Dec 15, 2016

Brazilian Government Emphasizes more Ethanol Production

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian government is launching an aggressive biofuel production program in order to achieve the greenhouse gas reductions it committed to in the recent United Nations Climate Conference. By the year 2025, Brazil has committed to reducing greenhouse gas emissions by 37% below the level of 2005. By the year 2030, they will reduce the emissions by 43%.

Ethanol and other biofuels will play a key role in achieving these reductions. Currently, Brazil produces 28 billion liters of ethanol per year and that is expected to increase to 54 billion liters by the year by the year 2030. The increase will be achieved by increasing ethanol production from sugarcane, ethanol production from corn, and second generation or cellulosic ethanol production.

At a recent workshop called "Renew Bio", Brazil's Ag Policy Secretary, Neri Geller, stated that the best way to achieve these goals is by reducing emission in the energy sector and the best way to do that is by utilizing more ethanol and biodiesel. Joining him in the workshop to develop a plan of action were the Brazilian Minister of Agriculture, the Minister of Mines and Energy, the Minister of the Treasury, the Commerce Institute, and representatives of Brazil's energy sector.

The Soybean and Corn Producers Association of Mato Grosso (Aprosoja-MT) endorsees the goal to produce more biofuels especially through the use of corn-based ethanol. The vast majority of ethanol in Brazil is produced from sugarcane, but corn-based ethanol production holds great promise especially in the state of Mato Grosso.

Mato Grosso is the largest corn producing state in Brazil with the potential to greatly increase corn production going forward. In order to achieve those increases, corn producers in the state indicate the need to vertically integrate corn production through more industrialization of corn in order to help sustain corn prices in the state. That is where corn-based ethanol production comes in.

Not only will corn-based ethanol production help to sustain prices, the byproduct of dry distillers grain could be used to help support the livestock industry in the state. Data from the Syndicate of Sugar/Ethanol Industries in Mato Grosso indicate that the state produced 83,000 cubic meters of corn-based ethanol in 2014/15 and that increased to 137,000 cubic meters in 2016/17 despite very low corn yields due to hot and dry weather.

The subject of more corn-based ethanol production was a primary topic of discussion at the first ever "More Corn Forum" recently held in the city of Cuiaba, which is the capital of Mato Grosso. The governor of state lamented that over the last ten years, ethanol production has taken a back seat in favor of petroleum, which has resulted in financial hardships for the sugar/ethanol sector. With the emphasis on greenhouse gas reduction, the governor hopes that ethanol production will now be emphasized once again.

In fact, the governor recently met with the American company ICM Inc. to discuss their intensions to invest in more corn-based ethanol plants in the state. The first corn based ethanol plant in the state is already operational in Lucas do Rio Verde producing 230 million liters per year. The governor and ICM hope this is just the first of many corn-based ethanol plants in the state.