠsÓ da cana: a rela“‰o capital x trabalho e o movimento sindical dos trabalhadores na agroind œstria canavieira paulista (S‰o Paulo: Annablume/Fapesp, 2002); da Silva, ÒSindicalismo, assalariados rurais e a luta pela cidadania. Ó 24 Scopinho, ÒA regi‰o de Ribeir‰o Preto e a agroindœstria sucroalcooleira,Ó 32. 229 By May 1984, project expansion had dramaticall y diminished in Pro⁄lcool. This put even more pressure on the distilleries already established, particularly the largest of them, to produce more alcohol per harvest. Maximizing production capacity, which was one of the tools implicit in Maurilio Biagi FilhoÕs comments about usineirosÕ entrepreneurial Òbusiness philosophy,Ó was built on greater extraction of labor from temporary workers. This point was made explicit in regional usineirosÕ comments on a new labor policy put in place in the 1983 harvest, known as the seven -rows policy. Thus, meeting the growing Pro⁄lcool demand for alcohol -fueled cars, placed additional pressure on the increasingly capitalist agricultural industry, with a direct impact on sugarcane workersÕ labor and lives. Indeed, laborersÕ working and living conditions are illuminating in the region rewrite with the most pressure on it to produce for national alcohol market. Worker Conditions and Everyday Violence To understand the significance of the Guariba strikes, one must understand not only the legal parameters from which salaried workers emerged but also the conditions in which workers lived and worked. An essential part of workersÕ experience hinged on their status as temporary or permanent although workers of both statuses lived in similarly precarious conditions. Historians of this period address these workers together as their very division in status was a tool of bureaucrats and usineiros to limit mobilization and extend the militaryÕs development agenda with little resistance. 25 25 See note 14. Also, Silva, Errantes , 61-64; As sociolologist Maria Concei“‰o DÕIncao stated in a Veja interview following the strikes, Òworkers do not identify as rural workers,Ó thus hindering worker mobilization. While both are bŠias -frias to the public, workers themselves disassociated with the term, further empowering the divisive nature of worker laws with social stigmas. 230 Following the ETR, contractors, known as empreiteiros or gatos, closely accompanied the expansion of temporary salaried workers in rural labor until changes in rural labor practices undercut these middlemenÕs position following the 1984 Guariba strikes. 26 Padre Bragheto, a priest in the region and important leader of the Guariba strikes in 1984, remembers how poorly contractors and employers treated temporary workers in this period. He states, Òthe gatos mocked all the [labor] legislation.Ó 27 Salaried workers remained dependent on these contractors for their jobs. According to journalist Wilson Marini, these intermediaries took around 20% of the salary destined for the canecutter and failed to follow labor laws, pushing workers to accept poor conditions to maintain their jobs in an unstable market. 28 Worker status was critical to determining worker pay. A Veja magazine report on the Guariba strikes reported that the average caneworker cut five tons of cane per day. These workers worked 8-10 hour days in the fields during the harvest months. Such a worker would make close to Cr$10,000 daily (little more than USD$5). In clearer terms, 5 tons= 10,000 pounds. That is 1,000 pounds per hour for $0.50 per hour!29 However, Moraes SilvaÕs in depth Interview with Maria Concei“‰o DÕIncao, ÒDespertar do bŠia -friaÓ, Emanuel Neri, Veja 821 (May 30th, 1984), 3-6. 26 Silva, Errantes , 114-116. 27 Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 28 Wilson Marini, ÒJovem, analfabeto, e inexperiente. Ò… o bŠia -friaÓ O Estado de S‰o Paulo (May 20th, 1984), 18. 29 ÒOs canaviais da ira,Ó Veja 820 (May 23rd, 1984), 24-25. I based the conversion on the exchange of rate of Cr$1845.4:US$1 in 1984 terms. However, with an inflation rate of over 200% in 1984, the actual value of worker pay was even lower in real terms. In fact, real workersÕ wages had been decreasing consistently over the last year with little wage correction made for this steady trend, further diminishing wage value for rural workers. Conjunta Economica , v. 38, n. 7 (July 1984): 65; see also, Baer, The Brazilian Economy , 427. While the Veja article estimates that the average worker cuts five tons per day, other studies suggest the ave rage worker cuts closer to 10 tons per day. Unfortunately, I was unable to discuss this topic directly with workers and am unable to resolve the discrepancy. Silva, Errantes , 93; Silveira, Igreja e conflito agr⁄rio , 58; Rosa Ester Rossini, ÒMulheres e home ns na 231 study of wages and wor kers in Ribeir‰o Preto presents a more complicated system in which sex, age, and status as temporary or permanent drastically influenced the average workers pay. Contractors also hired women, elderly, and children to work in the fields, all of whom they paid less than male workers. 30 Take for example the case of Dona Guiomar. The Globo Rural , the national stationÕs segment focused on rural Brazil rather than the traditional urban -focused programming, followed Dona Guiomar through a regular day as a canecutt er. She prepared her food at 4am in the morning before leaving for work at 5am. Her two sons also worked in the fields as canecutters although she noted the recent prohibition of children in the fields. She expected to make Cr$150,000 cruzeiros in an entir e month. As the head of the household, she paid Cr$30,000 per month to rent a room in a housing unit that she shared with two other female cane cutters. Her two sons shared the room with her. As the head of the household, she paid the rent plus the additio nal cost of electricity, gas, and water for housing. This illustrates the pressure that oscillating water prices put on the average cane worker. 31 for“a de trabalho na agricultura: o exemplo da macro -⁄rea de Ribeir‰o PretoÓ Paper presented at the 15th National Conference on Population Studies (ABEP -2006): 11. 30 Conversely, Geographer Rossini study of rural workers pay from 1977 to 1990 estimates that women made about 65% of the wages male workers made in 1977 while they made 75% of the wages that male workers made in 1985 (based on 1977 terms). Rossini, ÒMulheres e homens na for“a de trabalho na agricultura, Ó 12. 31 Ibid. 232 Figure 7: Dona Guiomar 32 Source: Reporter Ernesto Paglia, Globo Rural (1984). Cane cutting is arduous work, and laborers suffer work -related injuries often. Using sharp machetes to cut the cane, deep lacerations on the arms and legs were common, as were mangled limbs. Some workers died from heat exhaustion. 33 Other common ailments include breathing difficulty, cramps, dehydration, respiratory infections, poisoning and animal bites, and other pains of physically taxing labor. Usineiros hired their own medics who they paid to downplay extensive work injuries. 34 However, without proper pay, access to proper health care, or pay for sick days, these grizzly ailments were all the more life -threatening as workers had to work through these conditions to make enough money to survive and pay their own bills. Transport to and from the cane fields was precarious at best. Contractors provided transportation to the fields in pau-de-araras , or open trucks that packed large numbers of people, 32 Dona Guiomar, pictured in the center, was the topic of a Globo Rural expos” in 1984. Ernesto Paglia, Rede Globo (June 1984) in ÒBoias -frias e o Acordo de Guariba ⁄pos a greve de 1984,Ó (July 24th, 2014), YouTube, https://www.youtube.com/watch?v=9ZiZbF6WYUk . Accessed May 1st, 2015. 33 Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 34 Scopinho, ÒA moderniza“‰o e superexplora“‰o ,Ó 77. 233 which were common modes of transportation for rural workersÕ traveling short and long distances to work in the era. As Dona GuiomarÕs case illustrates, trucks suited for 45 passengers held 60 in tightly packed, insecure benches. 35 Her trip to the fields lasted over an hour. Sharp work tools, tightly packed trucks, and long, bumpy rides to and from work fields were very dangerous. Deadly injur ies in highway accidents were a normal occurrence, which local newspapers commonly reported. These tragedies drew little regard for additional safety measures, recompense, or improvements. 36 Housing conditions were extreme for these workers. Seasonal workers lived in temporary housing provided by usineiros and contractors on or near usinas in the countryside. These temporary units housed hundreds per barrack, with cases ranging from 500 to 800 workers at times.37 Padre Bragheto recalls the conditions when he went to visit workers. He claims, the units were Òbarracks that in reality were old coffee houses that had been adapted into precarious housingÓ for these temporary workers. 38 A 1984 expos” on an ÒalojamentoÓ on the Fazenda S‰o Vicente that provides sugarcane for the usina Santa Elisa paints a detailed picture of the desperate conditions in which workers lived. 35 Ernesto Pagli a, Rede Globo (June 1984) in ÒBoias -frias e o Acordo de Guariba ⁄pos a greve de 1984,Ó (July 24th, 2014), YouTube, https://www.youtube.com/watch?v=9ZiZbF6WYUk . Accessed May 1st, 2015. 36 Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.), i-ii. For examples, see Jau cases, Folder 50z383 -J, Arquivo Pœblico do Estado de S‰o Paulo : S‰o Paulo . 37 …lcio ThenŠrio, Jornal Rural (1985?), Disc-File 5, Copersucar/Museu da Imagem Collection, Ribeir‰o Preto, SP; Federa“‰o dos Trabalhadores na Agricultura do Estado de S‰o Paulo (FETAESP), ÒEpidemia de sarampo surge em Ôalojam entoÕ em Guariba: 1 mortoÓ Realidade Rural (August 1984): 7. O Centro de Documenta“‰o e Pesquisa Vergueiro : S‰o Paulo. These were presumably batches of men, but it is unclear. 38 Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 234 ÒIn each horse bay, in precarious bunks, around 20 workers sleep, in hay mattresses, for which they charge workers Cr$9000 [a month]. They have no bathrooms, nor showers. They have to carry water serve themselves water from a damn near the barracks to bathe themselves. But the damn water also has been contaminated by cane debris and pigs. Bad smell, mosquitos, this is the ambiance.Ó 39 The S‰o Paulo Federation of Agricultural Workers (Federa“‰o dos Trabalhadores na Agr icultura do Estado de S‰o Paulo ) called the barracks Òmodern senzalas [slave quarters],Ó where breakouts of the measles, rubella, conjunctivitis, and other such diseases were not uncommon. 40 Permanent migrant workers lived in the periphery of the rural cities and emerging Òsleeper -townsÓ that bordered these cities, many of which lived in guest -house styled repœblicas and pensłes , Òliving with diverse forms of violence and misery and exposed to risks of epidemics of infectious -contagious sicknesses.Ó 41 Access to water and public services became a particularly contentious point in these peripheral sleeper -towns. The state-owned Water and Sanitation Company (Companhia de Saneamento B⁄sico do Estado de S‰o Paulo - Sabesp) provided piped water to the peripheral communities in which bŠias -frias lived, which was the only public service available in these communities. However, the Sabesp prices were backbreaking for many workers. By the time the Guariba strikes began, Veja reported that Òin Guariba, of the 3,950 houses served by Sabesp, only 8 pay the minimum rate of 1,410; the rest pay around 11,000 cruzeiros per month[.],Ó which 39 FETAESP, ÒSecretarias estouram ÔalojamentoÕ em Pitangueiras: a“‰o exemplar,Ó Realidade Rural (August, 1984): 7. O Centro de Documenta“‰o e Pesquisa Vergueiro : S‰o Paulo. 40 Ibid; FETAESP, ÒEpidemia de sarampo surge em ÔalojamentoÕ em Guariba: 1 mortoÓ Realidade Rural (August 1984): 7. 41 ÒSleeper -citiesÓ are poor cities that emerged apart from urban centers where seasonal workers lived. They gained the name from the fact that workers would work all day in the fields and would only sleep in the cities at night. Scopinho, ÒA regi‰o de Ribeir‰o Preto e a agroindœstria sucro -alcooleira,Ó 42. 235 was a little more than a typical dayÕs wage. 42 Guariba clients paid well above other citiesÕ basic Sabesp charge. Local Sabesp manager Carlos Alberto Jœlio da Rocha claimed that the majority of workers paid the minimum ÒC$1,460Ó and ÒCr$1,560Ó in two different reports after the strikes but such inconsistency drove workersÕ action s as well.43 Sabesp continued to drive up tax prices and fees despite the limited financial abilities of the workers that lived in the communities. 44 Threats of additional price hikes became a driving factor in the explosion of the strikes. 45 All these costs and conditions left rural salaried workers in financially dependent situations that made it harder to contest worker abuses. For example, after the harvest, temporary workers that were able could return to their native regions until the next harvest, but many were left unemployed the rest of the year with no support from their temporary employers or from the state because their wages were so meager. 46 Similarly, many workers accrued debt to pay for their housing with loans that were worth more than they wou ld earn in the entire season, hindering any accumulation of savings. Subsequently, many workers that migrated to make more money than they would have made in their home states, stayed in the Ribeir‰o Preto region 42 Sabesp serviced 280 municipalities in the state. It set the minimum space allowed for monthly service at 10 cubic meters. Veja reported that neighbo ring cities like Ara“atuba and Piracicaba paid Cr$1220 and Cr$1372 for minimum service, which is notably cheaper than Guariba prices. ÒOs canaviais da ira,Ó Veja 820 (May 23rd, 1984), 20-26. 43 ÒSistema de corte da cana e contas de agua levaram crise a Guariba,Ó in Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). In Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.), 5. Cliff Welch Personal Archive Collection 44 ÒRevolta de bŠias -frias provoca destrui“‰o e morte,Ó Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). Also, Jos” Murilo de Carvalho, ÒSurpresa ” n‰o ter acontecido antesÓ in Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). As published in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.): 2 and 4. Cliff Welch Personal Archive Collection. 45 The Veja report indicates that workers received notices that Sabesp prices were going to increase by up to 900% on the previous Monday before the strikes erupted. ÒOs canaviais da ira,Ó Veja 820 (May 23rd, 1984), 21. 46 Ibid. 236 waiting for the next work season, unable to accumulate enough money to even return home in the interim. 47 Oscillating expenses, like a fluctuating water bill, could easily undo the budget a single worker or a working family with little reprieve or economic alternatives. Scholars have argued that the policyÕs success depended on the increasingly extreme exploitation of its rural labor force, and I would agree. The new labor structure, under which temporary workers became the standard model, was an important part of the changing realities of the Òmode rnizedÓ market, facilitated by the military governmentsÕ development agenda. 48 Like Anthopologist Nancy Scheper -Hughes work on everyday life for rural workers in the sugar -producing Pernambuco, rural workersÕ experienced the everyday violence of hunger and desperation. 49 Pedro Ulisses de Lima, a 55 yrs old cane cutter from Garanhuns, Pernambuco who worked for the Usina S‰o Martinho in Guariba told Veja reporters, Òwe live worse here than in the Northeast.Ó 50 Sociologists Ubaldo Silveira and Maria Aparecida de Moraes Silva called it Òwhite,Ó like a deafening white -noise, and ÒsilentÓ violence that was part of a Òhidden and legal violenceÓ promoted by the stateÕs commitment to Òtragic modernization.Ó 51 The conditions in which these transient workers lived were exp loitative and many were well aware of this fact. As 47 Scopinho, ÒModerniza“ ‰o e superexp lora“‰o na agroindœstria sucroalcooleira,Ó 70Ð78. 48 Karl PolanyiÕs work on the destructive nature of the capitalist market highlights the imposition of capitalism on the labor market and the violent disruptions created in the process. Legal intervention was critical to the creation of this new labor market just as it was in the Brazilian agricultural labor market. The rise of the agro -industrial market was a first and major step in the introduction of neo -liberalism into the Brazilian society. Karl Polanyi, The Great Transformation (New York: Rinehart & Co., Inc., 1944). For a more Marxist perspective on sugarcane workers and capitalism, see Maria Concei“‰o DÕIncao e Mello, O bŠia -fria: acumula“‰o e mis”ria (PetrŠpolis: Vozes, 1975) and Thomaz Junior, Por tr⁄s dos canaviais . 49 Nancy Scheper -Hughes, Death Without Weeping: The Violence of Everyday Life in Brazil (Berkeley: The University of California Press, 1992), 4 50 ÒOs canaviais da ira,Ó Veja 820 (May 23rd, 1984), 25. 51 Silveira, Igreja e conflito agr⁄rio , 69; Silva, Errantes , 27. 237 historian Jos” Murilo de Carvalho wrote in a special article for Folha de S‰o Paulo , the Guariba events were inevitable. 52 And yet, the strikes did not happen earlier seemingly for one major reason: usine iros suppression of workers through the separation of permanent and temporary salaried workers. Usineiros kept workers separated and suppressed workers by outsourcing labor employment and management to empreiteiros , or contractors, evading legal obligation s to workers, and employed their own jagun“os , or privately owned gunmen to provide more direct and violent surveillance of workers. 53 These employment practices, encouraged by the ETR and ET statutes, separated permanent workers and temporary workers, whic h also slowed worker mobilization repetition. Social stigma and work instability contributed to the suppression of worker action. Within a system that obstructed workers from legal avenues of contestation and the repressive structure of the labor market, the Catholic Church became a primary vehicle of mobilization for this newly developed and growing population of temporary rural workers. Actors within the Catholic Church and an unfortunate labor policy rallied salaried workers to protest in 1984. ÒCreating ConsciousnessÓ: The Catholic Church, the CPT, and Padre Bragheto Elements of the Brazilian Catholic Church were major grass -roots organizers and anti -military leaders during the dictatorship. The Church, as an institution, had supported the coup in 1964 although some bishops, such as Dom H”lder C›mara, were avid supporters of larger economic reforms even before the coup. Still, many members were far more moderate. More broadly, these moderatesÕ support for anti -military action grew substantially as the Vatican 52 Murilo de Carvalho, ÒSurpresa ” n‰o ter acontecido antesÓ in Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). BŠias -frias, Sangue quente , p. 4. Cliff Welch Personal Collection. 53 ÒGuariba: uma quest‰o de tempo,Ó Jornal do Inter ior 100 (Ribeir‰o Preto, January 14Ð20, 1985): 3. Folder 50/028. Arquivo Pœblico do Estado de S‰o Paulo : S‰o Paulo. 238 increasingly encouraged identifying with Òmarginalized sectors of society and their hopes for justiceÓ after the VaticanÕs second ecumenical council, from 1962-1965.54 Thereafter, the militaryÕs repressive crackdown on Òinternal threatsÓ to its authority increasingly clashed with activist clergy and laymembers, drawing the Church into a more assertive position against the dictatorshipÕs Òtorture, repression, and social and economic oppression.Ó 55 BrazilÕs National Council of Bishops (Conferenci a Nacional de Bispos Brasileiros Ð CNBB) emerged as the institutional voice of the ChurchÕs powerful opposition during the repressive de M”dici administration from 1968 to 1973. It would define church -state relations throughout the 1970s. 56 The progressive stance of some members won more and more support from moderate clergymen and women. For example, the outspoken S‰o Paulo Archbishop Dom Paulo Evaristo Arns strongly advocated for human rights justice for victims of government repression. 57 At the same time, more radicalized bishops in the Northeast and the Amazonian region spoke out against government violence and social injustice in support of the rural laborers, small farmers, and Indians. The adoption of human rights defense and a reconstitution 54 The 10th Latin American BishopÕs Conference in Medell™n, Colombia was a major success for the emerging popular Church. As Scott Mainwar ing notes, Òdespite the numerical inferiority fo the popular bishops, [the conference] approved a document that represented pastoral positions more progressive than those found in any Latin American country at the time. The final resolution declared: ÒIt is not enough to reflect upon, to obtain greater clarity, and to speak. It is necessary to act. This has not ceased to be the hour of the Word; it has become, with dramatic urgency, the hour of action.Ó Scott Mainwaring, The Catholic Churc h and Politics in Brazil, 1916Ð1985 (Stanford: Stanford University Press, 1986), 114; Archbishop Paulo Evaristo Arns and the Archdiocese of S‰o Paulo, Brasil: Nunca Mais (S‰o Paulo: Vozes, 1985); Catholic Church and the Archdiocese of S‰o Paulo, Torture in Brazil: A Report by the Archdiocese of S‰o Paulo , translated by Jaime Wright, edited by Joan Dassin (New York: Vintage Books, 1986), 123Ð124. 55 Margaret Keck, The WorkersÕ Party and Democratization in Brazil (New Haven, CT: Yale University Press, 1992), 47. 56 Skidmore, Politics of Military Rule , 135Ð137 and 180Ð183. 57 In fact, his work with the Commission of Peace and Justice rallied international support against the dictatorship, producing the popular report on military torture, entitled Brasil: Nunca Mais , which was published in 1985 and cited above. 239 of the church as that of Òthe people,Ó encouraged more laymembers to identify closer with urban periphery and rural workers than with elite government interests. 58 Following the 1968 Latin American BishopÕs Conference in Medell™n, Colombia, Catholic priests, nuns, and laymembers established Ecclesiastical Base Communities (Comunidades Eclesias de Base - CEBs) across the country in response to the new more community -based objectives the conference laid out. These CEBs became important bastions of rural mobilization in areas where rural workers had little or no access to organized labor groups. This was particularly true in the North and Northeast, where Brazilian bishops, like Dom H”lder, spoke out against the injustices of the economic system and the failures of Brazi lian agrarian reform. In response, priests in Goiana, Mato Grosso founded the Pastoral Land Commission (Commiss‰o Pastoral da Terra - CPT) in 1975 to support displaced workers and the struggle for land reform in response to the militaryÕs support of land consolidation for large -scale agricultural production despite promises of substantial land redistribution. 59 A product of these CEBs, the CPT became an important part of rural labor mobilization in the North and the South as CPT chapters quickly spread. Padre Jos” Domingos Bragheto, a young priest from the Jaboticabal diocese, and a few other members of the Archdiocese of Ribeir‰o Preto founded the first chapter of the CPT in the 58 Silveira, Igreja e conflito agr⁄rio , 94Ð95. 59 Skidmore, Politics of Military Rule , 135. Bishops in the Amazonian region particularly spoke out against the detrimental effects of the militaryÕs development programs in the region, which included the construction of the Transamazonian highway and large -scale cattle grazing schemes. For more on Amazonian development schemes and land conflict, see Joe Foweraker, The Struggle for Land: A Political Economy of the Pioneer Frontier in Brazil, 1930 to Present (Cambridge: Cambr idge University Press, 1981); Anthony L. Hall, Developing Amazonia: Deforestation and Social Conflict in BrazilÕs Caraj⁄s Programme (Manchester: Manchester University Press, 1989); Cynthia Simmons et al., ÒSpatial Processes in Scalar Context: Development and Security in the Brazilian AmazonÓ Journal of Latin American Geography , vol. 6 (2007): 125Ð148. 240 state of S‰o Paulo and the entire central -southern region in 1979. Jaboticabal, located between the central Ribeir‰o Preto, Sert‰ozinho, and the more distant Guariba, is a satellite town within the greater Ribeir‰o Preto region, with a strong agricultural presence and a larger population than Guariba. Bragheto, who started the chapte r after connecting with CPT members at another conference, established its base in Jaboticabal and became its first coordinator. 60 As such, BraghetoÕs work initially focused on traveling throughout the state of S‰o Paulo, trying to create small CPT bases in different municipalities. 61 A native of JardinŠpolis, another neighboring city of Ribeir‰o Preto, Bragheto grew up seeing labor injustice, which he says drew him to study theology and eventually into the church. He was ordained in the Jaboticabal diocese in 1975, after which he moved to two small parishes in the sugar -centered cities of Dobrado and Santo Ernestino. At this time, he became more aware of the conditions in which seasonal workers lived. This exposure made him start Òto think more on the agrar ian question in the interior of the stateÓ and become more vocal about the ÒinjusticesÓ that rural workers experienced. 62 Bragheto and the CPT were fundamental in preparing workers to establish and assert their labor rights, actively helping reconstruct workersÕ understanding of their place in society as Brazilian citizens. Bragheto and the CPT focused on Òorganizing workers through unions and fostering consciousnessÓ or as stated in another interview, Òin the time that we were out there, all the work [was] in this line of workersÕ rights, to organize workers that were completely 60 The Ribeir‰o Preto archdiocese includes the dioceses of Ribeir‰o Preto, Franca, Jales, Jaboticab al, Barretos, S‰o Jo‰o de Boa Vista e S‰o Jos” do Rio Preto. 61 Interview with Padre Jos” Domingos Bragheto, Cliff Welch on September 13th, 2004 in S‰o Paulo, SP. Transcription by Ana Cristina (CEDEM) on February 13th, 2007. Cliff Welch Collection: S‰o Paul o. 62 Ibid . 241 disorganized and to organize through unions and to make consciousÉ to foster consciousness.Ó 63 They went about doing this with informal meetings, assemblies, hosting worker celebrat ions, and the creation of new unions to slowly build workersÕ own understanding of their situation. As he recalls, Ò[É] we started the work just, very simply, visiting those [workers] that lived in the city as much as those that lived [É] in the countrysi de, and we got up in the morning, and we approached the workers that caught the trucks in the cities, in the periphery[.]Ó 64 The CPT mobilized workers as a unit with similar interests, helping break down the worker divisions established by usineiros and legal worker status. As Bragheto explained, they gathered groups of salaried workers to Òreflect on the light of faith in the situation that they lived, the exploitation, the lack of adequate equipment, [the groups] were made in the trucks while traveling together [to work].Ó 65 Through teaching about religion and faith, they helped workers articulate the injustice of the conditions in which they worked and lived. As Bragheto stated, ÒThen it was all a very difficult job, because the people were not very aware of the situation and this consciousness was awakening slowly.Ó 66 Although slow, the CPT helped workers understand themselves as conscious actors within a structure of production that exploited them, laying the foundation for the Guariba strikes. Salaried workers, whether permanent or seasonal, began to see themselves as a group of workers with the same struggles, allowing them to assert themselves in the Guariba strikes in a way they had not or could not previously. These meetings and the CPTÕs presence in general was an important part of this awakening. 63 Ibid. See also, Padre Jose Domingos Bragheto, Interview with Ubaldo Silveira on December 16th, 1993 as cited in Silveira, Igreja e conflito agr⁄rio , 125. The CPT -S‰o Paulo did not exclusively work on workers rights in the Ribeir‰o Preto region . They also worked on the fight for land, which gained more traction further west in the state. 64 Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 65 Ibid. 66 Ibid. 242 He remembers meeting a great deal of resistance to the work he did with rural workers from within the Ribeir‰o Preto diocese. Bragheto recalls the divisive nature of local priestsÕ support as the CPT began to work more closely with rural workers. He states, ÒLook a good part of the church, [...], was truly involved in the work to liberate, the liberation campaign was still heated then [...], there were bishops [...] that gave a lot of support, we felt very supported, and you had the other part that stayed blind, that stayed indifferent. [...] it was heating up in the city and priest colleagues were totally indifferent to the conflict.Ó 67 This division within the Church grew stronger as Padre Bragheto and the CPT clashed with usineiros more and more in the region. Beyond the work that Bragheto and the CPT did directly with workers, they also exposed pelego leaders , or government unionists who controlled the state-sanctioned unions, allied with usineiros. 68 The se union leaders also exploited workers for their own gains with business owners. These unions Òthat were in the hands of union presidents that acted in favor of usineiros which for whatever reason, did not defend workers, at maximum they gave [the workers ] a hair cut, some health plan, but they did not defend the workers in their rights[.]Ó 69 The CPT gave workers an alternative space to mobilize where, Bragheto felt, their rights were important. The rural labor union that the CPT helped organize in Jabotica bal met days before the strike began. Workers rallied around the new labor policy that usineiros were enforcing in neighboring usinas, the seven -row policy. Although in the meeting workers and the CPT leadership, including Bragheto, agreed that conditions were not right for a strike, workers still 67 Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 68 A pelego literally is a type of sheepskin horse blanket. For more on pelegos and their role in industrial unions, see Wolfe, Working Women, Working Men , 75Ð85. 69 Ibid. 243 began the strike a few days later. 70 Workers actions highlight their own agency in the mobilization, moving beyond the suggestion of the CPT leaders and acting of their own accord. Workers seized an important momen t with the beginning of the new harvest at a time in which CPT leaders were unwilling to push the status quo. BraghetoÕs commentary indicates that workers themselves were very much in control of the mobilization, despite reports to the contrary in the news papers. 71 The CPTÕs presence in the region was important to shaping workersÕ mobilization in 1984. Nationally, the CPT was a central organization in spreading strikes in the North and Northeast as well. However, the CPTÕs actions were unique in the region, where landed elites had more efficiently suppressed worker unrest for so long. Bragheto was the first to organize the CPT in the central southern region, spreading a level of workersÕ consciousness about labor exploitation and workersÕ rights through his work with temporary sugarcane workers. These same workers asserted these ideas of basic workersÕ rights in 1984. After usineiros attempted to put in place even more exploitative labor policies, best illustrated by the seven -row policy which usineiros first employed in 1983 and then more broadly applied in 1984, workers independently began the labor strikes in Guariba. 70 In fact, Bragheto was in Mato Grosso helping with a different land occupation in Ivinhema when the strike broke out despite claims in the news to the contrary. Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 71 As Bragheto himself stressed, workers acted of their own volition despite Veja and the Estado de S‰o Paulo explicitly identifying him as the leader of the strikes. Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. See also, ÒIgreja ao lado dos sindicatos,Ó O Estado de S‰o Paulo (May 16th, 1984), 38; ÒOs canavias da iraÓ Veja 820 (May 23rd, 1984), 24. 244 Sparks Fly: the Seven -Row Policy The imposition of the seven -row system was the ÒmatchÓ that set off the first Guariba strike itself. 72 In 1983, usineiros at the Usinas S‰o Martinho, Bonfim, Santa Ad”lia, and S‰o Carlos in the Ribeir‰o Preto region first applied the seven -row policy to extend worker production in 1983, but they did not employ the policy aggressively until the 1984 harvest .73 Employers had been using the established the five -row policy, in which they paid workers either per ton or per meter for an expected five rows of cut cane per day. Conversely, usineiros began enforcing the seven -row policy during the first week of the 1984 harvest, requiring workers to cover more area per day with the two additional rows. In the five -row system, workers cut a designated five rows at 1.5 meter of cane per row. 74 Researcher Francisco da Costa Alves of the Universidade Federal de S‰o Carlos noted that usineiros also expanded the width of the rows that workers had to cover so that they were responsible for far greater area while still earning per meter. Cliff Welch indicates that the seven -row system tried to extend rows to two meters on top of adding more rows. Additionally, the new policy required workers to carry the cane in their arms for another three meters to load the cane at the further removed main loading zone. 75 These descriptions of the seven -row policy illustrate the exploitative nature of the 72 Interview with sociologist and social assistant Ubaldo Silveira, Jennifer Eaglin, Apr il 21st, 2013 in Ribeir‰o Preto, SP. 73 ÒSistema de corte da cana e contas de agua levaram crise a Guariba,Ó in Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984) in Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jaboti cal: Fase, 1987- mimeo.), 5. Cliff Welch Personal Archive Collection. The three usinas are some of the better -established usinas in the region and also early Pro⁄lcool participants and funding recipients. They reside in PradŠpolis, Guariba, and Jaboticabal respectively, which are large municipalities of the Ribeir‰o Preto region. 74 Antenor Braido, ÒA dif™cil vida de quem corta cana,Ó Folha de S‰o Paulo (May 20th, 1984). See Guariba Workers Agreement in Ana Luiza Martins, ed., Guariba - 100 anos (S‰o Paulo, Prefeitura Municipal de Guariba, 1996), 186Ð187. Also, Welch, A semente foi plantada , 426. 75 The Guariba Accord established rows at a standard two meters per row. The length requirement in the agreement supports the assertion that usineiros and contractors manipulated 245 working conditions as the practice was not standardized but instead usineiros and contractors manipulated the length of rows often. Usineiros justified the program as beneficial for industrial quality of alcohol production. The policy was supp osed to Òbenefit the sugar -alcohol industry, because they receive a raw material with less impuritiesÓ accumulated on the land when trucks entered the fields. Instead, workers would carry the land further out of the fields, leaving cane stalks undamaged. Cane suppliers liked the deal Òsince they receive more for the delivered product.Ó Allegedly, rural workers would win because they could increase production 20% above their daily production under the five -rows policy, thus, Òreceiving more money in the same workday.Ó 76 In the most basic capitalist sense, the incorporation of the new policy would maximize production in the most cost -effective way, combining mechanical equipment, with lower inputs into said machinery, and the greater responsibility on cheap labor. Pro⁄lcool encouraged extensive mechanization, but temporary salaried workers still remained a cheaper work source than mechanized sugarcane collection in the 1980s. In fact, DÕIncao notes that even after the Guariba strikes required employers to tripl e workersÕ pay, they still remained far cheaper than the cost of gasoline to fuel mechanical collection in 1984. This, however, was not the case for year -round labor, where the use of insecticides, fungicides, and the length of rows often. Cliff Welch notes that workers wanted to return meter length to 1.5 meters but were not successful. êcaro Ferracini, Leandro Santini, and Heloisa Zaruh, ÒO Corte - 30 anos da Greve de GuaribaÓ (December 16th, 2013), YouTube, https://www.youtube.com/w atch?v=FYUfU9FDguw . Accessed May 1st, 2015; See Guariba Workers Agreement in Martins, Guariba - 100 anos, 186-187. Also, Welch, A semente foi plantada , 426. 76 ÒCorte da cana em sete ruas, a novidade da lavoura canavieira,Ó originally in Jornal dos Munic™pio s- published in A Comarca de Guariba No. 269 (Guariba, May 21, 1983). As published in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente , 9. Cliff Welch Personal Archive Collection. 246 fertilizer diminished permanent labor dema nd.77 Thus, usineiros mechanized around temporary workers. This meant more heavy equipment, like tractors, trucks, and fertilizer, to expand production at a faster rate, but workers could only cut so much. To save on costs, the seven -row plan would protect the land from greater stress and mechanical manipulation by keeping cane collection points further from the cane and simultaneously cut down on mechanized costs - namely gasoline, which was more expensive than laborers. 78 The policy focused on the producerÕs perspective with little practical regard for its impact on the field workers. The policy pressured workers on three fronts: physical demands, real wages, and job security. Workers were already at their physical labor limits under the five -row system, but the policy tried to extract an additional 2-3 hours of work out of each rural worker per day at minimum to meet the new cutting and loading requirements. Thus, workers would spend more time transporting cut cane to loading areas, less time cutting, and were still expected to cut more cane per day. This was physically impossible. While usineiros claimed workers would make more money by cutting more in a day, workers argued that the new seven -row policy actually diminished workers ability to the same amount as they had in the five -row system. The two additional rows combined with the extended the distance workersÕ had to carry the cane to the loading trucks to substantially increase the 77 Interview with Maria Concei“‰o DÕInc ao, ÒDespertar do bŠia -friaÓ, Emanuel Neri, Veja 821 (May 30th, 1984), 3-6; also, as cited in ÒS‰o Paulo: O levante do BŠias -frias: medo e tens‰o no interior,Ó Veja 820 (May 23rd, 1984), 20. Regarding the disadvantaged position of permanent workers, see, Scopinho, ÒA regi‰o de Ribeir‰o Preto e a agroindœstria sucroalcooleira,Ó 26. 78 These new advantages included: Òa lower quantity of land sent to the industries; less machinery traffic - loaders and truckers - within the cane fields; less area of compaction ; less damage to the cane roots, etc.Ó These benefits would produce Òmore income, more operation efficiency, less expenditure on gasoline (truck and loaders with 28% less gasoline).Ó ÒCorte da cana em sete ruas, a novidade da lavoura canavieira,Ó original ly in Jornal dos Munic™pios - published in A Comarca de Guariba No. 269 (Guariba, May 21, 1983). As published in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente , 1. Cliff Welch Personal Archive Collection. 247 overall labor with little additional pay. In fact, the additional loading time cut into their ability to maintain previous cutting production rates, and thus to make the same amount of cane in the same timeframe that they had previously in the five -row system. As workers were paid by the ton of cane cut, they made less money while covering more land for the usineiro. 79 At the same time, the new policy pressured worker job stability. Usineiros would need fewer workers per square acre if workers covered the two additional rows demanded, further exploiting the instability of the labor market. Not meeting the requisite row policy could lead directly to dismissal at the end of the month, suspension, or other coercive practices .80 In an average day, workers were expected to cut and load five to ten tons of cane per day. 81 Thus, usineiros and contractors undercut workers, as salaried workers claimed they had to generally work more to earn the same wages in the seven -row system that they had made under the five -row system. 82 In a market with poorly established payment structures, the capitali st focus on production speed and quantity put more pressure on exploited salaried rural workers that depended on the established system, however flawed, for survival. The seven -row policy was an extension of government -supported exploitative ploys by usin eiros to extract more labor from caneworkers. As noted previously, the salaried labor market 79 Murilo de Carvalho, ÒSurpresa ” n‰o ter acontecido antesÓ in Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). Also, ÒSistema de corte da cana e contas de agua levaram crise a Guariba,Ó in Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). In Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.), 4-5. Cliff Welch Personal Archive Collection. 80 Maria Aparecida de Moraes Silva, ÒAtr⁄s das cortinas no palco do etanol,Ó Folha de S‰o Paulo (S‰o Paulo: February 10th, 2007). Cliff Welch Personal Archive Collection. 81 Nonino and Amorim suggest it was more like six tons a day. See discussion above. Carlos Alberto Nonino and Galeno Amorim, ÒUma manh‰ de terror em Guariba,Ó O Estado de S‰o Paulo - Agriculture Edition (May 16th, 1984), 1 (p. 38 of full edition). 82 ÒRevolta de bŠias -frias provoca destrui“‰o e morte,Ó Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). As published in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente , 2. Cliff Welch Personal Archive Collection. 248 was essentially unregulated and usineiros had free reign to exploit workers however they saw fit. Padre Bragheto recalls the connection between the government, usi neiros, and labor exploitation, stating, Òthe mayors were allied with usineiros, [É]. The gatos , the usineiros, the empreiteiros were all united. There was no support for the worker class. [É] When [the municipal government] did not support [usineiros] directly they were indifferent, convenience turned them into allies of repression, [É]. They wanted to stifle everyone that rose up in that era.Ó Government officials condoned usineirosÕ actions with favorable legislation or convenient indifference on the federal and local level to aid usineirosÕ production abilities. This started with federal legislation and worked its way down to local inaction. The federal governmentÕs commitment to Pro⁄lcool drove legislative decisions and the Guariba strikes contribut ed to its slipping grip on security to back up its development agenda, which usineiros had effectively defended in the paulista countryside since the coup. The Strike On May 15th, 1984, in the town of Guariba, within the Ribeir‰o Preto region, over 5,000 temporary salaried sugarcane workers, known as bŠias -frias , went on strike to contest extended workdays, poor work conditions, underpay, and poor transportation services among other complaints. 83 In many ways, Guariba was the quintessential sugar -dominated city, hosting two dominant sugarcane and alcohol producing usinas, the Usina S‰o Martinho and the Usina Bonfim, within its municipal limits. The strike immediately affected three additional usinas, the 83 The term bŠias -frias means cold -sandwiches in reference to the cold lunches that fieldworkers ate in the fields during their long workdays. The term ha s a generally negative connotation. Silveira, Igreja e conflito agr⁄rio , 14. ÒPro⁄lcool, quem sai ganhando,Ó Cadernos de Estudos, no. 11, published October 1984. Brazilian Popular Groups: agrarian reform Collection, UNICAMP - AEL. 249 Usina Santa Ad”lia, S‰o Carlos, and Santa Lu™za, whos e workers lived in Guariba as well. Together, these five usinas were slated to produce 12 million tons of sugar in 1984. 84 4,000 workers from the Usina S‰o Martinho enlisted cane cutters from the other usinas to strike with picket lines blocking the entrance and exits of the city. Barring entry of the usinasÕ trucks that transport workers to fields daily at dawn, workers refu sed to go to the fields and instead marched to the cityÕs small central plaza in protest. These protestors sacked the largest supermarket in the city, the S‰o Paulo State Sanitation building, and burned a few vehicles. The Military Police intervened in the conflict to quell the strikers, killing a recently retired caneworker, Amaral Vaz Melone, and wounding 29 others. The initial strike quickly spread to the neighboring cities of Barrinha and Monte Alto, where the conflict escalated as more workers joined the strike. 85 84 See Figure 6 for a map of Guariba in the 6th administrative reg ion of Ribeir‰o Preto. Both the Usina S‰o Martinho and Bonfim were benefactors of Pro⁄lcool -funding. S‰o Martinho, located in PradŠpolis, was the largest usina in the country in 1984. The Usina Bonfim, while not of the same size as its municipal counterpar t, would peak as a larger alcohol producer than S‰o Martinho in the 1980s. Martins, Guariba Ñ100 anos, 143-149; 227; Carlos Alberto Nonino and Galeno Amorim, ÒUma manh‰ de terror em Guariba,Ó O Estado de S‰o Paulo (May 16th, 1984), 38. 85 Silveira, Igreja e conflito agr⁄rio , 73Ð75; ÒRevolta de bŠias -frias provoca destrui“‰o e morte,Ó Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). As published in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.), 2. Cliff Welch Personal Collection. 250 Figure 8: The Guariba Strike 86 Source: Carlos Fenerich, ÒRetrato do BrasilÓ, n. 36 (Guariba, 1984). Following two days of expanding strikes, usineiros finally gave in to workers demands after workers began burning canefields at the peak of the harvest and threatened to continue such actions. 87 Usineiros repealed the seven -row policy in a labor agreement with workers commonly known as the Guariba Accord. Despite this resolution, the strikes continued to spread, as caneworkers and other temporar y fieldworkers sought similar demands from employers, threatening to bring sugarcane and ethanol production to a halt in the most important ethanol - 86 Photograph as published in ÒGuariba Ð 30 anos da greve que mudou a vida dos ÔbŠias -friaÕ no Brasil, por Paulo Mancini,Ó EcoDebate.com , August 21st, 2014, accessed April 25th, 2015, http://www.ecodebate.com.br/2014/08/21/guariba -30-anos -da-greve -que-mudou -a-vida -dos-boias -fria -no-brasil -por-paulo -mancini/ 87 Alan Riding, ÒFor Brazilian Farmhands, a Notable Victory,Ó New York Times, (June 10th, 1984), accessed August 25th, 2014, . For more on the significance of burning land, protest, and sugarcane, see Rogers, The Deepest Wounds, particularly chapter 5, ÒThe Zona da Mata Alfame: Political Upheaval, Strikes, and Fire.Ó Rogers argues that caneworkers politicized fire, which was an easily accessible tool, contesting transformations of the land and workers charged history of using fire to terrorize workers in Pernambuco. 251 producing region in the country. In the three -day conflict, over 25 usinas came to a halt after the strikes expanded to over five municipalities in the region, including the Usina Santa Elisa.88 UsineirosÕ enforcement of the seven -row policy drove workers to strike at the beginning of the 1984 spring harvest. 89 This strategic move allowed workers to quickly capt ure the attention of usineiros, government officials, and the national public after the local Military Police violently suppressed the protest and workers began burning cane fields. State officials and usineiros shirked blame for the incident and each blam ed the other for the unrest. Federation and union leaders like Francisco Benedito Rocha, the general secretary of Fetaesp (the Federation of Agricultural Workers of the State of S‰o Paulo) took the opportunity to criticize usineiros and state officials, stating, ÒWhat provoked all of this was the revolt of workers against the little income that they were receiving for cutting cane, the changes made by usinas to the cutting system, changing from five rows to seven and the abusive increase in water prices tha t Sabesp was charging.Ó As president of the Rural Workers Union in Guariba, Benedito Vieira de Magalh‰es stated, Ò[É] bŠias -frias situation has been dramatic since last year, when the usinas S‰o Martinho (PradŠpolis), Bonfim (Guariba), Santa Ad”lia and S‰o Carlos (Jaboticabal) changed the cane cutting system, establishing the seven rows instead of the five as it was before.Ó 90 The leaders quickly identified the primary complaints around which workers rallied. 88 Welch, A semente foi plantada , 422. CONTAG/CPT/C IMI/CNBB/ABRA/IBASE, ÒCompanha nacional pela reforma agr⁄ria: InformaÓ 8 (Rio de Janeiro - November/December, 1984): 4. Brazilian Popular Groups: Agrarian Reform Collection. Strikes continued to spread throu ghout 1985, 1986, and 1987 as well. 89 The official international harvest year is September 1st to August 31st. The harvest traditionally begins June 1st for southeastern states. S‰o Paulo usineiros would prepare for the beginning of the crushing period fro m the first of May. At least this was the situation in 1978 and presumably the case in subsequent harvests. Governo do Estado de SP, Secretaria da Agricultura, and Instituto de Economia Agricola, Prognostico 78/79 (SP, 1978), 166. 90 ÒSistema de corte da cana e contas de agua levaram crise a Guariba,Ó in Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). In Boia -fria, Sangue Quente: Mobiliza“‰o e resist’ncia dos 252 However, some officials connected the strikes to broader social conflicts. Usineiros like Homero Correa Arruda Filho, the director of the Usina S‰o Martinho, blamed the government, claiming that the Òthe dissatisfaction today is general, principally with complaints against the government, whether on the municipal, state or federal level. Clearly there are those that benefit from this situation. It is strange that explosions like this havenÕt happened before.Ó 91 In his commentary, Arruda indirectly connects the bŠias -frias actions to the broader political mobilization of the Òdiretas j⁄Ó movement. Although it dissipated following the failure of the constitutional amendment to demand democratic elections in 1984, demonstrations in S‰o Paulo and Rio de Janeiro, amongst other cities, built a growing sentiment of the military governmentÕs impending demise. 92 ArrudaÕs comment is a broader critique of the militaryÕs weakening position in the country and its extension into the paulista countryside among assignors through the strikes. This is ironic given the fact tha t the military governmentÕs policies, particularly Pro⁄lcool and the labor deregulation coupled with it in the 1970s, directly led to the regionÕs notable economic success. Conversely, other officials looked at broader economic conditions as the cause. The Sabesp (Companhia de Saneamento B⁄sico do Estado de S‰o Paulo - the Water and Sanitation Company of S‰o Paulo) was the subject of particular ire for bŠias -frias , but Sabesp manager Carlos Alberto Jœlio da Rocha claimed, Òthe explosion of bŠias -frias , [É], is due to the fact that all of these people are living in an extreme situation of misery and hunger. The water bills are assalariados tempor⁄rios rurais (Jabotical: Fase, 1987- mimeo.), 5. Cliff Welch Personal Archive Collection. 91 Ibid. 92 Keck, The WorkersÕ Party , 219-221. 253 only a pretext.Ó 93 Similarly, S‰o Paulo Governor Andr” Franco Montoro responded to the strikes by placing workersÕ desperation in the context of national economic crises. The day after the strike, he noted that with Òinflation at over 200% and the federal government so focused on the external debt, the Nation is approaching the tolerable limit,Ó of which the Guariba strike was an example. S‰o Paulo Secretary of Labor Roberto Gusm‰o connected the national economy to usineiros own greed. In relation to the veritable inflation issue, he stated, ÒBŠias -frias are actually making less this year than last, and on top of that usineiros try to impo se on them the increase in cane collection quotas, [É].Ó94 These state officials used the strikes to criticize usineiros actions and distance themselves from political blame for the conditions that drove workers to strike. As the strikes spread, sugarcane production came to a halt in the region. According to Rog”rio Orsi, local usineiros and president of the sugar cane commission of the S‰o Paulo Agriculture Federation (Federa“‰o da Agricultura do Estado de S‰o Paulo -FAESP), usineiros of the region requested federal support from the notoriously violent Second Army of S‰o Paulo to end the disturbance. The commander , Òresponded that they ought to use good sense and treat their employees better.Ó 95 With threats to expand destructive and costly cane burning at the 93 ÒSabesp nega que tarifa sejam altas,Ó Folha de S‰o Paulo (May 16th, 1984) in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.), 5. 94 Quotes from Governor Montoro and Secretary of Labor Gusm‰o cited in ÒMontoro culpa a crise e Gusm‰o acusa a Ôgan›nciaÕÓ Folha de S‰o Paulo (May 16, 1984) in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, Boia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.), 15. Cliff Welch Personal Collection. 95 ÒOs canaviais da ira,Ó Veja 820 (May 23rd, 1984), 26. 254 beginning of the harvest, usineiros gave in to many of the rural laborersÕ demands to restart sugarcane production during the time-sensitive harvest season. 96 Figure 9: Caneworkers Burn the Fields97 Source: Carlos Fenerich, originally published in Veja (May 23rd, 1984), 20. On May 17th, two days after the strike first started, a coalition of union representatives and usineirosÕ representatives signed a new collective labor agreement, commonly known as the ÒGuariba Accord.Ó 98 Participants included S‰o Paulo State Secretary of Labor Almir Pazzianotto Pinto, FAESP Sugarcane Commission President Rog”rio Orsi, and the presidents of rural unions from Jaboticabal, Guariba, Cravinhos, and Barrinha, amongst other signatories. Workers won a good number of their demands including: a return to the five -row system; an increased 96 Accordin g to a Folha de S‰o Paulo report, usineiros informally agreed to change back to the five -row system and abolish the seven -row system at a meeting at the Jaboticabal Rural Union headquarters that very night. ÒRevolta de bŠias -frias provoca destrui“‰o e mort e,Ó Folha de S‰o Paulo (S‰o Paulo, May 16th, 1984). As published in Federa“‰o de îrg‰os para a Assist’ncia Social e Educacional, BŠia -fria, Sangue Quente: Mobiliza“‰o e Resist’ncia dos Assalariados Tempor⁄rios Rurais (Jabotical: Fase, 1987- mimeo.), 2. Cli ff Welch Personal Archive Collection. 97 Photograph as reproduced in Pastoral do Migrante, Facebook Page, as accessed April 25th, 2015, https://www.facebook.com/PastoraldoMigrante/photos/pb.225506677641289. -2207520000.1430006916./272921229566500/?type=3&th eater 98 Original accord reproduced in Martins, Guariba , 186-187. 255 established price of cane set to Cr$2,100 per ton; employer provided supply of work tools, protection gear like gloves and leather leg guards; free transportation to work; guaranteed worker registration and all the benefits and labor rights that accompany registration. 99 At the same time, workers and state officials alike praised the Accord for the concerted gains workers were able to achieve in a region that had such economic importance and yet workers had had such little political presence. Padre Bragheto recalls, ÒVarious laws arose afterward, in relation to salary, in relation to security on the job, thus, from there, many things changed, so we are like to say that it [the Guariba strikes] was a watershed moment. [É] before Guariba it was one situation and after Guariba it was a different situation. [É] It was an awakening in all the region and these strikes afterward, they started to pop up in various municipal ities, amongst orange grove pickers, amongst cane cutters[.]Ó 100 Strikes spread in the region beyond sugarcane workers. Only days after the Guariba strikes took place, orange workers went on strike in the nearby Bebedouro and beyond. 101 The Guariba strikes set a precedent, illustrating that workers could win basic labor rights through such mobilization and establishing the first collective bargaining agreement between usineiros and salaried workers in the region. Their actions, and the subsequent expansion of rural labor strikes, left an important mark on rural workersÕ struggle for labor rights. It would seem workers were able to win such concessions in the Guariba Accord because of the public nature of the Guariba strikes, which gained so much attention and publicized the poor conditions in which workers lived. As Padre Bragheto stated in an interview with Folha de S‰o Paulo the day after the strikes, ÒOnly the government and usineiros donÕt want to see the 99 Ibid. 100 Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 101 ÒOs canaviais da ira,Ó Veja 820 (May 23rd, 1984), 20. The Bebedouro strike becam e the largest strike of orange workers ever in the country. 256 problem [with work conditions].Ó 102 This statement is true both figuratively and literally. Where workers actions failed to impose compliance with the accord, negative press drew employer and government action. Usineiros faced little pressure to comply with the accord beyond workersÕ strikes. A National Agra rian Reform newsletter reported, ÒThe Guariba accord, [É], has been bungled almost systematically by contractors [empreiteiros ] that provide services for cane suppliers. [É] One of the principal problems for workers is that they do not have anyone to rely on and it is made worse with the futility of the Ministry of LaborÕs supervision system and employersÕ continuing abuse of power.Ó 103 As a result, usineiros often broke the agreement and workers strikes expanded intermittently throughout the 1984, 1985, and 1986 harvests. By late August 1984, workers in Araraquara, Ribeir‰o Preto, S‰o Manuel, Sert‰ozinho, Arapoema, and Andradina had used strikes to contest employersÕ failure to comply with the Accord or additional worker demands. For example, in Araraquara, workers began a strike in July 1984 to protest the usineirosÕ failure to comply with the recently signed Guariba Accord. In July 1984, over a thousand cane workers in the neighboring region of Araraquara protested against the usinas Maring⁄, Santa Cruz, and Santa Lœcia in protest of usineiros failure to comply with the Accord. Usineiros failed to provide protective gear for workers and continued inconsistent payment practices for work completed, both of which were key tenets in the Accord. 102 ÒCoordenador da Pastoral da Terra diz que n‰o ” l™der,Ó Folha de S‰o Paulo (May 17th, 1984). 103 CONTAG/CPT/CIMI/CNBB/ABRA/IBASE, Companha Nacional Pela Reforma Agraria: Informa 8 (Rio de Janeiro - November/December, 1984): 14. Brazilian Popular Groups: Agrarian Reform Collection. 257 While the strikes lasted for undetermined periods, …lio Neves, President of the Rural Laborers Syndicate in Araraquara, stated, Òthe situation in the region is hot.Ó 104 Similarly, sugarcane workers in Sert‰ozinho went on strike in early August. Sert‰ozinho, where the Usina Santa Elisa resided along with five other usinas, was the largest sugar -producing municipality in the country. Workers began the strike at the Usina S‰o Francisco at eight in morning to demand usineiros adhere to payment plans established by the Institute of Sugar and Alcohol (IAA). Batista Antonio, a small cane supplier from the neighboring municipality of Serrana and strike participant, noted, ÒThey only pay 60% of the price of cane with promissory notes for October, which we still have to cash and pay interest on.Ó105 Regular pay for work done was one of the critical demands of the Guariba Accord. By the end of the day, the strikes had spread to 150 workers and paralyzed S‰o FranciscoÕs production for the day, meaning that it stopped the usina from crushin g seven tons of cane for the day. Representatives from the 18 sugar mills and distilleries in the region met with strikers to resolve the issue that same afternoon. The quick response workers could garner from striking became a tool for Òdemanding [their] rights peacefully,Ó according to the President of the Western S‰o Paulo Sugarcane CuttersÕ Cooperative Fernandes dos Reis. 106 Their action illustrates the broader impact of GuaribaÕs success, as more workers pushed usineiros to comply with established rural labor laws with action. Despite the Guariba AccordÕs platform for better relations between workers and usineiros, later workersÕ strikes had less impact and gained less national attention than the initial 104 ÒMil bŠias -frias em greve exigem diss™dio cumprido,Ó O Estado de S‰o Paulo (July 6th, 1984), 9. 105 As cited in ÒProdutores de cana param em Sert‰ozinh o,Ó O Estado de S‰o Paulo (August 11th, 1984), 30. 106 Ibid. 258 Guariba strike. In November 1984, over six thousand rural workers went on strike to demand their continued employment by their employers beyond the short harvest periods. A major strike broke out in Guariba again in January 1985, at the beginning of the second harvest season. These strikes made broader dem ands for better labor conditions but met with less and less success than the initial strike in 1984. In these ongoing conflicts, usineiros and empreiteiros used increasing violence to force workers back to work. In the first strike, the Military Police intervened after the 14 military police posted in Guariba called in backup from the headquarters of the 13th Battalion in Araraquara. The Batallion mobilized 200 troops in Guariba, but over the week of conflict, the Military Police mobilized over 2000 soldie rs from the 80 different cities in the region to control the spreading strikes. 107 Secretary of Public Security Michel Temer asserted that the Military Police did not use excess force to contain the protestors, and Coronel Bonif⁄cio Gon“alves, commander of the policing of the Interior of the Military Police, repeatedly asserted that Òthe PMs did not use their weaponsÓ although Òvarious shots, never a shootout,Ó did occur. 108 And yet, in subsequent strikes, violence quickly spread. Former Secretary of Agriculture Jos” da Silva recalls that the federal government imposed Pro⁄lcool as a part of a Òwartime economyÓ because of the oil shocks, and, at times in the regional conflicts, private owners and Military Police defended it as such. 109 In the nearby city of Arapoema, S‰o Paulo, private ownersÕ henchman (jagun“os do grileiro ) Gilson Santana and the police ambushed and killed the 107 ÒTemer critica trabalhadores e garante que ordem sera mantida,Ó Folha de S‰o Paulo (May 16th, 1984); ÒOs canaviais da ira,Ó Veja 820 (May 23rd, 1984), 20. 108 Ibid. ÒComandante PM reafirma que tropa n‰o atirouÓ Folha de S‰o Paulo (May 17th, 1984). 109 FETAESP, ÒJos” Gomes da Silva volta ao batente: e Secretarias querem disciplinar Pro⁄lcool,Ó Realidade Rural (July, 1984): 8. O Centro de Documenta“‰o e Pesquisa Vergueiro : S‰o Paulo. 259 secretary of the Rural WorkersÕ Union, Hugo Ferreira de Souza, in August 1984.110 The government increasingly condoned this escalating violence, sending in the S‰o Paulo -based Batalh‰o do Choque to violently suppress the conflict in Guariba in January 1985. Workers armed with sticks, stones, and fire confronted hundreds of military -clad soldiers. Witnesses reported that police used home invasions, brutal beatings, tear gas, electric batons, firearms, and clubs against men, women, children, journalists, unionists, and religious leaders to suppress the strikes. 111 Padre Bragheto remained an active supporter of workersÕ mobilization and liberation after the Guariba strikes. He acted as a negotiator and representative of workers in disputes between workers and usineiros, and denounced employer abuses after the Guariba strikes. This made him a target amongst bosses in the region. 112 He recalls , Ò[É] the pressures against us were very strong, death threats, the threat of ambush, you knowÉÓ However, the threats on Bragheto were even stronger. He recalls, ÒOne of those times, out there in Guariba [É], the police caught me, beat me up[.] And Bebed ouro, in the strikes after those in Guariba, which blew up, I was imprisoned, I stayed, I stayed over night detained in jail[.] Thus, it was so, much persecution in this sense, in such a way that I had to leave the region because there were death threats in 110 The National Confederation of Agricultural Workers reported this case to the Ministry of Justice. ÒBŠias -frias preocupam novamente,Ó O Estado de S‰o Paulo (August 16th, 1984), 16; CONTAG/CPT/CIMI/CNBB/ABRA/IBASE, Companha Nacional Pela Reforma Agraria: Informa 8 (Rio de Janeiro - November/December, 1984): 15. Brazilian Popular Groups: Agrarian Reform Collection. 111 Silveira, Igreja e conflito agr⁄rio , 79-81; Di⁄rio do Munic™pio, Di⁄rio Oficial do Estado de S‰o Paulo (DOSP) (November 30, 1984): Section 1, p. 61, accessed September 8th, 2014, 112 According to the FETAESP supported Realidade Rural , he was Òmuito malhado pelos patrłes na regi‰o.Ó Bragheto himself said usineiros blamed him for the strikes, placing a target on his back. FETAESP, ÒSecretarias estouram ÔalojamentoÕ em Pitangueiras: a“‰o exemplar,Ó Realidade Rural (August, 1984): 7. O Cen tro de Documenta“‰o e Pesquisa Vergueiro : S‰o Paulo. 260 Barrinha, a bomb exploding in the parish, and fireworks thrown in the church to blow up the clock tower of the church. All for intimidation.Ó 113 So bad were the threats and violence that his parishioners and colleagues urged him to leave the region. He continued to work with the CPT until he was driven out of the region in 1986 due to his connection to temporary workers and the Guariba strikes. 114 He moved to a parish in Brasil›ndia in the city of S‰o Paulo where he still remains today. As national attentio n turned away from workers and returned to the Òcacophony of recently -mobilized groups,Ó usineiros had less pressure to uphold the Guariba agreement. 115 However, television reports continued to cast a negative light on work conditions, with shows like Jornal Da Terra and Globo Rural running expos”s on rural labor conditions regularly. 116 As a FETAESP report stated, Òafter radio and written press, lately it is television that is becoming a channel where the worker can speak of his problems, present his demands. Ó For example, on August 4th, a local team of Globo TV reporters went to a workersÕ barrack with members from the offices of Labor and Health in Ribeir‰o Preto, Araraquara and Bebedouro unions, and FETAESP to expose the poor conditions on the fazenda S‰o Vicente, owned by the Marchesi Group, which grew cane for the Usina Santa Elisa. 113 Interview with Padre Jos” Domingos Bragheto, Jennifer Eaglin on April 13th, 2013 in S‰o Paulo, SP. 114 Ibid. 115 The term is Cliff WelchÕs but the sentiment is my own. Welch argues that paulista camponeses had Òmemories and structures that they were able to use to make their needs known.Ó While these structures were important, I argue the attention workers gained from television expos”s and expanding media attention kept these issues in the public eye. The y worked in tandem but media attention should be included in a broader definition of these ÒstructuresÓ that Welch mentions. Welch, A semente foi plantada , 434. 116 FETAESP, ÒAos domingos a TV fala do trabalhador rural: e qui vai um conviteÓ and ÒSecretarias estouram ÔalojamentoÕ em Pitangueiras: a“‰o exemplar,Ó Realidade Rural (August, 1984): 3, 7. O Centro de Documenta“‰o e Pesquisa Vergueiro : S‰o Paulo. 261 A month later, the regional newspaper, the Jornal do Interior , reported that the Usina Santa Elisa bought 35 buses to transport bŠias -frias to and from the fields only a few months after the Guariba strikes. The buses held 50 to 65 passengers each and Òwere equipped with boxes for cane -cutting tools and reserves for up to 500 liters of potable water.Ó 117 Cl⁄udio Borges, the transportation manager of the Biagi owned Companhia Agri cola Sert‰ozinho (CASE), of which Santa Elisa is a part, stated that the buses were part of an effort to Òassure more comfort for our rural workers.Ó 118 The usina directed this publicized overture for regional businessmen and urban elite as well as to restor e public perception of the usina. The Usina Santa Elisa again presented its improved worker conditions to the public in an expos” on Dona Guiomar in a Globo Rural report following the Guariba Accord. While Dona Guiomar and her fellow caneworkers cooked their lunches and brought them in the tin cans that earned these workers the name bŠias -frias , the reporters also noted that some usineiros offered trailers that provided heated food. Workers paid Cr$1,460 per month for the company provided food. Paulo Magal h‰es, an Usina Santa Elisa representative, noted that the heated food provided Òpersonal satisfactionÓ for cane workers. 119 However, given the financial burden of purchasing the heated food every month on top of the financial strain described by Dona Guiomar , surely many workers could not participate. Nevertheless, the Usina Santa Elisa sought to distance itself from the negative image of the Guariba strikes and prove that it had made changes to improve workersÕ experience in the cane fields to the public. 117 ÒUsina utiliza Žnibus para transporte de bŠias -frias,Ó Jornal do Interior 86 (Ribeir‰o Preto, Septem ber 10Ð16th, 1984): 10. Folder 50/028, Arquivo Pœblico do Estado de S‰o Paulo : S‰o Paulo. 118 Ibid. 119 Also, Ernesto Paglia, Rede Globo (June 1984) in ÒBoias -frias e o Acordo de Guariba ⁄pos a greve de 1984Ó (July 24th, 2014), YouTube, https://www.youtube.com/watch?v=9ZiZbF6WYUk . Accessed May 1st, 2015. 262 While the Usina Santa ElisaÕs actions were likely in response to the strikes, expos”s on affiliated fazendas and their failure to meet the Guariba agreementÕs parameters may have also driven such actions. Such action responded to an increasingly negative public gaze on the strikes through television reports. In this respect, the strikes substantially strengthened workersÕ visibility and stories on these conditions became a mode of holding usineiros and empreiteiros somewhat more accountable. The Guariba stri kes drew this attention to these conditions and exposing them was seemingly good television. In fact, the Guariba strikes were so popular they inspired a telenovela, O Salvador Da Patria , in the late 1980s. 120 Thus, the Guariba strikes allowed workers to dem and tangible improvements to their working conditions. Appeasing workers was not important to employers but public perception was. The strikes and subsequent negative publicity drove some labor improvements. Overall, the Guariba strikes were an importan t moment in paulista rural labor history. WorkersÕ unprecedented demands and their gains with the Guariba Accord asserted the position of a growing population of workers, salaried temporary workers, which increasingly dominated the rural labor market. Cliff Welch argues that the strikes drew attention to agrarian reform as a central issue for the new civil government to address in 1985, further supporting the far -reaching implications of the strikes. 121 The attention that the strikes garnered first in Guariba spread through the region and the country, extending to sugar and orange -producing regions in Goi⁄s, Minas Gerais, and Paran⁄ as well. Thus, Guariba drew the attention of workers far outside the 120 Paulo Ubiratan et al., ÒO Salvador da Patria, Ó Rede Globo (January 9th, 1989 - August 12th, 1989), accessed September 9th, 2014, . 121 Cliff Welch cohesively summarizes the strikes and Guariba mobilizationÕs influence on the democratic transition. Welch, A semente foi plantada , 432-437. On the point of agrarian reform in the new civil government, a long and more violent struggle for agrarian land reform waged on in the Amazon, but the paulista centrality in Brazilian economics and politics certainly forced the issue into view more for Brazilians of the central -southern region. 263 Rib eir‰o Preto region, motivating other workers to make similar demands of their agricultural employers. 122 Guariba and Critiquing Pro⁄lcool While the Guariba strikes had clear implications for rural labor rights, it also had a lasting influence on reviews of the program in public debate. Over the final two military administrations, President Geisel and then President Figueiredo constructed and promoted Pro⁄lcool around the image of a domestic solution to an international problem that would increase job opportunities for rural laborers throughout the countryside among other benefits. Large -scale producers like Maurilio Biagi Filho continued to promote this position, even as the conditions of this labor expansion grew increasingly exploitative. 123 Efforts to red irect attention to the programÕs successful creation of jobs to garner support for the program became increasingly difficult. For many, it was increasingly clear that the Brazilian government employed Pro⁄lcool to meet its own economic and political intere sts to the detriment of rural laborers. As Jos” Gomes da Silva, founder of the Brazilian Agrarian Reform Association and former Secretary of Agriculture under S‰o Paulo Governor Montoro stated, Òthe real victims of Pro⁄lcool [É] were 122 Confedera“‰o Nacional dos Trab alhadores na Agricultura (CONTAG), RelatŠrio Annual de 1984 (Bras™lia (DF), June 29, 1985), 14Ð25. Brazilian Popular Groups Collection, Arquivo Edgard Leuenroth, UNICAMP: Campinas, S‰o Paulo. 123 As a CPT pamphlet summarized, the program had three key obje ctives: Ò1. To end the oil crisis; 2. To end the external debt (debts that were not made by the people nor had their approval); 3. To end employment inequality between the North and the South of the country.Ó Associa“‰o de solidariedade as comunidades care ntes de MT (Mato Grosso), Comiss‰o pastoral da terra/regional de MT, and Centro de documenta“‰o terra e indio, ÒPro -⁄lcool: Mar de cana, mar de mis”ria,Ó (Cuiab⁄ -MT, 1984): 10Ð11. Brazilian Popular Groups: Agrarian Reform Collection; Maurilio Biagi Filho, ÒO ⁄lcool ” nosso,Ó A Folha de S‰o Paulo (May 9th, 1983). 264 the salaried workers [volantes ], abandoned by the [federal] Government.Ó 124 Such opinions became increasingly common not only among rural workers but among political appointees surrounding the Guariba strikes. Rural workers actions, beginning with the Guariba strikes, drew social and political leaders into a conversation about the broader social impact of the Pro⁄lcool and long -term effects of the military governmentÕs development agenda. These conversations were not new but a connection between social justice and development reem erged around the public nature of the Guariba strikes. Conditions that had been shrouded in the silent dismantling of social responsibility for workers over the past forty years came into sharper view behind the Guariba strikes and the its resolution with the Guariba Accord. As stated in the National Agrarian Reform newsletter issued following the strikes in July 1984, ÒThe recent events in the countryside, the fights, the conflicts and the violence in general against rural workers and their families has at its core the same cause: the model of economic development applied to the agricultural sector.Ó 125 The Guariba strikes briefly forced the national spotlight on the realities of the ÒmodernizedÓ agricultural industry. The spreading notoriety of the Guariba strikes drew into sharp relief the impact of Pro⁄lcoolÕs expansion on workers. The 124 FETAESP, ÒJos” Gomes da Silva volta ao batente: e Secretarias querem disciplinar Pro⁄lcool,Ó Realidade Rural (July, 1984): 8. O Centro de Documenta“‰o e Pesquisa Vergueiro : S‰o Paulo. It is worth mentioning that Gomes da Silva became a strong proponent of land reform and together with Minister Nelson Ribeiro proposed the first National Agrarian Reform Plan of the New Republic (Primeiro Plano Nacional de Reforma Agr⁄ria da Nova Repœblica ) in 1985 to the new President Jos” Sarney, winning him no favor with agricultural elites. Dr. Fl⁄vio Teles de Menezes, President of Sociedade Rural Brasileira (SRB), ÒPaz no Campo,Ó in A Rural 65, n. 594 (December, 1985), 3. 125 CONTAG/CPT/CIMI/CNBB/ABRA/IBASE, Compa nha Nacional Pela Reforma Agraria: Informa 8 (Rio de Janeiro - November/December, 1984): 15. Brazilian Popular Groups: Agrarian Reform Collection. 265 strikes brought vivid imagery and horrific stories of extreme violence, exploitation, and hunger in a region that had prospered most under the program into public debate. The Guariba Strikes inserted Brazilian sugarcane workers in Ribeir‰o Preto into a broader review of Pro⁄lcool as the military dictatorshipÕs engineered development program, opening another avenue of criticism against the program. As the S‰o Paulo State gover nment gained more political independence from the dictatorship and its imposed development plan, government officials like Jos” Gomes da Silva acknowledged the need to address the disproportionate effects of Pro⁄lcool in the state. In fact, the Secretarie s of Agriculture, of the Interior, and of Industry and Commerce formed a commission on the subject to reconsider the direction of Pro⁄lcool in the state and Òlooking to ÔdomesticateÕ the expansion of cane in traditional sectors and under a policy of deconc entration [of land].Ó 126 Such a commission highlights the direct impact that Guariba had on development in the region and how it opened up larger dialogues about development and society for policymakers that had ignored the negative impact of such massive sugarcane expansion for so long. The political transition to democratic elections had an important impact on these state officials ability to criticize the program. Direct elections for governors in 1982 began a wave of political protest that culminated with the huge mobilization of civil society led by the ÒDiretas J⁄Ó movement. The process of political opening that initially began under President Geisel in 1974 and continued through the Figueiredo administration brought direct elections for the presidency earlier than hard -line officers had anticipated. 127 The success of these movements 126 FETAESP, ÒJos” Gomes da Silva volta ao batente: e Secreatrias querem disciplinar Pro⁄lcool,Ó Realidade Rural (July, 1984): 8. O Centro de Documenta“‰o e Pesquisa Vergueiro : S‰o Paulo. 127 Francisco Vidal Luna and Herbert Klein, The Economic and Social History of Brazil since 1889 (Cambridge: Cambringe University Press), 246Ð247. 266 along with a concerted commitment to political opening allowed criticism of the national alcohol program bloom in 1984 along with many other critiques of the military governme nt. At the same time, specialists and businessmen in Pro⁄lcool increasingly questioned the programÕs durability. For example, only five days after the strikes began, the major newspaper, O Estado de S‰o Paulo , published a news series, ÒO programa em deba te,Ó on the program. Engineer and automobile specialist Jo‰o Augusto do Amaral Gurgel reasserted earlier claims of the programÕs inflationary effect on the economy due to increased financing for production without increased income for the government. 128 Of course, rural workers still remained outside of GurgelÕs analysis and many of the other commenterÕs analyses. For example, Minister of Industry and Commerce Camilo Penna quickly dismissed GurgelÕs assessment and the general doubt in the program conveyed by the interviewer, Rodrigues. He argued that Pro⁄lcool, fortified by World Bank financing, Òadds up to internal investment to create jobs, open new economic frontiers, develop specific technology, reduce air pollution, secure contracts for the capital goods industries, offer a beneficial balance with the production of sugar, favor the creation of new businesses, many of which are in the Interior.Ó 129 Under fire, job creation remained a critical counterpoint for government analysis of the program. And yet, Guar ibaÕs influence did reach some commentersÕ analyses. For example, Lamartine Navarro Jr. also commented on the program in the debate. Navarro Jr. was a paulista 128 Rubens Rodrigues dos Santos int erview with engineer and industrialist Jo‰o Augusto do Amaral Gurgel, ÒValeu a pena investir tanto?Ó O Estado de S‰o Paulo (May 20th, 1984), 48. Ultimately, eight specialists contributed to the debate, which was published in segments over nine days. Those excluded from this analysis are: usineiros Olacir Francisco de Morais, specialist Eduardo Celestino Rodrigues, biochemistry professor Walter Borzani, and Petrobr⁄s President and former Minister of Mines and Energy Shigeaki Ueki. 129 Rubens Rodrigues dos Sant os interview with Minister of Industry and Commerce Camilo Penna, ÒPenna rebate as cr™ticas ao Pro⁄lcool,Ó O Estado de S‰o Paulo (May 22nd, 1984), 41. 267 engineer that had worked closely with usineiros and the government in the creation of Pro⁄lcool in the early 1970s. A contributor in the original report on opportunities for large -scale alcohol production with Maurilio Biagi in the 1974 report, ÒFotosintesse como fonte energ”tica.Ó He became one of the first owners of an autonomous alcohol distillery in the early program. 130 In his interview, Navarro revealed that state intervention did seek to address the programÕs social shortcomings. While Navarro quickly dismissed the inflationary accusations about the program, he drew attention to the state of S‰o PauloÕs attempt to integrate a social analytical aspect to program selection. He claimed that the stateÕs proposed intervention in program implementation, articulated in the document ÒGuidelines for the Analysis of Pro⁄lcool Projects in the State of S‰o Paulo,Ó proposed to Òcondition the installation of new units upon Ôfulfillment of labor legislation and collective bargaining in consultation with the Ministry of Labor, Rural WorkersÕ Syndicate and the Federation of Agricultural Workers.ÕÓ 131 Thus, while producers like Navarro opposed greater intervention in the program, state officials sought to address the programÕs apparent iniquities with state restrictions on the national programÕs implementation. The Guariba strikes surely had an influence on such a policy position. Ultimately, the GuaribaÕs strikes remained a blemish on the supportersÕ glowing review of Ribeir‰o PretoÕs own leadership in the program. This was most notable in the contributions of Luiz Lacerda Biagi, exiting president of the BiagiÕs Zani ni S/A, to the debate. The very first 130 Barzelay, Politicized Market , 300n20; Santos, ÒAlcohol as Fuel,Ó 254; Ruben Rodrigues dos Santos inte rview with Lamartine Navarro Jœnior, ÒPretende -se socializar Pro⁄lcool em S‰o Paulo,Ó O Estado de S‰o Paulo (May 23rd, 1984), 22. 131 As cited in Ruben Rodrigues dos Santos interview with Lamartine Navarro Jœnior, ÒPretende -se socializar Pro⁄lcool em S‰o Paulo,Ó O Estado de S‰o Paulo (May 23rd, 1984), 22. S‰o Paulo state government proposed greater control of program implementation in the document ÒDiretrizes para An⁄lise de Projetos do Pro⁄lcool no Estado de S‰o PauloÓ in order to intervene in the program Õs application. Lamartine claims the document proposed to Òdrastically limit the installation of new units or the amplification of already existing [units] in the area defined as non-priority through PrŠ -Oeste.Ó 268 questions posed to Lacerda Biagi referenced the recent Guariba strikes, questioning if the Guariba Accord would make the program unsustainable for producers. Lacerda Biagi tried to evade the topic, responding that the IAA handled the administration of sugar and alcohol prices and thus the IAA would consider pay increases in the next revision of national prices. Additionally, Lacerda Biagi blamed workerÕs mobilization on the exorbitant water and electricity prices (Òup to 1000%Ó) they faced, which redirected the blame to government administration. 132 This response dismissed the structural inequalities woven into the programÕs administration, much like the response of most of the debate participants that sought to promote Pro⁄lcool as an obvious success. However, the interviewer, Rodrigues dos Santos, went further to explicitly connect questions of inflation, surrounding the price of alcohol compared to the price of gasoline, to the forced increase in labor costs for produce rs in his questioning of Lacerda Biagi. In response, Lacerda Biagi boasted of the profits the program generated, stating: Òanhydrous alcohol alone generates 700 million dollars per year toward the public coffers. There is a surplus production of sugarcan e in Brazil, that is to say, if you make a balance of resources that the sector generates and of those that it utilizes, the balance is greatly in favor of an activity that represents a receipt around 12 billion dollars per year in Brazil, if we consider the prices of [refined] sugar, alcohol, sugarcane, and vinhasse [the problematic alcohol by-product most often used as a fertilizer in the fields], and which employs a contingent of around two million workers directly and indirectly.Ó 133 Lacerda Biagi touted the programÕs wealth to assure the public of the programÕs viability, but, in so doing, he reiterates the social issues created through the program, in which producers made large profits and the workers struggled. Most importantly, the interviewer pushed Lacerda Biagi on the topic, thus illustrating the way the Guariba strikes had drawn public attention to these issues. 132 Rubens Rodrigues dos Santos interview with Luiz Lacerda Biagi, ÒSal⁄rio pouco pesa no Pro⁄lcool,Ó O Estado de S‰o Paulo (May 27th, 1984), 42. 133 Ibid. See Table 10 as well. 269 Harvest Production (10,000,000 liters) Number of Direct Jobs (industrial and agricultural) 1975/76 .6 28,200 1976/77 .7 32,900 1977/78 1.5 70,500 1978/79 2.5 117,500 1979/80 3.4 159,800 1980/81 3.7 173,900 1981/82 4.2 197,400 1982/83 5.8 272,600 1983/84 7.9 371,300 1984/85 9.0 423,000 Table 10: Estimated Job Creation Due to Alcohol Production Source: CENAL as published in Rubens Rodrigues dos Santos, ÒPro⁄lcool alcan“ou os objetivos, afirma t”cnica,Ó O Estado de S‰o Paulo (May 25th, 1984), 24. In June 1985, a year after the first Guariba strike, Pedro Zan called Ribeir ‰o Preto Òa model of deve lopment Ó in his O Estado de S‰o Paulo special article. 134 Ribeir ‰o Preto stretched over 3 million hectares (almost 7.5 million acres) with over two million inhabitants by 1985. It was the biggest and largest producer of alternative energy and food in the state of S‰o Paulo. The alcohol industry was an essential part of this economy, strengthening the state of S‰o Paulo Õs national importance and placing a particular spotlight on the region in national politics. This position was tested with the Guariba strikes of 1984, challenging this pervasive image of Ribeir ‰o Preto development on a national scale and more acutely drawing attention to the social iniquities fundamentally woven into the National Alcohol Program. Similarly, Zan pointed to the ideal success of the Usina Santa Elisa an example of Ribeir ‰o PretoÕ s model development. He described the Usina Santa Elisa as follows: 134 Pedro Zan, ÒUm modelo de desenvolvimento,Ó O Estado de S‰o Paulo (June 16th, 1985), 20. 270 ÒThe Usina Santa Elisa is one of the largest and most modern in the country. It occupies an area of 30,000 [discontinuous] hectares [a little less than 75,000 acres] and penetrates 15 municipalities of the State. Its furthest points are 200 kilometers away. At its limits the horizon is mixed with cane -stalks and extensive green area. It is in this location that this year three million ton s of cane with be produced, sufficient for the preparation of 200 million liters of alcohol and 2.7 million sacks of sugar. Ó The principal reference points for the usina are Jaboticabal and Ribeir ‰o Preto, the heart of the Guariba strikes of 1984 and later strikes in 1985. The Usina doubled its area between 1980 and 1985, largely to accommodate a growing alcohol demand. In 1984, the usina had 21,000 hectares, which increased to 30,000 in 1985.135 The aggressive expansion described here was not unique, altho ugh extreme, to Santa Elisa. Sugarcane production reached deeper into the countryside as demand for alcohol was particularly poignant in the dominant alcohol -producing region so close to the central S‰o Paulo market. With over 3,000 employees, 2,000 were rural labor workers. 136 However, the Guariba strikes challenged this idealized version of Pro⁄lcool, the region, and the Usina Santa Elisa. Despite praise of Ribeir‰o Preto and the Usina Santa Elisa, temporary salaried workers had, and continued to, publicly protest the labor con ditions created for the programÕs success. This exposed the underbelly of the military governmentÕs development program. Usineiros won large profits but workers won very little from Pro⁄lcool. Instead temporary salaried workers, or bŠias -frias, expanded dramatically in both the North and the South thanks to labor legislation that facilitated emergence of this short -term labor force. By late 1985, the program remained in trouble, with the World Bank financing drying up and the Brazilian governmentÕs unable to support the program. Strikes continued in the region as the transition to a democratic government began in earnest. Biagi Filho remained an adamant supporter of the program with a bit more humility than his brother, Lacerda Biagi. In his praise 135 Zan, ÒA grande usina. Aqui se produz,Ó 20. 136 Ibid. 271 of the programÕs tenth year, he notes the important impact it had on job production. However, he goes out of his way to address rural workers improved working conditio ns, noting, ÒBetween August of Ô84 and Ô85, the average salary of rural workers for agricultural businesses connected to sugar usinas in the region of Ribeir‰o Preto increased by 300%, providing an excellent salary adjustment and certainly provoking replication in related areas of production.Ó 137 This is not to mention the myriad of other social proble ms that emerged with the program. 138 Still, the Guariba Strikes would contribute to usineiros like the BiagiÕs attention to rural workers more in an increasingly hostile national discourse about the programÕs value. The strikes introduced the social impact of the program. This included not simply citing job production, but forcing these producers and policymakers to engage rural workersÕ experience more amidst a shifting understanding of the programÕs costs. Despite the wealth created through the Pro⁄lcool program in Ribeir‰o Preto, a growing discord around the long -term influence of Pro⁄lcool would have a lasting impact on public debate. The Guariba Strikes were an important part of this broader critique gaining ground in the public discourse around the program. 137 Maurilio Biagi Filho, ÒO balan“o positivo do Pro⁄lcool,Ó Folha de S‰o Paulo (October 6th, 1985). 138 There is a growing literature that analyzes the costs of the program beyond just wages, especially worker dislocation, prostitution, etc. To solely address changes to wages is to simplify the deep impact the program had on the region. However, that is a project for another scholar. For example, see Silva, Errantes ; Scopinho and Valarelli, eds, Moderniza“ ‰o e impactos sociais ; Eliana Tadeu Terci et al. Desconcentra“‰o industrial: impactos socioeconomicos e urb anos no interior paulista (1970Ð1990) (Piracicaba: UNIMEP, 2005). 272 Conclusion Ribeir‰o Preto was the idealized ethanol capital, on which the federal government built its national policy of salvation for the economy. It was the jewel of the interior, through which it purported to develop the interior of the country , diversify economic opportunities for those outside urban centers, and resuscitate the agricultural economy. It was the pinnacle of agricultural industrialization on which the military government had invested a great deal of hope and more importantly fina ncial resources in effort to push its economic development vision for the country. As such, the Guariba strikes in the Ribeir‰o Preto region centrally situated the militaryÕs development agenda, from its inception in the 1960s to its height under Pro⁄lcool , under the public microscope. Pro⁄lcool expanded so quickly due to extensive federal intervention and a great deal of state and local political machinations. However, this process transformed rural workers lives and their place in Brazilian society as the government structured its own development plan behind domestic alcohol for fuel and the alcohol -fueled car. The Guariba strikes brought Pro⁄lcoolÕs broader impact into the public debate, exposing the falsity behind the greater military dictatorship promi se of economic and social stability that had legitimized the government since the coup in 1964. Just as present as the wealth connected with ethanolÕs growth was the troubled social reality that these workers experienced as a result of these drastic change s. The Guariba strikes were an important part of exposing this reality to the Brazilian public. Even as the 273 program continued through the 1980s as the government deregulated the industry, the strikes remained an important part of workers ongoing mobilizati on in the region. 139 139 A good example of the continued labor unrest in the region is the metallurgy workersÕ strikes at the BiagiÕs Zanini S/A in the 1990s. See Santos, A usinagem do capital . 274 Conclusion : Assessing Pro⁄lcool: Deregulation, the State, and Development Pro⁄ lcool Õs premiere position as a development program slipped away quickly in the latter half of the 1980s. Program expansion ended in 1984. With the formal transition back to a civilian government with the entry of Jos ” Sarney in 1985, the military dictatorship came to an end and questions about the program grew. In October 1985, following Petrobr ⁄s officials Õ complaints about the Òalcohol bill,Ó the government pursued an investigation of the program Õs value. Minister of Industry and Commerce Roberto Gusm ‰o and Minister of Mines and Energy Aureliano Chaves put together an interministry working group to evaluate the program. 1 Some, like Maurilio Biagi Filho, remained avid and outspoken supporters of the program and its positive impact on the economy. He supported the government Õs decision to create an evaluation commission on the program, claiming it was Òcorrect , opportune and necessary Ó because ÒPro⁄ lcool demands an full and in-depth examination that considers not only alcohol Õs contribution to a solution for the oil supply problem in Brazil - a problem that almost brought the country to rationing - but also take s into account the impressive universe of interests mobilized by the program, a true productive and technological achievement for important segments of the Brazilian economy. Ó2 Yet, doubts continued to grow despite such rhetoric. That the government wou ld pursue such an investigation revealed the deteriorating position that the program held in the new civilian government. The writing was on the wall for Pro ⁄lcool over the next couple of years. Despite the continued expansion of car sales, consumer supp ort withered around rising alcohol shortages 1 ÒCriado grupo de trabalho para avaliar Pro⁄lcool,Ó O Estado de S‰o Paulo (October 17th, 1985), 34; Maurilio Biagi Filho, ÒPro⁄lcool veio para somar,Ó Folha de S‰o Paulo (November 10th, 1985). The group included representatives from CENAL, the IAA, the CNP, Petrobr⁄s, the Secretary of Control of State Businesses (Sest) and the Ministry of Finance along with the Ministers of Industry and Commerce and Mines and Ene rgy. 2 Maurilio Biagi Filho, ÒPro⁄lcool veio para somar,Ó Folha de S‰o Paulo (November 10th, 1985). 275 between harvests. By April 1989, these problems had become frontpage news with extensive shortages in the country Õs major cities.3 Consumers that had once counted on the government Õs support, and subsidies, of the program lost faith in the alcohol -car. 4 Certainly, there were more issues at play in the in famous alcohol shortage of 1989. Sugar producers tried to pressure the government to increase sugar and alcohol prices, which was a constant battle. According to Veja, sugar producers only began collecting for the harvest after the government raised prices due to Bras ™liaÕs own alcohol shortage. While Copersucar President Zillo had guaranteed that shortages were not a threat to consumers in 1983, the tides had changed by 1989. Indeed, the report indicates that sugar and alcohol producers received an increasingly bad reputation for opportunistic price demands in the midst of the growing alcohol crisis. 5 The once effective promotion of Pro ⁄lcool as a national program completely shifted. Instead, the report describes the program as Òexpensive and ambitious Ó and a Òdramatic farce that makes up the Brazilian consumer Õs everyday .Ó6 In fact, the Veja report points to the alcohol shortage in the seemingly golden Ribeir ‰o Pre to region, including Sert ‰ozinho, from whence over 7 billion of the nation Õs 12 billion annual liters of alcohol came, as proof that the program was failing. Given the program Õs initial implementation to avoid oil shortages, the irony of alcohol shortages was not lost on the Veja author, this author, and likely neither the reader. 3 ÒUm sonho corro™do,Ó Veja 1080 (May 24th, 1989), cover and 102Ð107; ÒA dinastia do ⁄lcool,Ó Veja 1080 (May 24th, 1989), 108Ð110. 4 As one Bahian busines sman Augusto Garrido, owner of the Lido Confec“łes, stated in a Veja interview, ÒI do not feel secure with this government that [is in place]É At any moment, alcohol could lose all its advantages over gasoline.Ó ÒUm sonho corro™do,Ó 102. 5 ÒUm sonho corro™ do,Ó 102. 6 ÒUm sonho corro™do ,Ó 103. 276 While the Copersucar President Werther Annichino blamed government planning, the program Õs reputati on continued to decline. 7 Consumers began to transition back to gasoline -driven cars. Some staunch supporters continued to speak out in favor of the program and its positive long -term impact. For example, former Minister of Finance Delfim Netto argued that , Òthe current [alcohol] shortages have nothing to do with Pro ⁄lcool. Ó8 Former Minister of Industry and Commerce stated that, ÒIt is a crime to speak of deactivating Pro ⁄lcool. Ó9 Nevertheless, in March 1990, the second democratically -elected president, Fernando Collor de Mello, terminated the IAA as part of a neoliberal economic plan to stabilize the struggling Brazilian economy; in August, he recognized the limits of alcohol as a petroleum substitute, formally ending the program Õs expansion. Certainly, alcohol production continued, but the state-led development program as it had existed over the previous dec ade and a half ostensibly ended. The reafter, the sugar and alcohol industry under went extensive deregulation in the 1990s. The removal of the state in the sector fits into a series of neoliberal reforms that swept the country in the 1990s. 10 These reforms successfully removed the state from its central role in the creation and maintenance of the sugar and alcohol industry and replaced the state-led develo pment program with a self-sustaining market. Political scientist M⁄rcia Azanh a Ferraz 7 Ibid. 8 Jo‰o Camilo Penna, ÒChega de inverdades sobre Pro⁄lcool,Ó O Estado de S‰o Paulo (Febraury 27th, 1990), 38. 9 Ibid. 10 These neoliberal reforms, best embodied in the Washington ConsensusÕ promotion of open trade and macro -economic stability for developing countries, once again restructured ideas of development and growth in Brazil as theorists had in the 1930s and 1940s behind structuralism and dependency theory. Rather than looking to the state to intervene, the state became an unwelcome sign of dependence and backwardness that hindered the development of a functioning market in the 1990s. For example, see Haber, ÒThe Eff iciency Consequences of Institutional Change.Ó 277 Dias de Moraes reveals that the deregulation of the sugar and alcohol sector followed its own unique path just as the industryÕs reformation in the 1930s through the earl y 1980s had. Deregulation of the sector began with the end of the IAA and reached its height in 1998 when President Fernando Henrique Cardoso released all sugar and alcohol price controls for a free and floating market in 1998.11 Yet, the sugar and alcohol sector continued to grow as a vibrant private industry. As Historian Amanda Hartzmark points out, sugar producers did just fine without the IAA as they had found new more direct ties to government officials , whether through Copersucar or other access to state officials, that allowed them to secure financial support without going through the IAA. 12 In the 1990s, sugar production accelerated along with rural labor migratio n to Ribeir‰o Preto . The region remains the largest sugar and alcohol production hub in the country. Technology and research around the sector have intensified in the region behind event like the agroindustry fairs and conferences along with expanding research institutes in the interior of S‰o Paulo. Despite the program Õs conclusion, one sho uld look at sugar and alcohol development behind the program in a broader scope. On the 60th anniversary of the Usina Santa ElisaÕs founding in 1996, Roberto Rodrigues, agronomist, former S‰o Paulo State Secretary of Agriculture and future Minister of Agriculture, claimed, ÒMaurilio Biagi was an admirable driver in the cross from agricultural to industrial Brazil. He was one of the constructors of our modernization. The [sugar and alcohol] sector, the region, the state, and the Country owe much 11 Dias de Moraes, A desregulamenta“‰o , 15-16. 12 Hartzmark, ÒBusinesses, Associations, and Regions,Ó 316Ð317; Dias de Moraes, A desregulamenta“‰o , 81. 278 to him and to [the Usina] Santa Elisa.Ó13 Indeed, Biagi was among many paulista producers that defined the growth of the sugar industry, leading one of the more unique varieties of industrial development in Brazilian development history: agro -industry. The sugar and alcohol agro -industry grew in the 20th century with extensive government intervention to assist sugar producers. Peter Evans highlights Brazilian industries in which domestic producers domin ated smaller, less technologically centered industries and foreign producers controlled more industrial sectors in his study of Brazilian development. With his classic case of the Brazilian pharmaceutical industry, he highlights the way Brazilian producers were pushed out of the industry because of the foreign producers Õ technological advantages. In fact, Marshall Eakins extends this argument in his own work, claiming that Brazilian industrial development was defined by a Òlack of technological innovation Ó coupled with Evans Õ triple alliance of foreign capital, domestic entrepreneurs, and state intervention. Evans makes but one mention of the growing Brazilian wealth in the sugar and sugar machinery industry, noting the Ometto/Dedini groupÕs dominance in the respective sector. However, he quickly dismisses them, and thus the industry, stating ÒEven though their Fazenda S‰o Martinho is one of Brazil Õs largest agricultural companies and the Dedini steel company is one of the top twenty in the steel industry, the groupsÕ combined assets still do not put it among the top hundred corporations. Ó14 Despite their leadership in the industry, which the Biagis would rival in the 1970s and 1980s, Evans dismisses the entire industry because their wealth does not reach the top 100 corporations in the country. My work suggests that this dismissal ignores another development model in Brazilian history: the sugar industry and more broadly agro - 13 ÒParab”ns ‹ Santa Elisa,Ó A Revista Santa Elisa: uma his tŠria de trabalho e desenvolvimento , (Ribeir ‰o Preto: MIC Editorial Ltda, 1996), 74; Le‰o de Sousa and de Carvalho Macedo, Ethanol and Bioelectricity , 7. 14 Evans, Dependent Development , 148. 279 industry. This industry was very much shaped by the government Õs own political object ives in alcohol production beginning in the 1930s. The alcohol industry followed a different development model. Born of state intervention, it would unevenly grow alongside an industrializing sugar industry. Formed under the protectionist era of the 1930s by President Vargas, the Institute of Sugar and Alcohol (IAA) would support a dramatic transformation of the sugar industry, physically from the Northeast to the Southeast, and eventually in its nature from a domestic provider to a major world sugar expo rter anew by the 1970s. Initially dominated by foreign owners, domestic producers would push out foreign enterprise by the 1950s with the familial connections and entrepreneurial collaboration fostered in cases like Ribeir ‰o Preto in the 1940s and 1950s. The continued government support for alcohol production in the sugar industry endured as an outlet for sugar overproduction and expanding interest in diminished oil imports. Even still, the symbiotic growth of the sugar and alcohol industry deviates from the traditional industrial development examples presented in Brazilian historiography, primarily because of its agricultural foundation; However, its nature is very much industrial. Peter Eisenberg wrote of a sugar industry whose labor and production struct ure did not modernize at the turn of the century in his classic study, Modernization without Change, but in fact, the milling process did undergo a dramatic industrial expansion thereafter. 15 Where the industry once tied sugar planting and milling togethe r in old antiquated mils of the 19th century, the 20th century saw the arrival of the ÒmodernÓ usina, in which milling and planting were increasingly separate. As usinas spread, with larger, more concentrated milling processing for greater production than its predecessor, room for industrial growth in the industry opened. 15 Eisenberg, The Sugar Industry in Pernambuco . 280 Brazil Õs diminishing hold on the international market, intensified by a stronghold on the world coffee market, drove new sugar mill owners to invest in usinas with slightly more modern processing structures. The collapse of the world sugar market, along with virtually all other markets with the Great Depression in 1930, forced the government to intervene in a sugar industry that was still operating at varying levels of industrialization, with engenhos, central mills, and some usinas, largely owned by foreigners, speckled throughout the industry. Its inefficiency was most defined in the Northeastern market, the historical sugar -producing region of the country. While these producers pushed for increased government intervention to salvage the industry, sugar production in the state of S‰o Paulo, the traditional coffee country, expanded. With this expansion, a more industrial sugar sector emerged. Eventually, producers in the south, surrounded by more industrial development in other sectors, like textiles, food, and metallurgy, and with access to more state-level support in the industrial capital of the country, would usurp Northeastern production in the 1950s. These paulista producers, with their Òmodern,Ó namely mechanized and increasingly concentrated, production models would dominate and define the growth of a truly industrial sugar sector in the 1960s and 1970s. All the while a burgeoning, state-driven alcohol industry would grow alongside it. The government, in the form of the IAA, drove the growth of the alcohol industry. Originally formed as an outlet for chronic overproduction in the Brazilian sugar industry, Moacyr Soares Pereira calls it the first state-led industry. 16 The government completely constructed its demand with government -mandated mixture in the Brazilian fuel beginning in the 1930s. At times of struggle for the industry and the nation, the government promoted the industry as a solution to national problems: whether fuel shor tages, balance of payments 16 Pereira, O problema do ⁄lcool -motor , 165; see chapter 2 of this dissertation, 40. 281 iniquities, or excess sugar production on a slumping international market. At other times, particularly in the 1950s, production fell out of favor. However, it persisted as the sugar industry continued to industrialize and grow. By the 1970s, the sugar industry had grown into a domestic -driven export -oriented Òagro -industry.Ó The term grew around the sugar sector as domestic equipment companies reshaped the very make -up of the sector with massive, concentrated milling factories. Behind government -financed modernization programs in the 1970s, these large -sale units came to define the industry. And here is where the sugar and alcohol industry, so intricately connected in its formation, diverges from the traditional development mode l proposed by Evans and reasserted by Eakins. Unlike Evans contention, the sugar industry remained in the control of domestic producers despite the incorporation of more foreign technology in the 1960s and 1970s. Despite Eakins assertion, domestic technolo gical development drove the industries Õ continued expansion in the 1970s with the creation of the alcohol -fueled car and sugarcane equipment and refined production techniques among other innovations. These developments all occurred under a military dictato rship whose legitimacy was very closely tied to the sugar industry. First, the military pushed the industry Õs expansion behind a renewed agricultural export -led development model in the late 1960s. A newly modernized sugar industry, supported by government aid in the form of the IAA, drove this development model, producing huge profits on a particularly favorable international market in the 1960s and early 1970s. Then, the military dictatorship pursued a grander state-led development plan with the creation of Pro ⁄lcool to address a multitude of economic and political issues facing the government, not least of which was a spiraling development agenda and sky -rocketing oil prices. Once again, government officials would look to the alcohol industry to salvage these issues. 282 I argue that the program continues to defy the traditional Brazilian development models described by Evans and Eakin. My study focuses on the Usina Santa Elisa and the role its owners, the Biagi family, had in the modernization of the sugar industry and the recreation of the alcohol interests within the sugar sector in the 1970s and 1980s under Pro ⁄lcool. Their repeated intervention in the direction of the sugar and alcohol industry Õs development highlight the very important role that domestic sugar producers Õ had in the alcohol industry. These entrepreneurs were able to control foreign investment and technological development to a degree far greater than the pharmaceutical and car industry while remaining outside of complete state control like steel and petroleum. This remains quite unique to Brazilian development, perhaps answering Eakins Õ call to further explore secondary industrial development markets by assessing the place of agro -industry in traditional agricultural producing regions like Ribeir ‰o Preto. 17 Surely the program came with major costs. The agro -industrial nature of the alcohol program allowed the very nature of the sugar industry described by Eisenberg, in which nothing really changed for workers, to intensify and degrade in the case of sugarcane workers under Pro ⁄lcool. In order to make the program work, regulations of the labor market, so tightly wound in the sugar and alcohol production sector, were increasingly loose and indefinite in the labor sector. These were, in fact, damning for workers Õ mobilization and organization in the beginning of the program, further supported by an authoritarian political structure. 18 The reality of the program Õs impact on workers has garnered a great deal of attention in the historiography, with varying claims about the success of the strikes and their broader impact 17 Eakin, Tropical Capitalism , 170Ð175. 18 Although Guillermo OÕDonnellÕs study of bureaucratic authroitatian regimes has been much disputed and revised, his argument about workersÕ suppr ession stands. OÕDonnell, Modernization and Bureaucratic -Authoritarianism , 96. 283 on social relations between workers and the national government. 19 Yet, I argue that workers found a way to insert themselves in the debate on Pro ⁄lcool . Driven by a new labor polic y, insupportable service expenses, and trying living conditions, workers in the country Õs largest alcohol -producing region forced the issue . Their actions won national attention in numerous news sources, and workers experience under Pro ⁄lcool chang ed the national debate on the program. These strikes were part of a general shift in support against the program. This was not the first time, but it was possibly the last time that the program would lose support. Ironically, the strikes helped to justify neoliber al policies that abrogated the IAA and other government support for the alcohol industry. To assume that those that moved away from the program did so because of the Guariba strikes would be to overestimate workers Õ influence on a national political environment that had rather efficiently ignored them for decades. However, I argue that their very insertion into the debate promoted workers Õ own referendum on the failures of the military government Õs development agenda with some success. To say that the great attention the social impact of the program receives in recent Brazilian rural labor histories attests to this point seems ambitious but not overreaching to this author. 20 Today, Pro ⁄lcool remains a polarizing topic. Some argue it was one of the stateÕs most successful development programs to date. Others argue it was a complete disaster, dissolving into the night in the 1990s as a costly blemish on the authoritarian government Õs pockmarked face. Surely both of these perspectives are extreme. The program Õs success or failure is less the issue in my work. Rather I focus on the path of development that the program followed as 19 Welch, A semente foi plantada , 426Ð427. Clifford Welch claims that the strikes influenced the development of the agrarian reform agenda. 20 For example, Thomaz Junior, Por tr⁄s dos canaviais ; Welch, A semente foi plantada . 284 debated, manipulated, and pushed by producers and eventually by workers alike. In this space, there is room for both congratulator y recognition of domestic entrepreneurship to sit next to the critical eye for the program Õs social implications. From a macroeconomic perspective, the program was a success. The state successfully intervened in the market to create a new product, alcohol , structuring consumption and production through government support. However, the stateÕs basic accomplishment came with high costs. The program itself was expensive, totaling more than USD$7.5 billion over the course of the program according to former Minister of Industry and Commerce Jo‰o Camilo Penna .21 Economic scholars might question whether this cost was worthy of the product created. Certainly, in the wave of neoliberal reforms that swept the country in the late 1980s and early 1990s, politicians assessed it to be unworthy. In this respect, Pro⁄lcoolÕ s end, coupled with the end of the IAA itself, fits neatly into the broader neoliberal deconstruction of state-led enterprises in this period. Still, this project reassesses the stateÕs impact in the development of the alcoh ol industry given the industryÕ s success today. This work has unveiled the broader agro -industrial development model followed in the sugar sector that allowed the alcohol industry to emerge under state tutelage. The state was a crucial supporter of alcohol production over the course of the 20th century, without which there likely would not have been sufficient economic incentives to develop this alternative fuel industry. The state pushed technological development in and around the industry that preened it to become the most advanced ethanol industry in the world in the 21st century. 21 Luiz Carlos Correa, ÒPara Camilo Penna, Pro⁄lcool resiste,Ó O Estado de S‰o Paulo (August 19th, 1990), 94. 285 Assessing a development agenda includes more than just its macroeconomic indicators. The social impact of the program belongs side by side with the state-led industryÕs accomplishments. That the industry rem ains such an important part of the Brazilian energy matrix today with a largely mechanized production structure indicates that the issues that boiled over with the Guariba strikes contextualize a larger struggle between capital, labor, and technology that connects Pro⁄lcool and the sugar sector to many other industries today. These coexi sting and conflicting realities shape the complicated history of ethanol development in Brazil, but they are not unique to this industry alone. As countries seek to expand alternative energy options around the world, Brazilian politicians and businessmen, including former President Lula , hav e posited that BrazilÕs success with ethanol might be a viable development path for other sugar -producing countries. Notably, the US and Brazil entered into the 2007 US-Brazil Biofuel Partnership Agreement under President Bush and President Lula in which both countries have sought to expand the ethanol market and share technology and research information to encourage the the diversificatio n of the world energy matrix further with ethanol. In addition, the agreement has fueled trilateral projects between the US and Brazil in third -party countries, such as the Domincan Republic, Haiti, St. Kitts, Nevis, and El Salvador. 22 Yet, my research indicates that the Brazilian state created very specific conditions over numerous decades that allowed the industry to develop the way that it did. These conditions are not easily replicated, but their implications, macroeconomic and social, indicate that any attempt to do so within an expanding global biofuel market will likely require extensive state intervention to achieve with numerous social ramifications that come in tow. As such, the 22 Bureau of Western Hemisphere Affairs, ÒAdvancing Cooperation on Biofuels: U.S. -Brazil Steerin g Group Meets August 20 in Brasilia,Ó US State Department Archive, published August 22nd, 2007, http://2001 -2009.state.gov/p/wha/rls/fs/2007/91399.htm. 286 Brazilian ethanol case is a notable tale for alternative energy dev elopment today, with highs and lows that need to be considered and addressed head -on. 287 APPENDIX 288 Figure 10: Alcohol Production, 1936Ð1960 Source: IAA, Anuario Acucarareiro, 1951 and 1966 editions. Alcohol production measured in millions of liters. The IAA supported alcohol production explicitly beginning in 1933. Anhydrous alcohol first entered the market in 1934. Used in the gasoline mixture promoted by the IAA, anhydrous alcohol grew more slowly than hydrous alcohol, but the overall level of alcoholÕs expansion highlights the successful intervention of the federal government to promote alcohol production. !"# $%&"# %&!"# '(&"# &!!"# )%&"# $*')#$*'+#$*,!#$*,%#$*,,#$*,)#$*,+#$*&!#$*&%#$*&,#$*&)#$*&+#$*)!#-./0123# 456./0123# 7189:# 289 Year Alcool -motor production Alcohol Gasoline Kerosene Other Value correspondin g to gasoline substituted by alcohol (Cr$) 1932 19,265,909 12,147,957 7,096,405 16,491 5,056 3,328,540 1933 14,620,854 12,963,002 1,638,996 23,933 4,923 3,030,379 1934 27,285,269 14,115,963 13,154,824 14,278 204 3,373,715 1935 47,524,474 16,741,945 30,776,386 3,527 2,616 5,876,423 1936 138,611,595 24,340,393 114,268,502 2,700 --- 8,519,137.50 1937 112,342,593 18,446,646 93,858,920 35,826 1,201 6,991,278.80 1938 213,477,743 32,689,879 180,774,813 11,592 1,459 11,408,767.70 1939 312,683,596 49,065,372 263,613,752 2,920 1,552 21,539,698.30 1940 299,216,620 44,834,030 254,382,328 --- 262 17,664,607.80 1941 462,509,137 102,789,512 359,714,871 4,713 41 45,741,332.80 1942 290,575,449 104,692,135 185,619,753 1,421 262,140 46,588,000.10 1943 144,472,374 87,934,676 56,507,970 --- 29,728 55,838,519.30 1944 141,736,330 82,831,623 58,777,538 --- 127,169 40,587,495.30 1945 111,242,247 36,133,748 75,108,499 --- --- 15,284,575.40 Table 11: Alcohol -Motor Mixture, 1932Ð1950 (in liters) Source: IAA, Anuario A“ucareiro 1950Ð1951, 76; de Melo, A pol™tica do ⁄lcool -motor , appendix. 290 Table 11 (contÕd.) 1946 117,812,916 28,221,688 89,591,228 --- --- 13,264,193.40 1947 558,779,589 76,067,105 482,712,484 --- --- 39,783,095.90 1948 633,579,529 92,903,343 540,676,186 --- --- 48,588,448.40 1949 466,751,745 70,724,786 396,026,959 --- --- 40,525,302.40 1950 111,448,618 10,852,440 100,596,178 --- --- 6,392,087.20 291 Year Gasoline imports subject to denaturing Quantity of anhydrous alcohol corresponding to legal quota Production of anhydrous alcohol Number of Distilleries Capacity Daily Annual 1933 293,565,711 14,678,286 100,000 1 12,000 1,800,000 1934 353,523,763 17,676,188 911,861 5 48,000 7,200,000 1935 394,008,149 19,700,407 5,411,429 14 138,500 20,775,000 1936 430,757,560 21,537,878 18,462,432 26 275,000 41,250,000 1937 449,177,202 22,458,860 16,397,781 27 377,000 56,550,000 1938 482,503,809 46,804,839 31,919,934 30 427,000 64,050,000 1939 497,201,938 49,720,194 38,171,502 31 437,000 65,550,000 1940 584,935,070 58,493,507 53,473,533 38 572,000 85,800,000 Table 12: National Alcohol -Motor Production Capacity, 1932Ð1940 (in liters) Source: de Melo, A pol™tica do ⁄lcool -motor , appendix. 292 Usina 1951/52 1952/53 1953/54 1954/55 1955/56 1960/61 Santa Elisa Sugar: 133,159 Alcohol: H: 1,392,300 A: n/a 126,289 125,0971 n/a 170,400 1,282,843 n/a 188,000 1,821,070 n/a 157,166 1,681,320 n/a 483,562 1,604,400 1,868,000 Da Pedra Sugar: 214,637 Alcohol: H: 1,987,000 A: n/a 237,173 2,460,000 n/a 302,349 2,442,538 255,200 288,200 1,398,880 2,026,100 260,860 956,120 2,643,900 403,889 1,463,700 2,507,300 S‰o Geraldo Sugar: 64,003 Alcohol: H: 470,012 A: n/a 83,304 665,000 n/a 117,128 1,130,400 215,500 152,410 300,642 2,394,350 116,187 207,400 2,601,610 282,840 n/a 2,528,900 Santo Antonio Sugar: 54,712 Alcohol: H: n/a A: n/a 71,501 n/a n/a 94,602 n/a n/a 103,644 n/a n/a 104,476 n/a n/a 265,572 n/a 3,800,000 Santa Lydia Sugar: 47,135 Alcohol: H: 383,745 A: n/a 69,877 534,690 n/a 96,999 983,500 n/a 104,374 1,157,910 n/a 102,505 597,060 n/a 188,851 419,000 1,523,300 Table 13: Sugar and Alcohol Expansion in the Ribeir‰o Preto Region in the 1950s Source: IAA, Anuario Acucareiro , 1950, 53Ð56, and 60/61 Ð65/66 editions. H=hydrous alcohol and A= anhydrous alcohol 293 Year GDP Growth Rate (%) Agriculture (% of Total GDP) Industry (% of Total GDP) 1964 3.4 16.28 32.52 1965 2.4 15.86 31.96 1966 6.7 14.15 32.76 1967 4.2 13.71 32.03 1968 9.8 11.79 34.77 1969 9.5 11.39 35.24 1970 10.4 11.55 35.84 1971 11.3 12.17 36.22 1972 12.1 12.25 36.99 1973 14 11.02 39.59 1974 9 11.44 40.49 1975 5.2 10.75 40.37 Table 14: National Growth Rates, 1964Ð1975 Source: Baer, Brazilian Economy , 462. Note that the remaining % of GDP went to the Service Sector. 294 Figure 11: Monthly World Sugar Prices, 1973Ð1982 Source: Sugar prices from International Sugar Organization, Sugar Yearbooks as published in Santos, ÒAlcohol as Fuel,Ó 600. !"# $&"# '!"# ,&"# )!"# ;95<(!# =>?<($# @90<(%# 4A0<('# @9.<(,# ;25<(&# ;2:<()# 42B<((# C>A8<(+# DE8<(*# F1G<+!# H>E<+$# Sugar Prices (US ¢ per lb.) 295 Figure 12: World Oil Prices, 1973-1982 Source: Oil Prices reflect OPEC prices in nominal prices Data from International Crude Oil and Products Prices (Beirut, Lebanon) and Michael C. Lynch from Energy Laboratory, MIT as published in Santos, ÒAlcohol as Fuel,Ó 590. !"# $!"# %!"# '!"# ,!"# ;95<('# F1G<('# C>A8<(,# ;2:<(&# @9.<()# @90<((# ;95<(+# F1G<(+# C>A8<(*# ;2:<+!# @9.<+$# @90<+%# Oil Prices ($ per barrel) DI:#J0IE>3#KL#A>0#?900>:M# 296 Year Exports Imports Trade Balance Current Account 1970 2739.00 2507.0 232.00 -562.00 1971 2904.00 3245.0 -341.00 -1037.00 1972 3991.00 4235.0 -244.00 -1489.00 1973 6199.00 6192.2 7.00 -1688.00 1974 7951.00 12641.3 -4690.30 -7122.40 1975 8669.90 122210.3 -3540.40 -6700.20 1976 10128.30 12383.0 -2254.70 -6017.10 1977 12120.10 12023.0 97.10 -4037.30 1978 12658.90 13683.1 -1024.20 -6990.40 1979 15244.40 18083.1 -2838.70 -10741.60 1980 20133.00 22954.0 -2821.00 -12807.00 1981 23292.00 22092.0 1200.00 -11734.00 1982 20176.00 19395.0 781.00 -16311.00 1983 21899.00 15429.0 6469.00 -6837.00 1984 27006.00 13916.0 13088.00 45.00 1985 25642.00 13154.0 12487.00 -242.00 Table 15: Brazilian Balance of Payment (in US$ millions) Source: Werner Baer, The Brazilian Economy: Growth and Development 5th ed. (Boulder: Greenwood Press, 2001), 468. 297 Year Real Minimum Wage (Growth Rate) Inflation Rate 1970 1.8% 16.4% 1971 -.9% 20.3% 1972 -2.7% 19.1% 1973 -3.4% 22.7% 1974 5.4% 34.8% 1975 -5.1% 33.9% 1976 1.7% 47.6% 1977 -.9% 46.2% 1978 -1.7% 38.9% 1979 -17% 55.8% 1980 2.5% 110% 1981 -1.90% 95% 1982 .70% 100% 1983 -10.20% 211% 1984 -8.80% 224% 1985 -10.10% 235% Table 16: Brazilian Annual Inflation Rate (Average), 1950Ð1985 Source: Werner Baer, The Brazilian Economy: Growth and Development 5th ed. (Boulder: Greenwood Press, 2001), 470-471. 298 Harvest year Cane crushed (1,000,000 tons)* Sugar produced Alcohol produced 1975/76 68.3 68,322,619 555,627 1976/77 87.8 87,826,664 662,598 1977/78 104.6 104,633,795 1,470,404 1978/79 109.7 107,626,377 2,490,603 1979/80 117.3 112,648,423 3,396,455 1980/81 132.1 123,006,681 3,706,375 1981/82 133.3 132,886,342 4,240,123 1982/83 166.7 166,178,592 5,823,339 1983/84 210.0 196,742,941 7,8674,208 1984/85 228.0 201,218,937 9,129,329 Table 17: Sugarcane Crushed and Production of Sugar and Alcohol, 1970Ð1985 Source: Unica data as cited in Dias de Moraes, A desregulamenta “‰o do setor sucroalcooleiro do Brasil , 27-28. *Cane crushed data from IAA as cited in Pamplona, Pro⁄ lcool , 25. 1984/85 is an estimate. 299 Harvest North/Northeast Center -South Brazil 1975/76 25,600,659 42,721,960 68,322,619 1976/77 34,530,942 53,295,722 87,826,664 1977/78 35,683,051 68,950,744 104,633,795 1978/79 36,169,466 71,456,911 107,626,377 1979/80 35,224,179 77,424,244 112,648,423 1980/81 40,248,489 82,758,192 123,006,681 1981/82 41,731,267 91,155,075 132,886,342 1982/83 50,210,312 115,968,280 166,178,592 1983/84 52,221,376 144,521,565 196,742,941 1984/85 57,072,802 144,146,135 201,218,937 Table 18: Evolution of Sugar Production, 1975/76 Ð1984/85 Source: Unica data as cited in Dias de Moraes, A desregulamenta“‰o , 28. 300 Harvest North/Northeast Center -South Brazil 1975/76 93,790 461,837 555,627 1976/77 110,511 553,087 662,598 1977/78 207,795 1,262,609 1,470,404 1978/79 411,252 2,079,351 2,490,603 1979/80 569,245 2,827,210 3,396,455 1980/81 650,472 3,055,903 3,706,375 1981/82 825,720 3,414,403 4,240,123 1982/83 1,188,288 4,635,051 5,823,339 1983/84 1,129,635 6,734,573 7,864,208 1984/85 1,603,841 7,588,488 9,129,329 Table 19: Evolution of Alcohol Production, 1975/76 Ð1984/85 (in cubic meters) Source: Unica data as cited in Dias de Moraes, A desregulamenta“‰o , 27. 301 Harvest Total Anhydrous Hydrous 1930/31 33.3 N/A 33.3 1931/32 37.4 N/A 37.4 1932/33 39.0 N/A 39.0 1933/34 43.4 .1 43.3 1934/35 54.3 3.2 47.2 1935/36 62.0 7.7 54.3 1936/37 57.4 14.1 43.3 1937/38 63.9 20.6 43.2 1938/39 92.3 36.5 55.8 1939/40 92.3 36.5 55.8 1940/41 126.6 67.6 59.0 1941/42 128.6 70.6 57.9 1942/43 151.7 76.9 74.8 1943/44 125.0 46.6 78.3 1944/45 119.8 30.4 89.3 1945/46 106.5 26.1 80.4 1946/47 117.0 36.1 80.9 1947/48 143.8 61.5 82.3 1948/49 167.3 75.1 92.2 1949/50 135.6 30.6 105.0 1950/51 140.1 28.4 111.7 Table 20: Brazilian Alcohol Production, 1930/31 Ð1982/83 (in millions of liters) Source: Unica data as cited in Dias de Moraes, A desregulamenta“‰o , 27 and Santos, ÒAlcohol as Fuel,Ó 620. 302 Table 20 (contÕd.) 1951/52 170.4 50.0 122.4 1952/53 229.5 99.1 130.4 1953/54 274.0 144.5 129.5 1954/55 306.2 168.5 137.7 1955/56 283.2 165.8 117.3 1956/57 252.4 104.4 148.0 1957/58 398.8 245.1 153.7 1958/59 444.2 281.7 162.5 1959/60 472.0 302.1 170.0 1960/61 456.3 175.3 281.0 1961/62 427.5 206.2 221.3 1962/63 343.7 101.1 242.6 1963/64 405.5 96.1 309.4 1964/65 387.0 110.2 276.7 1965/66 602.7 336.3 266.4 1966/67 727.5 382.1 345.3 1967/68 676.3 358.5 317.8 1968/69 473.6 143.3 330.3 1969/70 461.6 100.4 361.2 1970/71 637.2 252.4 384.8 1971/72 613.1 389.9 223.1 1972/73 681.0 388.9 292.0 1973/74 660.0 306.2 359.8 1974/75 625.0 216.5 408.4 303 Table 20 (contÕd.) 1975/76 555.6 232.6 323.0 1976/77 664.0 300.3 363.7 1977/78 1470.4 1176.9 293.4 1978/79 2490.6 2095.6 395.0 1979/80 3396.4 2713.4 683.1 1980/81 3706.4 2104.0 1602.3 1981/82 4240.1 1453.1 2787.0 1982/83 5823.3 3549.7 2273.6 304 BIBLIOGRAPHY 305 BIBLIOGRAPHY Primary Sources Archival Sources: Associa“‰o de Come rcio e Indœstria de Ribeir‰o Preto (ACIRP) Arquivo Nacional, Rio de Janeiro Instituto do A“œcar e do çlcool (IAA) Collection Arquivo Nacional, Bras™lia Arquivo Pœblico e HistŠrico de Ribeir‰o Preto , Municipal Archive of Ribeir‰o Preto Arquivo Pœblico do Estado de S‰o Paulo Arquivo Edgard Leuenroth (AEL) , Universidade Estadual de Campinas (UNICAMP) Brazilia n Popular Groups Collection Biblioteca Canaoeste, Sert‰ozinho, S‰o Paulo O Centro de Documenta“‰o e Pesquisa Vergueiro, S‰o Paulo Published Primary Sources: Anu⁄rio A“ucareiro (1938-1967) Brasil A“ucareiro (1934-1979) Newspapers and Magazines: Di⁄rio do Munic™pio Estado de S‰o Paulo Folha de S−o Paulo Jornal do Brasil Realidade Rural Veja Personal Collection: Clifford Welch 306 Interviews: Biagi Jr., Maurilio. 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