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7-Business: Brazil's Votorantim invests in sugarcane biotech

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TITLE:  Brazil's Votorantim invests in sugarcane biotech
SOURCE: Reuters
DATE:   Mar 25, 2003

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Brazil's Votorantim invests in sugarcane biotech

SAO PAULO, Brazil, March 25 (Reuters) - Brazil's Votorantim Ventures, a
venture capital fund of the industrial conglomerate Votorantim, announced
on Tuesday the creation of CanaVialis, a biotechnology company devoted to
the sugarcane industry.

The fund will invest $25 million in initial capital in the start-up, the
day-to-day operations of which will be run by former researchers from the
Federal University of Sao Carlos.

CanaVialis will provide a wide array of services to Brazil's sugarcane
mills to improve productivity, including the development and supply of
disease-resistant cane plant varieties and the development of on-site

"The researchers will provide the intellectual capital and Votorantim
will provide the money," said Fernando Reinach, the temporary president
of CanaVialis and executive director of Votorantim Ventures and its $300
million in venture capital.

Reinach is also a former researcher in Brazil's genome project which
mapped the genetic code of the Xyllela virus, the plague of Brazil's
massive orange industry.

The researchers that will run CanaVialis have been responsible for
developing 22 varieties of cane over the past 30 that now account for 60
percent of the crop in Sao Paulo state, the main cane-growing state in
Brazil, the world's No. 1 cane producer and sugar exporter.

Reinach said the company would design specialized cane for the specific
microclimates and purposes of the mills, a service which has never been

The company will be based in Campinas, Sao Paulo, where it will operate a
molecular biology laboratory, a plant pathology laboratory and a
commercial nursery.

According to researcher Antonio Carlos Gheller, a Sao Paulo hectare
produces about 10 tonnes of cane a season on average but there are mills
that get 15 tonnes per hectare.

"Why can't we improve the average? Managing 50 percent bigger yields is a
real potential, not just a theoretical one," he said.

Reinach said Votorantim was investing in Brazil's competitive advantage
in cane production. The cost of producing a tonne of cane in Brazil is
about $140, compared with $246 in Australia and $660 for beets in Europe.