Sugarcane sector is the most affected; fire killed crops of settlers and farmers in Ribeirão Preto
09/06/2024
Fire on the Fazenda da Barra, owned by settlers, in Ribeirão Preto — Foto: Acervo Pessoal
The fires in the state of São Paulo have caused losses of more than R$2 billion to agribusiness, according to the state government, and forced small farmers and settlers in the Ribeirão Preto area to leave their farms and homes. Large companies in the sugar-and-ethanol sector—among the most affected—are carrying out daily firefighting actions in the countryside of São Paulo.
Guilherme Piai, São Paulo’s secretary of agriculture, said the fires hit 8,049 farms on almost 480,000 hectares. In sugarcane fields alone, around 240,000 hectares were affected, he told Rádio Bandeirantes. In total, 50 municipalities are in a state of emergency due to the fires.
The sugar-and-ethanol industry is the most affected, but there are also losses in grains, coffee, livestock, and other crops, in addition to damage to conservation areas in the state.
Settlers were also affected by the fires. On Tuesday (3), farmers from Fazenda da Barra, the largest settlement of the Landless Workers’ Movement (MST) in the Ribeirão Preto region, saw flames cross the train line that connects the area to the Cândido Portinari neighborhood and reach part of the movement’s 472 plots of land.
Nivalda Alves de Jesus, a settler who is part of the Mãos da Terra Agroecological Cooperative, said since Sunday (1) the fire had been causing damage to the farm, and on Tuesday (3) it reached some plots. Around 3,260 people live in the 1,700-hectare settlement.
“We lost production from our vegetable garden, structures for chicken coop, pig pens, and irrigation equipment. We released the chickens and pigs so they wouldn’t burn to death. In my plot, there was nothing left. The fire also reached my house’s tiles, windows, and doors,” she said. Ms. Jesus, who has lived in the settlement for 20 years, said that was the worst fire ever in the region.
Ms. Jesus said the settlement was still covered in smoke and the air was unbreathable on Thursday (5), forcing her to move to her daughters’ home in town. The settlers are now focused on assessing the losses and joining forces to meet the contracts for delivering school lunches to several municipalities.
Small coffee and vegetable producers in the Ribeirão Preto area also suffered losses. On Wednesday (4), João Lúcio Pinto’s smallholding in Buritizal was destroyed by fire, as flames that had been burning a sugarcane field on the banks of the road connecting Buritizal to Igarapava advanced over his property.
The fire burned the entire vegetable garden, killed animals, and destroyed the family’s house and the four cars they used to transport produce. In Santo Antônio da Alegria, at least 30 small coffee farms have seen losses since August 17th.
The two small farms owned by Mateus Cassarotti de Assis, which grows 25 hectares of coffee, were affected. He said the fire came down the mountain range that borders São Sebastião do Paraíso, Minas Gerais, burning coffee and eucalyptus trees. “We tried to contain the fire but it was useless. The counterfire measures did not work,” he said.
Raízen, one of the most affected sugar-and-ethanol companies, told Valor it is carrying out firefighting actions “daily in the vicinity of practically all of its 30 bioparks in operation.”
The company stated that, in addition to the dry weather, gusts of wind make it hard to contain the fire and have been largely responsible for the spread of fires.
The same concern was expressed by Secretary Guilherme Piai. He warned of what he called a “triple factor 30”—temperatures above 30 degrees Celsius, winds above 30 km per hour, and relative humidity below 30%. “We are experiencing these weather conditions, and between the 13th and 14th the risks will increase as intense winds are expected,” he said.
*Por Eliane Silva, Luciana Franco, Isadora Camargo — Ribeirão Preto and São Paulo
Plan is to update, renew transmission assets in different parts of Brazil
09/04/2024
Equipment manufacturer Siemens Energy signed four contracts with Eletrobras amounting to over R$300 million for updating transmission assets in several Brazilian states. The plan is to renew depreciated assets or those that have reached the end of their useful life.
Siemens Energy’s vice president for Latin America, André Clark, said the Brazilian system is reliable but has been operating for several decades and needs some repair and improvement. Furthermore, with climate events such as drought and heavy rains, combined with the expansion of intermittent renewable energy sources (wind and solar) in Brazil’s power mix, it is necessary to make an effort towards the grid’s resilience.
“The system was designed when there was only one type of supply and demand, stably, in a one-dimensional electrical system, without the extreme weather events we are currently experiencing,” he said. “We are facing new system operation barriers, a more adverse environment with further climate change, and changes in the demand and supply profile.”
In August, Brazil faced three blackouts in ten days. In one of the events, a kite caused the blackout, which raised fears among experts about the grid’s vulnerability. Mr. Clark emphasizes that the system is reliable but recognizes that adjustments to the current reality are required.
The investment is part of a project to improve transmission services, required by the Brazilian Electricity Regulatory Agency (ANEEL) to meet the conditions of regularity, continuity, efficiency, and safety. The agreements include clauses requiring transmission companies to carry out works to replace assets at the end of their useful life. Consumers pay for the improvements, as the amount is returned to the company through an increase in Allowed Annual Revenues (RAP).
The energy transmission segment has been increasing revenues for manufacturers in Brazil, not only with the update of structures but also with the construction of new projects following auctions. Under Siemens Energy’s total revenue in Brazil, the area of grid technologies accounts for 61%. In fiscal year 2023, this share was 45%.
According to Eletrobras’s vice president of engineering, Robson Campos, deliveries will start in 2024 and continue until the end of 2026. “Brazilian regulations encourage this type of investment and all major transmission companies invest heavily. Eletrobras has a planned investment of R$3.3 billion in improvements for 2024. These contracts with Siemens Energy represent less than 10% of what we will invest.”
Among the projects, is the update of the Grajaú substation, responsible for almost 40% of the energy supply in the city of Rio de Janeiro. In the Northeast region, the German company will supply new fixed series capacitor (FSC) banks for the Imperatriz line, in Maranhão, to ensure stability to the power system and increase transmission capacity.
In the states of Maranhão, Pará, Mato Grosso, and Rondônia, the manufacturer will install new circuit breakers to protect high-voltage assets. In the area of the Madeira River, known as “Linhão do Madeira,” Siemens Energy will provide an online monitoring system for gases dissolved in insulating oil for transformer stations.
Government intends to restore 15,000 hectares in Bom Futuro National Forest in Rondônia state
09/04/2024
The government expects to complete Brazil’s first public concession for forest restoration by the end of this year. This is also the first project to restore degraded lands financed through carbon credits, which could be an important test for the functioning of this mechanism. The goal is to restore 15,000 hectares in the Bom Futuro National Forest in Porto Velho, Rondônia.
Still in public consultation, the bid has attracted interest from private-sector companies and was well-received by the Indigenous community neighboring the territory. However, it still raises questions regarding oversight, land regularization, financing, and security.
As planned, the Bom Futuro National Forest (Flona) will be subdivided into blocks and handed over to the administration of companies. They will need to restore the land by bringing the vegetation as close as possible to the region’s original vegetation, said Renato Rosenberg, director of Concessions of the Brazilian Forest Service, an agency linked to the Ministry of the Environment and Climate Change.
The restoration of each degraded hectare in that forest is expected to require around R$20,000 for irrigation, soil recovery, and seedling planting. As a result, restoring the area would cost around R$300 million. Companies will be able to capture the carbon credits related to the new trees that will be planted and a portion of this revenue will go to the Brazilian state in the form of a concession fee.
Mr. Rosenberg said revenue is not the focus, though. “The government’s primary objective is not revenue generation and that’s why we are minimizing the concession fee.” Under the model being designed in partnership with the Brazilian Development Bank (BNDES), the proposal that offers the highest percentage of revenue—with a cap close to 15%—and a fixed payment at the time of contract signing wins. The financial equation, however, may vary according to non-mandatory actions that the project wants to encourage. “Investments in research and purchasing seedlings and seeds from Indigenous communities could be some of these actions. It’s not mandatory, but if they do it, they get a bonus,” he said.
Neighboring the Bom Futuro Flona, the Karitiana Indigenous community views the project’s arrival with optimism, both in economic terms and for the security of the demarcated territory, which occupies about 800 hectares. “We need to restore reforestation. We are suffering a lot from invasions by miners and loggers, and I think they [the concessionaires] can help monitor our region as well,” said Edilene Karitiana, one of the group’s leaders.
However, the format of the security scheme for the territory to be granted, which has a history of invasions and actions by land grabbers and organized crime, has not yet been defined. Without police power, concessionaire companies will need relevant support from the State to operate with some security in the area.
From the government’s perspective, part of the risk “is inherent to the business risk itself and is the same as in the case of a project in a private area,” said Mr. Rosenberg. “On the other hand, only the public power has police power. Therefore, part of this risk will be allocated to the granting authority,” he added, noting that the limits of each actor’s role will be discussed in the public hearings scheduled for this month.
The Karitiana people also see opportunities for selling seedlings. The supply of seedlings for restoration projects is one of the possible bottlenecks for the government’s goal of restoring 12 million hectares, as revealed to Valor in July last year by the president of the Brazilian Forest Service, Garo Batmanian. At the time, he estimated a demand of about 5 billion seedlings of various species. Production at that time was around 150 million seedlings per year.
In the case of concessions, according to Mr. Rosenberg, this risk is private and with little chance of problems. “They [concessionaires] will have a very comfortable maximum schedule to carry out the restoration. During this period, they will have time to organize the nurseries, whether vertical or horizontal,” he said.
One organization interested in participating in the bidding, re.green!, emphasizes that it already adopts partnerships with local communities in other projects, especially seed collection courses, an essential activity in seedling production. The company’s director of institutional relations, Mariana Barbosa, says that the Bom Futuro Flona could be a milestone for forest restoration in the country but notes that there are still questions to be answered.
“It’s a unique and innovative model. We see it as a positive agenda and have been studying the bids over the past few months. The current stage is precisely this: understanding how it will work, moving from a place of looking at opportunities to now seeing the project taking shape,” Ms. Barbosa said.
Mr. Rosenberg came out optimistic from the initial surveys with potential interested parties. Biomas, a company created in 2022 by Itaú Unibanco, Santander, Rabobank, Vale, Suzano, and Marfrig to operate in reforestation and conservation, is also interested in participating.
Natalia Renteria, director of Regulatory Affairs at Biomas, believes that the concession proposal “makes perfect sense” for the company. She reiterates that the success of a concession of this type can be a milestone for scaling restoration projects. “For a sector that is still in its infancy, it is very important. To scale in line with the country’s climate commitments, an economic model that stands on its own is necessary. And concessions fit into this. We are evaluating this opportunity and view the opening of this process very positively.”
The bid schedule includes a public consultation with Indigenous peoples confirmed for next Monday (9) at the central village of the Karitiana Indigenous Land in Porto Velho. On the 10th, the advisory council of the Bom Futuro Flona will meet, and the public hearing will take place the following day.
After these events, there will be a two-week period for clarifying doubts before forwarding the final version of the bid to the Federal Court of Accounts (TCU). The public spending watchdog has 75 days to analyze the material.
CEO Ernesto Pousada outlines plans for expanding international presence and exploring new market opportunities
09/02/2024
Ernesto Pousada — Foto: Leo Pinheiro/Valor
Vibra CEO Ernesto Pousada said the company’s top priority is renewing the Petrobras brand across its network of fuel stations. According to him, internal research indicates that consumers identify strongly with the BR brand, particularly in segments like convenience stores (BR Mania) and oil change services (Lubrax).
However, the outcome depends on ongoing discussions with the state-owned oil company. If Vibra is unable to renew the contract for the use of the BR brand across its more than 8,000 stations, the alternative plan is to develop the Vibra brand, a move that other companies have already tested, Mr. Pousada noted. “Both parties need to advance the discussions in the coming years. Vibra is keen on renewing, but under certain conditions,” Mr. Pousada said during Vibra Investor Day on Thursday (29th).
The contract for the use of the BR brand by Vibra is set for 10 years and will expire in 2029. Petrobras has not commented on the matter.
Mr. Pousada also said that part of Vibra’s growth strategy involves increasing lubricant sales to international markets, particularly in Latin America, where the company currently has a minimal presence. The company’s market position in this sector is still very small, leaving room for growth until it becomes the regional leader, the CEO mentioned during the event.
The initial phase of international expansion will focus on the southern part of South America, in the six countries where the company already operates, said Vanessa Gordilho, Vibra’s executive in charge of business, products, and marketing. “It won’t be starting from scratch and doesn’t require much effort,” said Ms. Gordilho.
According to Mr. Pousada, the past four quarters have been dedicated to “getting the house in order.” Additionally, the CEO said that the company will continue preparing its internal processes and management for a new growth cycle, which he expects to occur in the coming years.
Another avenue for expansion is through Comerc, whose acquisition of the remaining 50% stake was announced last week. The company plans to implement a strategy to capitalize on R$1.4 billion in synergies, which includes refinancing Comerc’s debt—currently more expensive than Vibra’s average debt cost—among other initiatives, said Clarissa Saddock, Vibra’s chief renewable energy and ESG officer.
Vibra also sees opportunities in its recently formed partnership with Itaú for energy commercialization, especially given the prospects for the complete opening of the market in the coming years, and in pending projects related to micro and mini-distributed generation and energy efficiency.
Regarding natural gas, Mr. Pousada mentioned that the company does not yet have a significant presence and is seeking the “right angles” to gain access to the molecule and advance in this segment, aiming to complement its product portfolio for clients. However, the executive said that the company does not have a strong desire to enter the natural gas market, and any moves in this area will be approached with capital discipline. Mr. Pousada also projected a 15% growth in the liquid fuels market by 2030.
With expected interest rates cut in the U.S., Brazilian companies should resume bond issuance
09/02/2024
Investment banks are preparing their first meetings with foreign investors to launch Brazilian companies’ issuances in the international debt market. Around six deals are expected for September, according to sources interviewed by Valor, including issuances by Raízen and banks. Subsea engineering company Oceânica, which is new to this type of transaction and tried to launch an offer in August, is also among possible candidates.
The market expects a busy season, starting Monday (2) after the return of vacations in the Northern Hemisphere and the Labor Day holiday in the U.S. In this scenario, some issuances may be brought forward not only to take advantage of more attractive rates but also to avoid proximity to the elections in the U.S., which could increase volatility.
The year has already surpassed 2023 in the amount raised with offers abroad. Brazilian companies issued $16.4 billion in bonds so far this year, compared to $16.1 billion last year, according to data from Bond Radar. People familiar with the matter say the expectation is that transactions will reach around $20 billion at the year-end.
The banks coordinating the operations have different readings of the impact of the election in the United States on the deals. Samy Podlubny, head of debt capital markets at UBS BB, says potential issuers are currently divided into two groups: those betting on September and those looking at January 2025 to avoid an issuance during the race for the White House. “Although they know this month’s window could be complicated, given the concentration of deals in a shorter time, several companies accelerated to issue before the [U.S.] elections,” he said.
Gustavo Siqueira, Morgan Stanley’s country head of fixed-income capital markets, says companies should try the September window. However, he does not expect an impact from the U.S. elections on the markets. “We see a more active month but some deals could be delayed to October or November,” he pointed out. According to the executive, the market is liquid and investors are seeking return, which opens up room for issuing companies. “We see a recovery after two weak years.”
From the beginning of August—when a steep drop in the stock market in Japan shook global markets—until now, the conditions for raising funds through bonds abroad have improved, according to Caio de Luca de Simões, head of debt capital markets at Bank of America in Brazil. “Treasuries became more stable and net interest rate spread returned to an appropriate level, after a period of strong volatility,” he said. “We are seeing one of the best cost scenarios for fundraising in the last two years.”
Pedro Frade, in charge of foreign debt at Itaú BBA, says rates contracted in the last month, both in Treasuries and Brazil risk. However, according to him, attention is focused not only on the next Fed meeting but also on the numbers about inflation and unemployment in the U.S., which could change the market’s mood and shrink the window for issuances. “Frequent issuers benefit from shorter windows,” the BBA executive points out, explaining that these deals are typically completed very quickly, making it possible to avoid market volatility.
He estimates a concentration of deals in the first half of the month. Given these uncertainties, the number of issuers that will be able to tap into the window is unknown. “Many companies will do their math to determine if the foreign market is the right path for them,” Mr. Frade says.
One of the points to be monitored by issuers in the next window is the high level of competition with other deals by companies from the same region. According to UBS BB projections, the number of offers from companies in Latin America could reach 15 in September. From Argentine companies alone, three deals are expected.
“Investors select not only [a deal] in Brazil but in Latin America as a whole, as the budget is usually the same,” Mr. Podlubny points out. “It doesn’t mean investors are short of funds but perhaps they don’t have time to dive deep into all deals and may choose to prioritize just a few. That could have an effect, for example, on the size of books.”
Miguel Diaz, debt market specialist at Santander Brasil, says the scenario is favorable given the current rates in the U.S. market, which have caught the attention of issuers. He expects up to eight issues between September and early October.
Matheus Licarião, head of debt capital markets at Santander Brazil, says investors’ agenda is very positive after Labor Day. He is working with two possible scenarios for the month. In the first scenario, as companies understand that the market has already priced the start of a reduction in interest rates, they choose to launch deals early this month—taking some distance from the U.S. elections. On the other hand, companies could choose to wait for the Fed’s monetary policy decision on September 18.
If optimism increases after that date, the space could be open to both frequent and new issuers, the executive says. “It’s a good timing for companies [to access the market]. The question is whether it will be a good or a very good window,” he points out.
When contacted, Raízen said it is always attentive to opportunities in the capital market, thanks to its “strategic positioning, quality of management, financial innovation,” and investment grade by three rating agencies. “It’s natural that the financial community keeps us on their radar and sees us as a candidate.” Oceânica did not respond to a request for comment.
Satellite broadband company dominates Brazilian market and has already requested telecoms telegulator ANATEL to expand network in the country
09/02/2024
Starlink informed Brazil’s telecoms regulator ANATEL that it will not comply with the decision by Justice Alexandre de Moraes of the Federal Supreme Court to suspend access to Elon Musk’s social media platform X.
The information was passed informally by the company to the agency’s chief, Carlos Baigorri, as revealed by TV Globo.
ANATEL has initiated a procedure on the 30th to notify internet carriers and shut down the platform.
Starlink offers satellite internet services and, like X, is owned by billionaire Elon Musk. With the platform’s non-compliance with court decisions, Justice Moraes ordered the company’s accounts to be blocked so that the imposed fines could be paid.
According to the president of ANATEL, the company is conditioning the cut-off of access to X on the suspension of the blockade of its accounts. He also stated that the maximum sanction for a telecommunications company, in case of non-compliance with decisions, is the revocation of the license, which would prevent Starlink from operating in Brazil.
Justice Moraes ordered the shutdown of X on Friday. The measure was adopted after the platform began to disregard court decisions and refused to appoint a new legal representative in Brazil.
In May, Starlink reached 42.5% of the market, overtaking Hughesnet, which held 38.1%, according to ANATEL. In June, Starlink had 215,500 customers, mainly in the Amazon region.
Airline expected to continue buying from Brazilian plane maker just like Gol continues seeking Boeing planes despite being in financial restructuring
08/30/2024
Azul’s financial restructuring is unlikely to affect Embraer’s sales, said Antonio Carlos Garcia, the plane maker’s chief financial officer. David Neeleman’s Azul is the only airline currently operating Embraer’s commercial models in Brazil but, according to Mr. Garcia, it continues to buy planes, and will keep doing so just as competitor Gol continues to seek Boeing planes despite its ongoing financial restructuring in the U.S.
At an event at B3 to mark Embraer’s 35 years of stock exchange listing, Mr. Garcia praised the company’s partnership with Azul. “They take planes from leasing companies. We already know that the lessors will continue to extend credit to Azul, just as they do for Gol. We have a lot of confidence in Azul’s business model. Things are more complicated for them, but we think they will pull through,” he said.
Regarding the aircraft manufacturer’s performance, CEO Francisco Gomes Neto stated that the next five years would be positive due to strong demand for its planes. “Our order book has surpassed $21 billion, which accounts for more than three years of production. And we have several sales campaigns underway,” he said.
The executive recalled that Embraer faced various challenges in recent years, including the pandemic and the failure of negotiations to create a joint venture in the commercial division with Boeing. “The year 2020 was difficult, with enormous losses. But one year later, at the end of 2021, the cash flow, which was negative by R$900 million, turned positive by R$300 million. The losses turned into profits,” he said.
Similarly, margins began to recover. Rodrigo Silva e Souza, vice president of marketing and market strategy for Embraer’s commercial aviation, highlighted that since last year, the company has had better margins on aircraft sales due to a change in discount policy.
“In new sales since last year, we have been working to increase profitability and capitalize on favorable market conditions. Therefore, I believe that in 2026 and 2027, we should significantly improve profitability,” he said during the event on Thursday (29).
According to the executive, the discount policy was designed considering various factors, including the pandemic, the end of the agreement with Boeing, and Airbus’s acquisition of Bombardier’s C-Series jet program (now A220).
“These factors made us have to be more aggressive to keep the company afloat during critical years. This has already changed due to strong market demand. We no longer need to be as aggressive as before. We have basically sold out the 2025 line and a good part of 2026,” he noted. According to Mr. Souza, Embraer expects to reach 2026 producing 100 commercial planes per year.
The government’s decision to release credit to airlines using the National Civil Aviation Fund (FNAC) as a guarantor, but without the obligation to use it to purchase Embraer aircraft, did not shake the Brazilian manufacturer.
“We do not rely on mandatory customer purchases. We do see that the Brazilian market—like others—needs more connectivity,” said Mr. Souza.
“If we take two of the largest regions, São Paulo and Rio, they represent 40% of the traffic. It is a concentrated market that needs to be decentralized and new routes developed,” he said. The use of smaller aircraft, such as Embraer’s commercial jets, would be central to this strategy.
CEO Francisco Gomes Neto praised the Brazilian government for the support it has offered the company. “The perspective they have is that in other countries where planes are produced, the percentage of national production flying is 40%. Here, it is only 12%. We have only one airline with Embraer jets,” he said.
Despite no constitutional spending mandates, states increase investments in public security amid rising concerns
08/30/2024
Ursula Dias Peres — Foto: Silvia Zamboni/Valor
Despite the absence of budget allocations tied to specific revenue sources and the urgency highlighted by public opinion polls, public security has become an increasingly significant area of expenditure in Brazilian states. In recent years, spending in this sector has grown at a faster rate in real terms than the overall state expenditures.
In the first half of 2024, the combined security expenditures of Brazil’s 26 states and the Federal District amounted to R$55.76 billion, marking a 14.2% real increase compared to the same period in 2018. During the same timeframe, the total aggregated state spending rose by 9%. Meanwhile, education and healthcare expenditures saw even more significant increases of 36.5% and 37.4%, respectively.
Public security, education, and healthcare constitute the trio of state public services with the highest spending volumes. Together, they represented 37.2% of total state expenditures from January to June 2024. Among these three sectors, security is the only one without constitutionally mandated spending, which partly explains why its share of total state expenditures has grown less than that of education and healthcare.
Security spending accounted for 8.7% of total state expenditures in 2018 and 9.3% in 2023, but the share declined slightly to 9.1% this year, with a cumulative increase of 0.4 percentage points over the period. In contrast, education’s share increased to 15.1% in 2024 from 12.1% in 2018, and healthcare’s share grew to 13% from 10.3%, reflecting respective increases of 3 and 2.7 percentage points, always considering the expenditures of the first semester. Part of the spending in these three areas came from a reduction in Social Security expenditures, which decreased to 16.7% from 18.6% of total state expenditures between 2018 and 2024.
The data, which includes both current expenses and investments, were sourced by Valor from the summarized budget execution reports submitted by the states to the National Treasury. The figures were extracted between August 8 and 12 and include only settled values, excluding intra-budgetary expenses.
Experts point to several contextual factors, such as the COVID-19 pandemic and the significant revenue increases experienced by the states in recent years, to explain the current expenditure landscape in key state-provided services.
In the realm of public security, the data shows substantial spending despite the lack of mandatory allocations, as seen in healthcare and education, according to Ursula Dias Peres, a public policy professor at the University of São Paulo (USP). “There is a pressing need and substantial budgetary commitment in security, with funds coming primarily from state treasuries rather than dedicated funds,” Ms. Peres said. However, she noted significant variation among the states.
Minas Gerais, São Paulo, and Rio de Janeiro are among the states with the highest absolute expenditures on public security. In the year’s first half, Minas Gerais spent R$8.78 billion, São Paulo R$7.47 billion, and Rio de Janeiro R$7.44 billion.
Although the absolute spending figures are similar, São Paulo has a significantly larger population than Rio de Janeiro, said Vilma Pinto, head of the Independent Fiscal Institution (IFI), a Senate-affiliated fiscal policy watchdog. According to the Brazilian statistics agency IBGE, São Paulo is home to 44.4 million people, while Rio de Janeiro has 16.1 million. “Thus, the per capita expenditure in Rio is higher than in São Paulo. However, we also need to assess the efficiency of resource use. The discussion should not only focus on the level of spending but also the quality of those expenditures,” noted.
The study also reveals significant differences in the spending structure. In Minas Gerais, security expenses account for 18% of total state spending. In São Paulo, the figure is 4.7%, and in Rio, it’s 15.1%. The shares of education and healthcare expenditures also vary among the three states, though to a lesser extent. São Paulo allocates 16.1% and 10.5% of its total spending to education and healthcare, respectively. In Rio, the shares are 8.2% and 8.6%. In Minas Gerais, these figures are 15.7% and 12.3%, respectively, for the first half of 2024.
Ms. Peres attributes the heterogeneity in public security spending to the current sector management. “The Unified Public Security System (SUSP) exists in law, but the states, responsible for 80% of the financing, are the primary operators of public security. The federal government doesn’t have the same influence as it does in healthcare, education, or social assistance,” she said.
“Each state implements its own policies, with vastly different governance in public security, policing strategies, salary structures, and approaches to repression or intelligence work, including the use of body cameras. The federal government is trying to regulate these areas now, but the differences remain stark. This disparity in governance is reflected in the budgets,” Ms. Peres noted.
Minas Gerais often includes pension costs for civil servants in its security spending, which can inflate its expenditures relative to other states that do not follow the same accounting practice, Ms. Peres said. In a statement, the Minas Gerais government said the state’s public security spending includes the costs of retired military personnel, as they do not retire but rather enter a remunerated retirement status at the end of their service period as prescribed by law.
Ms. Pinto highlights that the SUSP was created in 2018. “However, there are challenges in realizing the institutional potential of this tool. There needs to be an effort to improve the governance and efficiency of these expenditures,” she said. Ms. Pinto also noted that public security has become a more recent topic of debate, driven by public opinion polls revealing widespread feelings of insecurity among the population.
In Rio de Janeiro, the lack of a comprehensive public security policy explains the high expenditures in this area, said sociology professor Daniel Hirata, from the Fluminense Federal University. He said that the state’s strategy relies heavily on police operations. Mr. Hirata added that, when analyzing police lethality, most deaths in São Paulo occur during robberies and chases. In Rio, however, lethality is higher during police operations, an “indication of the central role these operations play in the state’s security strategy.” These operations, he noted, are “extremely costly,” requiring large numbers of personnel, heavy weaponry, vehicles, and technology. “These operations are necessary. The problem is that they have become routine and the primary tool of public security, leading to very high costs,” he added. In Rio, “we are addressing symptoms rather than the root of the problem,” he said.
Overall, Ms. Peres said, there is low investment in intelligence and investigative policing. “This has led to a very complex situation today, with significant increases in crimes against assets and swindle. Our police are not focused on these issues. We have an overt police force dedicated to combating street violence and drug trafficking, but not investigative intelligence. We are facing more scams, including crimes committed via mobile phones and the internet. Addressing this requires investment in software, monitoring, and specialized training.”
A review of the sub-function data for public security expenses reported in the fiscal reports shows that, on average, 29.3% of spending in this area goes to policing across the 26 states and the Federal District. The sub-function “information and intelligence” accounts for only 2.4% of the spending. “This is very low, even though the public often demands police presence. People want to see patrols,” Ms. Peres noted. “Administratively, it is easier to spend on personnel than to manage complex bidding processes for contracts that require specific management.”
According to the 2024 Brazilian Public Security Yearbook, the swindle rate per 100,000 inhabitants increased by 8.2% in 2023 compared to 2022, while the rate of electronic swindle rose by 13.6%.
In a statement, the Rio de Janeiro government said that public security consumes a larger portion of the budget due to payroll expenses for security forces and the prison administration, “without compromising investments in health and education.” The statement noted that more than R$4 billion has been invested in the current administration, focusing on police technology and modernization. Rio, the statement said, is the state that has acquired the most body cameras for police forces—more than 13,000 units have been installed in the Military Police alone—and will soon have over 5,800 security force vehicles equipped with onboard cameras.
In a separate statement, the São Paulo government emphasized that it is among the leaders in security investments, with over R$15 billion allocated in 2023. In volume, this is nearly 15 times the amount invested by states allocating around 10% of their budget to security. The statement also highlighted that total expenditures on security, prison administration, and Fundação Casa (an institution for juvenile offenders) amounted to R$11 billion, equivalent to 6.9% of the state’s total spending.
Unlike other states, the statement added, São Paulo’s debt service payments to the federal government account for a significant portion of settled expenses (7.9%). Additionally, transportation costs (6.4%) are significant in São Paulo due to its extensive road network, which is less of a factor in other states, many of which rely more on federal highways. “These are specific characteristics of each federation unit, which do not indicate low values allocated to the sector,” the statement concluded.
*Por Marta Watanabe, Rafael Rosas — São Paulo, Rio de Janeiro
Fires surge by 915% following a series of incidents last week, leaving situation still worrisome
08/29/2024
The number of wildfires reported in São Paulo this month has increased by 915% compared to the same period last year. The only state with a worse outcome was Mato Grosso do Sul, where fire incidents rose by 1,825%.
As a result, São Paulo is now the fifth state with the most wildfire outbreaks in the country (3,483) during the period from August 1 to 26—up from 13th place during the same period last year. Currently, the state is only behind Mato Grosso, Pará, Amazonas, and Mato Grosso do Sul, according to data from INPE (National Institute for Space Research).
The series of fires that struck the São Paulo countryside last week emerged almost simultaneously and in predominantly agricultural areas, according to a survey by IPAM (Amazon Environmental Research Institute) based on satellite-mapped heat sources.
Of the 2,600 heat sources reported in São Paulo between August 22 and 24, 81% occurred in areas used for agriculture, such as those occupied by sugarcane and pasture, according to a cross-analysis of satellite images from the environmental monitoring network with land cover and usage data from the MapBiomas network. Approximately 72% of São Paulo’s territory is occupied by agricultural activities.
Satellite images show the emergence of smoke columns within a 90-minute interval, between 10:30 am and 12:00 pm on August 23. The study strengthens comparisons between the incident in the São Paulo countryside and the so-called “Day of Fire,” mentioned by Environment Minister Marina Silva. She said that President Lula’s government is investigating whether the wildfires in the state have similar motivations to the criminally induced forest fires in August 2019 in the municipalities of Altamira and Novo Progresso, both in Pará state.
After two days without fires, São Paulo state recorded three new fire outbreaks on Tuesday (27th) in Batatais (350 km from the capital), in the metropolitan region of Ribeirão Preto, prompting a task force to combat the flames. Batatais is one of the cities on the state Civil Defense’s list of 48 municipalities on high alert for fires.
The outlook for the coming days remains concerning. The São Paulo Civil Defense has classified the metropolitan region of São Paulo as at emergency risk for fires this upcoming weekend.
According to meteorologists from the state agency, the classification is due to the hot and dry weather expected to return to the state starting this Friday (30th). With no rain in the forecast, the relative humidity in São Paulo city could drop to 20% over the weekend, according to INMET (National Institute of Meteorology), and temperatures are expected to reach 30°C in the capital.
There are four stages of warnings for fire risks: low (yellow), high (orange), alert (red), and emergency (purple).
The wildfires affecting different parts of Brazil may be linked to a historic lack of rain—the most severe in the last four decades—impacting 16 states and the Federal District.
The data comes from CEMADEN (National Center for Monitoring and Alerts of Natural Disasters), which considered information from May to August for all states since 1981, the year official records began.
Preliminary figures from the center for this August show that approximately seven out of ten Brazilian municipalities are affected by some level of drought: mild, moderate, extreme, or severe.
Meanwhile, Supreme Court Justice Flávio Dino ordered the federal government to mobilize, within 15 days, the Armed Forces, Federal Police, Federal Highway Police, National Force, Military Firefighters, and environmental enforcement agents to combat the wildfires in the Pantanal and Amazon—biomes that have been suffering from fires in recent days, with smoke spreading across the country. To fund the emergency actions, the federal government may open an extraordinary credit line through a provisional presidential decree.
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