Brazil is spending millions of dollars to mislead Americans that its ethanol is superior to the ethanol produced in the U.S. The most recent example of this misinformation is a publicity stunt to convince Washington, D.C. drivers that Brazilian ethanol is cheaper than U.S. product. This is both factually incorrect and intentionally deceptive.
A close look at the facts reveals that American ethanol is selling at a significant discount to Brazil’s. At today’s prices, a gallon of gasoline mixed with 10 % American ethanol (E10) would be 11¢ CHEAPER than a similar gallon using Brazilian ethanol. In fact, the gallon of gasoline with 10% Brazilian ethanol would be more expensive than straight gasoline.
[To better understand the current pricing of ethanol, please click here. To better understand the role of the U.S. in the world ethanol market, click here.]
“The facts are clear: using domestically produced ethanol saves drivers money while supporting jobs and local economies here in the U.S.,” says Renewable Fuels Association President Bob Dinneen. “Rather than seeking to cannibalize this market, Brazil should be working with the U.S. to expand the use of ethanol globally to displace reliance on petroleum. Unfortunately, Brazil’s singular focus on tapping into American taxpayer wallets impedes such efforts.”
Brazilian sugarcane and ethanol producers are also attempting to mislead Americans that if the tariff on imported ethanol was removed, Brazilian ethanol could compete with American ethanol. That isn’t true either. Even if the tariff weren’t in place, E10 made from imported Brazilian ethanol would still be 6¢/gal. more expensive than E10 made from American ethanol. The fact remains the tariff on ethanol imports exists only to offset the value of the tax incentive that all ethanol – regardless of national origin – receives.
Additionally, it is important to note that imported ethanol, Brazilian or otherwise, has long held a place in America’s market. In the past five years, America imported more than 2.5 billion gallons of ethanol directly as well as through trade loopholes such as the Caribbean Basin Initiative.
“Suggesting that opening the flood gates to Brazilian ethanol would provide more benefits than continuing to develop our domestic industry is nothing short of dishonest,” says Dinneen. “Waiving the tariff and allowing Brazilian ethanol access to American taxpayer dollars would cost Americans money and subsidize a foreign industry with a checkered environmental and labor record.”
As a 2008 Los Angeles Times story notes, “More than 300,000 farm workers are seasonal [sugar] cane cutters in Brazil, the government says. By most accounts, their work and living conditions range from basic to deplorable to outright servitude.” An Amnesty International report cited in the story confirmed that more than 1,000 people were “rescued in June 2007 after allegedly being held in slave-like conditions at a plantation owned by a major ethanol producer….” By comparison, a recent survey of American ethanol production showed that 75% of employees working at ethanol biorefineries made at least $50,000 per year while 99% report receiving healthcare benefits.
Also worth noting is that since 1999, Brazilian ethanol yields per acre have only increased 9% while total land planted to sugar cane has increased 92%, with many of these acres in environmentally sensitive regions. By comparison, ethanol yields in the U.S. are up 31% while total area planted to corn has increased just 11%. See more on this here.