USGC ethanol study team discovers promising potential in Peru

Farm Forum

A joint team representing the U.S. Grains Council (USGC), Renewable Fuels Association (RFA) and Growth Energy visited Peru last week to assess the potential for U.S. ethanol exports to that country. The ethanol study team was part of a broader trade mission hosted by the U.S. Chamber of Commerce to determine how the U.S. ethanol sector can fit into Peru’s energy portfolio.

As a result of the U.S.-Peru free trade agreement (FTA), Peruvian trade barriers to U.S. goods, services and investments have been reduced. The United States already accounts for roughly 25 percent of all Peruvian imports according to International Trade Administration figures. Given U.S. export success in this market and Peru’s commitment to energy security, diversification and climate change, there are exciting opportunities for furthering trade relations with the U.S. agricultural and energy sectors.

In 2008, Peru established its renewable energy portfolio standard with the goal of creating an energy system that was sustainable and reliable. Four priorities were established: implementation of measures that will increase energy efficiency; continued development of the country’s natural gas industry; integration of electricity markets in the Latin American region; and minimization of environmental impact and expansion in the use of low-carbon technologies.

Just two years later, in 2010, Peru began requiring a 7.8 percent ethanol blend in its conventional gasoline. While Peru has two modern ethanol production facilities, domestically-produced ethanol is still a relatively new industry with potential for growth. U.S. Department of Agriculture’s (USDA) Foreign Agriculture Service (FAS) in Lima forecasts Peru’s ethanol production at 250 million liters in calendar year 2015, up 5 million liters or 2 percent from the previous year.

While Peru is a potential market for U.S. ethanol exports, the most important takeaway from this mission was establishing potential partners and determining where and how the Council can be most effective in further expanding this emerging market.

“The team walked away feeling positive about the U.S. ethanol export market and the potential for growth,” said Marri Carrow, USGC regional director for the Western Hemisphere.

“It was good to hear firsthand from Peruvian officials of the country’s high priority on climate change and its commitment to clean energy development. They expressed optimism and interest to learn more about how U.S. ethanol can fit into that strategy.”

The ethanol mission and two others in the current round of market assessments were made possible earlier this year when USDA announced ethanol exports could be promoted under the Market Access Program (MAP). This program, part of the U.S. farm bill, provides cooperative funding for U.S. agricultural export promotion initiatives around the world.

The team finished its study mission on Nov. 7 in Panama City, Panama.

The Council is also planning to conduct another study mission to Southeast Asia later this year.