As previously mentioned, both Brazil and Argentina are very competitive when it comes to the production of first-generation biofuels. While Argentina's largest biofuels product is biodiesel, Brazil's largest stake is in ethanol produced from sugarcane. Brazil is the second-largest producer of ethanol globally and was the largest exporter until the US surpassed it in 2011. Brazil's vast territory and favorable water regime enables it to increase biofuel production without competing for resources with food production, at least in the near-term. Brazil also surpasses other South American countries in the amount of capital invested in agricultural R&D. This mainly comprises public funds from the Brazilian Enterprise of Agricultural Research (EMBRAPA) and federal universities. Public policies over the last few decades aimed at creating alternatives to oil products have made Brazilian production of ethanol from sugarcane the most efficient in the world. The size of the domestic market has also contributed to the expansion of ethanol production; Brazil's automobile fleet is largely comprised of ethanol and gasoline flex-fuel vehicles. Such vehicles currently account for almost 90% of new vehicles sold in the country.
Unlike the ethanol industry, modern biotechnology in Brazil did not originate from a centralized strategy by the federal government. It mainly started with individual initiatives, especially those of the genome networks in São Paulo; the Research, Innovation and Diffusion Centers; and Biominas, an important biotechnology cluster in the state of Minas Gerais. In São Paulo, funding from the Foundation for Research Support of the State of São Paulo (FAPESP), excellent universities, and public agencies in traditional biotechnology such as the Agronomic Institute of Campinas (IAC) and the Sugarcane Research Center were essential to the development of this sector. From its beginning, Brazil's biotechnology sector has shown more promise in agro-industrial activities, and the existence of relevant public research centers, such as EMBRAPA and the IAC, demonstrate that this remains the case.
Notwithstanding the non-centralized origin of the modern biotechnology industry in Brazil, the federal government has long acknowledged the importance of this sector. A modern legal system was implemented to allow the development of biotechnology in Brazil. Several laws and decrees were created so that the sector could flourish, including the Innovation Law (Law 10,973/2004) and the Biosecurity Law (Law 11,105/2005). Compared to other South American countries, the capabilities of the Brazilian government to promote industrial policies are unique. The success of the ethanol industry is a telling example. Previous policies, such as the Industrial, Technological and Foreign Trade Policy (PITCE 2003–2007), the Productive Development Policy (PDP 2008–2010), and the Action Plan for Science, Technology and Innovation (PACTI 2007–2010) have paved the way for the creation of Plano Brasil Maior (PBM), Brazil's current industrial policy. These policies have enhanced dialogue among the government, entrepreneurs, and workers, thus creating better conditions to engage the necessary institutions in the creation and maintenance of productive policies. The PBM now seeks to promote economic growth through policies that boost investments in Brazil and increase its competitiveness. Through PACTI, and its National Strategy for Science, Technology and Innovation for 2012–2015, the Ministry of Science and Technology has noted the strategic importance of biotechnology for the development of Brazil. Furthermore, the government is working to encourage the production and use of products made via biotechnology; for instance, the process of registration for biotechnology products takes higher priority than regular products. The deadline for concluding the registration process thus is reduced from up to 5 years to less than 60 days for biological agents.
Last year, the Brazilian Association of Biotechnology was created with strong support from the federal government to coordinate and represent the interests of Brazil's biotechnology companies both within Brazil and worldwide. As one of its first actions, the association released its Brazil Biotec Map 2011, a study mapping the biotech sector in Brazil.5 According to the study, there were 237 biotechnology firms in Brazil in 2011; 39.7% of these firms were related to human health, 14.3% to animal health, 9.7% to agriculture, and 14.8% to environment and bioenergy. These companies are concentrated in the southeastern region of Brazil. They are particularly focused in the states of São Paulo (40.5%) and Minas Gerais (24.5%). Many are new, with 63% founded in or after 2000. The study also shows that 25% of the companies export, while 86% import. Because incubators, technology parks, universities, and research centers are essential for this sector, 95% are connected to universities and research centers via partnerships. As mentioned earlier, investments in R&D and innovation are mainly public (accounting for 78%). Only 14% of the companies use venture capital financing. Around 40% of Brazil's biotech companies either have patent applications or already have patents filed, and the study notes that there is a healthy number of associated faculty and graduate students in biotechnology in the country for support. The report also notes that, because of all the incentives from the Brazilian government, a growing economy, and good science, the sector promises to flourish.