Grainnet

Bloomington, IL--The signing of an ethanol agreement between the U.S. – Brazilian represents a natural and positive step forward for the development of a international ethanol industry, according to the >b>Illinois Corn Growers Association (ICGA).

The memorandum of understanding signed this morning by U.S. Secretary of State Condoleeza Rice and Brazilian Foreign Minister Celso Amorim covers various aspects of the ethanol market.

Under the memorandum of understanding, the two countries will promote international efforts to standardize technical specifications for ethanol.

The goal is to establish ethanol as an internationally traded commodity.

“This is a positive development if it raises the world’s awareness of the potential for ethanol fuels and the contribution it can make to our energy needs. However, we will watch these developments closely to assure any future agreements are formulated in the context of fair trade,” said Steve Ruh, ICGA President of Sugar Grover.

According to the document, Brazil and the U.S. will engage in joint efforts to develop ethanol-related technologies and uses.

They will encourage development of ethanol-producing industries in Central America and the Caribbean as well.

The two countries will also work on development of other biofuels.

The memorandum did not directly address Brazilian concerns over U.S. tariffs.

President Bush met with President Lula at a Petrobrás biofuel facility in São Paulo during which a discussion was held on the U.S. tariff on imported ethanol.

During that meeting President Bush indicated the ethanol credit offset is not currently open for negotiation.

“Congress put our current ethanol incentives in place to incubate and grow a new industry and revitalize rural America. Our credit offset prevents foreign ethanol industries access to these American taxpayer dollars, but does not block access to the U.S. ethanol market,” Ruh said.

The Caribbean Basin Economic Recovery Act, enacted in 1984, allows up to 7 percent of annual U.S. ethanol consumption to be brought through Caribbean Basin Initiative countries duty-free.

As our production grows, so does their market access.

To date this limit has never been reached, so the issue is not overly relevant at this time,” Ruh noted.

Last year, the U.S. imported 433 million gallons of ethanol from Brazil, or roughly 10% of Brazil’s overall ethanol production. “A growing worldwide ethanol industry is a very positive development because it decreases our dependence on petroleum. Overall energy demand is growing and shows no end, so we must seek out and develop all alternative sources of energy that make sense and can be developed competitively here and abroad.” “We should continue to discuss the tariff issue and market access as part of an overall trade package that is fair and makes sense for the U.S. However, despite current growth in the U.S. ethanol industry, it remains a relatively new energy business. From a U.S. perspective that probably should not occur until we broaden our ethanol production base and get the cellulosic ethanol industry up and running,” Ruh said.

It is also important to note that Brazil is not currently a reliable source of ethanol.

Their industry makes ethanol from sugar and when world sugar prices are high they cut ethanol exports.

In the U.S., ethanol production has grown virtually every year, as has the size of the corn crop to supply this demand.

For more information, call 309-557-3257.

See Related Websites/Articles:

• Illinois Corn Growers Assn.

more GRAIN NEWS...