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Brazil In A Position To Export Ethanol

This is an editorial piece from Executive Editor Dan Crummet who is currently traveling in Brazil.

Two months after headlines about potential imported Brazilian ethanol unsettled many corn and sorghum producers across the United States, I accompanied a group of irrigators on a tour of the southern hemisphere for a look at irrigated agriculture in Brazil, South Africa and Australia. The tour was part of Valley Irrigation's 50th anniversary celebration.

What I saw in Brazil helped further explain why the largest nation in South America, with a tremendous potential for agricultural expansion, is in a position to ship high-grade fuel ethanol to ports of call north of the equator.

Brazil, with its state-owned oil company, is on a crash course to be "energy self-sufficient" within 10 years. To do that, the rapidly developing Brazilian economy has taken on what appears to be a four-pronged approach to energy independence: Those include;

• Close cooperation with international oil exploration partners.
• A very healthy sugarcane-based ethanol infrastructure—born amid devastating economic inflation of the 1990s and the subsequent high prices of imported petroleum.
• Encouragement and availability of "flex" engines in cars and pickups, which allow drivers to use gasoline, blended gasoline-alcohol mixtures, or pure ethanol.
• And, from the looks, feel, smell and taste of the air in Sao Paulo and Brasilia, the nation is taking a much more relaxed attitude concerning air pollution than that afforded to U.S. oil and auto producers.

Currently, a trip to a Brazilian fueling station allows several choices. Diesel fuel is a staple for bus, truck and off-road equipment, and sells for $3 to $4 (U.S. currency) per gallon (although it is sold by the liter.) "Gasoline," which, in Brazil is a mixture of 15% to 20% ethanol and refinery run gasoline, hovers in the same price range—a few cents above or below diesel. Alcool (Portuguese for alcohol), however, sells for about 60-cents U.S. currency per liter, or $2.40 per gallon.

For those with "flex" engines in their mainly European, Japanese and Korean fleet of smaller cars, the choice is simple—particularly if you're short on cash. The price difference is substantial and one that pumps a lot of alcohol into Brazilian tanks—despite the fact alcohol inherently has less energy than gasoline, and at least in Brazil, is reported to shorten engine life (unlike the "gasohol blends" used in the United States.)

Sugarcane, the feedstock for Brazil's fuel-ethanol still is plentiful and is the mainstay of the so-called "synthetic fuel" effort of the nation. Just about any planner or manager in Brazilian agriculture will show you hundreds of thousands of hectares of savannah-like rangeland that can be converted to farmland with reasonable effort. And, U.S. tariffs on sugar prevents its use on morning cereals in the Lower 48.

With those factors in place, and the demand for foreign investment and export sales driving Brazil's economic planners — in a nation where one-third of those employed are in production agriculture — a South American ethanol connection is ripe for distilling.