Despite being a soil scientist, it is hardly possible to work in agriculture in Minnesota and not know quite a bit about ethanol. Meeting with the people involved in the industry here has been quite enlightening. I am not sure whether we have gotten complete information due primarily to language translation, but the picture is quite clear and interesting. They view ethanol as a very large opportunity for their economy and I couldn’t agree with them more.

When we met with UNICA, the trade council for the sugar industry, they did not really seem threatened or concerned about either the current state of the world economy, or what the US had planned with respect to ethanol policy. They, more or less, seemed to be grateful to us for raising ethanol to a level of worldwide public visibility. Mr. Swarcz (Schwartz) stated that in the future Brazil and the US would be the drivers in worldwide ethanol production and everyone else would be on the sidelines watching. I think that this is correct. The industry takes a long range view of the situation, yet they did present us with some figures regarding why their system made more sense to them. They produce about 5x more ethanol per hectare using sugar cane than we do. What they fail to represent is that at this rate they have nothing left, it was all used in the process of generating ethanol or biomass burning energy. We have DDGs left, which are a great feedstuff for livestock and they do not mention this anywhere. In addition, since our system uses corn which stores indefinitely and can easily be transported long distances we have a logistical advantage they can only dream of. They do, probably have a system that produces more energy per acre than we do, but the problem with cane is that it must be processed the same day that it is harvested or it degrades rapidly and becomes worthless. Because of this they only move it about 20 miles at the most before extruding the juice. I am not going to go into a discussion regarding environmental issues, because I am having a hard time assessing just what the environmental impact is down here. I don’t think that it is particularly severe, but there are some down sides (just as corn can have at home).

The producers are not able to focus on a long term approach to the industry, as they are worried about sugar prices that will only bring them half way to break even this year. They seem a little miffed with respect to US farm policy and said that we should be lifting trade restrictions that prevent them from exporting to the US. What they fail to understand is that they might not have much of a market anywhere were it not for those policies that took ethanol to the forefront of our energy policy in America. Brazil has a very protectionist system, and they put very stiff tariffs on imports. They do not have these same restrictions on agricultural products, but their ability to produce vastly exceeds their domestic needs, making import of anything but real niche products unlikely. I don’t tend to doubt that if they were willing to open the doors of free trade of manufactured goods we might allow them into our ethanol markets, but for now it seems likely that things won’t change much on either side.