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US says Brazilian ethanol doesn’t increase food prices, destroy Amazon rainforest

U.S. says Brazilian ethanol doesn’t increase food prices, destroy Amazon rainforest

U.S. defends Brazilian ethanol:
Energy official claims biofuel does not increase food prices,
destroy Amazon rainforest
July 13, 2007

Brazil’s surging ethanol production does not put the Amazon rainforest at risk and is not fueling higher food prices, claimed a U.S. energy official visiting Brazil.

“There is a huge misconception internationally that in Brazil, we’re cutting down the rain forest to (make) fuels, which is not true,” Reuters quoted Dan Arvizu, director of the U.S. Department of Energy’s National Renewable Energy Laboratory. “Done responsibly (ethanol production) does not have to (compete) with food or impact the environment.”

Arvizu’s comments follow similar remarks Monday by Brazilian President Luiz Inacio Lula da Silva. Lula said that “European competitors were trying to undermine Brazil’s biofuels production by raising environmental concerns,” reported Reuters.

Scientists say while rainforest is not directly cleared for sugar cane plantations, expanding production is pushing smallholder farmers into more marginal areas, including the cerrado grassland and rainforests of the Amazon basin.

Sugar production in Brazil, 1981-2005. Chart based on USDA data.

“The high price of petroleum and other factors has driven up the demand for bioenergy, which means that the demand for new agricultural land is growing,” said Dr. Daniel Nepstad, of Woods Hole Research Center’s Amazon program, in an interview with “We see soy prices going up partly because less soy is being grown in the U.S. As corn expands to meet the surging demand for the emerging ethanol industry. As sugar cane expands in Southern Brazil, soy production is heading northward, encroaching on the Amazon. Soy prices are also inching up because of the new demands for biodiesel (from soy oil). All these are factors drive up the cost of the commodity and basically make it profitable to convert land where it wasn’t profitable a short time ago.”

Price per unit of potential energy, dollars per million Btu. Corn price includes subsidies.

Meanwhile the both the U.N. and the United States Department of Agriculture have warned that booming demand for biofuels has spurred a big jump in food prices over the past year. As the amount of corn used to make ethanol in America has tripled since 2000, corn prices as measured by the unit of potential energy has leapt to equal those of crude oil, according to The Economist. Now that corn prices move in tandem with energy prices, Goldman Sachs analyst Jeffrey Currie says that in order for grain prices to fall, the oil price must fall.

Venezuela and Cuba have echoed these sentiments, specifically criticizing ethanol production in the U.S. (the world’s largest producer of ethanol, most of which is derived from corn) and Brazil (the world’s largest exporter of ethanol, mostly made from sugar cane) for making food less affordable for the world’s poor — Venezuela, as a leading producer of crude, has a strong stake in seeing biofuels, a competitive threat, fail. The country need look no farther than Brazil, with ethanol presently accounts for as much as 20 percent of the country’s transport fuel market and nearly eight out of every ten new cars sold are flex-fuel—capable of running on either an ethanol-gasoline mix (“gasohol”) or bioethanol.

Beyond worries over the environment and “agflation”, some critics have also voiced concern over labor practices on plantations, noting that workers can sometimes be trapped in conditions analogous to slavery. In 2005, 4,133 slaves were freed after Brazilian SWAT-style teams raided 183 farms.

While Brazil and the U.S. having signed an agreement to promote ethanol production in Latin America and the Caribbean, the United States currently imposes a tariff of 54 cents per gallon on most imported ethanol to block imports from Brazil.

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