By MATTHEW D. ERNST
ST. LOUIS, Mo. — The Brazil Chamber of Foreign Trade said on July 5 it will continue to delay tariffs on U.S. ethanol imports.
A 17 percent tariff was proposed after Brazil Agriculture Minister Blairo Maggi, in April, called for an end to tariff suspensions on U.S. ethanol. Ethanol shipments from the U.S. to Brazil have jumped this year as Brazil sugarcane farmers respond to high sugar prices, sending less sugarcane to Brazil’s ethanol plants.
Brazil is outpacing Canada as the largest destination for U.S. ethanol, from January to May, according to trade data released by USDA on July 6. Ethanol export volumes to Brazil have tripled the level of 2016. Ethanol exports to Brazil are on track to exceed one billion liters in June, about the amount sent to Brazil during the 2016 calendar year.
Ethanol producers in the U.S. have welcomed demand from Brazil, in the face of abundant corn supplies and less ethanol exports to Canada. If enacted, an ethanol tariff from Brazil would pressure profits. “This could be a major drag on ethanol prices and profits in the second half of the year,” said Scott Irwin, University of Illinois economist, in a June 29 analysis at the farmdocdaily website.
Brazil trade policy since 2010 authorizes up to 20 percent tariffs on ethanol imports, according to USDA.
But Brazil has suspended those tariffs to increase biofuels supplies which help it meet an E27 mandate. It is uncertain whether the zero tariff on U.S. ethanol exports will continue for the long term. The U.S. industry supports proposals that could favor U.S. exporters.
“We will continue this work and appreciate the thoughtful consideration Brazilian officials are taking on a proposal that could have wide-ranging and long-standing impacts on both our industries and the global fuel supply,” stated leaders from Growth Energy, the Renewable Fuels Assoc. and the U.S. Grains Council, in a joint statement.
A proposed biofuels mandate for Brazilian fuel distributors, reported last week by Reuters, would create certificates of emission reductions which could be traded on a secondary exchange.
The program is supported by Brazil’s National Sugar and Ethanol Council and will require legislative approval from the Brazil Congress within four months, according to the Reuters report.