Dec 22, 2009
China Reduces Import Tariffs On Ethanol
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
China's decision to reduce import tariffs for ethanol from 30% to 5% as of January 1, 2010 will benefit Brazil's sugarcane producers in the long run. No one expects that China will make large ethanol purchase from Brazil in the short term because China lacks the needed infrastructure to import large quantities of the fuel, but once the needed infrastructure is in place, importing ethanol from Brazil would benefit both countries.
Currently, ethanol prices in Brazil are quite high due to a spot shortage of the fuel, but everything indicates that sugarcane expansion will continue in Brazil unabated. Chinese officials have also expressed interest in helping to finance Brazil's construction of ethanol pipelines to transport the fuel from the interior to the ports. Brazil and China both realize that anything that can be done to increase the trade of raw materials between the two countries will be mutually beneficial for both countries.
The state of Sao Paulo is responsible for over 60% of Brazil's sugarcane production and in many regions of the state there is little or no room for expanded sugarcane cultivation. As a result, there is a push for increased productivity from existing sugarcane production. Sugarcane producers are paid based on the total sugar recovered from each ton of sugarcane processed and anything that can be done to increase the cane's sucrose content increases profitability.
Embrapa scientists continue to strive to develop new sugarcane varieties that have higher sucrose content and to improve the processing efficiency. Embrapa has also developed sugarcane varieties with different lengths of maturity. Their goal is to have sugarcane maturing eleven months of the year, which would allow the sugar mills to shut down for only one month of the year to conduct their annual maintenance.