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Biofuels and sugercane

Brazil needs to invest more in biofuel production despite ranking as the No. 1 destination for investment in renewables, to meet higher future demand, analysts F.O. Licht and an industry official said on Tuesday.

Brazil drew one quarter of the $5.6 billion invested worldwide in biofuel production plants in 2010, or $1.76 billion. Biofuels projects in the United States and European Union attracted $1.13 billion and $893 million respectively.

But investments in Brazil are still perceived to be lagging behind a demand curve that is expected to take a steep upward turn through the end of the decade.

“The investments (in Brazil) are still suffering from the fallout of the financial crisis in 2008,” said F.O. Licht’s managing director, Christoph Berg, during a three-day conference his consultancy is holding this week in Sao Paulo.

“Signals from the world market will prompt new investments probably later this year but certainly by next … The world will need Brazilian exports of ethanol,” he said during the 7th F.O. Licht Sugar and Ethanol Conference in Sao Paulo.

The consultancy’s figures on investments include spending on biodiesel and advanced biofuels production as well.

Brazil also saw the most activity among the world’s ethanol producers in terms of take of takeovers, accounting for an estimated $3.5 billion out of $4.5 billion in transactions.

  • Biodiesel in Brazil: raw material: soybeans 82%,  tallow 14%, cotton husk 2%.
  • Total Production Of Sugarcane:  640 million metric tons.  960 million by 2020.
  • Total Production Sugarcane 2011: Cane processing will total 535 million metric tons in the 2011-2012 season or 40 million tons less than the previous estimate and below last year’s harvest of 557 million. (C Czarnikow Sugar Futures Ltd)
  • Taxes on Ethanol: Estimated tax of 23.04% on one liter of ethanol at the gas pump. If sold for R$ 1,79, liter, about R$ 0.41 is tax. (ESALQ)
  • Taxes on Sugar:  The final price of sugar sold at the supermarket is taxed at around 27.39%. A 5kg sack sold for R$5.00 has an estimated R$1.37 taxes in the price after all the taxes have been added throughout the production process. (ESALQ)