“Buy land: they’re not making it anymore.” The question of guns vs. butter is more theoretical than literal these days, but many countries face a more immediate dilemma: food vs. fuel. Should limited arable land be dedicated preferentially to food production, or should more land be used to produce biofuel feedstock crops, like corn and sugarcane for bioethanol or soybeans for biodiesel?
As the world sugar price has remained depressed, countries like India and Thailand have been playing with policies to encourage the growth of ethanol manufacturing capacity based on sugarcane.
Thanks to government policies that favor ethanol production and to strong domestic pricing for ethanol, Brazil has been crushing more cane for ethanol than for sugar for years. In fact, depending on the forecast, Brazil could lose its spot as top sugar producer to India in 2018/19, if sugar pricing remains weak and if weather for India’s cane crop remains favorable.
Brazil domestic reference pricing for sugar & ethanol
Source: UNICA, ANP, EMBRAPA, McKeany-Flavell
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