Ethanol, Agriculture and the Future of Brazil
October 10, 2007
Ethanol, Agriculture and the Future of Brazil

Oct 11, 2007 -- /prbuzz/ --Sao Paulo, Brazil - - 10/11/07 - - The twentieth century saw energy become the fifth human need alongside air, water, sustenance and shelter. Brazil—a country with 23 percent of the world’s arable land—has risen to answer our growing energy and sustenance needs as it works to become the world’s premier producer of ethanol and food.

Brazil’s generous climate and more than 884 million acres of potential non-rainforest land provide the ideal conditions for the country to become the world’s food and energy superpower. Improved infrastructure links are making it easier for multinationals to access Brazil’s excellent farming market. Currently, two products—ethanol and food—are driving Brazil’s long term growth rate. Brazil provides food stocks to nearly every country in the world, and the country’s home-grown sugarcane-derived ethanol presents a viable alternative to oil dependency. Indeed, Brazil is on its way to becoming energy independent and will soon become a net energy exporter.

The massive tracts of available land are the result of a small population in a huge land mass, most of which remains underdeveloped. One hundred and eight million acres are currently under cultivation leaving an impressive 383 million acres of grasslands, bush and pasture available for cultivation.

Sugarcane farming would certainly be a savvy use of the land. In recent years, the United States government has sponsored initiatives seeking to reduce the US’s dependence on foreign oil. Ethanol has been a key piece in this strategy. The government has high hopes for ethanol, as evinced by multi billion dollar agricultural subsidies amounting to approximately $1.21 per gallon. But the US’s corn-derived ethanol is actually an energy negative process, meaning that it takes more energy to cultivate and convert corn into ethanol than it would to simply use the oil that goes into the farming. Every 100 units of energy devoted to the cultivation of corn for ethanol results in only 70 units of ethanol-based energy. This additional energy usage to produce this ethanol comes from fossil fuels, causing a higher dependency on energy. Adding the cost of the subsidies to the energy-inefficient creation process, ethanol turns out to cost $132.37 per barrel—more than $50 more than the record-high market price per barrel of oil. In addition, the use of corn for ethanol production instead of food has pushed basic food prices up as much as 300 per cent in some parts of the world. Proponents of the ethanol program state that as the process matures, it will become more energy efficient. In truth, all that the American ethanol program does is commit eleven acres of corn to fill a single tank of gas for a year instead of feeding a family of seven for the same period.

Unlike the corn-based ethanol so prominent in the United States, Brazilian sugarcane-derived ethanol is energy positive. The ethanol production process is much lower-impact than that used in the US. The difference is so dramatic that one gallon of fossil fuel energy expended on sugarcane production is estimated to result in 3.7 gallons of ethanol. Indeed, the process is so efficient that ethanol could be exported to the US for $1.56 per gallon, adjusted to account for transport and ethanol’s efficiency factor compared to gasoline. At the moment, however, the US has in place a prohibitively expensive US$0.545 tariff per gallon on foreign ethanol which includes Brazilian ethanol. This exorbitant tax prevents US consumers from having access to the alternative energy source that could truly break dependence on Mid-East oil.

This tax is the result of powerful farm lobbies and the stringent efforts of several Midwestern senators and congressmen who want to maintain the competition that arises from US ethanol production. Within the near future, however, this position will become untenable and the US will have to repeal or radically change its ethanol tariff. By that time, Brazil’s ethanol industry will have matured, and the country will be ready to export at even more advantageous prices.

This growth potential is astonishing—currently, Brazil is only satisfying 1/50 of its potential ethanol production capacity. This amounts to 4.4 billion gallons of ethanol, derived from approximately half of the sugarcane crop. If you consider that one acre can yield an estimated 615 gallons of ethanol, investment and proper cultivation of Brazil’s 383 million uncultivated acres mean that Brazil has the potential to produce 5.2 billion barrels of ethanol per year. At 14.25 million barrels a day, this will make Brazil the primary energy producer of the future, topping even Saudi Arabia’s oil output.

To satisfy these potential yields and world demand, the agriculture sector will grow by seven and a half times over the next three decades, until all of the accessible land is properly utilized. The resultant need for land will precipitate one of the largest corporate land grabs in the world, as major energy and farming companies fight for control over this $238 billion per year energy and agriculture export market. Brazil’s economy will skyrocket on the back of this agricultural development, growing from the worlds tenth-largest to its fifth largest economy.

Michael Greene, chief executive of Brazil Property Group (BPG), says that he has received several inquiries and business from foreign investors seeking to enter the Brazilian land market.

“With raw acreage currently costing as low as $30 per acre in certain areas, the potential returns on an early investment are astonishing,” Greene says. “Brazil is poised on the brink of tremendous development.”

About Us - Brazil Property Group a real estate sales and consulting company that has over 500 large acre farms, cattle properties, and forestry properties, over 150 of these properties are 20,000 acres or more. Brazil Property Group also has several ethanol commercial properties for sale, at www.brazilpropertygroup.com. For more information call Michael Greene.

Name: Michael Greene
Phone: 1-616-308-1312
E-mail: This email address is being protected from spam bots, you need Javascript enabled to view it
Website: www.brazilpropertygroup.com
About the Press Release
The twentieth century saw energy become the fifth human need alongside air, water, sustenance and shelter. Brazil—a country with 23 percent of the world’s arable land—has risen to answer our growing energy and sustenance needs as it works to become the world’s premier producer of ethanol and food.


 
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