Food and Fuel: Brazil Breaks New Records

Earlier this year, Brazil announced that 85% of the new cars sold in 2007 in that country were flex-fuel. That brought the total number of flex-fuel cars in Brazilian roads to over 50%.

Last month, the Brazilian Association of Car Dealers issued its March 08 sales numbers: sales of flex-fuel cars increased by 26.7% compared to the same month last year. Of course, in order to support this great demand of flex-fuel cars, there must be a high-volume production of ethanol. Not just that, but an increasing volume land used for sugar-cane production.

Indeed, this is what happened: consumption of ethanol increased from about 3.5 billion gallons in 2006 to 4.4 billion gallons in 2007. The projected volume for 2008 is 6.4 billion, with exports of ethanol decreased due to increased internal demand.

Is all this coming at the expense of food production? That's not what the numbers say in Brazil. The figures released yesterday show that Brazil is moving towards a record-breaking year in crops production, with a 7.8% increase over last year, propelled not just by soybean and corn, but also rice, beans and wheat. Sugar-cane production in Brazil takes up only about 1% of the total arable land in the country, comprised of close to 750 million acres. It is worth noting that about 17% of this total is "land in rest" for crop production. So, there's plenty of room for both land for food and land for fuel.

When asked last week about the world food crisis, Brazilian President Lula said:

Of course this is bad, because there's a lot of hungry people, but I think it's good news for Brazil, because we can plant and export more food.

Now that it is clear that land for fuel has nothing to do with the food crisis, our leaders need to follow Brazil's example, as it can have a huge impact in in world's politics and economy: a) By increasing the production of flex-fuel cars, demand for gasoline should decrease, and therefore oil prices should decrease; b) Oil will stop being a strategic commodity, and therefore the political clout of oil-rich countries should decrease, leading to greater geo-political stability; c) With oil prices going down, world economy can only gain, as a major component of overall production and transportation costs is energy.

Brazil has a long history with ethanol - over 30 years - and during this period we certainly saw the country reaching a new status in world's economy.

This should tell us something.

Comments

[NumbersGuy:]

The problem is factoring the effect this may have on climate change. (And yes, I am taking it as a given - I'm going with the vast majority of the world's scientists, not the small group that denies it.)

To do a full economic analysis of that problem, we would first need to determine how much rain forest is being destroyed to make room for new crops. Then you have to determine how much carbon is lost, net, as a result of that deforestation and, assuming you believe the market cost of carbon, factor that into the analysis.

Many would argue (with some reason at this point) that the carbon market doesn't really reflect the reality of the climate change problem. In that case you can at least assess whether biofuels are helping alleviate or are making worst that problem.

But, in the end, I guess that's a separate question and doesn't really effect the fuels or food debate.

2008 May 09 10:17 AM

[Shenandoah:]

Ever notice that any article that has real numbers points strongly toward biofuels as a viable contributor as a solution to the petroleum problem? By comparison, the anti-biofuels articles and posters are always rants against fantasy issues with no numerical backup.

I see McCain has come out against the ethanol mandate. That says a lot about his analytical capabilites and ability to dig for facts.

2008 May 09 11:14 AM

[jacksaar:]

The key to ethanol production is finding the right raw material. In the US, our public policy for too long as presumed corn was the "right" crop. There real lesson for the US, find the crop that is "cheap", and "low on environmental impact." The Great Plains of the USA gives anyone the answer when you look around and see what grows without fertilizer. However, not enough profit for companies (Monsanto, Cargill, et. al.) and farmers (voters) to make things happen, yet. Time is coming though.

2008 May 09 12:33 PM

[cdcaddy:]

Talk about digging up some facts - the cane industry in Brazil is expanding in terms of production - but not at the expense of the rain forest. This country has found a way to do what we're still kicking around as an idea..."making ourselves less dependent on foreign oil". If our inept politicians will start working on this [cane based ethanol] who knows - maybe we can catch up to Brazil in 10 years or so...afterall they have been promoting and building infrastructure for
ethanol for 30 years...

ps. just look at the decrease in total energy [and water] required t make ethanol from cane vs corn...the next big move will be to sorgum
using even less water...

2008 May 09 04:44 PM

[sbenard:]

Shenandoah, your claims in your article are dead wrong. To the contrary, just the opposite is true. Every discussion I've heard on the subject has all the facts and figures on the side of the anti-ethanol crowd. I heard a Phd from Minnesota last night who cited that it take 450 bushels of corn to produce enough ethanol to fill a full-sized sedan gas tank just ONE TIME! That same quantity of corn has enough calories to feed a human for an entire year! It was you who didn't back up your claims.

Brazil has a very powerful advantage in becoming free from dependency on oil that is ignored in this article. Most arable land in the Northern Hemisphere is unsuitable for sugar cane. Sugar cane requires a tropical/warm climate.

And corn is an extremely poor choice because it requires enormous amounts of fertilizer (which is made from oil) and provides a relatively small yield. Only a very tiny portion of the plant is suitable for ethanol production.
We must therefore find a better alternative to grow here in North America. Some say switchgrass is the answer. It sure would be nice to find a solution -- quick -- that would make the U.S. energy-independent just as Brazil has become.

2008 May 11 09:12 PM