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Ethanol: With an American Friend Like This Brazil Needs No Enemies PDF Print E-mail
2009 - July 2009
Written by Mark S. Langevin   
Friday, 31 July 2009 02:23

US Senator Charles GrassleyIn a recent letter to President Obama, the Republican Senator from Iowa, Charles Grassley, threatened to hold U.S.-Brazil relations hostage to his insatiable thirst for corn fed ethanol.  Senator Grassley's Iowa is the largest producer of ethanol in the U.S.  For years Senator Grassley has played a key role in protecting U.S. ethanol producers from Brazilian ethanol imports, as both Chair and now as the minority's ranking member of the Senate Finance committee that oversees all U.S. international trade policy.

Under the long standing policy of protecting the Senator's family of corn fed ethanol producers, Brazilian ethanol imported into the United States is subject to two customs duties: an ad valorem tariff rate of 2.5 percent and a secondary tariff of 54 cents per gallon. 

These illiberal tariffs punish consumers, investors, and efficient producers while rewarding foreign producers of oil who indirectly benefit from the inefficiencies of corn-fed ethanol.  The tariffs act as an indirect subsidy to such transnational enterprises as the Archer Daniels Midland Corporation (ADM), the largest U.S. producer of ethanol. 

As Senator Grassley advocates for continued protection and subsidies for ethanol producers, such as ADM, this transnational company is busy planning future investments in Brazilian biofuel production and partially financed from these indirect subsidies!  Apparently, the bittersweet irony of this policy outcome escapes Senator Grassley as he continues his blind crusade for corn.

In July, the Senator alerted the President, Secretary of State Hillary Clinton, and U.S. Trade Representative Ron Kirk that he would hold up Obama's nominee for Ambassador to Brazil, Thomas Shannon, until the administration recommitted itself to a biofuel policy that benefits large transnational agribusiness groups and protects the most inefficient producers of ethanol. 

Moreover, every time motorists fill up at the gas pump, Senator Grassley and his corn fed friends shake them down for a nickel or dime per gallon.  These coins add up to boost ADM's revenues, allowing the company to spend millions in campaign contributions and soft money donations to Grassley's Republican Party over the past decade.

Worried about Ambassador Shannon's public recognition of this tortured trade policy, Senator Grassley tried to explain his corn cob logic, "Now, the president's nominee for ambassador to Brazil says the removal of the tariff would be 'beneficial.' It's important to know whether the administration's position has changed before this nomination goes forward." 

This means that Senator Grassley is threatening a "hold" on a full Senate confirmation vote for the President's nominee to represent the U.S. in Brasília even after the well respected career diplomat was endorsed by the Senate Foreign Relations Committee by a 14 to 4 margin. 

Not only is Grassley's threat as ugly as a scarecrow, but it reveals his perverse foreign policy views; positions that place the cultivation of corn above national economic interests and sensible international cooperation. 

Yes, with friends like Grassley, Brazil really does not need enemies.

Paradoxically Senator Grassley tactics all but confirm that Ambassador Shannon was correct to observe that opening up biofuel trade with Brazil would be "beneficial."  Despite Grassley's consistent support for expanding free trade and economic globalization, his stubborn sponsorship of all things corn defies the scientific findings that indicate that corn cultivation has a carbon footprint nearly equal to gasoline itself while Brazilian sugarcane fed ethanol measures a remarkable and sustainable energy balance that makes it a partial solution to global warming and keeps more dollars in the pockets of millions of motorists and taxpayers. 

It is time that U.S. trade policy and Senator Grassley come to terms with their outstanding commercial conflicts with Brazil, including the punitive tariffs on Brazilian ethanol imports.  The world needs more U.S-Brazil cooperation to frame the negotiations underway for a post-Kyoto Protocol treaty to rapidly reduce greenhouse gas emissions and to establish a global economic development agenda that reduces poverty and inequality around the world.

Our future peace and prosperity now depend on the Obama administration's capacity to overcome powerful private interests, including those rooted to corn fed ethanol production.  The President's choice for U.S. Ambassador to Brazil, Thomas Shannon, demonstrates such a capacity and seizes the opportunity to deepen cooperation with Brazil on a number of issues of vital concern to the United States, Brazil, and much of the world.

So with all due respect to Senator Grassley and his corn fed family of friends, this is not the time for playing scarecrow.  He should shuck his ethanol policy position in favor of the national interest and international cooperation.

Mark S. Langevin, Ph.D. is Director of BrazilWorks (www.brazilworks.org), adjunct Associate Professor of Government and Politics at the University of Maryland-University College, and Associate Researcher at the Political Studies Laboratory of the Federal University of Espírito Santo, Brazil.  He researches and writes on U.S.-Brazil relations.  He can be contacted at Mark.brazilworks@gmail.com.



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Comments (24)Add Comment
so your not making your money off the peoples back
written by Forrest Allen Brown, July 31, 2009
Sir

After reading your post on brazil .com .

Do you own stock in a cane plantation in brazil ????

Do you condone slave labor ???

Do you feel the millions of tons of pollution produced by the burning of Cain fields , the run off of toxins into the streams and rivers in brazil are okay .

The squalled living conditions the workers live in .

Much less the way the Brazilian justice department treats US citizens there holding kidnapped children from there parents,

ADM is a crook but so is brazils way it lets the owners use slaves to do there work

As most people from the state department and the last ambassador the US sent there they do nothing to help US citizens just sell visa to Brazilians , and make sure the government to get rid of workers .
Misses the point
written by Mike1608, July 31, 2009
Grassley has no qualms with Brazilian ethanol. IN fact millions of gallons of Brazilian ethanol make their way to the U.S. each year.

The concern is the blenders credit - a 45 cent per gallon credit given to fuel blenders to help them invest in infrastructure.

Without the import tariff to offset that credit, Brazilian ethanol that comes to the U.S. would, in essence, be subsidized by U.S. taxpayers.

The U.S. Ambassador to Brazil should support U.S. policy - and that includes ethanol/energy policy. Brazil has it's own army of lobbyists in D.C. to argue its points.
Do some travelling and THEN comment, Mr Forrest Allen Brown
written by lewis, August 01, 2009
To that Forrest Allen Brown guy

You obviously never even stepped on brazilian soil, and yet find ways to criticise it.

Brazil has no qualms against any country no matter how much ignorant people as yourself try to change it.

Actually, you could learn a lot from Brazil, starting with living in peace.
...
written by Mombai, August 01, 2009
Mr. Langvin,
Mr.Brown is right. It's only a matter of WHO's pocket the money goes in and it won't be the consumers no matter what!! It's obvious that suddenly Brazil and Lula are Obama's new "bff". People aren't stupid. The shell game of an article is misleading and designed to trick the ignorant into thinking that ADM is shaking down the poor American public, and all you, Mr.Langvin want to do is "help us"....yeah right. I find when politicians appeal to the public, and you ARE one Mr. Langvin, telling tales about their once co-conspirators, it's because they want to manipulate the public into believeing that only "THEY", have only "OUR" best interest at heart, when in fact, Mr. Langvin, It is simply again, an internal power struggle and "WE" are always the losers. We're gonna get hit for a nickle or a dime everytime we fill our cars up because Mr. Langvin, we NEED fuel. Anytime we NEED something Mr. Langvin, there is a battle for who is gonna make the killing off us. Personally, I can't stand Brazil. They hold Kidnapped U.S. children, against the Hague Treaty, and use their corrupt court system to play with the parents like a cat with a mouse. Obama has his nose up Lula's butt, calling him "THE MAN", while secretly he dispises the "white haired blue eyed" people as the cause of ALL the worlds trouble. Maybe that doesn't bother Obama, who's neither. Personally, if someone is gonna stick it to us, and it's only a matter of who that's gonna be, I'm with Grassley. Why send even more of U.S. jobs to a third world country, run by an ignorant uneducated, mobster, I'd rather have ADM stick it to me. Sorry, if that doesn't put money in the pockets of who ever is writing your paycheck. Brazil already enjoys a hefty share of the ethanol used in this country. The tarriff was designed BY Americans, to maintain a standard of living BY Americans not afforded to Brazilians. They live a substandard lifestyle, with a few crumbs thrown to them by Lula, the award winner for charity. Any money saved by Brazil on the tarriffs is only going to benefit Lula, not the slave labor.
...
written by Reality Check, August 01, 2009
written by lewis, July 31, 2009
To that Forrest Allen Brown guy

You obviously never even stepped on brazilian soil, and yet find ways to criticise it.

Brazil has no qualms against any country no matter how much ignorant people as yourself try to change it.

Actually, you could learn a lot from Brazil, starting with living in peace.


Who's living in peace? Brazil has it's own civil war going on! 50,000 people murdered a year, the 5th most dangerous country on planet earth, but because you're military isn't waging war in other countries, except HAITI, you think Brazil is a "peaceful country"?

Don't spread that bulls**t here bud, I'm in Brazil, and have been here for quite a while. Long enough to have friends murdered and wounded.

Have to love these people who ignorantly state, "pois eh, mas brasil é muito bom, não eh?"

Yeah, brazil is a great country, absolute paradise.....for CRIMINALS!No fear of extradition.....if you're brazilian. And no fear of going to jail, as long as you have a couple bucks and/or know someone in the right places.
Why should...
written by Gérson de Oliveira Nunes, August 01, 2009
the U.S. make brazil excempt from their energy tax that is applied to EVERY COUNTRY on the planet?

And, why doesn't brazil give the U.S. the same tax breaks that the U.S. gives them? Where is the reciprocity? Brazil already enjoys exporting numerous products to the U.S. TAX FREE! To the tune of BILLIONS of dollars per year in annual savings.....where is the reciprocity?

And now they want more? Yet give NOTHING in return?

Brazil always wants to "levar um advantagem em tudo". It's called the "lei de Jerson".

Dear Mombai
written by Mark Langevin, August 01, 2009
Dear Mombai,

fair enough. Just for disclosure, I don't earn any wage or dividend off of any ethanol investment, Brazil, U.S.A. or otherwise. Second, I'm all for agricultural subidies, as long as they go toward family farming, and if it's organic, even more. Third, Brazil has its share of problems, and I have and will certainly document them; but at the same time it is evident that their biofuel policy is aimed at benefiting most Brazilians, even the decreasing numbers of sugarcane cutters, in Sao Paulo, who are making the transition to mechanized agriculture and green, no burn harvesting... most of the cutters even have unions (albeit weak ones) and that is more than we can say about those working in the sugarcane and orange groves of Florida. Lastly, Senator Grassley is committed to free trade in almost all respects except corn; and in all honestly, he is not doing the corn farmers, ADM and others, by steering them toward trade distorting policies rather than help them find out the best, most efficient, and socially responsible ways of using their land, resources, and global reach. Yes, my commentary has edges, more to capture the attention of the reader, but the content serves to revive the debate on how the U.S. proceeds to increase its renewables in the transportation sector. Towards this end, Florida in 2010 moves toward a 10 percent ethanol blend, and as in all things political, Florida may decide this for Grassley, ADM, and all of us. Abrazos, Mark
Mark Langevin
written by João da Silva, August 01, 2009
Dear Dr.Langevin

Second, I'm all for agricultural subidies, as long as they go toward family farming, and if it's organic, even more


So am I, Sir. I think Mr.Brown, Mr.Mombai & Co are also in favor of this. However,your article gave me (and others) an impression that you were lobbying for the elimination of the import duties in the U.S. for Brasilian Ethanol to lower the gasoline cost at the pumps for the American consumers. However, your frank response helped to clarify my misgivings and I do appreciate it.

Also, you do not seem to be very familiar with the "History" of our Ethanol program which is more than 30 years old and was created for "Strategic Reasons". Unfortunately, it has become an "Export Oriented" product; Rather a commodity, just like Soy beans, leather, etc;, losing the focus on feeding our own people. As such, Mr.Brown, Mr.Mombai,Mr.Reality Check, Mr.Gerson Nunes, etc; have plenty of reasons to question you article.

Nevertheless, please do accept my kudos for being in favor of Organic products and small family farms. BTW, the Brasilians pay more to buy organic vegetables than their U.S. counterparts. It is sad, considering that the purchasing power of Brasilians.

Dear Joao
written by Mark Langevin, August 02, 2009
Dear Joao, all good points and certainly those of us who follow the issue understand that it is not in the best interests of Brazil to export all the ethanol to the U.S. The Brazil position has been centered around supplying 10 percent of the U.S. market without the tariffs. My criticism of Grassley is centered on where to focus U.S. agriculture and the costs of the large subsidies and the protection of ethanol... had the U.S. gradually removed the tariffs, then ADM and other large corn producers might have already innovated greater, more efficient use of agricultural wastes (biomass) to feed ethanol and biodiesel production in the U.S. The main point, how does the world get to lower emissions, renewable energy in the most efficient, quickest way? I think Brazil has the right public policy in the transport sector; the U.S. does not.
Huh?
written by Lorenzo15, August 04, 2009
I thought we could already export sugarcane ethanol to the U.S. through the Caribbean Basin Initiative? And we fail to export even that amount that we are allowed duty free? So it's bad that the U.S. would protect and build its ethanol industry like we did in the last few decades (PROALCOOL)? And so we're supposed to come up with extra land and laborers to produce this ethanol crop without destroying more forests (Cargill) and basically enslaving the laborers? Did you know that the "scientific findings that the carbon footprint of corn ethanol is simlar to gasoline" was determined by adding in CO2 released by destroying our forests, which we have been doing here for decades to grow crops and graze cattle (seems like that is our own fault (dirty politicians and local governments), not U.S. corn growers). Nevermind that numerous other studies do not show that U.S. corn production leads to Brazilian deforestation (on the contrary deforestation has decreased in the last few years as U.S. corn production and ethanol has increased). These new Brazilian ethanol crop farms, I can assure you, will not be "organic, family farms" but instead slash and burners benefitting the very international corporations the author purports to despise. I am confused by this--it seems contrary to what the good people of Brazil want. I would expect a PhD professor would do more research before attacking a person as he has.
Be Specific
written by Mark Langevin, August 04, 2009
Dear Lorenzo,

be specific with respect to your criticisms. I am not suggesting that Brazil has figured out how to develop the Cerrado and Amazon in a sustainable way, nor would I contest the association between Iowa corn, Mato Grosso Soy, and Amazon region beef production and pricing. However, whether it's the water added, Brazilian via CBI ethanol or corn ethanol from Iowa, we really can't afford the trade distortion that goes on, with all the transaction costs, uncertainty, and stupidity, as you note, the U.S. is importing Brazilian ethanol.

With respect to your slash and burn critique of sugarcane cultivation in Brazil. Take note, most of the horrific labor practices take place in the Northeast where the sugar is destined for the very small slice of the U.S. market via the tariff-quota form of national protection. In Sao Paulo the industry is moving toward an industrialization version of cultivation which pays fewer workers more... that is why there is a steady flow of Northeast sugarcane cutters moving to the interior of Sao Paulo to work for COSAN and other sugar/ethanol companies. Of course, sugarcane work, whether it's in the Northeast, Sao Paulo, or the Caribbean, is hard, and nobody chooses it as their first option, but in Sao Paulo it provides jobs, not slavery (your exageration only serves to undermine honest debate) and as I have witnessed myself, many work hard during the day and go to school at night to learn how to work the trucks, heavy machinery, refinery, etc.

With respect to subsidies, Brazil no longer subsidizes the cultivation of sugarcane or the production of ethanol; and Petrobras and the BNDES is banking most of the infrastructure projects that serve the industry, not to transfer income, but to add value and earn from the return on investment; the U.S. program only survives due to the subsidies and direct protection. My critique of Senator Grassley is that he places this protection ahead of the national interests of the U.S. and international cooperation with Brazil and other important countries. He is a corn dog, and it appears that you like them too!
Mark Langevin
written by João da Silva, August 05, 2009
Dear Dr.Langevin,

With respect to subsidies, Brazil no longer subsidizes the cultivation of sugarcane or the production of ethanol;


How sure are you about this?

and Petrobras and the BNDES is banking most of the infrastructure projects that serve the industry, not to transfer income, but to add value and earn from the return on investment;


Both Petrobras and BNDES can finance the "Infrastructure Projects" on subsidized interest rates at the expense of the Brasilian Tax Payers and "Lorenzo15" is talking the same language.

I think that Senator Grassley is also quite naive in the sense that he wants to defend the interests of his constituents who produce Ethanol out of corn and I am not sure if the good senator is aware of the long term negative repercussions on using fertile farm lands to produce Fuel(instead of food) for the vehicles. Nothing different from the "Paulista" landowners who are growing sugarcane. Formerly it was done by manual labor that was paid paltry wages. Now we have mechanized farming that does eliminate sugar cane cutters and cost effective, but does indeed destroys the subsoil and not produce food.

In a nutshell, Dr.Langevin: While the efforts of politicians like Sen.Grassley and their Brasilian counterparts are laudable in defending their rich constituents (after all, they get fat contributions from such folks),IMHO, they are very short sighted and hence not worth being voted into office.

Having said that,sir, I rest my case and leave to your good self to defend Ethanol as the only alternative source of energy!

Thank you.
...
written by Greenspan, August 05, 2009
With respect to subsidies, Brazil no longer subsidizes the cultivation of sugarcane or the production of ethanol


João is right, they are subsidized by interest rates lower than what anyone else can get.
Yes, we are all subsidized, albeit unevenly.
written by Mark Langevin, August 05, 2009
Dear all,

yes we are all subsidized, albeit unevening in such capitalist states as the U.S. or Brazil... and most producers are directly or indirectly subsidized, a process of facilitating the accumulation of capital, no doubt. So, if you want to make a critique of the capitalist state, just do it without confusing the issue with ethanol and the energy debate.

I support practical alternatives to fossil fuels for now, and ethanol is easly blended or splashed... of course the question is whether it is truly low emissions or not... and I think we now that answer to that.

I have been an advocate of Brazil's rural landless population for some time, see http://www.mstbrazil.org/rosset.html, but I also have to recognize that the MST made a strategic decision not to join the sugarcane ethanol bandwagon, and it is increasingly proving to be a costly mistake... leaving agribusinesses, like ADM, COSAN, and others to merge and expand without having to integrate with family and cooperative agriculture... not really their fault, they just want to make money. Of course, the original biodiesel initiative had the family farmer emphasis, good, but it looks like it will move away from this emphasis because of mandated demand (good) and the MST's unwillingness to try to spilt the difference and negotiate some integation with the larger agribusinesses and cooperatives that are now moving full steam ahead. Workers need to produce, and a lot is happening in Brazilian agriculture, however most of it is being engineered without the organizational representatives of rural workers... that should change.

The politicos like Grassley, well they are just corn dogs who sell old, used ideas that are no longer compatible with the need to create global public goods.
Mark Langevin
written by João da Silva, August 05, 2009
Dear Dr.Langevin,

Thank you for your latest comment and what makes an article more interesting is the writer participating in the debates after it is published. Please do accept my Kudos once again for your active participation.

I have been an advocate of Brazil's rural landless population for some time, see http://www.mstbrazil.org/rosset.html, but I also have to recognize that the MST made a strategic decision not to join the sugarcane ethanol bandwagon, and it is increasingly proving to be a costly mistake... leaving agribusinesses, like ADM, COSAN, and others to merge and expand without having to integrate with family and cooperative agriculture... not really their fault, they just want to make money.


Glad to know that you were (hopefully still are) an advocate of Brasil´s Rural landless population. I am surprised that you were an enthusiastic supporter of MST and got disappointed with them. I did try to access the website you gave to read your article and came across the message "Page Not Found" ! While I compliment you for your good intentions to promote the "cause" of the landless mass, I was surprised to note that you really believed that MST would share your philosophy!! That organization in favor the "Landless"???? Only other person to believe this is a gullible (but very distinguished) fellow blogger from Switzerland!!!!
That is a face
written by titan, August 06, 2009


only mother can love.
Obrigado Joao
written by Mark Langevin, August 06, 2009
Obrigado Joao, I guess.

Here is a better link to the Food First backgrounder on the MST, it was one of the first publications introducing the MST to the U.S., see it at; http://www.hartford-hwp.com/archives/42/013.html

With respect to the MST, I understand the organization's orientation with respect to agribusiness in Brazil, I just don't think it serves the cause of family agriculture with respect to the opportunities to "play off" agribusiness and erect the incentives that would compel these large enterprises to work with family and cooperative based agriculture. I admire the MST in important respects, but the organization's strategic decision making has moved this social movement to the margins, rather than the center of a national debate on agriculture and agroenergy. Ok, I'm repeating myself.

Stay tuned.

Adeus,

Mark
Mark Langevin
written by João da Silva, August 06, 2009
Obrigado Joao, I guess.


No worries, Doc. My thanks for indicating the website where your original article about MST appeared. I read it with great interest and now I can understand and appreciate your latest comments on MST in a better perspective!!!

Stay tuned.


I will.

Adeus,


To you too.






...
written by Mombai, August 11, 2009
Thank you Mark,
I understand your stance on making the most of U.S. Agricultural land,and I heartily agree,the U.S is no longer an industrial, agriculture, or even technogology giant. We are consumers and not producers, so we had better make the most of our resources. I view this haggle over sugar, vs corn as one issue, and the issue of reducing or eliminating tarrifs as another issue altogether. As previously stated, Brazil already receives BILLIONS of dollars of trade benefit from the U.S.. Subsidies to Brazil are NOT going to family farming as stated above by a Brazilian in the know. And since we impose this tarriff on everyone, why should we exempt Brazil from paying? O.K. our corn is not as efficient in ethanol production as their sugar. Our corn growers,who by the way USED to grow food, abandoned that food for the far more lucrative corn, assured and supported by the federal govenrnment, that this was the way to go. Now, all of a sudden, they are being railroaded out of the business? Why not take all of those tarriffs, which you so willingly want to hand back to Brazil, and use them to enable the corn growers to switch prduction to something else instead of leaving them holding the bag? Then you accomplish your goal of shifting ethanol production to Brazil, where they can " slash and burn", as one Brazilian writer above put it so clearly, their own country. This would certainly be a better way of convincing corn farmers to grow more sustainable crops, which would benefit us, rather than simply "put them out of business", by dropping the tarriff.
Thank you, Mark for being more clear in your explaination, and I hope I have clarifed my position.
However if HR3240 passes, it will all be a moot point anyway.
You could extend your hand to a Brazilian?
written by Wellington Silva, August 18, 2009
PROJECT IN BRAZIL BUILDING WITHOUT THE NEED FOR NATURE

Agreda.
Respect for nature!

You can help us achieve this dream?
Help us to spread this request to other pages on the internet.

Hello,

If possible, we need your assistance (donations) for this project where we want to build a house in the City of ecologically correct Pirambu - Sergipoe - Brazil.
I am Brazilian, living in the city of Aracaju - Brazil.
I have an excellent land in the tourist town of Pirambu, coastal town located 32 km. in Aracaju, Sergipe - Brazil.
Want to use my land to build a house in this area ecologically correct to show the man who can build good and beautiful places on the coast, without harming the nature.
I want to do this project, a reference in the region (Northeastern Brazil), to show the regional community and, if possible at all Brazilian who can build houses to live without the need to harm nature.
For this we need your valuable assistance in the realization of this dream (project).
I need donations, may be of material Ecological building the house, or money to buy the material for construction.
Our commitment to you is to inform you if you want the whole progress of the construction of the house until its final conclusion.
I invite you to participate in this project but will have little but their importance for the good of nature.
Let's show the man who can and should respect nature and we can build without the need to harm the environment.

For those who have help us, tell the data below the bank for donations.

BANCO DO BRASIL
AGENCY 0017-7
CURRENT ACCOUNT 16880-7
ON BEHALF OF WGLCAR Wellinton Silva

Your help has two purpose the realization of our dream to build the house proper, and while this home will refeencia to show the Northeast of Brazil and perhaps for all of Brazil, we can live in well with nature without necessiade of agredila .

Sinceramenmte their collaboration will be important to realize this dream, your donation may be 1 cent or $ 1 million dollars, the important and your participation in the realization of this dream and know that every brick for this house, has your participation too.
Thank you to everyone who helped and those who might not have had more help the good intention.
Wellington Silva
City of Pirambu-Sergipe - Brazil

I am a Brazilian anonymous, but I have a duty to contribute to the preservation of nature.
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