The ethanol Czars
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Two distinguished entrepreneurs dominate the ethanol industry in its two main production poles: Patricia Woertz and Rubens Ometto. Woertz is an American, considered the third most powerful woman in the world of business, and Ometto is Brazilian, number three on the worldwide list of green business billionaires.

Alliances between ethanol producing companies to push for pro-ethanol policies and family feuds over control of the family businesses that involve ethanol are some of the stories behind the consolidation of the ethanol empires.
Fifteen ethanol-producing companies control the ethanol kingdom in the Americas. This is one of the findings of an investigation conducted by the New England Center for Investigative Reporting and Connectas. The 15 firms sit at the top of a list of 288 companies in the two main ethanol producing countries, the Unites States and Brazil; and in the emerging markets of Colombia and Peru.

Archer Daniels Midland (ADM) holds the first spot on the list by far, with a production capacity of 1,720 million gallons each year in the United States. In Brazil, the other great production hub, the largest ethanol producer is Copersucar with 1,268 million gallons per year.

Poet Biorefining and Valero Renewable Fuels are next in line for the throne in the North. In the South, Odebrecht Agroindustrial (ETH Bioenergia) and Raízen follow as number two and three in Latin America.

The leaders of these empires have different stories.

In the United States, 60-year-old Patricia Woertz is the first person outside of the Andreas family to take the reins of the business that started as a linseed crushing enterprise in 1902 by George Archer and John Daniels. Woertz's leadership abilities took her from being an accountant in 1974 to holding strategic positions in the industry. In 2006 she rose to the top of ADM, one of the world's most powerful agricultural trade companies and the one with the most ethanol production capacity.

Today Woertz is the president of the board of directors and the executive director. Her annual compensation is around $10 million, according to Bloomberg Businessweek.

In 2012, Forbes named her as one of the 100 most powerful women in the world. That same year, Fortune ranked her as the sixth most powerful woman in the world of business in the U.S President. Woertz has occupied one of the top ten spots of this ranking since 2000.

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Photoby Morio. Courtesy of commons.wikimedia.org
During the sixties Copersucar (Brazil) financed Emerson Fittipaldi for the F1.
She isn't keen on giving interviews to the media but she does speak at events associated with business and leadership. In a conversation with the dean of the business school of the University of California, Los Angeles (UCLA), as part of the series Leaders on leadership, she said that in an effort to change business culture she tries to establish as much personal connection as possible with ADM's workers in 60 countries. Woertz says that in addition to sending employees emails and sharing blogs, she spends a large amount of time visiting the company's largest branches at least once a year and making the effort to visit the smaller ones occasionally.

Woertz is also thinking globally.

"Sometimes the emerging markets, many in Asia, sometimes in Africa, in Eastern Europe, Middle East, might be non-conventional, but they are the ones that are growing, where populations are growing, the needs are developing, it is where some of the best markets in the world are", she says.

The media suggested in 2006 that ADM admired Woertz's skills in management leadership as well as her experience at Chevron, where she ascended to the position of president of the international division and executive vice-president of Chevron Texaco. They said that another factor leading to Woertz's ascendancy was ADM's interest in the ethanol market, a biofuel they have produced since 1978.

In 2007, in a speech at UCLA about alternative energy sources, Woertz said "the questions today are how big can the renewable fuels become, how fast we can get there and what might it take" . At the time, it was considered that products like ethanol could compete head to head in the fuels market, because of the increase in energy demands and the location of petroleum in the volatile Middle East. It was around the time that then US President George W. Bush was enthusiastically promoting biofuels and the industry increased its production.

Nevertheless, 2012 was a bitter year for the ethanol czarina. At the beginning of the year Woertz was forced to cut 1,000 jobs at ADM and in the middle of the year she announced that the company's profits had been lower than expected. This was mainly a result of the drought in the United States, which affected the production of corn and, in turn, the ethanol business.

"Corn processing operating results decreased $818 million to $261 million due principally to poor ethanol margins", the company said in a report for the U.S Securities and Exchange Commission for the fiscal year completed on June 30th of 2012.

Latin-American czar
South of the continent, one of the most prominent figures in the ethanol business is Rubens Ometto, who owns part of the Brazilian company Cosan, even though Brazilian companies like Copersucar and Odebrecht Agroindustrial (previously known as ETH Bioenergia) have more production capacity . According to Forbes, Ometto had a fortune of $2.6 billion as of March 2013. The magazine also cataloged him as the third richest man in the world within the so-called green businesses. He is third on the list after Aloys Wobben, a leader in the wind turbine business and Elon Musk, a leader in the electric cars and solar systems businesses.

The difference between Ometto and some of his competitors is that he has made most of his fortune in the ethanol and sugar businesses.

Copersucar was born as a cooperative and today the company is in the hands of 48 independent partner mills that belong to 25 business conglomerates. Odebrecht Agroindustrial is one of the businesses handled by a firm with the same name, a company that begun as an engineering firm specializing in infrastructure that has diversified its portfolio to include investments in energy, oil, gas and biofuels. It went into the ethanol business in 2007 and since then it has been taking giant steps towards being number one in Brazil.

Ometto's trajectory has led him to be designated the first ethanol multimillionaire. After conflicts with his family, he took over Cosan and in 2011 formed one of the strongest alliances in the ethanol market: he joined forces with Shell to create Raízen. That company is the seventh largest producer of ethanol in the Americas.

For the months of July, August and September of 2012, Raízen Energia reported net profits of $1.06 billion, 15.7 percent lower than the same period of the year before. The report attributes this decline to the domestic low price of ethanol, among other reasons.

Cosan was created in 1936, the year Ometto's grandparents founded a sugar factory in Piracicaba, the city where he was born. But not until 1975 did Cosan become interested in ethanol production, when Brazil initiated the Proálcool program that promoted the biofuel.

Ometto studied mechanical engineering in Sao Paulo and by the age of 24 he had become the financial director of Votorantim Industries, a company created by the father of his then-girlfriend and future wife. He held the position from 1973 to 1980 when, according to Forbes, he took charge of Cosan at his uncle's request. After he took the reigns of the business, he had a long legal conflict with the family to gain even more control over the company until, ten years later, he bought his family's shares.

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Low oil prices in Brazil affected the ethanol production in 2012.
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Patricia Woertz runs the main ethanol producing company in the Americas, Archer Daniels Midland.
Ometto's power also is rooted in Brazil's sugar industry, a business that was founded by his great-great-grandparents who arrived from Italy in the nineteenth century. During the time when Brazil was a Portuguese colony, Portugal saw an opportunity to grow sugarcane in South American territory. In the sixteenth century African slaves were brought exclusively to work in the fields and produce sugar. At the time, the so-called lords of the sugar industry were associated with the highest and most powerful social class.

"The ethanol market is like a rollercoaster" said Ometto to Exame magazine in May 2012. That may be why his business compass is starting to point towards other horizons. The green multimillionaire is leaning towards gas, after ethanol production in Brazil during 2012 was adversely impacted by the prices of oil and sugar.

Cosan isn't the only company that's been affected. Biosev Bioenergia (Dreyfus), Odebrecht Agroindustrial, Bunge and the Cooperativa de Produtores de Cana-de-Açúcar, Açúcar e Álcool do Estado de São Paulo (Copersucar), the other four Brazilian companies that make the list of the 15 largest companies in the Americas, also were impacted.

In November 2012 during the Exame Fórum de Sao Paulo debate, Pedro Parente, president of Bunge Brazil, demanded the minister of finance, Guido Mantega, take the crisis that affected the ethanol production seriously. In his opinion, Brazilian government policies aimed at keeping oil prices low had obstructed ethanol production and Parente asked that ethanol be made a priority once again. Before joining Bunge, Parente had various public administration positions including Minister of Planning during Fernando Cardoso's administration.

Another company that experienced difficulties is Biosev Bioenergia, a part of the French group Louis Dreyfus Commodities. In June 2012, in its interim report, the company announced losses due to "the weather-related crop shortfall of 2011/12 in Brazil and consequent decrease in production".

But the crown of the kingdom in Brazil goes to Copersucar with net income of approximately $5.4 billion for the 2011-2012 harvest, of which 41 percent of the income came from the ethanol market.

Under Jorge Wolney's command, Copersucar financed Emerson Fitipaldi for the F1 (racing in Formula 1) during the seventies. Corpesurcar is also heir to the powerful sugar lords of old. This firm, a leader in both sugar and ethanol sales in Brazil, began as a cooperative that brought together the main sugar producers and had a direct relationship with the President of the country, something that helped them get through policies favorable to the industry.

"The drive to expand Copersucar´s interest beyond the Brazilian sugar industry was led by the cooperative´s well-known and extremely wealthy president, Jorge Wolney Atalla. Assuming the presidency –of Copersucar- in 1968, following a successful campaign to increase alcohol production during the 1966-67 overproduction crisis, Atalla turned Copersucar into one of the largest corporations in Latin America", writes Michael Barzelag in his book The Politicized Market Economy. Eight years later Brazil's flagship ethanol program was underway.

The other giants of the North
As for corn –the raw material for ethanol in the United States- the first factory dedicated to cornstarch production in the world began in the United States in 1844. The U.S. is the country with the largest corn production and export. Approximately 40 percent of the corn crop is used to produce ethanol. That's why corn's world economy is also linked with ethanol production.

Agricultural and bioenergetics policies in the United States are tied to the Corn Belt that includes Illinois, Iowa, Indiana, Michigan, Nebraska, Kansas, Minnesota and Missouri. Twenty-eight percent of the ethanol industry in the U.S. is concentrated in Iowa. After ADM the other firms that lead the market in the United States are Poet Biorefining, Valero Renewable Fuels, Green Plains Renewable Energy, Aventine Renewable Energy, Flint Hills Resources, Abengoa Bioenergy (a Spanish company with production plants in the United States and Brazil), Big River Resources, The Andersons Ethanol and Cargill.

These companies weren't strangers to the difficulties of 2012. Valero Energy, created in 1980, and Aventine, in 1981, under William Klesse and John Castle respectively, also started as a result of U.S. President Jimmy Carter's policy to reduce fossil fuel dependency. The two companies have the capacity to produce over 1590 million gallons of ethanol each year, according to the Renewable Fuels Association.

However, Valero Energy announced in June the temporary closure of two of its production plants and had losses in the ethanol business over the last year. Aventine indicated, in its first quarterly report of 2012 presented to the Securities and Exchange Comission, that "we can provide no assurance that the amounts of cash available from operations, together with the New Revolving Facility, will be sufficient to fund our operations".

The second firm in the U.S.-based ethanol kingdom started up in the eighties: Poet Biorefining, with a production capacity of 1629 million gallons per year. The firm began in 1983 as a Broins family business on a farm in Wanamigo, Minessotta. It was then known as Broin Companies. Four years later, in 1987, it bought its first ethanol plant in South Dakota and has stayed in the business.

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Sugarcane Associations represent the ethanol industry in Latin America.
Photo by Allan Ferguson. Courtesy of commons.wikimedia.org
Valero Energy announced losses in the ethanol business in 2012 due to the drought in the United States.
Until 2006 the firm was under the control of the three Broin brothers. That year, one of them, in charge of the company since he was 22 years old when he started as general manager of the Scotland ethanol plant, bought his brothers' shares. With about 10 thousand farmers that have shares in the company, Jeff Broin took over and in 2007 the company changed its name to Poet, a change the businessman touted as a new chapter in the world of biorefining.

Jeff Broin, who in 2012 went form being CEO to president of the board of directors, also has had posts in biofuel producers associations, such as Growth Energy and the American Council on Renewable Energy (ACORE), that are looking to consolidate the ethanol industry by supporting and promoting initiatives and favorable policies for the industry.

Another family that stands out in the ethanol world is the Koch family. Flint Hills Resources is number ten in the ranking and a Koch Industries subsidiary run by David and Charles Koch.

Koch Industries was founded in 1940 and in 2012 its earnings totaled $115 billion from its business conglomerate. It is one of the largest private companies in the United States, according to Forbes.

The Kochs have experienced a family feud. The battle divided four brothers into two sides and concluded in the sale of Bill and Fred's shares to David and Charles Koch, who are known today as the wealthiest brothers in the United States with $31 billion each, holding the fourth spot in the multimillionaire ranking behind Bill Gates, Warren Buffet and Larry Ellison. They also rank 41st on the 2012 Forbes list of the most powerful people in the world.

Charles and David Koch went to MIT and they are well known for their interest in influencing politics. They have traditionally supported Republican candidates and in the last presidential elections they contributed substantially to the campaign of republican candidate Mitt Romney. Before that, their public battle with President Barack Obama was also well known. They have openly criticized the President for his policies, including his bioenergy policy.

Beyond political disputes, the Koch brothers like making risky bets in the business world. "Playing it safe is slow suicide", said Charles Koch to Forbes magazine. With that philosophy they managed to create a very successful business. However, it's a firm that environmentalists have their eye on. In 2012, Koch Industries was fifth on a list of the 100 companies that pollute the most in the United States, according to a list by the Political Economy Research Institute.

Emerging czars
In Colombia and Peru, the ethanol business also has its czars. The industry in those two countries began later than in Brazil and the United States.

Colombia's story began in 1864, when Santiago Eder bought land in the Palmira municipality. He became one of the sugar business pioneers and one of the most important businessmen of the 19th century in Colombia, creating Grupo Manuelita. 142 years later –in 2006- his heirs started an ethanol business under Harold Eder's control.

Another family that leads the ethanol business in Colombia is the Lülle family. With ownership in the Providencia and Risaralda sugar factories, Ardila Lülle is the main producer of this biofuel in the country. Besides being part of the sugar business, he owns textile businesses and the radio and television chain RCN.

In Peru, the ethanol industry is headed by the Romero group, a family conglomerate considered the second largest and most influential in the country. Among its companies are: the Banco de Crédito of Peru, the Palmas de Espino group and its subsidiary Sucroalcolera del Chira, that began ethanol production in the country in 2008.

The industry's growth over time has been accompanied by the growth of business associations that have joined together to become a powerful lobbying force in places like the U.S. Congress. Renewable Fuels Association and Growth Energy in the United States; and the Union of the Sugarcane Industry (União da Indústria de Cana-de-Açúcar – Unica) and the Biofuel Producers Union in Brazil are some of these associations.

In Colombia the leaders in the sector are Asocaña and Fedebiocombustibles, as well as the Peruvian Association of Biofuel Producers in Peru.

These alliances have become cross-border societies. Since the tariff on imported ethanol in the United States expired at the end of 2011, companies have made cross-border acquisitions to grow and stay in the business. In November 2012 Copersucar of Brazil announced it had bought Eco Energy in the United States to become the largest ethanol trader in the world with 12 percent of the global market, according to press statements by the firm's director.

Beyond transcending borders, the czars of ethanol are fighting to keep their crowns. At the same time they are beginning to explore other options beyond biofuel to reduce their vulnerability to the surprises the ethanol market could have in store for them in the future.