...BIOFUELS 50 QUESTIONS AND ANSWERS ABOUT THIS NEW MARKET Ministério das Minas e Energia BIOFUELS 50 QUESTIONS AND ANSWERS ABOUT THIS NEW MARKET Presentation T he history of biofuels in Brazil began with pioneering tests carried out between 1905 and 1925 with ethanol. In 1931, the Brazilian Government passed a decree which obliged the mixing of 5% of alcohol in gasoline imported in to the country; seven years later, Decree-Law No. 737 extended the obligation of mixing 5% of alcohol also to gasoline produced within Brazil. In the 60s, the discovery of vast oil reserves in the Middle East lessened the world’s interest in biofuels. However, with the first world oil crisis in 1973, the search for new energy sources restarted. In 1975, Brazil launched the National Alcohol Program (known as Proálcool) – the largest program for the commercial use of biomass for energy purposes in the world. Two years later, Professor Expedito Parente, of the Ceará Federal University, discovered biodiesel made from cotton oil and, in 1980, he registered the first world wide biodiesel patent, now in the public domain. Throughout the world, with the passing of the years and the intermittent energy crises, associated to a greater demand for fossil fuels, new and strong stimuli emerged for the development of production technologies both for ethanol and biodiesel. These two products are starting to have a leading role in the world’s energy matrix and in the international fuel market. Thanks...
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...TRANSPORT INFRASTRUCTURE IN BRAZIL AND THE CONSEQUENCES OF DEVELOPMENT FAILURE 5335 Wisconsin Ave NW Suite 440 Washington, DC 20015 tel 202.274.1830 fax 202.274.1831 James Gregoire Copyright © February 2011 www.nexusinfrastructure.com Transport Infrastructure In Brazil and the Consequences of Development Failure CONTENTS ABSTRACT .........................................................................................................................................................1 I. INTRODUCTION .......................................................................................................................................1 A. Airports ................................................................................................................................................4 B. Roadways .............................................................................................................................................5 C. Rail ..........................................................................................................................................................7 D. Ports ......................................................................................................................................................8 E. Summary .............................................................................................................................................9 III. SPECIAL FACTORS ..................................
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...CASE STUDY 1 BUNGE LIMITED Jonathan West ‘We are at a very special moment in the history of Bunge. We have reached one plateau. Now, we need to go to the next round of change. We constantly need intellectual jolts to the company.’ (Alberto Weisser, CEO of Bunge Limited) In July 2002, Bunge, a global agribusiness and food company, announced that it would purchase Cereol, a global oilseed processor, based in France. The acquisition would transform Bunge, making it the world’s leading oilseed-processing company, and give it a more balanced geographic footprint, as well as access to new products, but would substantially increase the complexity of the company’s product lines, locations and personnel. Less than a year before, on 2 August 2001, Alberto Weisser, Bunge’s CEO, rang the opening bell on the New York Stock Exchange, as Bunge successfully went public after more than 180 years as a private company. The company had primary operations in North and South America and worldwide distribution capabilities. Bunge was the largest processor of soybeans in the Americas and among the world’s leading exporters of soybean products. It was the largest fertiliser producer and supplier to farmers in Latin America. It was also a leader in vegetable oil and wheat-based food products for food manufacturers, food service companies1 and consumers. Bunge’s net sales in 2001 were $11.5 billion (see Exhibits 1 and 2 for Bunge’s financials). Bunge had undergone a dramatic transformation over...
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............................................................................ 7 3 MILITARY EXPENDITURE - NATO ............................................................. 8 4 CONCLUSION ............................................................................................9 BIBLIOGRAPHY 10 3 1.1 INTRODUCTION AND STRUCTURE The acronym BRIC summerize countries: Brazil, Russia, India and China. The BRIC countries are promising due to its huge population and the long-lasting economic growth, that’s why expectations of the market development are high. The inventor of the BRIC concept, Jim O'Neill, chief economist at the investment bank Goldman Sachs, published the study,, Dreaming with BRICs: The Path to 2050 " in 2003. His sensational report predicted:,, Over the next 50 years, Brazil, Russia, India and China ,the BRIC economies, could become a much larger force in the world economy”. O'Neill forecasts that already in 2040 the BRIC countries could achieve together a stronger economic power than the G6 countries USA, Japan, Germany, France, Great Britain and Italy. ( O`Neill, 2003, S.3 ff.) After the dissolution of Soviet Union, the bipolar world is no longer...
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...Agriculture in Brazil Agriculture represents a big share of Brazilian economy ever since it was still a colony of Portugal. The first product consolidated was sugarcane, then coffee and later dairy. Brazil is now the third biggest agriculture exporter behind the USA and European Union only. The factors responsible for Brazil’s growth in global scenario are the available natural resources (soil, water and light), the diversity of products offered, the growth in agriculture area and productivity, growth in demand from Asian countries, among others. It is now the biggest exporter in sugar, cattle meat, poultry meat, coffee, orange juice, tobacco and ethanol (Landim, 2010). Food production in Brazil takes over 282 million hectares, approximately. In 2005, agribusiness was responsible for 27,9% of the national Gross Domestic Product (GDP), 36,9% of exportations e 37% of employments. Almost 40% of the agribusiness gross production is originated in family based farms (Spadotto, 2005). Thanks to the government’s investment in research through companies like Embrapa it was possible to grow 4.7% per year in productivity between 1990 and 2009 with only 1.7% growth in area. According to França et al (2009) between the last two Agribusiness Census made by the Brazilian government to measure the expansion of the national agriculture it was noticeable that the mid-west region was consolidated as a major production area, soybean production expanded into new areas like the north and northeast...
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............................................................................ 7 3 MILITARY EXPENDITURE - NATO ............................................................. 8 4 CONCLUSION ............................................................................................9 BIBLIOGRAPHY 10 3 1.1 INTRODUCTION AND STRUCTURE The acronym BRIC summerize countries: Brazil, Russia, India and China. The BRIC countries are promising due to its huge population and the long-lasting economic growth, that’s why expectations of the market development are high. The inventor of the BRIC concept, Jim O'Neill, chief economist at the investment bank Goldman Sachs, published the study,, Dreaming with BRICs: The Path to 2050 " in 2003. His sensational report predicted:,, Over the next 50 years, Brazil, Russia, India and China ,the BRIC economies, could become a much larger force in the world economy”. O'Neill forecasts that already in 2040 the BRIC countries could achieve together a stronger economic power than the G6 countries USA, Japan, Germany, France, Great Britain and Italy. ( O`Neill, 2003, S.3 ff.) After the dissolution of Soviet Union, the bipolar world is no longer...
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...SA, has faltered in Brazil. The reason: Brazilian women from the banks of the Amazon to Sao Paulo's slums and the affluent beach communities of Rio de Janeiro have traditionally bought their skin creams and mascaras from door-to-door sales representatives, not the shops where L'Oréal sells its brands. Cosmetics giant L'Oreal is trying to change the way Brazilian women buy makeup. WSJ's Christina Passariello reports from Rio De Janeiro. The French company won't use the direct-sales approach, but the company has adopted a strategy that takes a page from it: introducing personal beauty advisers at department stores. L'Oréal also plans to offer a new line of lightening creams at pharmacies. "Our big bet here is to create a makeup business in retail from scratch," said Jean-Paul Agon, L'Oréal chief executive, as he picked up a tube of Maybelline mascara, one of his company's many brands, in a Lojas Americanas department store in a middle-class Rio neighborhood. "The more the market develops, the less relevant direct sales will be." For L'Oréal, winning over Brazilian women is crucial if it is to meet its goal of adding one billion consumers—a doubling of its current clientele—over the next decade. L'Oréal currently makes about a third of its €17.5 billion ($23.36 billion) in yearly sales from emerging markets, and it wants to increase that to half by 2020. But despite its well-known brands—from Maybelline and Garnier to Lancôme–L'Oréal's growth in Brazil has been unsteady at...
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...government policies to promote production in ethanol because it created a incentive for farmers to plant more crops that can be turned into biofuels, and also farmers receive subsidies from the government between .29 to .36 per liter of ethanol. Placing a tariff on imports of sugar cane hurts the producers of sugar cane, and consumer of sugar cane such Brazil and typical consumers because nations such as United States tariff is 25 % of the value, and Eu tariff is 50 % of tariff. Now consumer must pay much more, and Brazil is left uncompetitive in the bigger markets. The final consumer and producer of sugar cane which is Brazil suffers the most from those policies. 2. If food prices are projected to raise to 1/3 of the price, reducing living standards in rich countries by about 3 %, and in poor countries by 20% , products such as cereal rising 10 to 20 % by 2015, and biofuel production reducing calorie intake by 2 to 8 % by 2020 in many of the world`s poorest country this is huge so rich countries should definitely do something, because the balance in the economy between the rich and poor will shift greatly with more poor`s in developed nations. An in the poor nations with calorie intake increasing the demand for food will continue to rise eventually until poor nations can`t afford it and a large amount of their population dies from starvation. So this issue creates starvation, increase poverty, and increase food prices. 3. If ethanol results in lower CO2 emissions...
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...PETROLEUM IN BRAZIL: Petrobras, Petro-Sal, Legislative Changes & the Role of Foreign Investment ANDREW D. FISHMAN George Washington University Washington, DC 20052 (860) 690 - 7553 AFishman11@Gmail.com Introduction On November 8, 2007, the state-owned Petróleo Brasileiro S/A (Petrobras) announced that it had discovered a “monstrous” reserve of light oil in the Tupi field of the Santos basin, off the coast of southern Brazil. A day later it removed 41 adjacent exploration blocks from a scheduled government concession auction to reanalyze how to best exploit the new resources.1 Since opening its petroleum industry in 2007, Brazil has attracted hordes of foreign corporations and created hundreds of thousands of jobs. In 2009 President Lula proposed sweeping changes to the industry in the form of four bills that would greatly increase the government’s involvement and relegate foreign oil companies to the role of “subservient partners.” In that same year, Petrobras successfully executed a public stock offering worth almost $79 billion (bn). Yet despite the largest public offering in history and tens of billions of barrels in proven and expected reserves, analysts at Credit Suisse and Deutsche Bank, among others, have downgraded Petrobras’ investment rated to “neutral” and “hold,” respectively. Despite incredible potential, uncertainty over the potential increase in government control, over-ambitious targets, infrastructural bottlenecks, technological capabilities, and corruption...
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...to promote production in ethanol because it created a incentive for farmers to plant more crops that can be turned into biofuels, and also farmers receive subsidies from the government between .29 to .36 per liter of ethanol. Placing a tariff on imports of sugar cane hurts the producers of sugar cane, and consumer of sugar cane such Brazil and typical consumers because nations such as United States tariff is 25 % of the value, and Eu tariff is 50 % of tariff. Now consumer must pay much more, and Brazil is left uncompetitive in the bigger markets. The final consumer and producer of sugar cane which is Brazil suffers the most from those policies. 2. If food prices are projected to raise to 1/3 of the price, reducing living standards in rich countries by about 3 %, and in poor countries by 20% , products such as cereal rising 10 to 20 % by 2015, and biofuel production reducing calorie intake by 2 to 8 % by 2020 in many of the world`s poorest country this is huge so rich countries should definitely do something, because the balance in the economy between the rich and poor will shift greatly with more poor`s in developed nations. An in the poor nations with calorie intake increasing the demand for food will continue to rise eventually until poor nations can`t afford it and a large amount of their population dies from starvation. So this issue creates starvation, increase poverty, and increase food prices. 3. If ethanol results in lower...
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...INSTRUCTORS MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT, 9TH ED. CHAPTER 15 SUGGESTED ANSWERS TO CHAPTER 15 QUESTIONS 1. As seen in Exhibit 15.2, Hong Kong stocks are over twice as volatile as U.S. stocks. Does that mean that risk-averse American investors should avoid Hong Kong equities? Explain. ANSWER. No. Although Hong Stock stocks are much more volatile /than U.S. stocks, their systematic component of risk is relatively low because of the low correlation with the U.S. market. The net result is that the systematic risk (beta) of the average Hong Kong stock from a U.S. perspective is only 0.85, compared with a beta of 1.0 for the average U.S. stock. In other words, diversifying into Hong Kong stocks will reduce the riskiness of a portfolio currently concentrated in U.S. stocks. 2. What characteristics of foreign securities lead to diversification benefits for American investors? ANSWER. The two basic characteristics are: a) Many foreign securities are issued by companies that produce goods and services not available from U.S. companies. b) All U.S. companies are more or less subject to the same cyclical economic fluctuations. Foreign securities by contrast involve claims on economies whose cycles are not perfectly in phase with the U.S. economic cycle. Thus, just as movements in different stocks partially offset one another in an all-U.S. portfolio, so also movements in U.S. and non-U.S. stocks cancel out each other somewhat. 3. Will increasing...
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...Emerging markets Recent history The four BRICs The BRIC’s roller coaster. 2009 Sales dropped in 50%, stabilize in 2010 Annual growth of 15% per year through 2014 Russia China The largest one. Share in 53% in 2008 Share is expected to be 61% in 2014 Brazil The most mature and stable market. Probably remain the second largest to 2014 Outpace both Brazil and China in growth India Summary • • • • • • The 4 BRICs are different There is no standard BRIC car Brazilian favor sporty hatchback Russians – western sedans and SUV Indian seeks ultra-low-cost minicars China – affordable luxury style sedans Brazil • The largest South America’s largest economy • Population close to 200 mln • GDP per capita of US$ 10 300 • The rapid growth of China’s economy has dramatically increased export demand for Brazil’s raw materials Brazil, history • • • • 10 years ago was a less confident place Economic crisis, history of inflation Political disarray with deep structural problems Seemed destined to remain a country with a great unrealized potential Brazil now • Quiet optimism that the country has been set on a more stable path • Still high level of poverty and corruption • But a sense of underlying progress with evidence in official statistics • Incomes are up • The gap between Brazil’s rich and poor has closed a little Brazil now • Locals treat the improvements due to just departing president Luiz Iinacio Lula da Silva (ince 2002) • The country...
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...expanded its operations into Brazil (the only foreign-based operations for Riggers). As a result of this expansion, the client has encountered two complex issues related to accounting for income taxes. During the 2012 year-end audit, the auditors must use professional judgment with regard to these two income tax accounting issues. The first issue relates to the client’s valuation allowance against a net operating loss (“NOL deferred ”) tax asset (“DTA”) in Brazil. The second matter is the Company’s uncertain tax position resulting from transfer pricing in the United States. These two items require judgment on the part of management, thus the audit engagement team must apply the professional judgment framework during its year-end audit. Valuation Allowance As of December 31, 2012, Riggers has a $59+ million NOL carryforward on its Brazilian corporate income tax return. In 2011, Riggers had booked a $86,956 valuation allowance against the DTA established in recognition of the future tax benefit of the NOL, as the client believed it was not more likely than not (>50%) that that portion of the NOL future tax benefit would be utilized. In 2012, Riggers estimates that it will have enough future income in Brazil to offset the NOL and, as a result, is not reporting any valuation allowance as an offset to its $20+ million DTA. Note: a DTA for NOL carryforwards is recognized (not fully offset by a valuation allowance) as the company believes it is more than 50% likely that it...
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...as whole Brazil boasts having a reputation of fabricating some of the world’s most creative advertising especially when it is entertaining which includes familiar venues like the United States but in addition evening soap operas known as telenovelas and sporting events are popular and coveted advertising space (O’Barr, 2008). Since the average Brazilian tends to watch an average of five hours of television per day, television comprises of 59% of the media mix and the Brazilians are overtly loyal to their evening news and telenovelas so to center their time around those events (Millwardbrown, n.d). Other media channels include the newspaper at 18%, magazines at 9%, radio at 4.5%, and internet at 1.5% but growing fast (Millwardbrown, n.d). Millwardbrown (n.d) further advises that Brazilians “don’t usually like comparative ads or ads that denigrate the competitor” and states that advertising investments is 50 times less than U.S or less than 1% of GDP and that the majority is spent with the dominant advertising force at Rede Global de Televisao (television) who owns the majority of the channels in Brazil. Costs for advertising are increasing and as of 2006, R$ 950 million was spent (Millwardbrown, n.d). Acir (2011) points out that it is important to realize that the internet industry is on the rise and changes to advertising in this media mix should be reviewed and not be a missed opportunity for market penetration. Sales promotions customarily used in Brazil include social...
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...expanded its operations into Brazil (the only foreign-based operations for Riggers). As a result of this expansion, the client has encountered two complex issues related to accounting for income taxes. During the 2012 year-end audit, the auditors must use professional judgment with regard to these two income tax accounting issues. The first issue relates to the client’s valuation allowance against a net operating loss (“NOL deferred ”) tax asset (“DTA”) in Brazil. The second matter is the Company’s uncertain tax position resulting from transfer pricing in the United States. These two items require judgment on the part of management, thus the audit engagement team must apply the professional judgment framework during its year-end audit. Valuation Allowance As of December 31, 2012, Riggers has a $59+ million NOL carryforward on its Brazilian corporate income tax return. In 2011, Riggers had booked a $86,956 valuation allowance against the DTA established in recognition of the future tax benefit of the NOL, as the client believed it was not more likely than not (>50%) that that portion of the NOL future tax benefit would be utilized. In 2012, Riggers estimates that it will have enough future income in Brazil to offset the NOL and, as a result, is not reporting any valuation allowance as an offset to its $20+ million DTA. Note: a DTA for NOL carryforwards is recognized (not fully offset by a valuation allowance) as the company believes it is more than 50% likely that it will have...
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