The tremendão of biodiesel
How Gaucho businessman Erasmo Carlos Battistella, who was the owner of two gas stations seven years ago, became partner of Petrobras and the owner of one of the largest companies of biofuel in the country, with a turnover of R$ 1 billion.
In mid-2004, the gaucho businessman, Erasmo Carlos Battistella, was waiting in a bank queue to pay for his bills when some farmers asked his opinion about biodiesel. He was the owner of two gas stations in Colorado, a city which is 300 kilometers from Porto Alegre, he did not know much about the subject. That time, biodiesel had just started to gain space in the news because of the preparation of the National Plan of Production and Use of Biodiesel (PNPB) by the federal government. His fellows' interest attracted his attention and he started to research about the subject. Less than one year later, he decided to invest in the area.
Today, being 33 years old, the businessman is sure that his intuition was correct. BSBIOS, founded by the entrepeneur in 2005, invoiced R$ 1 billion in 2011. Yet: Battistella became, last year, a partner of Petrobras, when he sold 50% of the company for R$ 200 million to Petrobras Biofuel (PBio), subsidiary of the State Brazilian Company of petroleum. With the association, he became the greatest producer of biodiesel in Brazil, a sector that will receive investments of R$ 28.1 billion until 2020, value five times superior to what was spent between 2005 and 2010. "Nobody believed in me. I was the reason of people's laugh", said Battistella to DINHEIRO.
The sector of biodiesel is still giving its first steps in Brazil, but, it has already created its first millionaires. Battistella, for instance, may be considered the first entrepreneur not linked to large international or national industrial groups that make money from the exploitation of this kind of renewable fuel. His business arose from a governmental policy, which privileges investments in the area, after president Luiz Inácio Lula da Silva, had signed the law, in 2005, that says it is compulsory to use the current mixture of 5% biodiesel to common diesel. Thanks to it, in seven years, Battistella is no longer a small businessman and created a billionaire company.
BSBIOS, which head office is in Passo Fundo (RS), is already one of the 100 largest companies in Rio Grande do Sul, it appears among the 200 largest companies of South region and entered the list of the thousand largest of Brazil. "Erasmo has a tremendous entrepreneurial ability and a strategical vision on the sector", says the ex-minister Miguel Rossetto, currently chairman of PBio, who since the association between the two companies also commands the managing council of BSBIOS. Battistella's entrepreneurial performance is still more surprising when his path is taken into consideration.
Born in a family of small farmers in Itatiba do Sul (RS), the entrepreneur was baptized in honor to singer and composer of Jovem Guarda, Erasmo Carlos, known as Tremendão, whose his parents were fan of. Despite his name reminds the musical universe, Battistella wanted to be a soccer player. Fanatic fan of Grêmio, he tried to follow the carrier, he even disputed regional championships for the city team. He quit everything in order to dedicate to rural techniques in Erechim (RS). He worked at the cooperative of the city and, later, was called to help his uncle's store of rural fertilizers and inputs in the neighborhood town Nicolau Vergueiro.
His first own business would come in 1998 only, when, then being 20 years old, asked the grandmother of this girlfriend that time, Fabiana, today his wife, for a loan of R$ 20 thousands. The resources were used to lease a gas station in the city. He doubled the capital, transferred the post and built another one in Santa Cecília do Sul, where there was not any business of this type. Five months later, he sold the unit for R$ 200 thousands and went to Colorado. Then, he started to control two gas stations, business that he kept until 2007. As the city was larger, the volume of sales compensated the financing result. "I have always been a kind of a handyman in business", asserts Battistella.
"I helped customers, transported fuel in my own truck and even worked as a cashier." Knowledge acquired during this period, together with the entrepreneurial spirit made Battistella to see a chance of making even more money when he decided to invest in BSBIOS. "The success of the program of incentive to ethanol, Pro-Alcohol, led me to believe that, with biodiesel, the same would happen", he states. "We have a green pre-salt to exploit." The rise of his company, a soup of letters in which B refers to Brazil, S as a reference to the region he is from, and BIOS to show what is produced, followed the expansion of the sector. In 2005, there was not any other plant of biodiesel in the country. Today, there are about 70 companies that began to invest more in the area. But, unlike what happen with ethanol, the country was late towards biodiesel. Germany, which is a pioneer in the sector, leads worldwide, with annual production of 2.6 billion liters. Brazil is the next, with 2.4 billion liters per year. In order to compare, Brazil produced 28.2 billion liters of de ethanol in 2010. "In biodiesel, we will exceed Germany in 2012", asserts Rossetto. By keeping an eye on these opportunities the companies of agro-business begin to direct their efforts for biodiesel.
Take as an example paulista Granol. In 2011, renewable fuel represented 43% of the turnover of R$ 1.9 billion, a result which was four times higher than the one of 2006. "The tendency is that it increase even more because the sector will grow", says Paula Regina Cadette, financing director of Granol. Pbio is also investing heavily. Between 2010 and 2014, US$ 3.5 billion will be directed to biofuels. The subsidiary of the state company has currently three own plants of biodiesel in the country: Candeias (BA), Quixadá (CE) and Montes Claros (MG). American ADM, one of the largest of agro-business in the world, also reinforced its investments in biodiesel in Brazil. The company, which already has one unit in Rondonópolis (MT), will have two more: one in Joaçaba (SC), expected for this year, and another in São Domingos do Capim (PA), that must be opened in 2016. The idea is to repeat the leadership in biodiesel that the company has in Europe in Brazil as well. BSBIOS of Battistella is also investing highly. In November last year, the company opened a crushing machine of soybean to supply the plant of Passo Fundo. The enterprise consumed R$ 130 million. Currently, the company counts on two factories. The largest one is in its headquarters, with productive capacity of 160 million liters of biodiesel per year. The other is located in Marialva, in the North of Paraná, 400 kilometers from Curitiba. This industrial unit can produce 126 million liters of biodiesel per year. The three factories of PBio have productive capacity of 434 million liters per year. "I want to become one of the consolidators of the sector in the country", says Battistella. To do so, he already sets strategies of competition acquisition in the area of biodiesel, the entrance in the market of biolubricants and also expansion to ethanol segment. The growing interest for biodiesel results in a combination of factors. The first of them is towards the environment. It is estimated that the mixture of biodiesel to diesel allows the reduction of pollutants to 57%.
The variety of raw materials such as soybean make dissemination of biodiesel feasible - it corresponds to 80% of the total produced -, canola, sunflower, Jatropha curcas, castor bean, dendê and animal fat. In Brazil, the objective of the government to support this sector is also to encourage family agriculture and generate income in the field. Nowadays, there are more than 100 thousand small farmers providing raw material for the production of biodiesel. All chain must generate 4.7 million jobs until 2020. Despite optimism that reigns among the companies of the sector, biodiesel market depends on structural and regulatory issues to grow fast. An example of barriers that still mark the area is the fact that the sector acts with 53% idleness. Another problem is that distribution of biodiesel is still not efficient. "Producer plants are located far from consumer markets, and this raises logistic costs", says Ricardo Hashimoto, director of Fefuels, entity that represents companies of fuel distribution. In order to give a new boost to the sector, Aprobio, entity which joins producers of biofuel and is directed by Battistella fights towards the creation of a regulatory mark. One of the proposals is the increase of the percentage of biodiesel addition to diesel. Nowadays, it is in 5%.
The proposal is that it raises to 10% until 2014 and 20% in the end of this decade. With that, Brazil would be in line with partners of Mercosul, like Argentina and Colombia, and Europe. If it depends on Battistella's willfulness, this battle has many chances to be won (read interview below). He is already articulating to defend this plan. In December, last year, for instance, he gathered with the minister of the Civil House, Gleisi Hoffmann, to discuss a proposal of a regulatory mark to be directed to the National Congress, which must be presented in February. "Biodiesel is a one-way path", says Guilherme Nastari, director of paulista Datagro consulting.
"But, if the government does not provide incentives and create, indeed, a clear regulatory mark, the potential of the sector may be wasted." This is only another obstacle in Battistella's path. For this to happen, he had to overcome several adversities. The first of them was to obtain a financing to build BSBIOS. Battistella saved everything he gained with the gas stations to pay R$ 100 thousand to Brazil Bank, that made the financing project of the company. "The idea was feasible, but the majority of the city thought it was a dream only", states Ividio Schweizer, manager of BB, who helped him to write the business plan.
After that, Battistella had to go to Brasília, in his first plane trip, for a meeting in the Ministry of Rural Development, whose holder was Rossetto. The objective was to obtain the Social Fuel Stamp, which foresees a series of rules, like the minimum purchase of 30% of raw material from family farmers, in exchange of the reduction of taxes to producers companies. Without this stamp, he would not obtain the financing of R$ 28 million which he pleaded at BNDES. He also obtained the support of four local businessmen that, together with him, invested more R$ 5 million to create BSBIOS. To wit: Mário Wagner and Paulo Montagner, of the company of rural machines, Kuhn do Brasil Group, Antonio Roso, engineering company Metasa, and Arlindo Paludo, of group Vipal, that acts in several sectors from tires to financing.
Today, he maintains a hard work routine, which includes daily journeys of 14 hours, besides week travels by many points in the country. Battistella remains faithful to his origins and takes care of this family. "I do like to take my two daughters to school when I am in Passo Fundo." The old habit of playing soccer was also kept, the games are less frequent and the businessman also includes tennis in his sports menu. His friends, who in 2004 make him have interest for the sector of biodiesel, are regular interlocutors. Even because, great part of them integrates the supplier portfolio of BSBIOS. "We increased the offer of food with Biodiesel"
The CEO of BSBIOS, Erasmo Carlos Battistella, was interviewed by DINHEIRO:
Do you agree with the release of diesel, which already owns 5% of biodiesel in its composition, to supply the vehicle fleet in Brazil?
This is one of the Aprobio goals. I believe that this process could begin with the release of cabs that ride in large cities. Diesel is already used as fuel for vehicles in Argentina and Paraguay, besides Germany, country that leads the market of biofuels in the world.
The program of biodiesel was created to join sustainability and development in the field. Would you say this has happened in practice?
I believe so. The benefits of this program are clear because they integrate two strands. One of them is the reduction of greenhouse gases emissions, by means of the least use of mineral fuels, which improves life quality. The second one is the encouragement to family agriculture.
Despite diversity of sources in Brazil, 80% of biodiesel is produced from soybean. Why other vegetable oil crops like castor beans and sunflower seed did not work?
Brazilian agriculture was always based on traditional crops like soybean and maize. Today, we experience a process of diversification and this has been reflecting the field of biofuels as well. Vegetable oil crops offer has grown and we already count on options like palma and canola. Besides the companies, the government, through Embrapa, is investing in researches for diversification of these sources.
A great polemic involving biofuels is the possibility that they compete with food production. Does this really happen?
Of course they do not. When we produce biodiesel, actually, we increase the offer of food, thus the residue of production changes into input for feeding cattle and poultry. FAO, an agency of the UNO for food and agriculture, defended in 2011 the investments in biofuels like ethanol and biodiesel. According to the entity, green fuels represent a mean to increase food security in rural economy countries when stimulating the creation of jobs and raise income.
Source: Isto É Dinheiro - Marcio ORSOLINI