November 23, 2012

Corn Promoted as Supplement for Brazilian Ethanol Production

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

A workshop is being held today in Cuiaba, Brazil, which is the capital of the state of Mato Grosso, to promote the use of corn as an additional raw material for the production of ethanol. The idea is to utilize corn as an alternative raw material to produce ethanol during the time of the year when sugarcane is not available. This concept of a flex-sugar/ethanol mill that can utilize different raw materials at different times of the year to make ethanol is starting to get noticed in Brazil.

Traditional sugar/ethanol mills in Brazil only utilize sugarcane as a raw material, but these plants must shut down between sugarcane harvests. By utilizing corn as a raw material during this shut down period, the plant could keep operating year round.

In the state of Mato Grosso for example, the sugarcane harvest starts in April and it concludes in October. They do not harvest sugarcane during the November to March period because that is the peak of the rainy season and excessive rainfall can keep the mechanical harvesters out of the fields. As a result, the mills are shut down for four months due to a lack of raw material.

This concept of utilizing alternative raw materials to produce ethanol could be particularly attractive in areas of Brazil where there is an excess of corn production. The excess corn must be transported at very high costs to livestock producers in other parts of Brazil or to exporters. That is currently the situation facing corn producers in Mato Grosso.

Mato Grosso only consumes a small portion of the corn produced within the state. The silos in the state are full of corn at the same time that livestock producers in southern Brazil or northeastern Brazil are desperate for corn to feed their animals. As a result, in recent years the federal government has had to step in to purchase some of the excess corn, pay for transporting it to other regions of the country, and then sell it at a loss to livestock producers.

Keeping the corn within the state by producing a value added product such as ethanol is a very attractive alternative for Mato Grosso corn producers. The byproducts of corn ethanol production such as dry distiller's grain could also be utilized in the livestock industry in the state.

There are a lot of advantages to keeping the mill operating year round by converting the mill to a flex-raw material mill including: a relatively low level of initial investments to make the plant corn compatible, low cost of investment per liter of ethanol produced, optimizing the plant'a capital investment by utilizing the plant for four additional months per year, reducing shut down and startup costs, more efficient utilization of labor costs, and diversifying the raw material base.

A stand along mill in Brazil utilizing only corn as a raw material for the entire year is not economically feasible, especially compared to the relatively low cost of producing ethanol from sugarcane. But, it is certainly economical to keep the operations running by converting the plant to utilize corn when sugarcane is not available.

This is just one potential way of making sugar/ethanol mills more economically viable in Brazil. An additional way of making sugar/ethanol mills more sustainable is the utilization of sugarcane residue to produce cellulosic ethanol or what is commonly called second generation ethanol. Much of the sugarcane residue is currently burned to produce electricity to run the mill or it is it utilized as a soil supplement. By burring the residue, not only are energy costs are held down, but many of the mills sell their excess electrical production back into the electrical grid.

A stand along cellulosic ethanol mill in Brazil is also not economically feasible at the present time, but it is economically feasible to use the synergies of producing regular ethanol and cellulosic ethanol at the same time.