Brazil Is Growing Its Biofuel Industry

Brazil, Business News/Analysis, Farming/Growing, Feedstocks, Field/Orchard/Plantation Crops/Residues, Infrastructure, Marketing/Market Forces and Sales, Opinions, Policy, Sustainability

February 24, 2021

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by Julio Bravo (Farm Futures) Brazil already has the largest fleet of cars driven by ethanol, mainly from sugarcane; now corn-based ethanol plants are on the rise. The ethanol produced by sugarcane and corn has have the potential to reduce up to 90% of the greenhouse gases. And, as mentioned in our recent blog, the country’s diesel fuel will soon have an additional one percent of biofuel (13% compared to current levels of 12%). This is mainly produced by soy oil.

The carbon footprint these biofuels leave will be a business opportunity to exchange carbon credits with different industries.

Many power plants produce sugar cane ethanol, and in between harvests, use the plant to produce corn ethanol to maximize capacity. These are called flex plants. However, there is a wave of corn ethanol plants rapidly growing in Brazil, similar to the corn belt in the early 2000’s. They are mainly located in the center west of Brazil where the biggest corn producers are located. That was a very good opportunity for our “safrinha corn,” the second crop. Logistically, processing this corn domestically is more profitable then trying to ship it out of the country.

Now, with these corn ethanol plants we have seen prices of corn in those parts of the country jumping over 30% in the past five years.

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During the 80’s and 90’s there was a lot of illegal deforestation happening in the Amazon; back then the regulations were weak, and penalties weren’t as severe as today. The ‘grileiros,’ those who grabbed land illegally, were mainly loggers and cattle breeders; they would falsify documents to illegally obtain a piece of land and are the main people responsible for logging the forest.

Agriculture is the backbone of the Brazilian economy and is responsible for a third of the Brazilian GDP (Gross Domestic Product). Its growth curve is paralleled by the regulations growth curve. Brazil today has a strict set of enforced environmental laws. Farmers must have a percentage of their farms preserved. These areas are called “Legal Reserves” and “Permanent Preservation Areas” (APP). The law states that every rural property must maintain areas covered in native vegetation as Legal Reserve. The percentage of the area varies from region to region; in the Amazon forest the reserve must be of 80% of the area, which means you can only utilize 20% of your land resource. Otherwise, there are penalties. READ MORE

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