Victory Without Fuel

After thirty years, the U.S. barriers to the Brazilian ethanol were taken out. It is a pity that the Brazilian sugar mills are not able to supply not even the internal market.

In recent years, whenever a Brazilian president had a meeting with his fellow American counterpart, he took the opportunity to claim the opening of the U.S. market to ethanol produced in Brazil. The ritual was repeated in Lula's meetings with Bush and with Obama, and then during the meeting of president Dilma with president Obama. In addition to the pressure from the Brazilian government, the Sugar Cane Producers Association (UNICA) hired lobbyists to influence American congressional representatives and thus bring down the barriers. Brazil, in its dream of becoming the "Saudi Arabia of biofuels", wanted to conquer the American fuel pumps.

In the USA, alcohol is mixed with gasoline in a proportion of 10%. Now, with the USA in crisis, Congressmen did not reach an agreement to renovate the main laws that protected the local ethanol producers. The irony is that the Brazilian production goes through a bad time, with deep fall in local cane harvest and the lack of investment in new plantation areas.

Brazil does not have now, conditions to expand its exports. In fact, the factories here cannot even supply the internal market. The country became an importer of alcohol - and in a stroke of irony-, the main suppliers are Americans.

Two measures protecting the US against the Brazilian ethanol: a surcharge of 15 cents per liter imported from Brazil and a grant of 13 cents for the American distributors on fuel produced and bought locally. As a result, Brazil even producing fuel alcohol in the most efficient way that exists (from sugarcane), could not compete with the American alcohol made from corn.

The protectionist measures adopted by the U.S. with respect to ethanol cost the American public coffers US$ 6 billion per year. With the industry already strengthened (the country is the largest producer and exporter of ethanol in the world), participants felt the time is ripe to put an end to subsidies. In the end, the measure tends to benefit Brazilian producers. However, they first will have to invest to be able to meet the increased demand in the Brazilian pumps.

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