A Competitiveness Index of Soil Tillage and Planting Among Sugarcane Mills and Suppliers: The Benefits of Cost Reduction and High Production Strategies

Abstract

Sugarcane mills (SCMs) and sugarcane suppliers (SCSs) use different production systems. To increase competitiveness, these systems use cost reduction, high productivity investment, and technology strategies according to their scale of production, that is, small (S), medium (M), or large (L). The question that arises is: which of the three production scales, among SCMs and SCSs, have the best competitiveness index in activities related to soil tillage and sugarcane planting? The objective of this research was to analyze and compare a competitiveness index built by using the values of four variables: planted area, sugarcane replanted area, cost of soil tillage, and cost of planting. The study was conducted with data corresponding to the 2017/18 harvest season from 31 SCMs and 42 SCSs located in Brazil. In addition, Monte Carlo Simulation was used to analyze the level of certain costs and profits through relative frequency. Small scale suppliers showed the highest productivity and lowest cost in soil tillage, while the medium scale sugarcane mills revealed the smallest sugarcane replanting cycle area and the lowest cost of planting. However, the competitiveness index showed that SCSs are more competitive than SCMs, with both kind of sugarcane producers taking the benefits of using cost reduction and high productivity strategies.