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August 13, 2019

Corn Ethanol Production continues to expand In Brazil

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

One of the most interesting changes in Brazilian agriculture over the past several years has been the initiation of corn-based ethanol production. Brazil's ethanol production has traditionally been based entirely on sugarcane at several hundred sugar mills, but that started to change over the last few years.

The first corn-based ethanol facility in Brazil started operations in the city of Lucas do Rio Verde in central Mato Grosso in June of 2017. That first facility opened the way for corn-based ethanol production and according to the National Union of Corn Ethanol (Unem), there are at least 7 more corn-based ethanol facilities scheduled to be built in the center-west region of Brazil over the coming few years with a combined annual production capacity of 3 billion liters of ethanol.

In addition to new corn-based facilities, other traditional sugar mills that only utilized sugarcane have been retrofitted to utilize corn during the time of the year when sugarcane is not available. These facilities are being labeled "flex" facilities because they can utilize sugarcane or corn to produce ethanol.

Generally sugarcane is not harvested during the rainy season, which extends from December through early March. During that period, the traditional sugar mills stopped processing sugarcane for a 2-3 month period. That is now changing as mills are retrofitted to utilize corn allowing the mills to continue producing ethanol year round. The owners of the retrofitted mills have been very pleased with the results. There are three such retrofitted mills in Mato Grosso with most new sugar/ethanol mills being designed to utilize both sugarcane and corn.

A study conducted by Professor Marcos Fava Neves from the University of Sao Paulo/Ribeirao Preto indicated that a new corn-based facility had a construction cost of US$ 90 million. A "flex" facility that could utilize both sugarcane and corn had a cost of US$ 60 million. The cost of retrofitting an existing mill to utilize corn when sugarcane is not available had a cost of US$ 20 million.

All of these corn-based facilities are being built in the center-west region of Brazil because corn is abundant in the region, the price of corn is relatively cheap, the cost of transporting the corn to export facilities or livestock operations in southern Brazil is very high, and the cost of bringing in ethanol from other regions of Brazil is also relatively high. Farmers are very pleased with these new facilities because they feel it will help to support corn prices and offer them an alternative in marketing their corn instead of relying heavily on the export market.

These and other topics will be the focus of the 27th FENASUCRO & AGROCANA trade show to be held August 20-23 in Sertaozinho, Sao Paulo. The trade show represents all the sugar sector in Brazil as well as 43 other countries along with 3,000 different products. The show is expected to attract 39,000 visitors and generate R$ 4 billion in future sales.