Brazil to Boost Cane Crop Area 50% in 8 Years, Rodrigues Says
May 18 (Bloomberg) -- Brazil will increase its sugarcane crop area by half in eight years as flexible-fuel cars boost demand for ethanol made from the tropical plant, Agriculture Minister Roberto Rodrigues said.
Sugarcane planting in Brazil, the world's biggest ethanol consumer and producer after the U.S., will rise to about 9 million hectares (22.2 million acres) by 2014, Rodrigues, 63, said in an interview at his office in Brasilia yesterday. Current crops represent 10 percent of the 60 million hectares of Brazilian land with potential for cane planting, he said.
The Brazilian unit of Volkswagen AG, Europe's biggest automaker, and other car companies in 2003 introduced vehicles that can run on ethanol, gasoline or any blend of the two, boosting consumption of the bio-fuel as oil prices surged. Ethanol makers are building 51 new mills and studying another 100 projects to add to about 300 existing plants, aiming to meet rising demand, Rodrigues said.
``The expansion of sugarcane is really spectacular,'' said Rodrigues, whose farm in Piracicaba, Brazil supplies cane to sugar and ethanol mills. ``There has been a substantial growth in demand.''
Brazil's annual ethanol consumption will rise to about 27 billion liters (7.12 billion gallons) in eight years from about 15 billion liters now, as a rising number of cars run on the fuel, Rodrigues said.
More than 75 percent of new cars sold in Brazil have so- called flex-fuel engines. Rodrigues, a former agronomy professor whose hobby is composing country music, expects the number of such vehicles to rise fivefold in eight years to about 5 million.
Domestic Use
Most of the rising ethanol production in Brazil will cater to the domestic market, Rodrigues said. The South American country is not prepared to immediately supply the U.S. market even if the world's No. 1 economy scraps a 54-cent-a-gallon tariff on imports of Brazilian ethanol, he said.
``For Brazil to be a supplier to the U.S., a long-term agreement would be needed,'' Rodrigues said. ``If we plan it, though, it's possible.''
Brazil, the No. 1 per capita ethanol consumer and maker, last year produced 4.23 billion gallons of the bio-fuel, compared with 4.26 billion gallons in the U.S., according to F.O. Licht, a Ratzeburg, Germany-based commodities research company.
Rising demand from drivers of flex-fuel cars pushed up the bio fuel's price to a record high in Sao Paulo in March.
Ethanol for June delivery rose to 1.3 real (59 cents) per liter on March 2, the highest in at least six years, at the BM&F commodities and futures exchange in Sao Paulo.
Harvest
It has since slumped 20 percent, to 1.05 real per liter yesterday, after producers started harvesting sugarcane a month early in April to ensure ethanol supplies.
Ethanol traded on the Chicago Board of Trade for July delivery rose 10 cents, or 3.5 percent, to $2.95 a gallon yesterday, extending its 41 percent rise this year.
Brazil currently processes about half of its cane crop into ethanol and the other half into sugar.
Most of the new mills under construction or study in Brazil will focus on ethanol, Rodrigues said. He expects that two thirds of the 3 million hectares of sugarcane crops farmers will add in eight years will supply ethanol production.
Investments from Asian and European countries will account for part of the expansion, Rodrigues said. Investors in Japan are also considering building pipelines to take ethanol from Brazilian producing areas to ports, he said.
To contact the reporter on this story:
Carlos Caminada in Brasilia at at ccaminada1@bloomberg.net
Last Updated: May 18, 2006 08:25 EDT |
