Brazil Ethanol Increasing Sugar Prices
Demand for ethanol in Brazil is helping to increase sugar prices, according to a Bloomberg article sent to us by alert reader Erick Erickson of Holdrege, NE (Thanks, Erick!). Of course, it’s not entirely because of the demand for ethanol. Part of it has to do with the hurricanes here in the US that devastated sugar cane crops in Louisiana and Florida last year – and a big drought in Thailand. So … yeah, they’re making more ethanol in Brazil, but it’s basically the law of supply and demand here that is driving up sugar prices to a 24 year high. Basic Economics 101. So, relating that to the last post about increased ethanol production leading to world hunger … I would venture to say that it may (and hopefully will) increase the price for corn, but that is a good thing for farmers who – unlike most producers of goods – don’t set their own prices. They just have to take the best price they are offered at the market. The main reason for corn farmers to promote ethanol production and use is to increase demand for their product and ultimately the price they receive. It’s a bonus that ethanol is good for the environment too.
3 Comments
C. Scott Miller
The ultimate feedstock for ethanol will not be food crops. Instead, it will be agricultural, forestry, and urban waste – which will have no impact on world hunger other than to help societies build renewable fuel plants to get rid of their wastes and produce surplus liquid and electric energy. I invite you to read up on “Cellulosic ethanol” from Wikipedia and my BioConversion Blog – particularly word searches on syngas fermentation and BRI Energy.
Gary Dikkers
Cindy,
Do you know why Brazil has had good luck with ethanol? There are at least four reasons:
1. It is more efficient to make ethanol from the sugar in cane than from the starch in corn.
2. They have a climate conducive to sugar cane. (Their nearness to the Equator is an act of nature.)
3. They have vast tracts of virtually free, virgin land that is also conducive to growing cane.
4. They have a supply of almost dirt cheap manual labor. (No using a heavy diesel tractor that consumes 20-25 gallons of fuel an hour for them at harvest time.)
Any attempt to draw parallels between Brazil’s ethanol experience and our’s would be a mistake.
Cindy
Read the Fortune magazine article for a good history of Brazil’s ethanol industry growth. It was no overnight success. We can learn much from Brazil’s efforts.
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