Brazil ethanol industry needs years to recover lost production, says IEA
By MICHAEL HADDON
Brazil's ethanol industry will take several years to recover from recent production setbacks due to aging agricultural infrastructure and economic uncertainties, an International Energy Agency official said Tuesday.
"It will probably take another two or three years for production volumes to really reach where they were two years ago, as a lot of replanting of sugarcane crops has been postponed and liquidity is not so ideal to start new projects in Brazil," said Anselm Eisentraut, senior IEA bio-energy analyst, at a conference in London.
The South American nation is the largest grower of sugarcane, which can be used to make sugar or ethanol from fermented sugarcane juice.
However, its growers are struggling to bounce back from a bad crop in 2011-12 and are dealing with rising production costs, appreciating currency, and troublesome weather.
But Brazil's aging sugarcane plantations - where produce can be allocated to sweeteners or biofuels - means the South American powerhouse remains promising for US exporters due to its shortage of domestic ethanol.
However, Mr. Eisentraut said Argentina and Colombia are signaling continued growth in biofuels, although he accepted such South American nations were much less important in terms of volume.
There has been a rapid increase in global biofuel production in the last 10 years, he added, with support policies in Brazil, the US and European Union having a strong impact on demand, while more than 50 countries have blending mandates and targets.
The sustainability of biofuels have been questioned in recent years after spiraling food price inflation was blamed on the alternative energy source, but Mr. Eisentraut said it was not the key driver behind rises in agricultural prices.
Indeed, he added that biofuels are a measure by which the agricultural sector can create new sources of income and diversify their markets.
Dow Jones Newswires
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