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Brazil’s ethanol industry fighting to recover

The volume of Brazilian sugarcane in the current harvest is expected to shrink by 4%

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Antonio Padua Rodrigues UNICA director

According Antonio de Padua Rodrigues, director of Brazil’s sugarcane industry association, the volume of sugarcane produced in this harvest will drop by about 22mn tonnes. Brazil has had serious aging process of its sugarcane fields. The volume of sugarcane in the current harvest is expected to shrink by 4%, which will undermine ethanol production, said Rodrigues.

The director of Brazil’s sugarcane industry association, Antonio de Padua Rodrigues, spoke in an interview to BNamericas about the situation in the country’s ethanol sector, which is trying to recover from the aging of sugarcane plantations.

Mr. Rodrigues believes Brazil could see a recovery in the short-term “if the ethanol market is able to maintain higher price levels for longer, which ensures profitability for producers.” However, if there are no changes “production will increase or decrease every year depending mainly on weather conditions,” he explained.

Since 2008, when the country first started a price policy to support gasoline sales, under which taxes levied on the fossil fuel were subsidized by Petrobras, the ethanol industry has been losing competitiveness.

Brazil spent seven years without correcting gas prices, said Rodrigues, while the biofuel industry was going through a huge change in the productive process for sugarcane. During this period, the burning of sugarcane bagasse stopped and manual harvesting became mechanized. However, there were no incentives to accelerate mechanization and expand the consumer market. So unfortunately, over the past few years, sugarcane plantation has become older and the ethanol production has declined.

If there’s no long-term policy that stimulates hydrated ethanol consumption, there will be no development for this market. It’s essential to create incentives for ethanol, for example, with tax breaks due to its environmental advantages. At the same time, Brazil needs price predictability for gasoline.

Another important measure is for the government to set goals for the participation of hydrated ethanol in the country’s fuel matrix. The market growth can’t be based solely on the availability of sugarcane, concluded Rodrigues.