Economic efficiency in the production of sugar and eethanol: an analysis of several mills of São Paulo state

Abstract

In the current global trend to search cleaner and more efficient energy, the Brazilian ethanol can perform an important role, not Only internally but also in the international scenery, because it is revealing itself as a biofuel with very high energy balance and also because its consistent productivity improvements in the last decades - mostly in São Paulo state. This work achieves multicriteriaL efficiency indicators employing DEA (data envelopment analysis) modeling for a sample of 38 ethanol and sugar mills in São Paulo state. Data from the 2006 financial balance sheets such as fixed and plant assets and expenses figure as entry variables, while sugarcane production levels beyond the gross yield and gross operational profit are used as output variables according to the DEA modeling. A cluster analysis identified three groups of mills with different economic efficiency levels. Kruskal-Wallis tests found significant statistical differences among the efficiency of the three clusters due mostly to the differences among the levels of investment and assets allocation and not due to the result variables such as sugarcane production, gross yield or operational profit. The results of this research can represent a support or practical implications for managers of sugar and ethanol mills by supplying parameters in order to make comparisons of the operational and economic performance among mills. Limitations and future researches are also presented.