Tapping a new market for North Dakota ethanol

Jonathan Knutson
Forum News Service

North Dakota ranks 10th in U.S. ethanol production. Brazil, already the world’s biggest buyer of U.S. ethanol, almost certainly will buy even more in the future.

Recognizing opportunity, state trade and ethanol industry officials recently visited Brazil to build relationships they hope will lead to future sales of North Dakota-produced ethanol to the South American country.

“It was a valuable trip for North Dakota’s ethanol industry,” said Deana Wiese, executive director of the North Dakota Ethanol Council. “With the significant increases in demand predicted in Brazil over the next decade, we’re optimistic that our companies will be able to help fulfill that need.”

North Dakota is capable of producing 520 million gallons of ethanol annually at five plants. About 10% of that is used in the state. The rest is sent to other states and exported to several countries, primarily Canada, with none currently going to Brazil, Wiese said.

The United States leads the world in ethanol production, with its product made from corn. Brazil ranks second, using sugar cane to make ethanol. Even so, Brazil relies heavily on imported ethanol in addition to what it produces itself. Last year, America exported 1.9 billion gallons of ethanol, 30% of it to Brazil.

Now, Brazil has evaluated whether to lift ethanol trade barriers, including a 20% duty on imported ethanol after an annual quota of 158 million gallons is reached.

“The Brazilian market is quite promising, especially if the 20% duty is eliminated, and this trade mission helped us build mutually beneficial relationships with ethanol industry leaders,” North Dakota Agriculture Commissioner Doug Goehring, who led the trip, said in a written statement.

In early September, according to published reports, U.S. and Brazilian officials agreed to raise the tariff-free quota of imported ethanol from 168 million gallons to 198 million gallons. The 20% tariff remains in place for imports beyond 198 million gallons, according to the reports.

From Aug. 5-9, Goehring and officials with Midwest Ag Energy, Red Trail Energy, the North Dakota Ethanol Council, North Dakota State University, the U.S. Commercial Service and the North Dakota Trade Office traveled to the Brazilian cities of São Paulo and Recife. They attended briefings on Brazil’s burgeoning ethanol market and met with ethanol importers and distributors.

The North Dakota Trade Office partnered with U.S. Commercial Service offices in Fargo, São Paulo and Recife, and the Foreign Ag Service on the trip.

Lindsey Warner, director of marketing and events for the North Dakota Trade Office, organized the mission and guided the group in Brazil. Brazilian ethanol companies will visit North Dakota in the future, she predicted.

Other major corn- and ethanol-producing states, such as Nebraska and Iowa, are closer to Brazil, which conceivably could offer ethanol producers in those states a cost advantage in sending their product to Brazil. But Warner said she doesn’t think that will be the case.

Brazil has raised sugar cane since the 16th century, and ethanol from it has been produced for decades. The oil crisis of 1973 encouraged Brazil to develop its ethanol industry, and a variety of government programs helped to do so.