With the increase in the world demand for alternative fuels, Brazil hopes to add 3 billion liters to its annual alcohol exports by the year 2010. This is the estimate of the São Paulo Sugar Cane Agroindustry Union (Unica).
The southeastern Brazilian state of São Paulo is the largest producer in the country. Last year, for the first time, the sector presented a significant increase in the shipping of fuel alcohol.
“In 2004 there was a significant change in the foreign market,” stated Antônio de Pádua, the technical director of the Unica.
From the last sugarcane crop, a total of 14.7 billion liters of alcohol was produced, being 2.4 billion exported, against 1.1 billion liters in 2003, a total that generated US$ 500 million in revenues, double the total of last year.
According to Pádua, the main generator of these results was the increase in demand for the product for use as a fuel, to be mixed with gasoline, which rose to 60% of total exports.
In the past, according to him, the product was purchased mainly for use in the drink and perfumery industries.
Among the factors that influenced this performance are the increase in oil prices and the proximity of enactment of the Kyoto protocol – the international agreement that establishes targets for control of polluting gas emissions -, to take place in 2008.
There are other products that can be mixed to gasoline, like the MTBE (Methyl Tertiary Butyl Ether), but this, apart from being a hydrocarbon, thus susceptible to the oscillation of the price of the commodity, is more pollutant than alcohol.
The main importers of the Brazilian product are currently the United States and India, countries where alcohol is already mixed into petrol, but which are also great producers.
Larger or lower US purchases of Brazilian alcohol, for example, depend very much on the behavior of product prices on the US market.
The Brazilian alcohol sector is, therefore, more interested in the opening of new markets with great potential, among them the Chinese and Japanese.
Japan, for example, has already authorized the mixture of 3% anhydrous alcohol into the petrol used in vehicles in the country. The Brazilian government is insistently negotiating with Japanese authorities for Brazil to become a great supplier once the market is opened.
The worldwide alcohol production, according to Pádua, is around 35 billion liters, but foreign trade represents just 10% of this total, or 3.5 billion liters per year. This makes Brazil, which is already the largest producer, the main exporter.
According to Pádua, if all the countries adopted the mixture of alcohol into their fuel, the volume traded internationally could grow to seven times the Brazilian production, estimated at 15.2 billion liters for the current harvest. The United States are the second largest world producer, with a yearly total of 12 billion liters.
But this increase, according to him, is very unlikely to take place, as there are many other products that may be added to petrol.
“This demand may increase to 10, 15, 20, 30, or even 40 billion liters. These are possible figures, but only time will tell, and it will depend on oil prices, on environmental questions, etc. The foreign market is still going to develop,” he explained.
For the time being, the sector is considering additional exports of 3 billion liters up to 2010. For this purpose, according to Pádua, the sugarcane cropland in Brazil should rise from the current 5.5 million hectares to around 7.5 million and production may grow to around 10 billion liters, being 7 billion turned to the domestic market.
It is also worth recalling that the Brazilian market consumes the largest part of the production, and this should not change as, apart from adding fuel to petrol, the country has a large fleet of alcohol powered vehicles and of “flex fuel” vehicles, that may be fueled by alcohol, petrol or any mixture of these two fuels.
However, whatever the increase in demand, Pádua believes that Brazil has a great potential to contribute as the main world supplier.
“Just to give an idea, if the entire Brazilian sugar production were converted into alcohol, we would have an extra 28 billion liters a year. The Brazilian competitive advantage is very significant,” he said.
“We are the most competitive country in sugar production, there is no reason for us not to be the same with regard to alcohol,” he added. The alcohol sector alone has a turnover of US$ 4.6 billion in the country.
Translated by Mark Ament
ANBA ”“ Brazil-Arab News Agency