The Brazilian Government wants more ethanol in 2012

Pressed by the sugar and ethanol mill owners, the government is preparing measures to stimulate the production of ethanol in the next year, to avoid the repetition of the 2011 results now confirmed: the Brazilian production of hydrated alcohol, used in automobiles powered by gasoline and alcohol, will fall almost 30% compared to 2010. A fall of 13.1% on the supply of anhydrous alcohol, mixed with gasoline is also predicted. Among the actions under consideration is the increase of 20% to 25% compulsory addition of anhydrous ethanol to gasoline.

Two months ago, the government reduced the mixture to 20%, to avoid climbing prices of ethanol and fuel shortage. Now, however, producers say that there is excess anhydrous ethanol in the market and at least 500 million liters of the product will be "wet", i.e. transformed into hydrated alcohol until the next harvest, which begins in March 2012.

"We have excess anhydrous ethanol. (Resuming the 25% mix rate) is good for the industry and for the country, once one of the consequences is the fall in imports of gasoline, reducing the expenses of Petrobras", said the President of the Union of the Sugar Cane Industry (UNICA), Marcos Jank.

President Dilma Rousseff wants the sector to think about ways to prevent the lack of the product in the off-season reflected in inflation increase. Another determination is that the technicians create a specific credit line for the storage of sugar cane. This already existed, but was suspended at the beginning of the decade, according to a source from the Ministry of Agriculture.

According to UNICA's estimates, the production of anhydrous ethanol in the current crop is 9.25% higher than the period of 2010/2011. Concerning hydrated ethanol, the situation is reversed: there will be fall of 28.8%, or five billion liters. Until the end of the harvest, the expectation is that the mix of sugar and ethanol stay in the ratio of 48.36% and 51.64%, respectively. To Jank, another stimulus would be the adoption of a differentiated tax treatment. According to him, the member states should follow the State of Sao Paulo policies, where the ICMS on gasoline is greater than that of alcohol (25% and 12%), respectively.

The above summary reflects the reporting and opinions expressed by the cited news media. Candex does not independently verify information, nor do the reports necessarily reflect the opinion or reporting of the board of Candex.